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REPORT

OF THE

COMMISSION OF INQUIRY

ON

MARUTI AFFAIRS

MAY 31, 1979

NEW DELHI

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CHAPTER '/Ill

CHAPTER IX

Qv,rTt:R X

CO~IESTS

I STROllUCTION

Otcnh I ar'\d :! nf Tcrnb of Reference)

l1111i;itit111, pi 1)\.'.t.''"ini; and clearing of r-.taruti C

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Ill' notilication No. S.0. 375(E) dated the 30th ~la):, I 977 the Central Government appointed a Com-mission of Inquiry for tlw purpo>c of looking into the affairs of the following Man11i concerns :

(i) Messrs :-., .. Jaruli Li1nitcd. a co1npany fonncd and n.:istc1\:U under the (~oJnpanics 1\i:t. 1956 (I of 1956) and hul'ing its regi>lc'red otl1cc at P1.1lam-Gurgao11 Road, Gurg~1on, (Haryana);

(ii) Messrs Maruti Hca\'y \'chicks ( l'ri\'atc I Limited, a company formed and registered under the Companies Act. 1956 (I ol i9:"61 ;1nd having its n:gi..;tc..n:d otlicc at 138-B, New Colony, Gurgaon (formerly, J>alam-Gurgaqn Road, Gurgaon) ;

(iii) Messrs Maruti Technical Services ( Privat~) Liznitcd. a con1puny forn1ccJ and n.:blt.:rcd under thc Compnnb Act. I '15 (I of

19~6) anU having it\. ri:gi~h:n.:d llllicl! ;it 1::-49, Kirti Nagar, Nc\v Dc..lhi.

'[he lcrnt:, of rcfcrcncl.! of the (.'tl1n111i~~iou \\'ere frame

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supported by affidavits, and one replied by a telegram; some of these statements however came late, after the public sittings of the Commission had ended.

Copies of some of the documens referred to in the rep.m and a list of the names of the witncssos and those who filed affidavits are included in an appendix (in four parts).

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CHAPTER I

Of the first two items in the lisl of mailers f~r inquiry specified in the .terms of reference of tlu' Commission, the second is really a part of the first. The first item covers :

"All matters pertaining to the initiat!on, prc:-cessing and clearing of the Marut1 small car project includini: :

(a)

(b)

the comparative merit of the Maruti c.ar project vis-a-vis other claimants for a licence to manufacture a 'm~ll car, the preference, ~ any, sho~n to the said Maruti car proiect and, in case there was any such preference, the reasons for the preference shown and its justifi-ability".

The Maruti car project was cleared . whe~ a liecnc~ to manufacture cars w~s giyen to Shr1 s:uiiay. Gandhi who had applied !or 11. The second. item mcludes "all matters relating to the pro))"r tesung and clear-mce, by the appropriate authority, of ,!h~ pro!otype Maruti car and its parts and components Obv1ously, it was only after proper testing of the prototype that the Maruti small car project could be clear: ducing in this country a low cost passenger car wuhm the price range of R;;. 5,000-Rs. 7,000. There were then three existing manufacturers of passenger cars : Hindustan Motors Limited of Calcultll, Pr~mier Auto-mobiles Limited of Bombay, and Standard Motors Products of India Limited of Madras. The Jha Committee submiued its report on January 25, 1960. The main conclusions of the Com:mittee on this topic, which the Government accepted, were that there would be sWJicient demand to sustain the economic production of a low-cost car but there was little pros pect of the price of any of the passenger cars then being produced coming down to the level o! Rs. 5,000-Rs. 7,000 and that, to have a cheaper car, a more modest vehicle would have to be chosen. To consider whether it was feasible to !llllnufacture a low cost car,. available for about Rs. 6,500 inclusive of all charges, Government decided to appoint an Expert Committee that would examine the matter at technical levels. It was also decided that in case the Expert Committee considered it feasible, the project would be undertaken in the public sector. An Expert Committee under the Chairmanship .:if Shri . G. Pande, Vice-Chancellor, Roorkee University, was appointed in October 1960. On the bast~ of the proposals received by the Jha Committee and the data collected subsequently by the Ministry of Commerce and Industry, the Pan de Committee wrote 10 thirteen foreign manufacturers and Hindustan Air-craft Limited, Bangalore, asking them to indicate whether they were interested in collaborating with the Government of India in setting up a production unit in the- country. On an overall assessment of the detailed proposals received from some of . these manufacturers, the Committee concluded that if the Renault "Dauphine" model of M/s Regie Nationale des Usines Renault of France was selected "the objective which the Government have in view 'will be achieved". On, the proposal of Hindustan Aircraft

Limit~d. Bangalore. who were trying to. develop an '.'indigeno~~ car", the Committee was "greatly impressed by the attempt but thought that ."the development of a new design o( passenger car is,

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however, of necessity a lengthy process" and that "it would he wholly inadvisable 10 consider the establish-ment of a plmll for the production nf such a car"

hccuu~c "110 one can \Vith any cartainty. predict the 1i1uc tluH nHty be ncccs~ary befnrc !he de:i,ign is fully ::nd Siltisf,u:tnrily estahlish1..d for 1nass production".

Pandc (\Hnrnittcc's n:porl \\'as considered hy an Ad hoc Committee qf Secretaries and. it was decided to hring 1he matter before 1he Cabinet. The Planning Commission and the Ministry of Finance (Department of Economic Affairs) who \\WC asked io comment objected to the project mainly on the ground of the foreign exchange position at the time. The Note prepared for ll~e Cabinet sought directions as to whether the low cost car project should lie taken up for imple-mentation and negotiations with Renault resumed having regard to the views expressed by the Planning Commission and the Ministry of Finance. Considera-tion of the note was however postponed by the Cabinet in view of the "foreign exchange situation". Shri C. Subramaniam, then Minister of Steel and Heavy Industries, made a statement in the Lok Sabha on August 9, 1962 that "th~ small car project could not he moved up in the list of priorities and for some tim~ to come the priority in the field of automobiles should he definitely and overwhelmingly in favour of the manufacture of commercial vehicles for 1he transport of goods and public passenger transpon and tha1 Government have to defer consideration of the 'mall car project till more propitious conditions".

Criticism ho1V1.""Ver grew in Parliament and outside about the inadequate supply of pasesngcr cars in rcla tion to demand and their inferior quality and high prices. One aspect of the criticism was that the Government was "helping in this manner the mono-polist in1ercsts to grow in the automobile industry and leaving it entirely in their hands". (Shri Bhupcsh G1ip:a's speech in Rajya Sabha on August 27, 1962).

