Mr. Jagannatha Rao (Congress) said that taking into consideration all the evidence and probabilities of the case, the Government was justified in coming to the conclusion that Mr. Patel had to be exonerated. But he regretted that Mr. Krishnamchari was placed during the inquiry in an unfortunate situation. He was not defended by a counsel. Mr. Rao regretted the observations of the Bose Board that the LIC deal was put through because of some generous contributions made by Mr. Mundhra to the Congress. Though the Board was presided over by a Judge of the Supreme Court, its findings were not judicial in character. It was open to the UPSC to accept or reject them.

No Body To Blame

Mr. R. R. Morarka (Congress) said the LIC inquiries showed how even the highest placed officials, from the Minister down, had not spoken the whole truth. He said it was most surprising that nobody was blamed for a deal which had cost the Corporation millions of rupees, the Government its reputation, the Minister his political career, the Principal Secretary his job and Mr. Kamat his seniority.

Defence of T. T. K.

Mr. Feroze Gandhi (Congress), who was one of the first to have brought the LICMundhra transactions to Parliament's attention, challenged anyone to produce a single line of evidence that Mr. T. T. Krishnamchari had suggested to anyone that the LIC should invest a single pie in the Mundhra concerns. He said it was unfortunate that there was so much stress in the inquiries as well as in the Parliament on the June transactions. The fact was that the transaction with Mr. Mundhra started in April, not in June. Many things, good and bad, had been said about Mr. Krishnamchari, Mr. Gandhi said, but he was nowhere in the picture. Mr. Gandhi said: "Those concerned with these transactions have definitely lowered the dignity of the Ministry of Finance. But Parliament, I think, has done its duty. Let. us hope that the administrative departments

of the Government have learnt their lesson. They will learn their lesson and I assure the House, no matter what goes wrong in Govt. departments, for a hundred years the L.I.C. will never make the mistake of this kind."

Mr. L. N. Bhanj Deo (Independent) said the UPSC had exceeded its jurisdiction by discussing the constitutional responsibility of the Minister. Mr. Surendra Mahanty (Gantantra Parishad) said the UPSC had ceased to be a body which could command respect in the House or outside. Mr. Indulal Yagnik (Independent) said the Commission's report looked a miserable document as compared to the weighty document of the Bose Board.

When the House resumed the debate on

Saptember 8, Mr. S. M. Banerjee (Independent) urged the Government to revise its decision upholding the recommendations of the UPSC on the role of officials.

Mr. P. T. Thanu Pillai (Congress) said an objective and dispassionate reading of the findings of the Bose Board led one to the logical conclusion that the Minister had no liability in the transaction and that the Principal Finance Secretary had overstepped his authority. The Minister had not given his consent to the deal and the Principal Finance Secretary_took an undue interest in the transaction. The Government's attitude towards Mr. Patel was proper as no mala fide had been established.

Action Against U.P.S.C. Members

Mr. B. C. Kamble (Republican) said a convention should be established whereby Parliament and the Government unanimously accepted reports of inquiry boards on matters like the LIC deal which affected public services. The Government resolution on the reports, he said, did not contain anything positive, and was apologetic. In the resolution accepted by the House on the Chagla Commission report it was stated that appropriate proceedings would be initiated against the officers concerned. Now the charges against them had been dropped. The UPSC, Mr. Kamble said, had no business to go into the findings of the Bose Board. He referred to the Constitutional provision relaring to disciplinary action against the members of Public Service Commission and suggested that action should be taken against some of the members of the UPSC.

Mr. Prabhu Narayan Singh (Socialist) said there was sufficiently strong circumstantial evidence to prove that Mr. Krishnamchari had responsibility for the LIC deal. He also

denied the allegation that the Socialist Party had received Rs. 5,000 from Mr. Mundhra. Home Minister's Views

The Union Home Minister, Pandit Govind Ballabh Pant, intervening in the debate, reiterated that the former Finance Minister Mr. T. T. Krishnamcnari was not to blame either directly or indirectly for the transactions between the L. I. C. and Mr. Mundhra. As regards Mr. Patel, he said the Government had not technically exonerated him for his part in the deal. While the Government accepted the operative part of the Public Service Commission's recommandations regarding him it did not agree with the arguments and reasoning of the Commission. Actually the action taken in respect of Mr.

Patel was in effect more severe than action

taken against Mr. G. R. Kamat despite the fact that Mr. Kamat, was technically and in the eyes of the law guilty.

