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Episode 3

Jain Hawala Diaries - Pt. 3

The 1996 elections loom, and a beleaguered Congress party struggles to win back power. In the meantime, the Hawala PIL is clubbed with other similar anti-corruption petitions in the Supreme court. In the lower court, LK Advani and other prominent figures, find themselves facing a trial in the Hawala corruption-related cases. As action builds inside and outside the courts, an anti-corruption campaigner switches teams. And amicus curiae Anil Divan makes a shocking discovery that will upend the course of the litigations and bring new documents to light. Ultimately, what will come of all the legal proceedings? And what will be the legacy of the Jain Hawala PIL?


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. Ashok Kumar Panda
  2. Kamini Jaiswal
  3. Prashant Bhushan
  4. 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, I am your host Raghu Karnad. In the third and final part of our look at the Jain Hawala case, we continue to follow the political and legal fallout of the diaries.

1996 was a crucial election year. An ascendant BJP was looking to make a mark in national politics. PV Narasimha Rao’s government was haunted by the diaries right till the end of its term, with some cabinet ministers being forced to resign. In court, the Jain Hawala petition led to path breaking judicial innovations, most notably the first instance of a court-monitored investigation. This meant that the CBI and other agencies would have to regularly report on the progress they were making. The court’s pressure worked. Within months, the CBI filed charge sheets against several A-list politicians and bureaucrats and  trials were looming. 

We ended episode two in early 1996, when the court started hearing other petitions related to inaction in corruption cases. These came in the run-up to the general elections, and most of them concerned important governmental figures, including the Prime Minister himself. Eager to avoid politicising them, the court clubbed them together with the Jain Hawala petition. And it appointed Anil Divan as Amicus Curiae or Friend of the Court.

Jaiswal: Amicus is a person who is purely an officer of the court. He's not representing anybody. He is representing the cause. And he is an officer of the court. He's not supposed to take sides. He's supposed to be totally objective. And therefore, he was appointed as an amicus…  You have an amicus, the court has complete confidence in the amicus… This was not the only case there was another one or two matters that came at that point of time. One of them was the Indian banks case, which Mr. Subramaniam Swamy did, and as soon as he brought it to the notice of the court, immediately, the court said, you know, Mr. Swamy, you've done your job. Now, we are appointing Mr. Anil Divan as Amicus.


Host: That was activist-lawyer and petitioner, Kamini Jaiswal reflecting on Divan’s appointment. Divan did not disappoint. He vigorously embraced the role as he submitted progress reports to the court on the status of the CBI investigations and kept taking the agency to task. He informed the court about the systemic difficulties hampering the agency. 

In March 1996, for instance, he told the court that the CBI had not interrogated the sitting governors of Uttar Pradesh and Kerala connected to various scams. The reason was these figures enjoyed constitutional immunity from investigations; the CBI simply couldn’t touch them. But as pressure built in court, the tainted governors had to resign. 

Divan’s other breakthrough also came in March 1996, when he asked the court to safeguard the evidence, primarily the diaries, in the Jain Hawala case. The court drew up details on how to protect the documents: they would have to be deposited in a bank vault, with the sole key in the custody of a court official. A highly secure system was also put in place to move documents to a  handwriting expert in Shimla.


There were other concerns too. Media reports suggested that the Prime Minister was slyly meeting CBI officials to influence the investigation. Since chargesheets had been filed mainly against Narasimha Rao’s own party rivals and members of the opposition, this only compounded suspicions of his meddling with the CBI. Divan asked the court to restrain the CBI chief from reporting to the Prime Minister. Here is Justice Verma in an interview to Doordarshan explaining what the court did next: 


J. Verma: what we quickly thought was, rule of law must be maintained but, you see, there are certain areas which must be left to the political process and there should be no instability at the centre. Rule of law to be maintained, CBI director must be answerable to someone. Merely asking him to report will ensure an internal check because he will know that even though he is not to report to his political superiors, but then he has to report to the court and the court can, if he goes wrong or does something wrong, so that accountability was enforced in this manner... it was to the institution of the Supreme Court that the CBI director was made accountable and this is how we tried to reconcile the requirements of the rule of law and the need for a certain area being left only for the political process.


