Author : Sushmita Patra , Student of Sister Nivedita University ( Kolkata )
To the point
The Fodder Scam, also known as “Chara Ghotala”, was a significant corruption scandal that impacted several districts across Jharkhand and Bihar, including Ranchi, Chaibasa, Dumka, Gumla, and Jamshedpur. This elaborate fraud, estimated to be worth around Rs 950 crore (or approximately Rs 2,255 crore in today’s value, accounting for dollar conversion), spanned many years.
“The scam primarily involved the creation of fictitious herds of livestock, for which funds were illicitly obtained to purchase fodder, medicines, and animal husbandry equipment”. This widespread deception was carried out by state government administrative officials and elected politicians in Bihar, across multiple administrations, including those led by opposing political parties.
Although the Fodder Scam came to light in 1996, the fraudulent activities had been ongoing for over two decades prior. It was a landmark case, being among the first instances where sitting politicians were convicted and subsequently compelled to resign from their positions in both the Assembly and Parliament.
Use of legal jargon
Cheating and Dishonesty : Essentially, cheating involves deceiving someone into:
Giving up their property.
Allowing their valuable securities (like signed documents or sealed papers) to be altered, destroyed, or converted. For this to be considered cheating, it must be proven that the deception caused the victim to lose property that had monetary value. The penalty for such an offense can be imprisonment for up to seven years, along with other liabilities.
Criminal Conspiracy : Criminal conspiracy, as defined in “Section 120B of the IPC”, carries penalties and falls into two main categories for legal purposes. Firstly, if a specific punishment isn’t already outlined in the law for a conspiracy to commit an offense punishable by death, life imprisonment, or rigorous imprisonment for at least two years, the person involved will face the same punishment as if they had aided and abetted that offense. For other types of conspiracies, the penalty can be imprisonment for up to six months, a fine, or both.
Criminal Breach of Trust by Public Servants, Bankers, Merchants, or Agents : Section 409 of the IPC addresses criminal breach of trust when committed by individuals in positions of significant responsibility, such as public servants, bankers, merchants, factors, brokers, attorneys, and agents. These individuals handle considerable power over property entrusted to them. A breach of trust by them can lead to major public and private disasters.
Falsification of Accounts : “Section 477A deals with falsifying accounts, which encompasses two distinct offenses”. Deceiving, manipulating, destroying, mutilating, or creating false entries in any book, account, or electronic record.
Creating or assisting in creating fraudulent entries in the same manner. These two offenses are separate and don’t depend on each other. The penalty for falsification of accounts can be imprisonment of any kind for up to seven years, a fine, or both.
The Prevention of Corruption Act, 1988 : According to Section 13 of this Act makes it a crime for a public servant to engage in criminal activity. A public servant commits criminal misconduct if they dishonestly or fraudulently misuse or convert for their own benefit any property entrusted to them or under their control in their official capacity. This also applies if they allow another person to do so, or if they intentionally accumulate wealth illegally during their time in office.
A person is considered to have illegally enriched themselves if they, or anyone acting on their behalf, possess financial resources or property disproportionate to their known income sources, which they cannot properly explain. Criminal misconduct, as defined in Section 13, is punishable by imprisonment for a minimum of four years, which can extend up to ten years, along with a fine.
The proof
CBI Investigation
The Honorable Patna High Court ordered the CBI to investigate . There were already 41 cases filed by the police, and 23 more were added based on tip-offs and complaints. Altogether, the CBI investigated 64 cases. The first FIR (First Information Report) was filed on March 27, 1996, regarding fraud in the Chaibasa treasury.
In June 1997, the CBI sought permission from the Bihar Governor to prosecute Lalu Prasad Yadav, who was then the Chief Minister. A charge sheet was filed against him and 55 others under sections related to forgery, conspiracy, and corruption.
Because of this, there was political drama. Lalu’s party, Janata Dal, didn’t support him continuing as CM while under investigation. So, he quit Janata Dal, formed his own party (RJD), stepped down, and made his wife Rabri Devi the Chief Minister.
The CBI revealed that in all these cases, money was withdrawn from treasuries in Bihar using fake documents. The fraud was done by creating false allotment letters and fake supply orders for items like fodder, medicines, and tools. Sometimes, items were never supplied or only partially supplied.
First Fodder Case
The first trial started in 2002. Out of 170 accused people, many had died, fled, or admitted guilt. In March 2012, Lalu and former Bihar CM Jagannath Mishra were accused of stealing funds from Banka and Bhagalpur.
Second Fodder Case
In 2017, Lalu Yadav was convicted again—this time for illegally withdrawing ₹89.27 lakh from the Deoghar treasury. He got bail in 2021 July, after serving half of his sentence. Jagannath Mishra, however, was declared not guilty.
Third Fodder Case
In January 2018, Lalu was once again found guilty of taking ₹33.13 crore from the Chaibasa treasury, He was sentenced upto 5 years .
