What governments did, and what it cost the country

What was done

The government appointed a commission of inquiry into the LIC's purchase of shares in Mundhra companies. The Law Commission's 1962 report records that this inquiry led to the resignation of the then Finance Minister. In later company proceedings, the Supreme Court held Haridas Mundhra liable to pay compensation to LIC for abandoning a share purchase deal.

What it meant for the country

The LIC's investment of ₹1.24 crore in Mundhra companies led to a Finance Minister's resignation and a Supreme Court finding that Haridas Mundhra must compensate the insurer.

• LIC paid ₹1.24 crore for shares in Mundhra companies that were later described as worthless; this figure was put before Parliament in 1957, as reported by the Scribd document. [12]
• The inquiry led to the resignation of the then Finance Minister, T.T. Krishnamachari, as recorded by the Law Commission and as reported by the Scribd document. [13][12]
• The Supreme Court held Haridas Mundhra liable to pay compensation to LIC for abandoning a share purchase deal, and his appeal substantially failed. [1]
• In Richardson and Cruddas Ltd., the board of directors were removed on the ground of mismanagement and an Advisory Board was constituted by court order. [2]
• A criminal investigation against Haridas Mundhra was opened in December 1957 by the Delhi Special Police Establishment, and the High Court allowed the Magistrate to take cognizance of the report. [5]

Step by step

1. 1956-04
   Haridas Mundhra was elected chairman of the board of directors of British India Corporation Ltd. [1][5]
2. 1957
   Parliament was told that LIC, under pressure from the finance ministry, had bought shares in companies promoted by Haridas Mundhra for ₹1.24 crore, which were alleged to be worthless. This is as reported by the Scribd document. [12]
3. 1957-03-04
   Haridas Mundhra wrote to the company authorising a debit; he was later held mainly responsible for abandoning the share purchase deal instead of enforcing it. [1]
4. 1957-09-07
   By a deed of revocation, Haridas Mundhra became entitled to exercise an option to purchase 51 per cent of the remaining shares in Champarun Sugar Co. Ltd, and he paid for and obtained a transfer of 49 per cent of the shares. [11]
5. 1957-12-21
   The Deputy Superintendent of Police of the Delhi Special Police Establishment lodged a report against Haridas Mundhra. [5]
6. 1958-08-01
   In Richardson and Cruddas Ltd., the court constituted an Advisory Board after the board of directors had been removed on the ground of mismanagement. [2]
7. 1958-08-05
   The Allahabad High Court held that the report of the Deputy Superintendent of Police was a competent police report and that the Magistrate could take cognizance of the case. [5]
8. 1961
   In appeals before the Supreme Court, Appeal No. 299 of 1961 succeeded as regards Haridas Mundhra, and Appeal No. 296 of 1961 brought by Haridas Mundhra and Tulsidas Mundhra substantially failed. The court held Haridas Mundhra liable to pay compensation to the Corporation for abandoning the share purchase deal. [1]
9. 1962-12
   The Law Commission's Twenty-Fourth Report recorded that the Mundhra Inquiry under the Commissions of Inquiry Act, 1952, led to the resignation of the then Finance Minister. [13]

The documents

1. [1] Life Insurance Corporation Of India vs Hari Das Mundhra And ... Court, indiankanoon.org
2. [2] Richardson And Cruddas Ltd. Life ... vs Haridas Mundhra And ... Court, indiankanoon.org
3. [3] Chiranjilal Ramachandra Loyalka And ... vs Life Insurance ... Court, indiankanoon.org
4. [4] Khagendra N. Sen Sharma And Ors. vs Life Insurance ... Court, indiankanoon.org
5. [5] Hari Das Mundhra vs The State on 5 August, 1958 - Indian Kanoon Court, indiankanoon.org
6. [6] Constituent Assembly Debates On 5 November, 1948 Part I Court, indiankanoon.org
7. [7] M/S.T.T.Krishnamachari & Co vs The Assistant Commissioner Of ... Court, indiankanoon.org
8. [8] Commissioner Of Income Tax vs T.T. Krishnamachari & Co. on 14 ... Court, indiankanoon.org
9. [9] T.T.Krishnamachari & Co vs Godrej Agrovet Limited on 20 April ... Court, indiankanoon.org
10. [10] THE LIFE INSURANCE CORPORATION (AMENDMENT) ACT, 1957 Court, indiankanoon.org
11. [11] Champarun Sugar Co. Ltd. And Anr. vs Haridas Mundhra And Ors ... Court, indiankanoon.org
12. [12] Chagla Commission: LIC Mundhra Scandal | PDF | Government Web, scribd.com
13. [13] The Commission Of Inquiry Act 1952 - Indian Kanoon Court, indiankanoon.org
14. [14] The Commissions Of Inquiry Act, 1952 - Indian Kanoon Court, indiankanoon.org
15. [15] Section 3 in The Commissions Of Inquiry Act, 1952 - Indian Kanoon Court, indiankanoon.org
16. [16] Discussion On The Trade Marks Bill, 1999. on 22 December, 1999 Court, indiankanoon.org
17. [17] Presentation Of The 56 Th Report Of The Standing Committee On ... Court, indiankanoon.org

Compiled from the documents cited, 1 Oct 2026

What was done

The Life Insurance Corporation of India used company-law proceedings to obtain findings against the British India Corporation board and against Haridas Mundhra. The Calcutta High Court removed the board and managing agents of Richardson and Cruddas Ltd and placed the company under a court-appointed Special Officer. Haridas Mundhra was charged with cheating and forgery, and a court record refers to his conviction.