Host: The Jain Hawala diaries continued to prove costly for political careers. Narasimha Rao’s bid to reclaim power in the approaching 1996 general elections was looking more and more dismal as accusations of corruption against him and his cabinet steadily mounted. Just months before polls, a small opposition party accused Rao of bribing MPs to secure their votes in an earlier no-confidence motion. This was just the latest in an avalanche of allegations against the Rao government. A recent report by the digital platform Lallantop recapped the incident: 


<Audio Lekin 1995 aate aate ek naya khulasa hua. Aarop laga ki JMM ke sansadon ne sarkar bachane ki awaj mein rishwat li. Mukadama hua. Sunwai shuru hui…..Rishwat kaand maamle ki sunwai ke dauran 1 April 1997 ko delhi ki ek adalat mein Uss samay ek ajeeb scene ban gaya jab JMM Sansad Shailendra Mahato ne kaha mere bank khaate mein Jama rishwat ki rashi sarkar zapt Kar sakti hai. Uss se pehle 22 march ko apne ikbalia Bayan mein Shailendra mahato ne svikar kia tha ki 28 July 1993 ko PV Narsimha Rao sarkar ke khilaf avishwas prastav ke virodh mein vote dene ke liye unhe bator rishwat 40 lac rupay Mile the. >


Host: On the other side of the aisle, LK Advani and Yashwant Sinha, who had been charged in the corruption cases, had to sit out the 1996 elections to protect the BJP’s campaign. 


[News clip of Atal Bihari Vajpayee’s press conference] 


And 96 will mark the end of half a century of Congress misrule and herald the commencement of a really new chapter


[News clip of 1996 election campaign]


HK Dua:  The opposition parties have started raising corruption as an issue but some recent scandals have proved to be equalisers and corruption is no longer an issue that concerns one party. But people are certainly keeping it in mind. I‘m sure they would like to vote for cleaner candidates. Those with better image, less corrupt image.


Host: In the 1996 elections, the Congress party was wiped out. They lost 92 seats, making it their worst defeat ever at the time. Though parliament was hung, the BJP’s anti-corruption platform ultimately gave the party its first chance to lead a government at the centre. But Advani and Sinha remained on the sidelines, with their political futures hostage to the ongoing court cases. 


While the BJP talked a big anti-corruption game, on May 8, 1996, the court took the first major step towards the trial of Advani. Amidst death threats, CBI special court judge VB Gupta framed charges against Advani, VC Shukla and the Jains. Unfazed, Advani and the rest responded by challenging that order before the Delhi high court. And who defended Advani in the high court? None other than Ram Jethmalani. As you will recall, Jethmalani had spent the better part of 1993 as an anti-corruption crusader strongly insisting that the diaries incriminated senior politicians. Three short years later he was singing a different tune: that the documents could hardly be the basis for trying Advani. Divan was in for a rude shock when he read about Jethmalani’s sudden switching of teams. Kamini Jaiswal recalls: 


Jaiswal: For the person who has brought you the cause to go and appear for one of the persons who's accused in the matter was totally unacceptable to Mr. Divan. We felt it was professionally incorrect.


Host: An outraged Divan wrote to his dear friend and I quote: “I could hardly believe my eyes that you are seriously canvassing that there is nothing wrong in your defending LK Advani.” Jethmalani tried to defend his position, but that did little to convince Divan. As amicus, any goings on related to the PILs were of concern to Divan. He did not want to give the public an impression that lawyers were in cahoots with the establishment in covering up corruption. Divan ultimately held a press conference in which he expressed his angst. Here is Kamini Jaiswal reflecting on that episode:

Jaiswal: He did not want the message to go to the public, that on the one hand, we are pursuing the case. We are pursuing the cause. And we are getting pressurised because Mr. Advani, at that point of time was, you know, a very senior political figure and he was holding a position. So therefore, he wanted to clarify to the public that, you know, he had not, none of us, in fact, were so worried about it, but he was very, very particular that he would want it to bring out to the public that he did not agree to one of the persons who was with the cause to have represented the accused and that it was incorrect.

Host: Jethmalani didn’t flinch. He continued to defend Advani. He told the high court that Advani was facing, and I quote “a serious miscarrige of justice”. It worked. The High Court quashed the charges by rejecting the diaries as evidence—Advani and the others were let off, without even facing a trial. Armed with this clean chit, Advani went on to contest and win in the 1998 and 1999 elections. This judgement had far reaching consequences beyond Advani; it proved to be the undoing of all the pending corruption cases related to the diaries. Shantonu Sen, an ex-Joint Director of the CBI, explains how the prosecution  faltered. 