Fourth Fodder Case
In March 2018, he was convicted in the Dumka treasury case for fraudulently withdrawing ₹3.76 crore between December 1995 and January 1996. He was in jail for 14 years Later, the Jharkhand High Court granted him bail in this case too.
Fifth Fodder Case
In his fifth and final conviction, Lalu was found guilty of misusing ₹139.35 crore from the Doranda treasury in Ranchi. He was sentenced to 5 years in prison and fined ₹60 lakh.
Abstract
The Fodder Scam began in the late 1970s as a small fraud carried out by lower-level government workers in Bihar. These officials submitted fake bills and misused government funds meant for buying animal fodder. Over time, this scam grew bigger and involved more people, including businessmen and top politicians. What started as minor cheating slowly became a huge, organized crime. The first Chief Minister to be linked to this scam was Jagannath Mishra, who held office in the mid-1970s. In 1977, the scam began in areas that are now part of Jharkhand (which was part of Bihar back then). That same year, Lalu Prasad Yadav entered politics, inspired by Jayaprakash Narayan’s anti-corruption movement. Initially, Lalu wasn’t involved in the scam. But by the time he became Bihar’s Chief Minister in 1990, the misuse of government funds had already been going on secretly. Money was being illegally withdrawn, and fake transactions were happening between suppliers and the animal husbandry department staff. Instead of stopping the scam, Lalu allowed it to continue. Eventually, a big chunk of ₹950 crore was stolen during his time as Chief Minister from 1990 to 1996.
In 1985, T.N. Chaturvedi, India’s Comptroller and Auditor General (CAG), noticed that Bihar’s treasury and departments were not submitting their monthly account reports on time. He alerted then Chief Minister Chandrashekhar Singh, warning that these delays could signal financial fraud. This led to more warnings by senior auditors over the years. However, the Bihar government, under different Chief Ministers from different political parties, kept ignoring these red flags, often due to pressure from powerful individuals.
In 1992, Bidhu Bhushan Dwivedi, a police inspector in Bihar’s anti-corruption unit, reported the scam to G. Narayan, the head of the vigilance department. Later, Amit Khare, who was the Deputy Commissioner of the Animal Husbandry Department, finally allowed a raid in 1996. This raid confirmed that funds meant for buying cattle fodder were being misused. What began as petty fraud had grown into a large web of corruption involving business people and politicians.
During the raids, the state government formed two inquiry commissions. One was led by Phoolchand Singh, but he was later found to be part of the scam, so that commission was scrapped. The Bihar police registered multiple FIRs, and people began filing PILs (Public Interest Litigations), asking for the case to be handed over to the CBI.
On March 11, 1996, the Patna High Court agreed that funds had been wrongly taken out from the Animal Husbandry Department since 1977-78.
The CBI was told to examine all suspicious transactions, especially those involving fake expenses, and to finish the probe within four months. The agency soon began questioning top leaders like Lalu Prasad Yadav, Jagannath Mishra, and many senior government officials.
Case law
Lalu Prasad Yadav v. State of Jharkhand (2017)
Lalu Prasad Yadav, the former Chief Minister of Bihar, was involved in the Fodder Scam. He had already been punished in one of the cases linked to the scam. So, when the court said he would have to face more trials for other treasury frauds, he objected. He argued that all the frauds were part of the same scam, so he should not be tried again and again.
The Supreme Court disagreed with Lalu’s argument. It said that although the scam had a common pattern, each fraud was connected to a different government treasury (like Chaibasa, Deoghar, Dumka, Doranda, etc.) and happened at different times. So, every illegal withdrawal was a separate crime, and Lalu could be tried separately for each one.
This ruling allowed the CBI to conduct multiple trials against Lalu Prasad Yadav and others involved in the scam. It also made it clear that repeated financial frauds from different places can be treated as individual cases, even if they are part of a larger scam.
Conclusion
The Fodder Scam was a massive financial fraud in Bihar, where government funds meant for animal welfare were misused for years. Powerful politicians and officials were involved, including Lalu Prasad Yadav, who was convicted in multiple cases. Despite early warnings, the scam continued due to political protection. The Supreme Court confirmed that each act of fraud was a separate crime. This case reminded the country of the importance of transparency, accountability, and strong action against corruption.
FAQs
1. What is the Fodder Scam?
– The Fodder Scam, also called Chara Ghotala, was a big corruption case in Bihar and Jharkhand. It involved fake bills for buying animal fodder, medicines, and equipment. Officials and politicians stole nearly ₹950 crore over many years.
2. When did the scam start and where?
– The scam began in the late 1970s in districts that are now in Jharkhand (then part of Bihar), like Ranchi, Chaibasa, Dumka, Gumla, and Jamshedpur.
3. Who were the main people involved?
– Many government officers, suppliers, and politicians were involved. The most well-known name is Lalu Prasad Yadav, former Chief Minister of Bihar. Jagannath Mishra, another ex-CM, was also named in some cases.
4. How was the scam carried out?
– Officials created fake animals, fake bills, and fake supply orders. Money was taken from government treasuries without actually buying anything or delivering only a small part of what was claimed.
