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Episode 2

Jain Hawala Diaries - Pt. 2

The CBI’s investigation into the mysterious set of diaries has stalled, despite evidence of widespread corruption among top politicians and bureaucrats. Public-spirited citizens decide it is time to act. Journalist Vineet Narain picks up the story again and makes it a national issue through his video platform. Senior lawyer Ram Jethmalani joins the crusade. Anil Divan, a formidable lawyer is approached to take on the public interest litigation, a first-of-its-kind corruption petition. The petitioners want the court to push the CBI to investigate, given the evidence it has. Divan is sceptical about the outcome, but comes on board. The first phase of the litigation plays out.


Host:  Raghu Karnad

Research and Writing:

Research Manager:  Ramya Boddupalli

Legal Researcher: Uday Vir Garg & Vipinn Mittaal

Scriptwriter: Ramya Boddupalli 

Script editor: Bhavya Dore

Fact checker: Vipinn Mittaal

Advisors: Lawrence Liang, Ranvir Singh, Shyam Divan and Vivek Divan


Head of Production: Shaun Fanthome

Creative Director: Mae Mariyam Thomas 

Producer: Abbas Momin

Producer/Sound Editor: Joshua Thomas

Production Assistant: Sakshi Nair

Sound Design & Mix: Kartik Kulkarni

Graphic Designer: Sephin Alexander

Show notes
Guest speakers in this episode include:
  1. Abani Sahu
  2. Ashok Kumar Panda 
  3. Kamini Jaiswal 
  4. Justice Mukul Mudgal
  5. Prashant Bhushan
  6. Sanjay Kapoor
  7. Shantonu Sen
A list of archival resources used to research this episode can be found here. 
A curated collection of archival resources used to research this episode can be found here - Jain Hawala Case (

Host: Welcome back to Friend of the Court, a podcast series that explores important constitutional cases against their political and social contexts. I am your host Raghu Karnad. In the first three episodes of this season, we are exploring the Jain Hawala Diaries case formally known as Vineet Narain v Union of India. In episode one, we saw how a set of unassuming red diaries revealed details of regular cash transactions between the industrialist Jain family and their supposed beneficiaries. Suspicion loomed large that the cryptic initials recorded in the diaries matched the names of powerful figures, including sitting ministers, prominent opposition leaders and senior bureaucrats. The diaries indicated pervasive corruption in national politics and hinted at a serious rule of law crisis. Media exposés about the diaries shook the establishment. But the CBI seemed to be doing little, and the diaries continued to collect dust in the agency’s maalkhana. However, vocal lawyers and journalists were not prepared to stay quiet. They decided it was time to hold public institutions accountable. It was time to go to court.


Host: In July 1993, PV Narasimha Rao’s shaky minority government scraped through its third confidence motion by a slim margin of 14 votes. The Prime Minister and his cabinet had been battered by a string of corruption allegations, which paralysed the government. P Chidambaram, the minister for commerce was even forced to resign. The public was growing despondent over the mounting rot in politics, and cynical about agencies like the CBI. 

[Excerpts from Vineet Narain’s Kalchakra report


Namaskar Kalchakra ke dasve ank mein apka swagat hai. Aaj desh ke karodon log desh mein badhte bhrashtachar, mehngai, nainsafi aur badhaali se behal hain. Kuch log hain jo iske khilaaf sangharsh kar rahe hain aur bahot se log hain jo sangharsh karna chahte hain…..Ismein humne Lok tantra ka asli chehra apke saamne pesh karne ki koshish ki hai.>

Host: At 69, bald and bespectacled, Ram Jethmalani, was a Rajya Sabha MP and future law minister. He  featured prominently in Vineet Narain’s Kalchakra report and began to zealously pursue the case. In August, he dashed off a letter to the Prime Minister, asking about the status of the investigation into the diaries.

Kapoor: Mr. Ram Jethmalani is a very eminent lawyer and the belief was that, if India's top criminal lawyer takes up this case, it would acquire a different kind of stature and it will get a kind of recognition which it had been struggling to you know get over a period of time and he addressed a press conference where he laid bare all the so-called allegations that had been levelled, he spoke about the Jain Hawala scandal.


Host: That was Sanjay Kapoor, then a Blitz reporter and now the Secretary of the Editors Guild of India. He wrote the first story about the diaries in 1991. At the press conference, Jethmalani went all guns blazing, and again, urged the Prime Minister to act. But Jethmalani’s calls had little impact on the government. The CBI appeared to be in a stupor, even as the Jains were reportedly seen hosting ministers at their farmhouse.