While in the third five year plan, the target fixed was 30,000 cars per annum, the production w~s well below that level and the demand was estimated to be inuch In excess of 30,000. The Working Group on Transport Equipment had estimated that the demand would be about 80,000 cars per annum by 1970-71. Consultutions ht'ld by the Ministry of Industry with the existing manufacturers failed to find a solution to the problem-how the increasing demand could be met consistently with the public expectation as to prices nnd quality within the limitations of the prevailing conditions. Jn the meantime the Ministry maintained touch with some of the foreign parties who had shown interest in the small car project in India but it was not possible to go beyond the stage of preliminary diS'-1lS sions in the absence of a definite policy. The advice of the Sub-Committee of the Economic Committee of the Cabinet on Key and Basic Industries was sought in this matter. The Sub-Committee met on August 25, 1965. The meeting was attended among others by Shri T. T. Krishnamachari, Minister of Finance, and Shri T. N. Smgh, Minister of Industry. A proposal for exploring tho possibility of locating a small car, that is, a low cost passenger car, project in the private sector was discussed in the meeting. This appears to be the first time when the private sector was seriously

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thought of in this context. Of! a cons!deration o~ the different issues, the Sub-Committee ultimately decided that a rnmprchcn~i\'c paper scttin,; Oll all t~e rcfovant point' ,huuld be placed bdorc the. Cabmct. Tbc1 Cahinct met on July 28, 1%6 to ~ons1der !h_e summary pul up h)' the Ministry of lndu>ry. Whd: a dcfi!lt!C decision in the matter was defcrr,d, thbile indiJslrY~r:r:Similarly: wci arc not yet sclf-sullicicnt either in' regard : to components.or raw matcrials,t.wilh, the result that even car inanufacturing: units,;: which had bcCn functioaillg for . the: last several years arc still dcpc:ndant on im~ccimponcnts/raw materials, the value cof, Which. is not allSl-"'-Rl'' ,-,,,, :J 1,." "', ~ -'Ar , .,_,,

It was doubted whether any useful pwposc would be served by the M"misuy in exploring the possibility of

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selling rp such completely indigenous capacity eilher in the State sector or in the private sector. The note however sugtcstccj that the parties who had alroady shown intere-i might he wrillcn 10 on the basis of tho (~uhinct decision and tlHLt if a worlh\1/hilc schanc fron1 the Mysore Government was forthcoming, it might be t!i\'l'll lirst consideration as as~urcd bv the Minister of Industry in lhc Lok Sahha en August\ 1966. Orders were sought as to whcll!or the Ministry's appr,,ach lwuld be confined to these parties and the cxlstin~ cnr manufacturers or whether a fair chance should b~ giv~n lo cvi;ryone. in the .~ountry by issuing a publk notice on tlus subiccl. Shn R. V. Suhrahmanian, then Joint Secretary in the Ministry, expressed the view lhat proposals from the Staie Government organisations >houkl b~ considered firs1, then those from the private 'ector un11s, and lastly the proposals of the cxisthJ" automobile manufacturers. Shri N. N. Wanchoo, wh~ was then Secretary, disagreed with the Joint Secretarv us regar~s entertaining any proposal from the existing auto!11ob1lc. manu(acturers. He was afao against issuing pubhc notlc~ which he thought would only invite "wild cat schemes". The procedure of invitin~ ap(>li-cution~ is ~ontemplatcd in rule 14 of the Reg1strat1on und L1ccnsmg of lncjuslrial U?dcrtakings Rules, 1952, ftamec,i . under the lndustnes (Development and Regulal1on) Act, 1951. The rele-vant rule is as follows :

"14. /11vitatio11 of app/icatio11s.-(1) The Ministry of C?mmerce .a~

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of foreign r.xc:1ange expenditure._ or i~port of capi_tal goocjs, components or ra~ matenals ; it sought.specific infonnation on the techrucal aspect of the pr?iect and also on such matters as foreign collaboration, t~port.cd machinery, raw materi?!s ct

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"what was being clone" about Saujay Gandhi's appli-cation and why they were "taking so much i;mc". Sanjay Gamlhi was present when Subrnhmanian \\a.> \)cing questioned by the Minister.

In the meantime at a meeting held on January 16, 1969 the Planning Commission took the view that on account of the constraiJll \ln resources the c;;r pro-ject could not be included in the Fourth Fiv~ Y car Plan. However, at the instance o( Shri N. Subrah-manayam, Secretary (Heavy Industries), the Plan-ning Commission agreed to the matter b.:ing held over for further disc

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As a result of all these deliberations . Shri San jay Gandhi came up with a revised proposal towards the end of October I 969. The revised project report was scrutinized by B. S. V. Rao who prepared a summary for the L.icensing Committee on Novem-ber 20, I 969. It would appear from this summary that Shri Gandhi had raised the propos"c) invc,tmcnt on plant and machinery from Rs. 3.72 crores to Rs. 4.63 erores. The recommendation of the Technical Adviser annexed to the summary mentions that the proposed car was of ~l two cylinder tlc.,)1511, the engine fitted in the prototype was an air-cooled one dc\'e-loping 24 H.P., the car was to have ultimately a syn-chromesh gear box instead of the crash type which the prototype hac), an

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. ,.,.,f1~!tatt:!:i:' taken by the Government. He stated that the Govern-ment had decided "in principle, to the creation of the additional capacity of 50,000 cars per annum in the publi\: sector based 011 a proven foreign d~hign , that the ministry "will now initi!lte the necessary ~etaile_d studies 011 the most cconomac way of establishing this additional production capacity in the public sector, as also the ways and means of financing the project". After giving some more details as kl how the Govern-ment proposed to proceed so far as the public sector prajcct was concerned, the Minister referred to U1e proposals from the private parties. "Govcrwncnt have also recdved", he said, "a number of proposals from the private panics for Laking up the manufacture of passenger cars in the private s~ctor. Some of these pa,rtics claim that they a(C in a position to manufac-ture cars based oil compklely indigenous ources'.'. In fact till theu there was only one party, Shri Sanjay Gandhi, who had made this claim ; there was another, Shri M. Madan Mohan Rao, but his claim was some-what ambiguous. Shri Dinesh Singh concluded his statement with these words :

"With a view to encouraging the growth of indi-genous taknt and resources, Government have decided to issuz Letters nf Intent to such of the parties in the private sector ~s arc prepared to take up the manufacture of cars based on completely indigenous designs and without requiring imports of or alloca' tion or foreign exchange".