Pandit Pant deplored the remarks made during the debate against the members of the UPSC whom he described as esteemed and estimable people who were discharging their duties according to their own light and who had been appointed with due regard to their capacity for undertaking and fulfilling responsibilities entrusted to them. Congress Party's Anxiety

He said it was Mr. Feroze Gandhi and Dr. Ramsubhag Singh, both Congress members who had first drawn the attention of the House to the matter and demonstrated the anxiety of the Congress Party to maintain higher standards of public conduct, He added that the offer for the appointment of a commission of inquiry came from no less a person than Mr. Krishnamchari himself. The Government was no less anxious to look deep into the transaction.

The Bose Board of Inquiry was constituted unde Rule 5 of the All-India Service Statutory Regulations. Unlike the Chagla Chagla Commission, this body was constituted under special regulations for specific purposes. While charges were framed against three officials, Mr. Patel, Mr. Kamath and Mr. Vaidyanathan, under the rules it was incumbent on the Government to refer to the UPSC before taking any disciplinary action, Pandit Pant said. Further, there was a similar Constitutional obiligation on the Government, and

the Board was well aware that under the Rule it was constituted its recommendations were bound to be reviewed by the UPSC. In the circumstances it was obligatory on the Government to give attention to the UPSC's recommendations.

Unkind Remarks About U.P.S.C.

Some members, Pandit Pant said, had not been very kind to the UPSC. It consisted of several distinguished people and was presided over by one of the seniormost members of the Civil Service. It was, therefore, unfortunate that they had been spoken of in a manner which did not seem to him to be quite appropriate. Of course, he added, it was open to anyone to bring specific charges against any particular person and establish them. But to make insinuations against people who discharged their duties was not likely to hearten them. It was the duty of the Commission to review and take into consideration all that the Bose Board - had said and other material that reached them. On the basis of that material the Commission gave its findings. In fact there had been a long standing convention that the advice of the UPSC should be invariably accepted. The consensus of opinion in both Houses of Parliament was that the Government should not depart from the Commission's recommendations. As a rule, the Home Minister said, the Government accepted the advice of the UPSC. He added that during the last eight years-from the date the Constitution came into force-more than 53,000 cases were referred to the Public Service Commissions. Out of these the Commissions' advice had not been accepted only in 16 cases. That was indication of the importance Government attached to the advice of these Commissions.

Pandit Pant said there was no mala fides in the case of anyone. Neither Mr. Patel nor Mr. Kamath derived any personal advantage from the transaction. They might be guilty of error of judgment, Secondly, Mr. Patel had rendered valuable service to the State for a period of more than 35 years and the Government could not ignore this. Further, Mr. Patel had been actually concerned with the reorganisation of the LIC. He was its first Chairman and it was a very difficult task involving the integration of 260 odd companies and placing them on a sound and work

able basis. Even the scheme of nationalisation of life insurance was carried out by him. Officers' Role

The Home Minister said that Mr. Pillai in his note of dissent had recommended compulsory retirement for Mr. Patel. As a matter of fact, Mr. Patel had expressed his desire to be relieved of his office even before the Government passed its orders. Another factor to be borne in mind, Pandit Pant said, was that Mr. Patel and others had undergone the great ordeal of their conduct being subjected to public scrutiny for nearly two years. They might not agree with a man's behaviour but they had to take a human view of things, he added. It had been stated that Mr. Patel was restless in getting the transaction through. Mr. Patel was a person who plunged into any matter he took upon himself and did not rest till it was finished.

So far as Mr. Kamath was concerned, Pandit Pant said, he was technically in the eyes of law guilty. He was the chief executive officer of the Corporation and he ought to have been careful in that capacity. Mr. Kamath was graceful and accepted responsibility in a straightforward manner and so the Commission only suggested the penalty of censure and that had been accepted. Collusion and Conspiracy

Replying to the debate, Mr. H. C. Mathur repeated his assertion that it was clear from the records that the collusion and conspiracy between Mr. Patel and Mr. Vaidyanathan had resulted in this stinking and dirty deal. They had arrogated to themselves the powers of the executive committee and the Investment Committee of the LIC, he added. It was Mr. Patel's hands which brushed aside all the assurances given by Mr. C. D. Deshmukh to Parliament about the investments of LIC and it was again Mr. Patel's hands which made the Investment Committee and the Executive Committee defunct. Mr. Mathur was convinced that only Mr. Patel and Mr. Vaidyanathan had mala fides and were responsible for the whole bungling. He suggested that these two people must be prosecuted under the Anti-Corruption Act. "This Act", he said, "has not been enacted by Parliament only to prosecute petty clerks. If it has any meaning it should be invoked here".