In October 1993, having lost faith in the government and the CBI, Narain and three others filed a Public Interest Litigation or PIL in the Supreme Court. What was their main plea in this first-of-its-kind petition? They wanted the court to step in and appoint independent officers to investigate the diaries. Apart from Narain, the team of petitioners included veteran journalist Rajinder Puri, and rising lawyers Prashant Bhushan and Kamini Jaiswal, who were chosen to add heft in a case against A-list politicians. Prashant Bhushan tells us more. 


Bhushan: Usually courts also look at who is the petitioner, whether the petitioner is a credible person or not. And the courts also look at the lawyer who is arguing the case, not just because of how good or how effective he is, but also his sort of public credibility, so therefore both the petitioners and the lawyer are important in these kinds of PILs.

Host: PILs are a type of petition that deal with public grievances, especially violations of Fundamental Rights. Early PILs in the 1980s focussed on environmental issues and relatively localised lapses in governance. By the 1990s, as the PIL movement gathered pace, the courts were taking on a more crusading role. Unlike others before it, the Jain Hawala PIL was more ambitious in scope. In one fell swoop it took on the entire political establishment for corruption. In a surprise twist, however, Jethmalani, the most vocal campaigner, did not represent the PIL. The move seemed unusual at the time, but would make more sense later. Instead, he approached Anil Divan.


[Clips from Anil Divan’s interview to Bloomberg TV]


Hello and welcome to this very special interview. Joining me today is the doyen of the Indian legal fraternity, Anil Divan. Constitutional lawyer, senior advocate at the Supreme court, and one of India’s best legal minds. 

Host: Tall and imposing, with a pencil moustache, Divan had more than four decades of experience at the bar. Divan’s commitment to public causes was forged during the Emergency when he participated in  protests and constitutional battles alike. Although his practice focused mainly on corporate and commercial matters, Divan had a history of arguing cases of public importance. With a reputation for being impervious to political pressure, he was perfectly positioned to get to the bottom of the Jain Hawala story. But, he did not agree to take the case right away. Kamini Jaiswal tells us more about the team’s efforts to convince Divan:

Jaiswal: Anil Divan was a very upright, very straight, very hard taskmaster, and a very, very competent lawyer. So to get him involved, first, we had to convince him about the authenticity of the whole thing. And it was important that in court, somebody and there are a lot of technical issues would be involved. And it was important that the court looked at the kind of credibility of the person before it… And number two, we did not want in any event for it to be termed as a politically motivated case. So Mr. Divan had no political affiliations also and he was definitely a person who once he got into a matter would do any and everything to take it to its logical conclusion he would not dump it midway, he did not give his other cases preference over this issue. So therefore, it was very important we have somebody we could rely on, who would not let us down.

Host: In Divan’s own words, he was eager to argue the matter, but was cynical about the outcome. The petitioners came to the court with an extraordinary claim: not only was corruption in public office a serious crime, but hushing it up amounted to a violation of a citizen’s fundamental rights, especially the right to equality. They pointed out that investigative agencies, particularly the CBI, were behaving in an arbitrary manner, and treating some people as if they were above the law. This had become obvious when the CBI charged suspects in its terror investigation but did not pursue leads against powerful politicians in the very same case. Suspecting that the CBI was stalling because of its political bosses, the petitioners also made an unusual prayer. They asked the court to appoint independent officers to investigate the case and report to the court. 

Bhushan: Here is a case where the CBI has got some evidence which shows some powerful people receiving cash from some corporation or company which was also involved in hawala operations et cetera. The CBI is not investigating this because of the power and the influence of these individuals who are involved and therefore the legal question was: can the court not do anything about this? Should the court not do anything about this? Should the court not see and ensure that the CBI does its legal duty that is, pursue investigation without fear or favour?


Host: With a heavyweight like Divan attached to the case, the PIL quickly got the attention of the court. The petition was admitted by the Supreme Court in December 1993 by a three-judge bench headed by Chief Justice MN Venkatachaliah. Early on, the bench made a startling suggestion. Abani Sahu, Ram Jethmalani’s junior and one of the lawyers who assisted Divan in this case, explains:


Sahu: When Justice Anand said why don't you go to the Magistrate, then we felt surprised actually. How did- knowing fully well who the recipients were -  even Justice Anand said to go to a magistrate? It was unusual… the rule of law was not there. It was like show me the man, I’ll show you the rulebook. That's why we wanted a petition before the Supreme Court under Article 32 to investigate the matter. Once Justice Anand said, when he was on the bench with Justice Venkatachaliah, that why don't you go to the magistrate to file the petition? Mr. Divan said it's quite impossible, the magistrate will not take the case into cognisance, because the kind of recipients were there and all the corrupt money. 