Whal Government meant by "i11digenous" whrn it insisted that the car proposed to be ntanufacturcd in the private sector must be wholly indigenous, was made clear by different Ministers who had to deal with this question at difierent times. To u quer} made in Rajya Sabha on July 28, 1966 as to whether an automobile engineer from Kerala had manufactured a small ca.r entirely with indigenous material, Shri D.

S~!vayya, Minister 'lf Industry, said : "It is not !Cnown wher.ber all the locally pur~based component.> are indigenous. It is therefore difficult to assert 1ha1 the car has been made entirely wiU1 indigenous mate rials", Shri C. Subramaniam, Minister of Industrial Pevelopment, in the course of a debate in Lok Sabha ?n [)ecember 22, 1972 Oil the policy of Gowrnmcnt m regard to manufacture of car indicated that an in-d.igenous car should be one fabricated from the male rials in the co~ntry. Shri Dinesh Singh in bis evi-dence before the Commission agreed with the views expr_essed by Shri Sanjivayya and Shri C. Subra mamam. He added th:11 indigenous machinery com ponents and materials "would mean those i.i~t arc actua.lly prod~ee~ in India", that it would be wrong 1o describe as 111d1~enous imported materials a\'aiJablc from the est:1blish;

ncction with his scheme. According to Subralunanian, Rao was summoned to explain the discrepancy be-tween his application. and bis project report. Rao also indicated in the report that it would not be ~dvisable to bring out a prototype vf the proposed ~~r. nor it was possible for him to do so. In his deposition he explains this by saying that before the "basic de. sign drawing" was developed, it was impossible for anyone to come out wi:h a prototype of a car which could be subsequently successfully manufactured. Rao's project report also disclosed a sch~me of Joi/it venture with Malaysia for tyre~ and tubes, and with U.A.R. for ball ~ml roiicr pcarings as these items were likely to be in shQrt supply.

M. Madan Mohan Rao came to New Delhi from Madras on the 17th and met R. V. Sub~ahmanian at his office in Udyog Bhawan. S. R. Kapur, Under Sec-retary in the Ministry, B. S. V. Rao, :Oevelopment Officer, DGTD, and N. T. Gopala Iyengar, Industrial Adviser, DGTD were present at the time. According to M. Madan Mohan Rao, Shn Subralunanian pres-suri,zed him to drop the three conditions meutionca in his teehno-eeonom1c feasibility report, viz. joint ven-ture with Malaysia and JJ.A.R., noi!produclion of prototypc'uand having his car design approved by on expert m .S.A. Rao says that he was made to address a let.ter to the Joint Secretary waiving the conditions. A1 regards the third condition lie stated In the letter that If foreign exchange was not permitted for the purpose, Ile would get his design A~t. ru'ff '~Jmil!~t W~~~ ! !!!. S !@!l }lftl'li~ tl'W!lfillfl?d In

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9. Kerala Stare Industrial Development Corpora-tion, Trivandrum. '

10. M. Madan Mohan Rao, Madril$: ' '' ::

Referring to the schemes of the parties 11,'."2, 3, .s and 6 which involved foreig11 collaboration and those f the parties 4, 7 and 9 which 'hlvOlved 'import of either capital goods or compo11ents and raw materials,

it was pointed out in the summary that these 8 schemes did not qualify according . to the guidelines. The two remaining schemes, those of Shri Sanjay Gandhi and Shri Madan Mohan !ho, based completely on lndi genous know-how . anil materials wer~' the only twr proposals that satisfied the conditions. The .summary also mentioned the recent discussions. held' witb these two parties. It was stated that Sanjay qandl).\ c;la.irned to have developed a prototype o[. the C!lt.>exceJ)t the engine, that he was working on :the. pr61(!typc of nn engine of his own design and he ~hopecl'to'evolve the finill prototype shortly and that by 'the '\:efd of the third year from the date of approval of 'bis: scheme he would be able to 'achieve the productiqn tatgei o{ 7500 cars per annum reaching the"optimum produc-tion target of S0,000 cars per annum w1tbi1i'the next two years. To a suggestion that it .wo.:.Jd \le more realistic to plan for a capacity lower ''tlian ,, what he had applied for and for a slower build:_up:::or the pro-duction volume, Sonjay Gandhi, itwa' mited,'clnimed that he would be installing from the ' v~1y' peginning equipment and machinery capable of lhe'' maximum production, and as such he wanted the full capacity applied for to be allowed. From Rao it was gathered that he would require six months,fqr producing a suitable design, about. a year for prejiiiring the work-ing designs which he wanted to be approved by a design institution in India or abroad before starting on the prototype, that with initial prciduct'on of 24,000 cars pet annum he expected to reae)l'the opt.i-mum production of 75,000 cars per annum by the end of the sixth year. He made it clear that he meant to produce a car suitable for rural area~. which would not be very sophisticated in design. It was observed in the summary that Rao's plan to prciduce 75,000 cars P"t imnum WllS. overambitious and tbal It. would be re11lls!tbJ.1tilJipro'l'li hlii so1iiiilll rot. M 111 lll. oa1111 Ul!Y 11f i 0,00Q cars per annum golns !IPIQ 291000 to ~5 000 m r~ j#or ili'lilliftl 11lillrtijfl1W, .. Tll\I t11mttJ~~y a_ l!A' fl!.\I. oJoso_ lfl ". 1~_"1111 11:1n,,l~h\ijfi. dlt eMohl~llli1 h4 1ri ~-il~ij rv waa roalihsd n ""II ii oowo,

It Is not disputed that 'Uiuolly iluoh 1ummftrlOM ror t.l~n$lng Commltt~c include comments by, .the varioliil scrutinizing @gencles like IDGTD and others. In the field of smallcar project the main scrutinizing agency was tho PGTD. l have 11lreac1 referred to their comments on Shri Gandhi's proposal. The sum-mary prepared in this case however dld not incor poratc comments o[ any o[ the serutJnizlng 11ge11cies. The ex11tanation offered by. s. R. Kapur; Under Sec toilll}', Ml11istry of Industrial Development, which wllS dlidorscd by M. M. Vadi1 SenlClt. lndusirlal A~ vlscr, DGTD and T. Swaminaman, Secretary, Ministry o[ Industrial Development, is that the whole matter WI!$ being viewed only in the context of the totully indigenous nature of the proposals and as such the

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con)menlS of the OGTD and other scrutinizing agen-cies were not required to be forwarded to the Licensing Committee.