What it meant for the country

The court record shows findings of mismanagement and liability against Haridas Mundhra, his criminal charge and conviction, and court control of Richardson and Cruddas Ltd.

• The former board of British India Corporation was found guilty of mismanagement between 1956 and 1958, and Haridas Mundhra was held liable to compensate the Corporation for loss on the Samastipur share deal. [1]
• Haridas Mundhra was charged with cheating and forgery-related offences on 22 March 1958, and the record refers to his conviction. [4][1]
• Richardson and Cruddas Ltd, a company involved in the litigation, had its board and managing agents removed and was placed under a court-appointed Special Officer. [3]

Step by step

1. 1956-04
   Haridas Mundhra was elected chairman of the board of British India Corporation Limited, and his brother Tulsi Das Mundhra was elected a director. [1]
2. 1957-02-06
   A court exhibit recorded finance by the Corporation to the company at Rs 44,74,236 on this date, rising to Rs 52,15,000 by 2 July 1957. [1]
3. 1957-03-02
   A contract about the purchase of Samastipur shares involved Jamunadas Kayan, Haridas Mundhra and others; on 4 March 1957 Haridas Mundhra wrote to the company authorising a debit. [1]
4. 1957-07-02
   The Corporation's finance to the company stood at Rs 52,15,000. [1]
5. 1957-12-20
   The State Bank of India, Kanpur, had instituted a suit against the Corporation for recovery of debts, and the Kanpur civil court appointed an officer on that date. [1]
6. 1957-12-21
   The Managing Director of British India Corporation lodged a report with the Deputy Superintendent of Police, Delhi Special Police Establishment. [4]
7. 1958-03-22
   A charge-sheet was filed under sections 420, 467 and 471 of the Indian Penal Code in the court of Sri Maharaj Singh. [4]
8. 1958-04-23
   The Calcutta High Court confirmed the appointment of a Special Officer for Richardson and Cruddas Ltd, removed all members of the board and managing agents, and directed the Special Officer to manage the company. [3]
9. 1958-06-03
   The Special Magistrate rejected Haridas Mundhra's objections to the investigation and trial. [4]
10. 1958-08-05
    The Allahabad High Court delivered its order in Hari Das Mundhra vs The State, in which Haridas Mundhra challenged the validity of the trial and investigation. [4]
11. 1958-08-08
    The Calcutta High Court ordered the constitution of an advisory board to assist the Special Officer of Richardson and Cruddas Ltd. [3]

The documents

1. [1] Life Insurance Corporation Of India vs Hari Das Mundhra And ... Court, indiankanoon.org
2. [2] Chiranjilal Ramachandra Loyalka And ... vs Life Insurance ... Court, indiankanoon.org
3. [3] Richardson And Cruddas Ltd. Life ... vs Haridas Mundhra And ... Court, indiankanoon.org
4. [4] Hari Das Mundhra vs The State on 5 August, 1958 - Indian Kanoon Court, indiankanoon.org
5. [5] Khagendra N. Sen Sharma And Ors. vs Life Insurance ... Court, indiankanoon.org
6. [6] Jehangir Mahomedali Chagla And Another vs M.V. Subrahmanian ... Court, indiankanoon.org
7. [7] V.M.Singh vs Feroze Varun Gandhi on 16 July, 2014 - Indian Kanoon Court, indiankanoon.org
8. [8] Introduction Of The National Asylum Bill, 2015. on 18 ... Court, indiankanoon.org
9. [9] V.M.Singh S/O Mander Singh vs Feroze Varun Gandhi on 14 ... Court, indiankanoon.org
10. [10] Presentation Of The Final Action Taken Statements Of The ... Court, indiankanoon.org
11. [11] (In Liquidation) Official Liquidator vs Haridas Mundhra And ... Court, indiankanoon.org
12. [12] Hungerford Investment Trust Limited ... vs Haridas Mundhra ... Court, indiankanoon.org

Compiled from the documents cited, 30 Sept 2026

What was done

Parliament enacted the Armed Forces (Special Powers) Act, 1958 on 22 May 1958, replacing the Armed Forces (Assam and Manipur) Special Powers Ordinance, 1958. In 1972 Parliament amended it to extend to Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura and to give the Central Government power to declare disturbed areas. The Act remains in force.

What it meant for the country

The Act is harmful on the record because it authorises soldiers to use lethal force and arrest without warrant in disturbed areas while requiring central government sanction for any prosecution.