Host: In earlier years, cases against former Maharashtra chief minister AR Antulay and former union minister Bhajan Lal had stalled in the lower courts. So there was reasonable ground for Divan’s hunch that a case in a trial court against big names would hit a dead end. While the bench did not press the issue of approaching a lower court, they did ask the petitioners to do something else: remove the names of suspected offenders from the PIL. Though the court did not spell out why, lawyers we spoke to speculated that perhaps the court did not want to blatantly politicise the case. Leaders such as Buta Singh, Arif Mohammad Khan and Devi Lal had been singled out in the petition, along with their suspected misdeeds. The suggestion alarmed journalists like Narain and Kapoor, who feared that removing names would muffle its impact. After all, the high-profile figures suspected of wrongdoing were what set this case apart. But, for Divan, the PIL presented an opportunity to address a bigger systemic problem beyond the corruption of any specific individuals. Divan proceeded to drop the names. 


Then, in January 1994, the CBI’s first response in court uncorked a major new admission: they told the bench that the diaries indeed exist. But over the next eight months, things slowed down, as the matter was not heard. Then in October 1994, Chief Justice Venakatachaliah retired and the petition went to a bench headed by Justice JS Verma, the third-most senior judge in the Supreme Court. He had a reputation for being a fearless, independent jurist who did not shy away from taking the government to task. With him leading the bench, the petitioners were filled with optimism. Prashant Bhushan explains why. 

Bhushan:  Justice Verma was relatively the most independent judge in the Supreme Court at that time and also quite strong and firm. And therefore he was definitely the best person to steer this case both in terms of tightening up the CBI for its investigative lapses or lack of investigation in that particular case as well as for giving those final directions... Before this there were various kinds of PILs involving environment or rights of the disadvantaged and the poorer sections of society and this was one of the first PILs relating to corruption in high places and it was also the first case where the court ordered institutional reforms to be put in place because till then the view of the judiciary had been that, look the court does not have the jurisdiction to order the government to put in place institutional reforms or that is the matter for the legislature. 

Host: Unlike most legal cases, PILs are not meant to be adversarial in nature. They are an opportunity for the court and the parties to work towards a solution together. Verma and Divan, were ideally placed for this; given their passion for upholding constitutional values, and their mutual regard. The results were instantaneous. As soon as he took over, Justice Verma expanded the scope of the hearings by issuing notice to the Union of India. This meant that the court could seek updates and interventions not just from the CBI, but also from the revenue, tax and foreign exchange authorities. In December 1994 Justice Verma came up with his most creative judicial innovation. It was called “continuing mandamus”. Here’s Justice Verma explaining its significance in an interview to Doordarshan. 


J Verma: Everyone is aware of mandamus, where the court in a writ petition gives a direction for compliance. Very often what used to happen was a mandamus was given to a person who had failed to perform legal obligation to do it. And then when he did not then a contempt petition would come that was  the indirect way. Well, what occured to me as the presiding judge with which my colleagues on the bench fully agreed when I discussed with them, was this: that if we combined the process in one proceeding and call it monitoring, so that we give the directive to perform and retain(audio unclear) over the matter till the completion of the performance is reported. you see we would be there by giving a mandamus which would be continuing till the performance is made. 


Host: Instead of a one-time order, as was the norm, the CBI would have to continuously update the court on its progress. That progress seemed to come swiftly. Just a month after Justice Verma’s order, in January 1995, the agency registered a Preliminary Enquiry, to scrutinise 119 contracts issued by state-owned corporations to the Jains. If the CBI proved these contracts had been unfairly or illegally awarded, it would indicate that the Jains had been bribing politicians and officials across the board. By April 1995, four years after finding the diaries, the CBI finally arrested three Jain brothers. Under custodial interrogation, they deciphered the names of their alleged beneficiaries; both prominent politicians and bureaucrats. The alphabet soup of initials unravelled to match flesh-and-blood leaders. 

For instance, at serial no 26, against the initials LKA, was a sum of Rs 60 lakhs. Did it mean that the top BJP Leader LK Advani had received this money? On page number 118, the letters AN appeared, against the amount of Rs 35 lakhs. Was this a payoff to Rajiv Gandhi’s confidante Arun Nehru? The CBI also examined officials, politicians and documents to determine if the Jains had received favours in exchange for money. By the end of that year, the CBI had gathered enough evidence to file charge sheets in a Special Court against a few senior public servants and the Jains themselves. That was just a start. In January 1996, came the real bombshells. Charge sheets were filed against LK Advani, Arjun Singh, Madhavrao Scindia, Arif Mohammad Khan, Yashwant Sinha and several others. 