Sen: CBI failed to produce before the court the source of the funds. CBI failed to establish that this was a book of account with genuine entries. And thirdly, CBI also failed to a certain extent to establish that the acronyms honestly reflect the name of the person they're prosecuting… This investigation should have been carried out in a manner that the evidence - after all the person who wrote the diary Surinder Jain was available… The book of accounts or hawala diaries having been thrown out as no evidence, the rest of the cases could not be proceeded with. The main fulcrum of your case is gone. So what do you base your investigation charge sheet on?


Host: In the Delhi high court, lawyers for the Jain brothers had made another curious argument. They said that MPs and MLAs could not be considered public servants under the Prevention of Corruption Act. The twisted logic went like this: MPs and MLAs were elected by popular vote and were not employees appointed for fixed terms who drew regular salaries like bureaucrats. If this argument was accepted it meant they would not be accountable under corruption laws. These arguments, and the fate of the prosecution cases, alarmed Divan. By the end of 1996, Divan asked the Supreme Court to appoint a competent legal team to represent  the CBI  in the remaining cases. He also told the court how a growing climate of intimidation was thwarting the agency’s work. The most extraordinary such instance was the spate of violence in Bihar following the CBI’s questioning of Chief Minister, Lalu Prasad Yadav in connection with the 900 crore fodder scam.  


[ News clip of fodder scam investigation]


The Bihar fodder scam sparked off controversy and heat as Bihar Chief Minister and Janata Dal National President Lalu Prasad Yadav was interrogated this week by the sleuths of the Central Bureau of Investigations in connection with the scam. The investigation in the scam has been going on for over nine months with the CBI having interrogated almost all senior bureaucrats and politicians. Yadav’s interrogation was the last on CBI‘s agenda, before it submits its progress report to the Patna high court on January 17. But two days after the interrogation, a much ruffled Yadav expressed complete lack of faith in the CBI’s investigations and alleged that the agency‘s joint director, UN Biswas was hand in glove with the BJP. The Bihar CM further alleged that Biswas’s statement that Yadav would be chargesheeted amounted to contempt of court as the matter was subjudice. Towards the end of the week, state Janata Dal Workers disrupted incoming trains and flights to Patna and called for a statewide bandh on January 16.

Host: But it wasn’t just obstacles on the ground. The Supreme Court’s sweeping orders so far were still not enough to free the CBI from political control. The agency kept running into dead-ends. They still needed permission to investigate top officials, which the government often delayed. In one case, according to a report in the Hindustan Times, the delay had allowed a bureaucrat under suspicion to get rid of damning evidence. Vexed, the CBI even reportedly asked the home ministry in 1996 to revoke a certain executive order that had since 1988 been quietly and effectively preventing them from fully doing their job. In government circles, it was commonly referred to as the Single Directive. 

Sen: Originally, the single directive was a directive to the CBI, that CBI will not investigate any act of corruption against an officer of the rank of Joint Secretary level without the prior permission of the government. This decision was taken, I think, sometime in 1969. And there were then various provisos and safeguards added to the directive.

Host: That was Shantonu Sen, the former senior CBI official. As he explained, the directive worked as a specific instruction to the CBI to stay away from investigating senior civil servants without permission from the government. To Divan, who ultimately discovered the order, it was like a cricket match where the umpire was turning a blind eye to cheating by star players. But the hypocrisy didn’t end there. The directive’s scope was silently expanded to include high ranking officials of government banks. As if that were not enough, by January 1997, the media was also reporting that the government wanted to extend this protection to sitting and former ministers. Divan was disturbed that the government was busy institutionalising systematic curbs on the CBI. So he brought the Single Directive to the court’s notice. Ashok Kumar Panda, one of the lawyers in Divan’s team, tells us more:


Panda: The Single Directive was highly confidential, it was not available in public domain. So for the first time, Mr. Anil Divan as amicus he brought it forward. There were two sources. One, Mr. Anil Divan got it from his independent source…  I was privy to another copy. So that is how we had the document from two sources. And in our written submission, Mr. Divan, he presented the Single Directive and asked for a direction from the court saying that the union should be directed either to confirm the existence of such a directive. And the union came out saying that yes,  such a directive was in existence. Before that, it was not in public domain, no one knew about it. 


