The Jeep Scandal 1948

Author: Huda Zehra, a student at Unity Degree College, Lucknow

A scam in general term is known as any false and illegal action. In legal term it is defined as the intentional use of fraud or dishonesty infringing any person’s legal right. Scam is generally carried out for the financial benefits which hold characteristics like cheating, hidden information and breach of trust. A scam consists of two factor i.e., civil and criminal factors. Civil factor of scam involves the financial harm to a person and the punishment is given in the form of fine or compensation whereas criminal factor of scam involves violation of law and harm to others.

The list of scam is very much long but Jeep Scandal of 1948 is considered as one of the oldest and famous case after Independent India.

Background:

During the Indo-Pakistani war of 1948, the Indian Army needs 4603 jeeps. About the thousand numbers of jeeps were imported from the USA. To get the rest of the jeeps, Indian government tried their best but remains unsuccessful in getting the jeeps.
Financial Advisor A.K. Chanda and defence secretary went to UK for remaining jeeps but they were unable to get the jeeps at desirable price.
After many problem and discussion one company named as Anti- Mistanees which had a capital turnover of only 600 pounds get the order for 2000 second hand rebuild jeeps from V.K. Krishna Menon and he gave this order to this firm without following the proper procedure.
The price of 2000 second hand jeeps was about the same as the price of new jeeps that can be purchased from the USA and Canada. And the reason Menon gave for ordering from this firm instead of ordering from any other firms was that the delivery would be fast and quick from here.
The mode of the payment was that 65 % of the total amount would be given on inspection of the jeeps, 20% would be given on shipping of the jeeps and remaining amount will be payable after delivery. He inspected only 10% of jeeps randomly and admitted to pay 65% of the total amount to the firm i.e., $172,000.
It was said that the entire delivery of the jeep would be completed by 9th December, 1948 but not a single jeep was delivered till 26th December, 1948. On the other hand Menon said that 1300 jeeps have been shipped by the firm. Later, in March 1949, only 155 jeeps arrived in and that too was of no use means they were unserviceable. The Ministry of Defence refused to accept them.
When Menon came to know about this, he went to that company that nameless company refused to pay compensation and the government suffered a loss of Rs. 80, 00000.

S.C.K. Agencies: One such contract was made with S.C.K. Agencies in which the government again had to face huge loss.

Krishna Menon signed a new contract for supply of 1007 jeeps with London based firm named as S.C.K. Agencies and the price of each jeep was $ 458.10 and it was said that 68 jeeps will be supplied every month.
But due to some reason Menon reduced the supply of jeeps from 68 to 12 per month only for 6 months and thereafter 120 jeeps will be supplied every month.
In reality only 49 jeeps were supplied in the period of 2 years and the government did not get any compensation only because of their earlier contracts.

Due to this loss, members of the party and opposition party were making a lot of noise. To solve this situation, Pandit Jawaharlal Nehru formed an investigation committee which was named as Ayyangar Committee Investigation. A committee was headed by Anant Swami Ayyangar.

Ayyangar Committee Investigation: When the committee investigated, many shocking points came to light.

Mr. Chanda the Financial Advisor, told the committee that the deal was only signed by High Commissioner (Mr. Krishna Menon) and he was not involved in any meeting and discussions related to Anti- Mistanees and S.C.K. Agencies. Even the Financial Advisor and Legal Advisor of Indian High Commission were not consulted when the order of Rs. 80, 00000 was placed to Anti-Mistanees whose capital was only 605 pounds.
The condition of the payment was that 65 % of the total amount would be given on inspection of the jeeps, 20% would be given on shipping of the jeeps and remaining amount will be payable after delivery. Within a month of signing a contract, 65% percent of the total amount was paid without getting the investigation certificate.
Instead of doing inspection himself, Krishna Menon gave the responsibility of inspection to a new firm and before the completion of the investigation a payment of Rs. 1, 72000 was made to Anti- Mistanees. He also said that only 10% jeeps will be inspected and the remaining jeeps will be considered as inspected.
Ayyangar committee also told that the inspection of 10% jeeps was also a fraud because the 155 jeeps that were landed on Madras port were also of no use.
All the payment to Anti Mistanees and S.C.K. Agencies was made by the Krishna Menon without the prior approval by the Defence Ministry and Financial Advisor.
The Ayyangar sub-committee presented its report before Jawaharlal Nehru on 9th April, 1951.

Aftermath of the investigation:

The committee recommended that a high level committee consisting of one or more high court judges should be formed to go into the depth of this matter but the government avoid their views and said that the committee should reconsider their suggestion.
When the committee refused to do so then in 1955 the government took the decision to close the case completely.
Despite of doing so many wrongdoings, in 1956 Menon was appointed as minister in the union cabinet and was declared minister of defence in 1957.

Inadequacy and defect in the system of law open doors for the scammers and fraudsters. Amending and changing the law due to the situation of society is not a solution. Scams and fraud arises when the agencies and companies do not take their responsibilities seriously and misuse their power simultaneously. If there is a good and strong management who follows the rules and regulation of the law then it is difficult to correct all these problems but never impossible.