The Licensing Committee. met on August 31, 1970 under the Chairmanship of Shri T. S. wwuinathan, Sec-retary, Ministry or Industrial Development ll)ld Int~1-nal Trade. Among other members who attended the meeting were R. V. Subrahmaniau, N. Radhakrisbnan, :Deputy Secreta.ry, S. R. Kapur and M . M. Vadi of D.GTD. The Licensing Committee accepted fully the recommendations o( the Ministry except for raising the capacity in the cas.: of Madan Mohan Rao to 2S,000 cars per annum outright ; the Ministry bad sugges.ted 10,000 cars per annum initially going upto 25,000 ultimately. .

Sbri Dinesb Singh, Minister of Industrial Develop-ment, gave bis approval to the recommendations of the Licensing Committee on September 18. Lette111 of intent were issued to these two parties oii Septem-ber 30, 1970 for the establililunent of new industrial undertakings for the manulacturo of passenger cars, in the case of Sanjay Gandhi for the annual capacity of ~o.ooo cars at Faridabad in Haryana, in the case of Madan Mohan Rao for an annual capacity or 2S,OOO cars at Nagpur in Maharashtra. Jn \be meanllme Prime Minister Shrimati Indira Gandhi in a speech made in Ahmedabad on September 23, referred to her son's car project. A sum111.11ry of the speech appeared in the Hindustan Times next day under the caption "Mother's Praise". lt is as follows ;

"Prime Minister, Mrs. Indira Gandhi, today commended the enterprising spirit of her son, Mr. Sanjay Gandhi, in putting forward a proposal for a small car, completely Indian.

Mrs. Gandhi said sh~ could not say whether a licence would be granted to him.

She had been asking all young men 'to be enter-prisinll even before her son had taken to dcslgnmg a car. Her son was a delicate young man and with whatever money and energy he had, he modelled a car, not a posh one, but fairly comfortable and suitable to Indian conditions. It would suit the middle class, she added". ,

The letter of intent issued imposed four conditi.ons: ( l ) No foreign collaboration or foreign consul-

tancy arrangements will be permitted. (2) No import of capital goods will be allowed. (3) No jmport of components/raw materials will

be allowed. ( 4) Bcf?re the letter of intent is converted into

a I"'ence, prototype( s) will be developed and got tested and approved for roadworthi-ncs< by an authority appointed for the pur-pose- by Government.

The letlers of intent were valid for six months. Jt . may be stated here that sometime after the letters of

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intent were issue11'ito Sanjay>Gi(nd,lii{~JMauan Mohan: Rao, -o~"~qts :w;l~~;-ed. to 1-evise . .their r.icbemes hto ma)CCj:>~rt\tem,. \holly indigenous were- also. granted .Jett~;!Of"intcnt;., .'tarys~~6:8ry;0~~;.f~~~g~j~~~ ;. . 1~Wt Jeitdr tif intent; "lll' ~~cltef' t! .,'!1 wlli~h

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request Uir expansion of the capacity, it was said that this could be considered only after Rao. had achieved the capacity of 25,000 car> per.annum. R. V. Sub rahmanian who saw the not~ on January 23, '!971 ex-pressed the opinion that release of foreign exchange for having drawings and designs checked abroad, would amount to agreeing to foreign consultancy arrangements which was con\fary to the Government policy. As regards the ~rmission sought for expanding the pro-duction capacity, Subrahmanian thought that this could be considered only after a substantial portion of the capacity approved earlier had been achieved. B. D. Pande, then Secretary in the Ministry, approved 'the recommendations and so did Shri Dincsh Singh, M!nis ter of Industry. Shri Dinesh Singh had earlier given Rao. th~ impression that his case would be favourably considered when Rao met the Minister in Madras' sometime in January l 971. The Ministry of Industrv wrote to Rao on March 15, 1971 that his requests could not be accepted. Rao says that '1n view of the attitude of the Ministry" he "asked for permission to impo!'f 4 foreign small cars to study and standardise certam components and mechanism" and this request was also turned down. Rao could. not therefore pro-

~eed further .~han p~eparation of the drawings. Accord-mg to Rao the M1mstry of Industry was more parti cular on the production of a hand made prototype" -"the very idea" with which he was "in. disagreem~nt from the beglDDing". In Rao's opinion "at the Initial stage evaluation of my design drawings ....... was more valuable than the ~ting of a hand ~ w~" ,

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. A!ter the re!~ation of the condition relating to the restrictlo!1 !JD IDlport of raw materials, and the grant of perm1ss1on to change the location of his facto!}' from Faridabad to Gurgaon ana extension of the vali~ dity.of the period of the_Ietter of iote~ from.sh: m0nths

. to eighteen months, Saniay Gandhi wrote .to the Deputy Co',ltroller, Exchange Control Deptt , R~serv~ Bank of li;i~1a, on March 29, 1972 stating that"he proposed to vmt some of the European countries to inspect various car manufacturing units. J t was said that this would be a.study tour to C'll~ble him to produce the prototypes of his car and submit a complete project report to the Government. Next day he made an application to the Reserve Bank of India for release of foreign ex-' change for his visit .to Czechoslovakia, West German{ and U:K for a penod of one week in each of these countries for the purpose of studying the car. plants ' and the manufacturing technique. The date of his proposed departure was April 3, 1972. On the ~e ~ay he. made the application, March 30, 1972, Sanj~

andh1 was allowed 126 for two weekS' stay in West' CGermany and. U.K. and Rs. 1134 for one week in ~e~hoslovakia .. Shri "! B. Chavan, then. Finance Mm1stc~, stated m Pn~bament on May 15, 1973 that the foreign exchaqge was released to Sanjay Gandhi for a ~tudy tour-cum-training in .motor car maoufacturin ~nils, that !h~ release of foreign exchange was to faci~ htate sub!111s~1on !Jf prototypes to the Governmtnt and ~as not m v1ol:it1on of any of the. conditions Imposed m the letter of mtent. . . ..

' . ' i ., .,:_ '! th I rave refe!'fed to the four conditions menti~ned in

e etter of mtent. Under the fourth condition th , holder of the letter of intent was ~equired to dev' I e S/8 HA/79-3 e op

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(iii) Repeat performan.ce trials. (iv) Continue reliability by an!'Lhcr 10,000 Kills.

anu ropcat p ...-rormance trials. (v) Complete the reliability for 10,000 Kms. anu

repeat performaooe tests. . (vi) Dyna111ometer test the engine on romplchon

of first I 0,000 Kms. (vii) Strip ei.amine the en::ine, the .11ear box and

differential and note down the wear pattern on completion of 30,000 Kms.