Scindia and two other cabinet ministers were forced to resign. Over the next three months, the CBI filed a total of 39 chargesheets in the Special Court against more than 50 bureaucrats and politicians from nearly every party. All this was reported to the Supreme Court as it unfolded in the lower court. Remarkably, however, there was no public record of these proceedings in the top court. The government had requested the court to conduct large parts of the hearings in-camera, or behind closed doors. It feared that hearings in open court might unfairly tarnish the reputations of the prominent people still being probed. Abani Sahu told us that the lawyers even had to take an oath that they would not breathe a word of what went on inside. Over time, the developments in the Supreme Court began to trickle through the legal system. Empowered by the top court’s actions, several High Courts too, began directing the CBI to begin sensitive investigations. 


[ News clip about fodder scam investigation ]


For the Janata Dal President and Chief Minister of Bihar Mr. Lalu Prasad Yadav it was yet another chapter in his battle for political survival. This time Mr. Yadav is fighting on two fronts, first to stave off prosecution in the 1000 crore rupees fodder scam where the CBI has filed a chargesheet and targeted him as one of the prime accused in the case. The central leaders of the party including the Prime Minister Mr. I K Gujral have hinted that Mr. Lalu Yadav should step down as the Bihar Chief Minister. Ek situation aaya hai jis situation me jo chara ghotala hai Usme naam aane ke baad aur charge sheet Hone ke Baad har party Ke Log resignation ki maang Kar rahe hain aur usme Janta Dal ke log bhi hain

Host: By 1996, the Patna high court had ordered the CBI to investigate Bihar Chief Minister Lalu Prasad Yadav for the fodder scam. The Bombay High Court had ordered the CBI to investigate a suspicious death tied to young Shiv Sena leader Raj Thackeray. Errant politicians across the country and the political spectrum were beginning to feel the heat.

[News clip of LK Advani press conference] 

Do baatein, ek toh main tyaag patra dun aur dusra jab tak ye jhutha aarop vaha Court usko radd na karde


Host: Stung by the chargesheet, LK Advani, the second-most important leader of the BJP after Atal Bihari Vajpayee, resigned as Member of Parliament. He vowed that he would only contest elections after his name was cleared. With charge sheets filed, Justice Verma’s bench was able to steer the investigations to their logical end just over a year after they started hearing the petition. But the court was confronted with a series of other, similar cases, where agencies were stalling against investigating establishment figures. One was filed by the maverick politician Subramanian Swamy on the alleged corruption in national banks. The second, filed by lawyer Anukul Pradhan, sought action against the financial misdeeds of Narasimha Rao’s spiritual advisor, the godman Chandraswami. AK Panda, Senior Advocate and a member of Divan’s team, explains why they were all clubbed together:  


Panda: It was judicial statesmanship to my mind. In the sense the court was also insulating itself from the political overtones the cases entered, and the political overtones were like Dr. Subramanian Swamy. Everybody knows he's a political person. So, the court, in his case said, let the Amicus represent the case. And the petitioners’ role will be confined to assisting the Amicus.


Host: By early 1996, the court had appointed Anil Divan as amicus curiae for the entire batch of petitions  on investigative inaction. Amicus curiae is a Latin term that means Friend of the Court. 


Panda: The only requirement of an amicus curiae is he has to be absolutely impartial and objective. In our adversarial system, as counsel we represent parties, we try to project their points of view. But the moment you are appointed an amicus, you are a friend of the court. Your duty is towards justice and court alone, and nothing else.


Host: This meant that Divan no longer represented the Jain Hawala petitioners. As amicus, Divan was tasked with analysing political and bureaucratic corruption and suggesting amends. He was assisted by a team of lawyers, including AK Panda and Mukul Mudgal.  How does the court decide whom to appoint as amicus? Mudgal, who went on to become the Chief Justice of Punjab and Haryana High Court  weighs in. 


Mudgal: You do put lawyers in certain categories….Let me tell you, this doesn't come easily to judges, and I've appointed about 15 to 20 amicus during the course of my judgeship. You have to weigh the reputation of a lawyer. That yes, he won't be suborned by the might of the parties involved and he would not succumb to pressure. 


Host: As more and more corruption scandals tumbled out of the closet, expectations were riding high on Divan. Three years after Vineet Narain’s expose, there were signs that the law was finally catching up with the powerful. But the public was no closer to knowing why the CBI was unable to function as it was meant to. Anil Divan was determined to get to the bottom of this question. Join me, Raghu Karnad, on the next episode of Friend of the Court, as Divan discovers secret government documents that explain the CBI’s reluctance to investigate India’s biggest political figures.

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