• The Act permits any commissioned officer, warrant officer, non-commissioned officer or equivalent to fire upon or otherwise use force, even to the causing of death, against persons contravening certain orders in a disturbed area. [1][6][10]
• The Act permits arrest without warrant and entry and search without warrant in a disturbed area. [1][6]
• No prosecution, suit or other legal proceeding shall be instituted except with the previous sanction of the Central Government against any person for anything done under the Act. [1][9]

Step by step

1. 1958-05-22
   The Armed Forces (Assam and Manipur) Special Powers Act, 1958 came into force, replacing the Armed Forces (Assam and Manipur) Special Powers Ordinance, 1958; anything done under the Ordinance was deemed done under the Act. [3][4]
2. 2015-02-25
   In the Lok Sabha, Thokchom Meinya raised the issue of repeal of the Armed Forces (Special Powers) Act, 1958. [7]

The documents

1. [1] The Armed Forces (Special Powers) Act, 1958 - Indian Kanoon Court, indiankanoon.org
2. [2] The Armed Forces (Special Powers) Act, 1958 - Indian Kanoon Court, indiankanoon.org
3. [3] The Armed Forces (Assam and Manipur) Special Powers Act, 1958 Court, indiankanoon.org
4. [4] The Armed Forces (Assam and Manipur) Special Powers Act, 1958 Court, indiankanoon.org
5. [5] Section 1 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org
6. [6] Section 4 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org
7. [7] Need To Repeal The Armed Forces (Special) Powers Act (Afspa ... Court, indiankanoon.org
8. [8] Naga People'S Movement, Of Human Rights ... vs Union Of India ... Court, indiankanoon.org
9. [9] Section 6 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org
10. [10] Section 4 (a) in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org
11. [11] Section 2 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org
12. [12] Section 5 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org

Compiled from the documents cited, 1 Oct 2026

What was done

Parliament enacted the Armed Forces (Assam and Manipur) Special Powers Act, 1958, replacing the Armed Forces (Assam and Manipur) Special Powers Ordinance, 1958. The Act empowered armed forces personnel in disturbed areas to use force even to the causing of death, arrest without warrant, enter and search without warrant, and barred any prosecution except with the Central Government's previous sanction. The Act was later extended to seven states.

What it meant for the country

The Act on its face permits the use of force 'even to the causing of death' and bars any prosecution without the Central Government's prior sanction, curtailing legal accountability for such force.

• Armed forces personnel may 'fire upon or otherwise use force, even to the causing of death' against a person contravening certain orders in a disturbed area. [1][6]
• No prosecution, suit or other legal proceeding may be instituted against any person for anything done under the Act except with the previous sanction of the Central Government. [1][12]
• A person arrested under the Act must be made over to the officer in charge of the nearest police station with the least possible delay. [1]

Step by step

1. 1957-11-29
   Parliament enacted the Naga Hills-Tuensang Area Act, 1957, forming a new administrative unit in Assam comprising the Naga Hills District and the Tuensang Frontier Division, to be administered by the Governor as the agent of the President. [7][9]
2. 1958
   The Armed Forces (Assam and Manipur) Special Powers Act, 1958 was enacted, extending to the whole of Assam and the Union Territory of Manipur, and repealing the Armed Forces (Assam and Manipur) Special Powers Ordinance, 1958. [3][4]
3. 1958-05-22
   The Armed Forces (Assam and Manipur) Special Powers Act, 1958 is deemed to have commenced on this date; anything done under the repealed Ordinance is deemed to have been done under the Act. [3][4]
4. 2015-02-25
   In the Lok Sabha, Thokchom Meinya (Inner Manipur) raised the issue of repealing the Armed Forces (Special Powers) Act, 1958. [11]

The documents

1. [1] The Armed Forces (Special Powers) Act, 1958 - Indian Kanoon Court, indiankanoon.org
2. [2] The Armed Forces (Special Powers) Act, 1958 - Indian Kanoon Court, indiankanoon.org
3. [3] The Armed Forces (Assam and Manipur) Special Powers Act, 1958 Court, indiankanoon.org
4. [4] The Armed Forces (Assam and Manipur) Special Powers Act, 1958 Court, indiankanoon.org
5. [5] Section 1 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org
6. [6] Section 4 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org
7. [7] The Naga Hills-Tuensang Area Act, 1957 - Indian Kanoon Court, indiankanoon.org
8. [8] Section 2 in The Naga Hills-Tuensang Area Act, 1957 Court, indiankanoon.org
9. [9] Section 1357 in The Naga Hills-Tuensang Area Act, 1957 Court, indiankanoon.org
10. [10] Section 1357 in The Naga Hills-Tuensang Area Act, 1957 Court, indiankanoon.org
11. [11] Need To Repeal The Armed Forces (Special) Powers Act (Afspa ... Court, indiankanoon.org
12. [12] Section 6 in The Armed Forces (Special Powers) Act, 1958 Court, indiankanoon.org

Compiled from the documents cited, 1 Oct 2026