The dilierence between the pcrfonnance test and the reliability test was explained by Sh(i A. S. Jayaraman, Oirector. of Vehicles (Resear~h and ~vc!~pme~t). Ministry of Defence : "The obiect [of r~liabiJ!tY mile a,ge test) is to brin~ out th,e defects wht~h W\11 only come to hght after. It has picked up certain. mil~a~ to hii:Jilight the defects, the performance test will h1ghhght the 'performance characteristics of the vehicle. 'fhat can -be found in a short time. Later on we continue 1unning the car wider varying con.ditions lo see whe-ther the various components built ID stand up to the ri11ours or the test. Do they yield or fail etc, which will highlight the reliabilit~ .. We repeat the perfor-mance test once in I 0,000 Kms. to verily whcthe~ there is any drop in pcrfo1mance". He added that 11 w~ not possible to come to a conclusion as to roadworth1-ness m:rely on the performance tests.

On June ~6. 1972, A. S. Jayaraman wrote to Shri 8. S. V. Rao, Development Officer, DGTD, say-ing 1hat Maruti's complaints were only an attempt. to find an excuse to send their p1ototypc to an altemallvc 1csting agency. fn spite of the clarification &!ve~ ~y VRDE in their Jetter dated Jwie 7. 1972 MarutJ L1m1t-d continued writing to them for details of the tesl schedul: and data. In tueir letter of July 24, 1972 10 Maru1i Limited, VRDE listed in detail the lesl$ they proposed 10 adopt. A copy of the letter was sent by VRDE to Ministry of Industrial De\'elopmeot. Howcvel', on August I, 1972 Maruti Limited asked for more delr.lils regarding the methodology of !he tests. Over the controversy on the method Qf ~estmg a meeting was held on September 28, 1972 ID thP. office of 8. S. V. Rao, Development Officer, DGTD, bclween him and the representatives of Maruti Limit~d. Sanjay Gandhi who was present at the meeting ex-pressed concem over the delay that would be caused if the prototype was sent to VRDE for performance and reliability tests and wanted from VRDE the methodology of the proposed tests in writing. Shri Gandhi suggested that the trials might be held by his company in Delhi in the presence of an observer chosen by the Ministry of Industrial Development for the purpose.

12

A series of meetings with the representatives of Mauti Ltd., followed in October in the room of K. B. R.~o. Oirector General, Technical Developm~nt. The first of them, held on October 3, was attended by R. V. Sub-ruhmanian. now Additio.~al Secretary in the Ministry nf Industrial Development. It was agreed that the lrials should be held by VRDE. Another mee1ing was held on October 5, where R. V. Subrahmanian and A. S. Jayaraman, Director of Vehicles er. Automobile Division, oym, A. S. J:r~~ a!I~ Brig. R. S. Chawla, Director. VRDb. h,~,.Nil!':~nT and Sanjay Gandhi. R: V,'Su. ra qia!l\~ ,.Ina. e a request that a report might be se11t _t? th

1 .~.-.~..~tr)'. !IS . ~oon as each perfonnance test Was CO_l!f,~~''''"''",

. _ -: ,:A-:,_t(f{ -_. __ . On October 18, 1972 the minute$

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January 6, 1973 rcierred to the history of the dispute between Maruti Lio1iced and VRDE including the decisions taken in the mcetin!(S held in October 1972 and observed that if Maruti were granted un industrial licence bdorc completion of the tests "other holders of letter of intent who have yet to dcvdop prototype would ,dso press for immediate grant of an industrial licence to them ...... ". His r

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to M;iruti Li.o;lited ii) a letter dated December 21, 1973. signed by S. l'fi. Ghosh,- Joint Sr.crctary. l'ho

lcitcr stated /mer a/ia : "'the relevant condition of the letter of intent is that the prototype will be deve-loped a.nd got t.;sted and approved for roadworthincs~. It is not the Minislry of Heavy Industry that will develop the prototype and, therefore, it is not for ihc

~try of HeJVV Industry to get it tcs1ed and approved for roadwortbiness. The s1ipulation is that the Government ol India will convert the leuer of intent into a.n industrial licence only after the applioont bas developed a prototyp~ and got it approved ; in other words, he shoutd not only develop a protot) po but should proJu:c a certificate of roadworthim:ss of the prototype by the appointed authority i.e. VRDE. Ablllednagar''. Pos~ibly this led Maruti to write '" VRDE on December 31, 1973 accepting VRDl:'s terms and conditioas for testisg the prototype. In a meeting i)eld in the oOice of A. S. Jayaramun, Director of Vehicles (Researcb and Development), New Delhi, on January 24, 1974 which was auencled on behalf of MaiUti Limited by retired Wir.g Cc1n-ma.o.der R. H. Chawdhry, Maruti Limilcd agreed tus~u to be .wholly indigenous haci .in illlported engine fitted c:in 1t, w!}ich W&.$ one of the two German N.S.U. engines brought into this country by W.!;i.F. Mnll;o:,, a West German natkna.I and an ~xpert 10 spo:-wel4mg of car budies. Before des.;rib uig how and w11y. ~u.ller imported the two engines from Germany, 11 1s. necessary to state how Mu.lier canie t.o be ar.sochtcd "ith the Maru1i concern>. At a meeting of the Boord ot Directors of Maruti Limited ~.~Id on June ~.9, 1972'.a .. resolutioo was passed that