Mr. Mathur said he would not suggest that Mr. Krishnamchari had any mala fides but in his view the former Finance Minister had personal and constitutional responsibility. The Speaker, Mr. Ananthasaynam Ayyangar, questioned the relevancy of any reference to Mr. Krishnamchari in the debate and said that he was surprised that his name had been brought in when the Bose Board and the UPSC were concerned only with the officers. U.P.S.C's Role

Mr. Mathur asked Home Minister to take note of the fact that not one member who had participated in the debate had been charitable to the UPSC. "It is very unfortunate and I do not know who is responsible and I wish only to ask the Home Minister to give serious thought and take such steps as will restore the confidence in the UPSC." The Home Minister replied, "I am prepared to listen in confidence to any member but to set afloat a rumour and make it appear there is ground for condemnation, I do not agree."

Rajya Sabha Debate

The Rajya Sabha also on September 11 approved the Government resolution on the

conduct of Mr. H. M. Patel and Mr. G. R. Kamat in the purchase of the Mundhra shares by the L. I. C. The debate in the Rajya Sabha found many supporters for Mr. Patel and the UPSC and Government came in for strong criticism for not having "exonerated" Mr. Patel. The Home Minister himself pointed out this divergence of views between the two Houses and said that the Government resolution had taken a middle position. The Home Minster also went in detail into the relative roles of the Minister and his officials.

Pandit Govind Ballabh Pant said that whatever view one might hold about the part taken or not taken by the former Finance Minister, no officer involved in the deal could be said to have been free from blame. Government had, therefore, taken a course of action (unlike the UPSC) which did not do any harm to the former Finance Secretary but which had also "to some extent taken into account the nature of transactions and the way it had been caried out".

Minister-Secretary Relationship

The Home Minister also told the Rajya Sabha that the Government was considering

whether it was desirable to frame rules to regulate the relationship between a minister and his secretary in regard to matters which might come up before the minister.

Mr. Krishnamchari's Statement

The former Finance Minister, Mr. T. T. Krishnamchari, in his first public statement after his resignation, on August 31 replied to some of the remarks concerning him in the UPSC's advice to the Government and in the report of Vivian Bose Board of Inquiry on the conduct of officials in the LIC Mundhra deal. The scope of advice tendered by the UPSC, Mr. Krishnamchari said, was clearly defined in Article 320 of the Constitution and was strictly limited to the disciplinary action proposed against the officers concerned. The UPSC was in a sense an

the Bose Board except in so far as its findings appellate authority sitting in judgment over related to officials. The UPSC had, however, commented not only on all matters raised by the Bose Board, even those strictly not relevant to the disciplinary action on hand, but also on similar points not strictly relevant to the proceedings against the officers, arising out of the Chagla report. It was strange that on the same evidence as was available to the Bose Board and without having the advantage of examining the witnesses in person, the UPSC had found it possible to reach the conclusion that Mr. Patel had the authority and approval of the Finance Minister for his part in the transaction. Mr. Krishnamchari contrasted this with the conclusion of the Bose Board that they were unable to accept Mr. Patel's contention that he had ministerial approval or authority. It was also odd how the UPSC had persuaded themselves to accept the evidence of two other officers of the Finance

Ministry which had practically been ignored by the Bose Board for obviously valid reasons and use this evidence to support untenable conclusions to justify Mr. Patel's actions on the basis of alleged nature of Mr. Krishnamchari's relationship with the officials or prevailing practices during his Finance Ministership. The UPSC also seemed to have completely failed to recognise the importance of one of the main ingredients of the charge against Mr. Patel, namely, that he caused the purchase, and the Bose Board's

findings that he induced the LIC to act in a certain manner.

Sweeping Obiter Dicta

In regard to the report of the Vivian Bose Board of Inquiry, Mr. Krishnamchari said the Board could have avoided sweeping obiter dicta had they really attempted to confine themselves to the limited disciplinary inquiry that they had to undertake and remembered that he (Mr. Krishnamchari) had a witness to appeared before them only as help them with facts within his knowledge regard to June transactions. Mr. Krishnamchari said: "It pains me to note that instead of writing with even the normal judicial restraint and objectivity, they seem to have altogether ignored them as virtues". Civil Servants & Ministers

in

The former Finance Minister refuted at

the end of his long statement he quoted length the "milch cow" "assistance" and other thories propounded by the Board. At Prof. S. E.

