In a country with a strong market like India, there were many industrial groups that traded in various sectors even before partition.
Accusations of amassing wealth through unethical means, doing business through corruption, or prospering through leftist methods have often been leveled against businessmen or industrial groups since partition.
Relationships between businessmen and politicians, accusations from opponents and their implications, and upheaval in politics are commonplace. However, immediately after partition, for the first time in India’s history, a powerful group stood in the spotlight.
In the 1950s, India’s third-largest conglomerate at the time was embroiled in corruption allegations.
The then Nehru government investigated this industrial group and found it guilty. It was the Dalmia Jain Group!
The special thing is that the person who brought the Dalmia Jain group to justice was Nehru’s son-in-law himself, i.e. Feroze Gandhi!
What is this case? What is the Dalmia Jain Industrial Group scandal and what is the interesting history of this company?
Dalmia Jain Group expands into various sectors
Industrialization was given more emphasis in independent India. Among the industrial groups that were large and nationwide at that time, the name of the Dalmia Jain Group was mentioned first.
Although they have been accused of corruption in the past, the party’s contribution to promoting industrialization in independent India is still recognized.
The Dalmia Jain Group was involved in cement, banking (India Bank and Punjab National Bank), insurance (India Insurance), media (Bennett Coleman), sugar, paper, chemicals, textiles, aviation, motor vehicles, electricity distribution, biscuit manufacturing, and the milk business was spread across various regions.
Ramkrishna Dalmia was the head of this group. In fact, he was a leading businessman since before independence, i.e. since the 1930s.
Naturally, his name was among the first few big businessmen after the partition of India.
From gambling addiction to entrepreneur
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The story of how Dalmia, who was once very poor, became so great is also very interesting. Dalmia detailed it in an interview given to the American press in 1949.
This journey was recorded by Bhasur Mukherjee in his book ‘The Founding Fathers of Fraud’.
Born into a poor family in the Chidawa area of Rajasthan, Dalmiya spent his childhood in Calcutta. After his father’s death at the age of eighteen, the responsibility of a large family fell on his shoulders.
He used to go to work with his uncle Motilal Jhunjhunwala. There he learned many things in the trade.
He learned all the tricks of the silver trade in particular. After initially making good money, he fell into financial trouble again due to his addiction to speculation and gambling.
Deep in debt, Dalmia sought the help of an astrologer and took risks to make huge profits in the silver trade, a story he recounted in his autobiography and interviews.
After this profit, Dalmia gave up gambling and focused his attention on business.
However, over time, the group was accused of misappropriating funds, transferring funds from wealthy companies to their private businesses, and misusing funds from their insurance companies.
- Nehru’s son-in-law exposed this fraud
Feroze Gandhi was elected to the Lok Sabha from Rae Bareli constituency in the first general election of independent India. In fact, this was his first speech as a representative of the people.
In 1955, an investigation revealed that a large amount of funds invested in the insurance company by policyholders had disappeared.
In this context, the then President had issued an executive order in November to strengthen the Insurance Act. A debate was going on in Parliament to convert this ordinance into a law. Feroze Gandhi gave a speech of about an hour and fifty minutes in support of this law.
Feroz Gandhi said, “Many new companies have entered the business because the insurance business is very profitable. The opportunity to utilize the low capital requirement and the large premiums paid by the people is being misused by these companies.”
,Photo captionIt was Feroze Gandhi who exposed this scandal.
In the same speech, Feroze Gandhi finally targeted the India Insurance Company controlled by the Dalmia Jain Group.
He alleged that the India Insurance Company had misused Rs 22 million from pensioners’ funds. After this speech by Feroze Gandhi, the government’s attention was drawn to the malpractices in the insurance industry.
Dalmia bought the India Insurance Company in 1936 and in just one year the company’s turnover reached Rs 25 crore.
Bhaswar Mukherjee mentioned in the book ‘Founding Fathers of Fraud’ that Feroze Gandhi made fun of the Dalmia Group in his dramatic speech.
The story of how Dalmia started trading silver and how he became rich on the prediction of an astrologer was also told in Parliament.
Feroze Gandhi also criticized that Dalmia Insurance is now gambling with public money.