rJte companv , do . ava,d of the sen le,~ nl Mr. W.H.F. Muller subJect to continuation from the proper Go:ct!Jment authurity t~e posi.il>ility (sic.) of su foreign collaboration or foreign consultancy arrlll\l!C mcnts will be permitted. As such it is for consideratioo whether we ~all approve !be appointment of a foreign technician as t~cbcical adviser by M./s, Maruti Ltd . We may perhaps inform the Minil.try of Home Affairs that w: have not received a.ny pra:posal from M/s. Ma,ruti Ltd. for the appointment of Mr. ~fuller as their technical adviser". Joint Sccretarv S. M. Ghosh approwd the suggestion contained in the note on September S, sayin~ "As we have not received any 'lroposll, the questiOJl.,if it;shouJd be approved d".s not arise'!. ID an allidavit a,ijirmed on December 16, 1977 Muller says tbatht wu first asked by Shri San jay Gandhi to olfer technical: advice to Maruti Untited "for Ille developQICJ!.t.aod,produc-tfon of small car for which the said,; company "had been issued a lct1c1" 9( intent by the Clovci.'mnentl', a.nd that it w.111 on Shrl Gandhi's' advk:e>that>J he wrote to tl!e Foreigne.-s Regional Registration' Officer, New Delhi, ,;in July 29, 19'72 sadng: lbathe had entered into a contraa with 111anuL Limited ; with clfect from July l, 1972 as technical adviser.' But subsequently Shrl Gandhi told him that the contract would be exoc'utcd with Maruti 'Tcch11lcal Services Private Limited and tlterefore be wrote a.notherktter to the Foreigners Regional Registration Officer on October 8, 1972 which &a}S that he' WB.$ '"free to negotiate servke cvntracts as an individual entrepre-neur" and tha1 ''on this basis . a coouact is being conclud_ed with Maruti Technical Serviceir '(J>) Ltd". Th?" JS no reference here to his earJiCr: .. letter (Ji w!Jich he ha:f slated that he had entertd into q. conitaCt with Maruu !fd Shri Sanjay. G11odhi'sJdeclsion to change: MuUer.s cmplo~; was obviously a subterfuge to atoid the d1fficul!y hin:ed in rhe file of the Ministry of lrid\15trial D iyeJ .. rment in the way of Maruti Ltd. employing a foreigner as technical adviser." Thereafter on Decell!ber 7, 1972 Shri Sanjay Gandhi as Direaor of MarulJ 1: 7hnkal Services Private I JIJliU,d WIOIC ro the Addiur.nal Secreia~. Ministry. of. lnd~lrial ~v~lop!.cnt, thar Maruo Technical Services Private Limned bas a~velopcd a small passenger car .. and the company .,.ii! also undertake l'CSCal.ch and expc

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rimentnl work", that it "will QJso provide to Maruti Ltd., a public limit~d company, the technole>gy re quired for setting \10 and operating the car manufac turing plant undertakc11 by the said company" and therefore the company was "desirous of engaging the services of Mr. Willv H. F. Muller, a technical expert", "as suc1 trcliuidans lire not : Mr. Muller had entered mto a yearly contract with

M/s. Maruti Tc:hnic;il Servi~s Pvt. Ltd. which was also situated ia the . same prcn1h~s of Maruti Ltd. for givi!Jg technical advice for the development and production of the small car 'Maruti'. He was to be paid a sum of Rs. 4,000 per month to start with in Indian currency and no part of the same was 10 be repatriated to any . f from Customs authorities. Subsequently, I had .returned the !Doney to Shri Sanjay G

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When pressure mounted for production of a prototype for the VRDE for testing one such NSU engine was fined ;~ the prototype which was sent' to VRDE. Ahmcdnagar for test . . , , The second engine was used for various tests in the factory itself'.

Thus the Maruti prototype car which was l'cqui1cd to be wholly indigenous had an imported engine.

One of the reasons th made hy them to the Minbt r; seeking to change the condition in the Jetter of intent requiring VRDE's ap-proval of the prototype as roadworthy. S. M. Ghosh who was then Joint Sccr.:tary in tho Ministry of Hcaw Industry has admitted that in his expcricnc" "so muoh correspondence all round has not been exchanged for tcstii1g of any other prototyc car". The arrival of th.: Maruti prototype qr at Ahmednagar seemed to murk the end of a phase, but net quite. In a meeting held in the office of the Diroctor, VRDE, Ahrnednagar, on February 14, 1974, Sanjay Gandhi again indicated that he had reservations regarding the reliability test though loss than a month ago, on January 24, J 974 Sh1i R. N. Chawdhry on behalf of M"ruti Limited had agreed to the reliability trials. Shri Gandhi said that he would take up the matter with th~ Ministry of Heavy Indus-try. Shri Chawdhry, Chief Executive of Manni Limited from Octobc1' I. 1971 It> .March 3, 1974, whu was examined by the Commission, in reply to a ques-tion why Maruti \Vas objecting so vehemently to the reliability test, said : "that car was not capable . of going through the test".

The tests on thl' Maruti prototype car began w1tn an initial inspection conducted on February 11, 1974. On February 22, Maruti Limited fo1warded to VRDE the details of procurcmrnt of components for the prohJ-typc in response to VRDE's query. 111c information supplied discloses that som~ parts were brought out from the motor market anc! some from other parties. Several components were shown as "presumed to be Imported" but "original supplier not traceable". Some parts were admitted as import from the Government 'I It is also inexplicable how YRDE failed .to notice at that stage that the enp)ne titted on the prototype wa; an imported one. Shri R: H. Cha~dhry ~as asked, "supposing a car is fixed wtth a foreign engine, al what stage you can find that a foreign engine had been fixed?" Shri Chawdhry's answer was that one could "find out by havin" a look at the car". Shd Jayaraman's evidence st~ggcsting that VROE would have taken note of this fact at the

16 st~ge of the strip examiriat!on of th.~. CJ!&iii~,~oes , itot therefore seem quite convincin~. lf'it "wlii(' ,!"~own at 1he very begiuning that the engwe y.r~ not ,J,lldige;i:JllS, then all the subsequent trials we~ .. tisele~ ~!CC~1ses, and if this information was disclqsc

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:sed to Wi:e any effective steps before their profo1>'!'e has bee1. n approved for. roadworthiness, and the mdustrial 1cence has been issued to them".

On rec~iviag Radhakrishnan's note Sbrl S. M g,hosh, J omt .se~retary, recorded bis own no~ 0~

ay 8, 1974 m which he stated that the ~a~ d1tisfactoriJy ~ompJ~t~ the perforn1ance fri~l~1~~~ 1 a succeeded m all ma1or tests. The onlv mention able defect according to him was the vi'b t' 2700-3000 rounds. per minute which he ra tb~~Ji

could easily cortecled. The note added that: "the only condition prescribed" for issue of licence was the "ap-proval of prooot;ipc" .and that "this bas been done". Ghosh was not:mfavourof reducinilth';capacity ane;I suggested that it might be prescribed in Ute licence: that the capacity which remained .ai. 50,00() vehicles wo.uld

be "attainabl,e in two stages'~, :in)tiall~', .ttj~~)icenca would be .. endorsed for.125,0QO, .. ()n;\!.l&. ~.day