Finer from his book "Anonymous Empire": "The position and role of the higher civil service in this country is often misunderstood. The work of a department is carried out in the name of its Minister, and, with rare exceptions he and ans

is answerable in Parliament werable to Parliament for all that his officials do. But one of the chief duties of the higher civil service is to advise the Minister. Again, given the great size and complexity of a modern department, a good deal of discretion is left to such senior officials for them to use, as they think fit, in the knowledge that if they err they will have committed perhaps the most grievous sin in the civil service canon, namely to have got the Minister into trouble. Lastly, when new legislation is required, it is the civil servant who, under the Minister prepares it. He is, in short, policy adviser, policy promoter and legislator, and all this in the process of getting things done, which is what we mean when talk of the art and practice of administration. The civil servant, therefore, has two compulsions. He must know; he must act."

Mr. Krishnamchari added that this quotation would help to place in correct perspective much that had been said both by the Bose Board and the UPSC on the relation between a Minister and a civil servant.

The Finance Minister, Mr. Morarji Desai, inaugurating the Customs and Central Excise Advisory Council in New Delhi on Septembet 3 said the problem of corruption could be met if ways could be found to avoid unintentional harassment in the collection of taxes. He said prompt service should be the aim of tax-collecting machinary, though promptness did not mean slipshod work. Expressing concern at the present state of affairs which led to corruption, Mr. Desai said: "Corruption comes out of harassment, whether intentional or unintentional. Intentional harassment should be punished and unintentional harassment should be avoided". He hoped that the non-servicemen members of the Council could help in creating an atmosphere which would prevent businessmen from becoming agents of corruption. Such businessmen should also be taught a lesson by public censure. Otherwise there would be no scope for honesty in society."

Income-Tax Officer Gaoled

An Income-Tax Officer and a clerk of the Income-tax Department, Bombay, have been each awarded 18 months rigorous imprisonment on charge of issuing income-tax refund vouchers in the names of persons who either did not exist or were not entitled to refunds.

Corruption In Rehabilitation Ministry

Initiating a two-hour debate in the Rajya Sabha on September 1, on the Dandakaranya project, Mr. Bhupesh Gupta (Communist) alleged highhandendness by the Union Rehabilitation Minister, corruption and nepotism among officials and a rift among various State Governments concerned with the project. He demanded a commission of inquiry. The Union Rehabilitation Minister, Mr. Mehr Chand Khanna, characterised the charges levelled by the Communist leader as "wild allegations".

S.P.E.'s Work In July

Seventeen gazetted officers were among the 108 Government servants against whom

-Morarji Desai

the Special Police Establishment of the Union Government started open inquiries in July last. Two of them were military officers, five of the Bhilai Steel Project, four of the Railways, one of the Nangal Fertilisers, one of the CPWD, one of the Defence Accounts and one each of the Ministries of Communications, Steel, Mines and Fuel, and Agriculture. In three cases Railway officials were caught while taking bribe. Investigation was completed and prosecution was launched in the case of an executive engineer of Andhra Pradesh and two Customs appraisers for criminal conspiracy to cheat the Government of nearly Rs. 3,61,000. In all, prosecutions were launched during the month in 14 cases, involving 22 Government servants, including three gazetted officers for offences of bribery, corruption, cheating and criminal breach of trust. In addition, 28 cases, involving 12 gazetted officers and 33 other Government servants, were reported to the departments concerned for taking necessary action. Sentences of imprisonment and fines totalling Rs. 7,750 were awarded to 28 persons convicted by courts. Three Bombay business magnates were sentenced to simple imprisonment ranging from three to months and also fined for cheating the Chief Controller of Imports and Exports, Departmental punishment was given to three gazetted officers and 20 other Government employees. Six non-gazetted employees were either dismissed or removed from service, and six others, including two gazetted officers, had their increments withheld.

Home Ministry's Shipping Deal

18

Replying to questions in the Lok Sabha on September 8 Mr. B. N. Datar, Minister in the Ministry of Home Affairs, confirmed that one Mr. Jack Collett had obtained a payment of 10,000 by cheque on false pretence that he could influence the Indian Government. Mr. Datar added that in July, 1956, the Union Ministry of Home Affairs purchased a ship named El Halal from the Halal Shipping Co. Ltd., London. When negotiations were (Continued on page 36)