In this regard, Dalmiya’s daughter Neelima Dalmiya Aadhar has written in her book Father’s Dearest: The Life and Times of RK Dalmiya that ‘Feroze Gandhi’s strong demand in Parliament in 1955 gave Nehru the opportunity he was waiting for. Then the establishment of the Vivian Bose Commission of Inquiry put Dalmiya in a dire situation.’
Commission of Inquiry, Crime and Punishment
,Photo captionJawaharlal Nehru
Subsequently, the Government of India, led by Nehru, launched an inquiry into the Dalmia Jain Group of Companies on 11 December 1956. The purpose of this inquiry was to investigate whether fraud, dishonesty or illegal transactions were taking place in the companies of this group.
An inquiry commission headed by Bombay High Court Justice S. R. Tendulkar and then former Supreme Court judge Justice Vivian Bose launched an investigation.
Apart from Tendulkar, the initial members of the commission were N. R. Modi, a chartered accountant from the audit firm A. F. Ferguson & Co., and Income Tax Commissioner S. C. Chaudhary. On 20 August 1958, Justice Vivian Bose took over the leadership of the commission after Tendulkar’s illness.
This Commission of Inquiry submitted its 815-page report on June 15, 1962.
The Commission of Inquiry said the report found that the Dalmia Group misused public funds. It revealed that the group had taken money from government companies, banks and insurance companies for personal use.
The Dalmia Group approached the court questioning the commission. They claimed that the Commission of Inquiry under the Commission of Inquiry Act 1952 was invalid and that the act did not apply to private companies.
However, the court rejected this argument and said that this was a matter of public importance.
Dalmiya was ultimately sentenced to two years in Tihar Jail.
After this scam was exposed, the insurance industry in India was nationalized on January 19, 1956.
After this, Dalmatia’s industrial empire began to decline.
,Photo captionMuhammad Ali Jinnah
Dalmia’s relationships with important figures
In fact, after World War II, there was a rapid development in the political and economic arena. During this period, many Indian businessmen saw it as an opportunity to increase their private assets. Dalmia was no exception.
As a major businessman, Dalmia had good relations with Muhammad Ali Jinnah, Jamnalal Bajaj, JK Birla, the Maharajas of Bikaner, Jaipur, Darbhanga, Jodhpur, Jamnagar, and the Nizam of Hyderabad.
In the early days, Dalmiya was a fan of Congress and Mahatma Gandhi, but later Dalmiya became a critic of Jawaharlal Nehru.
He had good relations with many pre-independence leaders and revolutionaries, including Dr. Rajendra Prasad, Subhash Chandra Bose, Vallabhbhai Patel, and Jayaprakash Narayan.
He never met Jawaharlal Nehru, but his relations with Muhammad Ali Jinnah were cordial. They were his close friends. Dalmia’s house was just five minutes away from Jinnah’s and they often spent time together. Dalmia himself had bought Jinnah’s bungalow, 10, Aurangzeb Road (now Dr. APJ Abdul Kalam Road), in Delhi after the partition for two lakh rupees.
Dalmia was a religious man. He worked hard to ban cow slaughter.
Dalmiya’s name in the diary of Gandhi’s assassin
Nathuram Godse, who assassinated Mahatma Gandhi, had done a lot of Reiki before the assassination. Nathuram Godse, who came to Delhi in January 1948, called Dalmia from the Delhi railway station.
Information about this was provided by Dalmiya’s daughter Neelima Dalmiya in Father’s Dearest: The Life and Times of RK Dalmiya.
In her book, she writes that ‘Godse felt that Dalmiya was a rich and powerful Hindu whose voice reached every corner of the country. So he thought that Dalmiya could help in this mission. He knew nothing else about Dalmiya. He knew that he was a religious Hindu and had openly expressed strong dislike for the Congress.’
He did not pick up the phone, thinking that the caller might be calling to ask for money from a charity, but this action later proved beneficial to him.
Because when Nathuram Godse was caught after Gandhi’s assassination, Dalmia’s contact number was listed in his diary, but the police could not find any evidence that Dalmia was involved in the murder.