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breakdown was given to the Ministry of Heavy Ii: dustry by A. s. Jayarnman in his letter dated, lu?c 29, 1974 which enclosed "photographs of the aamge 10 the car along with copies oi statements of the dnvy of the car and the Maruti Mechanic who w~s trave Ji with it". The Jeuer said that th~ accident ~~ p~ed to be due to th~ failure of steermg mcchani?m and added that the do.foci. was of a nature which needed a proper invcsuganon by the man~facturers of Maruti. The Ministry was ~equested. to as1vetnmc:tt to which he hiO\SClf was a ~. VRDB ooID.idered thC 'reii3bilify lest as es~ential and, i.n accordance with the: fourth condition of the Jetter of inteut, it could bo oonvc.rtet ea!>Y: tQ,j~philn, but bis attempt to show as i! VRDE ha4 iipproved tlie prototype car as roadworthy was both J:tj\i,\ti6ed and misleading. Shri Sondhi'$ own. notci 'a!Sit1 rCc:orded on July 4, said that Gbosh's note. was,,v~cpafed in con. sl!ltation with him. Stating that the P!lrfuajiance of the prototype had been quite satisfaetory,-Soiidbi remark-ed that the Government. should_, !l,OW Rr()CCed t~ grant an industrial liCC!lce, ,~dhi's D.oi~k1m','secii by tl1e Minister, T. A. Pal, wllo puthis' sigiiature below it "~ toke!! o~ his approval. Whether Shri S!>ndhi was right in thinking that the perform au~ -of !h~ protQtlJ>e up tQ 10,000 Kms. was sulliciellt\'inllicati~ 1 j)f':1ts road-wortbiness is U.Ot relevant, wl1atil~ reii;\lant is the fact that VRDE as the testing aulli()i-ity appointed by the Government had not approved the vehicle for roacl-woi"thiness ; neither the liM 11or the ,second report said that the Maruti protctype was roi!dwortby. A. S Jayaraman has said that "a far as we arc concuoed the roadworthin~s certificate. would. only be 2iven after completion of the reliability". ' .

Maruti Limited had. the damaged vehicle repaired and put on road agam for further rc!!abiilty trials,

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and rccoriijug this fxt in his note dated July 20, 1974 Shri M. Sondb,i asked S. M. Ghosh to take 'action to COl)Vert the lctier of intent into an indus-' trial licence: On the Jiles one dell3 net find itny justi-fication for the step tak~n by Shri Sondhi which was clearly in disregard of the fourth condition of the letter of intent.

19

The last phase in the progress for the issue of a licence now started. S. M. Ghosh on July 22, 1974 sent a note to R. K. Tikku, Director in the Se~:~tariate for Industrial Approvals (SIA for ltort), Ministry of Induslnal Dcvclopmen,:, which aid "all conditions laid down in the letter of intent dated 30th September 1970 for manufacture of 50,000 pas-senger cars a yc~r have since been fully and satisfactori ly complied with. An industrial licence for the manufac-ture or 50,000 car.i a yea< may, therefore, be issued to Maruti Ltd." Tikku r.as said that as the note wlucll he got Crom S. M. Ghosh "dealt with an important and sensitive case" he thought it was "advisalilc to keep his immediate superior officer Shri Mahadcvan .. informed, and showed the note to Shri Mahadevan. I. Mahadevan was the Joint Secretary in the Ministry or Industrial Dewlopment. He says in his deposition that in normal drcumstnnces there w-as no need for the Director to come to him, but "as it was an impor-llUlt and sensitive case, he t.hought it was his duty to bring it to my notice". It appears that Mahadevan himself then took the mattor to the Secretary in the Ministry of Industrial Development and after consul-tation with him sent a slip to R. K. Tikku which read : "Discussed with secrctal)'. This case can be dealt with under the rule:; following usual procedure and routine in due course". Asked why he considered it a sensitive case, llfahadevai1 ays: "We were aware that this was the case oi Maruti and the applicant in this case was Shri Sanjay Gandhi". R. K. Tikki; sent Mahadevan's note alc>n_; with S, M. Ghosh's note dated July 22, 197.1 to N. Venknte,an, Under Sec-retary. in ~he SIA. yc11katcsa!1 was then ineharge of th.c L1ccnsmg Comnutlec Section which was entrusted with the tnsk of convening the lcllcrs of intent into industrial licences. Th~ notes were handed over bv ycnkatcsan to Thakkcr, Section Officer of the Licens-ing C:ommittee Section with in,tructions to proees fo, case m the usual manner. Tlmkkcr asked for the rele-vant file from. the Department of Heavy Industry but the file was no.t made nvaibble to him. According to Mahadevan, :r1kku ~nd Vcnkatesan crdinarily >.z reco!'lmcndat1on of to~ udminislrativc Ministry for con-versmn of the letter of int~nt to a licence used ta go on the fife of :he admi11istretive Ministry and SIA was prov1?ed with the file dealing with the original letters of intent. The main function of STA as r, k explains w t " h k ~ l JK u

.. , as ,0 c cc the letter of intent, and the eond1t10115 put '.n !her~. W!1cther they had been carrie:J forw~rd m the mdustrr11l licence and whether he ba,-c rcqmrcmcnts were fulfilbl". The STA was , h 1 ever sup cd t h h' . no. ow-l t' t:i_'!S. 1 ~o ~ md the advice of the adminis-ra ive in.1stry. 13l~ih Tikku and !\tlahadcvai1 uhiie ~hkn

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better IQ advise them to return the vehicle. The note of the discussion record~d by S. M. Ghosh on May 21, 1975 which was marked to the Minister stated that the Secretary was .if opinion that as the licence had been issued and the vehicle had ~lready run about 20,000 Kms. further reliability trials were primarily for bringing to the notice of the manufacturer tl1e remedial de~ects which might be noticed in the pro-cess and that the purpo$e could be better served if

~ production model was picked up from the a'Sembly hne and tested for durability. The suggestion was in accordance with a new system called "concurrent test" which had been introduced from January 1974 l11Dg '.lfter Shri Sanjay Gandhi haa beeu granted a leiter of mt.en:t. The concurrent test was applicable only to the ex1st1!1g manufacturers. Even Shri S. M. Ghosh admits that 1t had never been the idea that the "test sche-dule for prototype should be modified in the light of concurrent testing system" introduced later. Ghosh

g~s ?~ to .add that "in this particular case as the rehab1hty trials could not be continued and licence had already been issue~!, it was felt t!1at the same pur-pose could be served m future by ptcking up vehicks from. the ~ssem.~ly fin~ for purported test over suh-

~ta!1.t1al mtleage . ~ut after licence had been issued, msistencc on any lmJ of test would be pointless un-less the manufacturers thought it useful for them.

