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Independent India’s first scam was exposed by Feroze Gandhi, the fearless husband of Indira Gandhi

Independent India’s first scam involved a lot of dirty monies, a shady businessman, government links and hold your breath, the popular government insurance company, Life Insurance Corporation of India (LIC). And the person to have exposed the scam was none other than Feroze Gandhi, the husband of Indira Gandhi.

Feroze altered his family name from Ghandy to Gandhi when he joined the Indian Independence Movement in 1930.

The man who gave the Gandhi’ surname to his family, was originally known as Feroze Jehangir Ghandy, born to a Parsi family. Unlike the popular perception that his wife Indira coerced to change his surname for acceptance in the society, Feroze altered his family name after joining the Indian Independence Movement in 1930. He was  influenced by the ideals of Mahatma Gandhi.

While his domestic life was still under public scrutiny, Feroze Gandhi won independent India’s first general elections in 1952 from Rae Bareli constituency (Uttar Pradesh). In 1955, as a fire-spitting MP, Gandhi made the first expose in the Lok Sabha about Ram Kishan Dalmia. Considered one of independent India’s richest businessmen, Dalmia used public money from his own establishments Bharat Bank and Bharat Insurance Company to buy media giant Bennett and Coleman. Dalmia got two years in jail in 1956 for his offence. Shortly after, LIC was nationalised to prevent irregularities and corruption in the insurance sector.

In 1955, Feroze Gandhi made the first expose in Lok Sabha how Ram Kishan Dalmia (above), one of free India’s richest businessmen, used public money from his establishments for private benefit.

But this was just the prelude to free India’s first biggest scam. In another shocking expose in 1958, Feroze Gandhi revealed LIC’s shady deal with Haridas Mundhra, a stock broker of dubious character. The Mundhra scam laid bare how the stockbroker used his political clout to pressure LIC to invest in the shares of his loss-incurring companies: Richardson Cruddas, Jessops & Company, Smith Stanistreet, Osler Lamps, Agnelo Brothers and British India Corporation.

Feroze Gandhi with a young Rajiv Gandhi at Delhi airport. With him are Vijayalakshmi Pandit’s daughters Rita (left) and Chandralekha.

The investment was the largest that LIC had made in its short history. Soon after the shares were bought by LIC, it was found that the prices were inflated, and to add more misery, it crashed as Mundhra’s companies sank. LIC was set back by a gross loss of Rs 150 lakh. The Vivian Bose Board of Inquiry, which was looking into the scam, pointed out that Mundhra had donated Rs 1 lakh to the UP Congress and Rs 1.5 lakh to the All India Congress Committee (AICC) in 1957, which coincidentally was an election year.

Feroze Gandhi raised the matter with alacrity, much to the embarrassment of the Congress party, of which he was a member, and was headed by his father-in-law Jawaharlal Nehru. Gandhi charged finance minister TT Krishnamachari (popularly known as TTK) and the finance secretary, HM Patel that they had pushed LIC’s investment through. TTK resigned on corruption charges, and Mundra was imprisoned for forgery.

Feroze and Indira drifted apart after he unearthed the Mundhra scam in 1956, that put PM Jawaharlal Nehru and his government in great embarrassment.

The scam put Feroze Gandhi in the limelight, but the rift in his family widened, with wife Indira choosing to stay at her father’s residence, and his father-in-law Jawaharlal Nehru giving him the cold shoulder. Nevertheless, this Gandhi earned the name of a fearless crusader against corruption in new India.

About the author


Whether it’s women issues, politics or the paranormal, Rubi has an opinion on everything. Art and entertainment interest her, too. Hindu College alumni, she has written for The Hindustan Times and The Financial Express. Every now and then, she loves picking up her camera to capture life and its various shades.


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