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Mundhra scam and the importance of Question Hour

Sixty-three years ago, on September 4, an innocuous unstarred question raised during the Question Hour in Parliament led to the unravelling of the infamous Mundhra scam — India’s first big financial fraud

September 03, 2020 / 12:37 PM IST

A day after it said there will be no Question Hour in the forthcoming fourth session of the 17th Lok Sabha, the government, on September 2, relented amid Opposition’s accusation that it was ‘murdering democracy’.

The government said it will reply to unstarred questions during the session.

This, at best, is a partial victory for the Opposition, as the 1957 Mundhra scam, the first serious political crisis to hit the Jawaharlal Nehru-led Congress governments of the 1950s, showed. The scandal had its origins in an innocuous unstarred question asked in the Lok Sabha on an early September morning 63 years back.

However, it was not until MPs could ask a starred question on the issue that they succeeded in pinning down Nehru’s then finance minister TT Krishnamachari, costing him his job.

Interestingly — and this is difficult to imagine in this day and age — the MPs who wrought this on the government belonged to the ruling Congress.


Unstarred questions get written replies from the government. It is during the starred questions, which if they come up during the Question Hour, that ministers not only have to reply orally but also field supplementary questions.

The Power Of An Unstarred Question

The Mundhra scam made Congress MP Feroze Gandhi, the son-in-law of Nehru and grandfather of Congress leader Rahul Gandhi, a star parliamentarian.

On September 4, 1957, Congress MP Ram Subhag Singh and two others submitted a question to the finance minister, drawing his attention to a report published in the August 3 Delhi edition of The Statesman. The report had stated that the Life Insurance Corporation (LIC) had invested a sum of Rs 1 crore ‘in a private enterprise in Kanpur’. The MPs sought to know the name of the enterprise, the total amount invested, and the reasons for investing the funds in a private enterprise.

Since it was an unstarred question, the ministry tabled a written reply. In his reply, Deputy Finance Minister Bali Ram Bhagat denied that the LIC had invested the sum in any single private enterprise with its headquarters in Kanpur. Bhagat and his ministry officials resorted to a technicality to evade answering the issue at the heart of Singh’s question.

The LIC, it eventually unravelled, had invested in excess of Rs 1 crore in several companies owned by industrialist and speculator Haridas Mundhra, and only one of these was headquartered in Kanpur.

Singh dug deeper, and asked a fresh question on the subject in the winter session on November 29, 1957. This time it was a starred question.

Feroze Gandhi, the Congress MP from Rae Bareli, had by then joined Singh in grilling the government. When they asked whether the shares of Mundhra companies were purchased at a higher price than the market price on the day the transaction took place, Krishnamachari said he has been told no such thing happened.

Feroze Gandhi and Singh demanded a debate on the issue, which took place on December 16, 1957, and Feroze Gandhi emerged the hero of the moment as he pinned the finance minister down with a barrage of questions.

Nehru was forced to appoint a commission of inquiry, which was headed by Justice MC Chagla. The commission indicted officials, including Krishnamachari for not putting all the facts before Parliament. It was also discovered that not only Nehru, but Krishnamachari himself, in his earlier stint as the commerce minister, had flagged the dubious activities of Mundhra.

The Importance Of Question Hour

The Question Hour is considered the most important hour of parliamentary proceedings, and the replies even to unstarred questions can come to haunt a minister, as Minister of State for Finance Anurag Thakur has discovered in recent days.

In a reply to a question during the Budget session on March 17, Thakur said the data does “not suggest any adverse impact on the economy” because of COVID-19. “Additionally, a positive impact on India’s economy may arise from decline in global oil prices triggered by the outbreak of COVID-19,” Thakur said.

Social media lost little time to dig up Thakur’s reply when Finance Minister Nirmala Sitharaman recently attributed the economic slowdown to COVID-19 as an “act of God” which “may result in contraction of economy this fiscal”.

Questions Raised

Over the years, both starred as well as unstarred questions have helped MPs ask searching questions to the government and get important information in the public domain, like the quantum of bank NPAs.

Not that MPs have always covered themselves in glory. In 2006, Speaker Somnath Chatterjee expelled 10 Lok Sabha MPs and one Rajya Sabha MP, after a private television channel caught them willing to raise questions in Parliament in return of monetary benefits.

While his grandfather’s political stardom was in some measure to do with the Question Hour, Rahul Gandhi was pilloried until some months back for not being a serious parliamentarian given his record in asking questions in the Lok Sabha.

During the short tenure of the ongoing 17th Lok Sabha, Rahul Gandhi, who now represents Kerala's Wayanad, has asked 41 questions in the Question Hour.

Given that the current Lok Sabha has held only three sessions, this is a respectable average of 14 questions per session. It also compares favourably with the average of 49 for this Lok Sabha of all 543 Lok Sabha MPs put together.

Rahul Gandhi is in his fourth term as an MP. As the MP representing Amethi in Uttar Pradesh in his first three terms, between 2004 to 2019, Rahul Gandhi asked only three questions—all three in 2005.

In the run up to the 2019 Lok Sabha, the Bharatiya Janata Party, and its candidate from Amethi Smriti Irani, brought this fact up to accuse Rahul Gandhi of being not only a non-serious parliamentarian, but also not raising issues that concern Amethi.

Rahul Gandhi lost from Amethi, but it is ironical that the BJP-led government is now unwilling to face the Question Hour.

Archis Mohan is a Delhi-based senior journalist. Views are personal.
Archis Mohan
first published: Sep 3, 2020 10:21 am

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