Host: Having been found out, the government turned combative in court. It claimed these directives were, quote, “confidential and privileged”. Eventually, Divan himself produced a copy of the mysterious set of instructions that had impeded the CBI. His discovery was a turning point. If the CBI was prevented from acting impartially, it was impossible to break the nexus between criminals, politicians and bureaucrats which was at the root of corruption. In his recommendations to the court, Divan suggested a range of reforms to give the CBI director more independence. These included the appointment of an office of a public prosecutor who would advise the CBI on legal matters, a fixed three-year term for the director and the scrapping of the Single Directive. In its final judgement, the Court struck a balance between the recommendations of the amicus  and the realities of the political system. AK Panda sums it up:


AK Panda: If you see, if you analyse the judgement, you will find that the court was on the path of bringing about consensus between parties. It is a classic case of a departure from adversarial litigation. Public interest litigation itself is nothing but a departure from adversarial litigation. And the court played a major role in bringing about consensus between parties. 


Host: The court struck down the Single Directive. It said that just because the CBI reported to the Prime Minister, it did not mean that the government had unlimited power to interfere with its work. It followed this up with guidelines to protect the CBI’s autonomy. Did it work? Here is Justice Verma reflecting in 2009, 12 years after the Hawala Judgement on the fate of these guidelines:


J Verma: I had hoped that given the autonomy which the SC  gave it in the well known Hawala case.. It was only for the people who occupied the highest positions in the CBI who could ensure that there could be no extraneous influence on their working. But I am sorry to say that public perception, which according to me is not unreasonable, is that they have not lived up to those expectations.


Host: The independence of the CBI is a controversial subject to this day, with the lasting image of the agency as a “caged parrot”, hostage to the whims of the central government. The Single Directive has remained a contentious piece of executive action, with successive governments trying to resurrect it. Meanwhile, the CBI’s remaining prosecution cases dragged on in the lower courts only to eventually fall apart. None of the politicians investigated in the Jain Hawala case was ever tried, let alone convicted. The Jains too, were never found guilty. The entire Jain Hawala saga resulted in only one conviction. Ironically, it was the corruption case against one of the CBI’s own investigating officers, OP Sharma who had first discovered the diaries in 1991. Sharma was charged with receiving bribes from the Jains and convicted in 2013, over 20 years later. 

Though the judgement’s legacy might be mixed, the Jain Hawala PIL nevertheless shook the establishment unlike anything before. Cases like the coal scam, the Hathras rape case in UP, encounter killings in Manipur or the Kathua rape-murder have all used court-monitored probes, which is a direct outcome of the Hawala PIL. Justice DY Chandrachud, a Supreme court judge, has remarked that court monitored probes seem to have better results. Prashant Bhushan tells us about how the Jain Hawala case helped future petitioners like him articulate problems of political morality in constitutional grammar. 

Bhushan: I think It has two important legacies, it laid the foundation for court monitored investigations which was used thereafter in Coalgate as well as 2G et cetera. Of course, now the court has started backtracking on that again in the last three, four years, four years or so but that was an important milestone and it laid the foundations for the subsequent cases that came thereafter. Then secondly it also was the beacon for the jurisprudence of institutional reforms; the first case and it laid the foundation for the police reforms case and thereafter civil services reforms case or even that the election affidavits which politicians were required to give to a very large extent Vineet Narain judgement laid the foundation for all those cases which came this whole batch of institutional reform cases.  


Host: The Jain Hawala judgement reframed our understanding of corruption by treating political deceit as a threat to the rule of law.  Here is Justice Verma, summing up, in an interview to NDTV in 2009: 

J Verma: When this petition was brought to the Supreme Court, as a PIL, then we in the supreme court thought that it is a violation of the entire nation’s rights, constitutional guarantees and fundamental rights under Articles 14 and 21. (article) 14 is Right to Equality, (article) 21 is right to life with dignity. Now if there is no equal application of law.. and invariably leave out the bigger people from the net and ultimately in a developing country if the money meant for national good.. for public good.. for the people’s welfare, if it goes in private pockets, then it is at the cost of the people’s welfare.

Host: Constitutional battles are rarely absolute victories. The Jain Hawala diaries raised pressing questions that struck at the very heart of our political system. The case signalled a triumph of hope against cynicism. It showed that institutions can play a crucial role in upholding constitutional ideals if they are granted autonomy and legal protection. To those in power, it was a warning that they weren’t above the law. To the press, it demonstrated the force of fearless reporting. To the judges, it was a lesson in dispensing justice innovatively. To the lawyers, it set an example of how they can use their craft for public good. And finally, to a cynical republic it signalled that not all was lost. That all it takes is a few friends of the court acting with courage and creativity. 

That was the story of the Jain Hawala diaries. Join us next week as we shift gears from a slow burning corruption case to the high stakes Cauvery River Dispute, in which Anil Divan represented the state of Karnataka. Until then, I’m your host Raghu Karnad and this is Friend of the Court

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