It would appear from Ghosh's statement that the idea of aP,plying the concurrent test as a substitut~ for reliab1hty trials was thought of by Shri Sondhi. Shri T. A. Pai, who wa~ then Minister of Heavy In-dustry has deposed befoN this Commission and agreed with ~ndhi and Ghosh that reliability trials were not essential. Even Shri Pai in hi:! statement recorded by the Commissii;in on December 24, 1977 said : "Con-current tests are not we same a~ reliability trials. The two are meant to s:rve different purposes. While the concurrent .tests were meant !o ensure the post manu-facture. ~a.mtenance of quahlJ by the manufacturer, t!'e rehab1Jity tests were meant to ~heck the specifica-uons held out by the maker and to ensure safety ot travelling public". Uut in a subsequent statement madu ?n Ja~~ru;Y. 13, 1978 Shri Pai staled that the word reliability. m the extract quoted above was an mad-vertcnt trustakc and the word should be replaced by thhc word 'pciformuncc'. In that case the purpose of t e perfo:mancc test as stated by Shri Pai would not be .quite the same as described by Shri Jayar:iman ~ssu:rung that the reforence to the reliability test ii;

c Imes quoted .above was a mistake for performance test, what remams uucontradictcd is that concurrent tests were m~ant to ensure the post manufacture main-tenance quality. The fourth condition mentioned in the Jetter of Jn!Cnl was .that before the letter of intent was

t,0nJert~ mto an mdustrial licence, protot\'pes must b; a~v;:~rltyte~ed, .anddapproved for roadviorthiness

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I _.c. he was a rude person to deal with and absolutely unreasona~_le, so I had to go lo the Prime Minister and to!d her that this would put her reputation down and failure _would lie taken rather seriously". To a further quesllon as to what The Prime Minister said, his answer wa.s that she said she would advise Shri Sanjay Gandh;. To yet another qu~ry : "Did she not say t~at th!s was no concern of ~inc, ~by did nt r,iu brmg this 10 the notice of Shri SanJ~/ Gan~hi ?. , t}ie an.swer was "she did not say that . Shrt Pat said Utat he also brought 10 her notice that he bad doubts about U1e reasonableness of the licence given t!> Ma!'1Jti .for a capacity. of 50,000 car~ a year, espectaUy m 11ew of the market coodit!ons and the large investments involved in such a bi" venture. He suggested . t~at a lesser capacity woUid have been more realistic. According to bun h3 told Shrlmati Gandhi that he wouW "like his Secretary Sondhi to explain to h;,r the implications of production of 50,000 . cars . Shri Sondhi's e~idence is that when they decided to . convert the letter of intent into industrial licence on i~tting the interim reports from V.RIDE, it struck him ijiatit was very difficulc to achieve the ?0,000 capa-city sanctioned to Maruti, the reason bemg that such. a bii; venture needed very heavy investment and also required development of ancillary industry in the country at a high leYel. He also explained to his Minister that apart from the other reasons, production at that scale would require very substantial inpul Prime Minister, which was mere atbreat than a query. Dhawan said that be "could report to the highesl.'' possibly trying to convey to Sondhi that further delay in issuing a licence to Sbri Sanjay Gandhi would incur the dis-pleasure of the Prime Minister who was obvio;isly the "highest". ; .. , iii I '. ..

After Shri Pai had sp0ken to the former Prime Mliilster, Shri Sondhi was given an opportunity to see l)er. According to Shri Sondhi be explained the whole position to Shrimati Gandhi Who said she would consider what he had told her. However. these meetings did not yield any result Either

. Shrimati Gandhi having co11sidercd what Shri Sondhl had told her found that the capacity of 50,000 cars tor which Maruti had been given licence was reason-able. or . on a c_onside~atfon o_f th~ matt:r she agreed with Shn Sondht but dd no; Ima 11 possible to induce Sanjay Gandhi to agree to a reduced capacity, or she did not allow herself to be bothered by wha Shri Sondhi had told her.

When it was found that it was not !)ossible to continue the reliability trial; becau~ thti ne5es~~~ facilities bad bee11 withdrawn by uru . 0 th ght that VRDE would be better ad\'!Sed to re~~n the vehicle. Accordingly S. M_. Ghosh sub milted a note to the Minister and oi; his concurrenc~ orders were issued on May 5, 1915 to VRDE t return the prototype. Tb~ prot'!type was hanJcJ over to the representative of Maruti onJune_ 14, 1975.

Summary of speeial features.-Tbe special features appearing in the account given L~v~ 9f how the Maruti car project was cleared may now be Uilllllarized : .

Ca) ' ,,

To consider the feasibillt1 of ~ufactunui: low cost. passenger cars m the CllD\ry, the Central Government .. bad appomted t.yo Committees one in 1959 and the other in 1960. Th~ project was not impleme!lted even after the committees bad submitted their reports as. the for~ign excliange position at the time was wd to be un-favourable. Criticism how~ver grew that the inaction \\lllS in the mtc;rest .of the monopolis'.s in the automobile mduslr .>'.

Replyin~ to .i debate in the Lok Sabha on the subject. of small car in . August 1966 Shri D. S:mjivayya, MWster .of Iudus!J'Y, staied that t)Je fcasibilit)' of; !lJe car pxoJe~t would be ,~nsldered . first,.Jn t}ie public sector. ".Shri Fakharuddm Ali Ahmed, MWster of Industrial Develppment aud Company Affair.;, repe\ted iii Rajya s_abha in July 1967 that the endea\Ot:r o' th~ Governm;mt would be to explore the possi-bility of manufacturing a. c:;lieap car in the public sector. Shri Sanjay Gandhi applied for an industrial licence to manu.facturc

passeng~r cars on Oecem.ber 11, 196~. Th~ desire

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which clahned to be indigenous. Shri Kapur's anxiety to have the proposals claim-ed as indig.enous sent to the licensing com-mittee without waiting for the . Cabinet decision is hard to explain unless the object was to hasten the i

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capacity of 50,000 cars a year in the case of Sanjay Gandhi was not disturbed. There appears io be no valid reason for the two cases being treated di!Icrently. The licensing committee raised Rae's capacity to 25,000 cars per an11um. According to the declared policy, the cars were required to be ono hundred per cent indigenous which the DGTD, the Tariff Commission and even Shri D. Sanjivayya thought was an impossible condition. I~ was therefore hardly of any practical significance whether , an entrepre-neur was permitted to manufacture 25,000 cars or 50,000 cars a year. To the mem-bers or the licensing committee, especially to R. \ 1 Subr:;ihnu:nian, it scen1s, no one could be equal to $anjay Gandhi even in a make believe world.

(f) Shri Sanj3y Gandhi trieil hard to avoid 1hc tests that VRDE, Ahmednagar, proposed to carry out on !he Maruti prototype car, spe-cial!y the reliability test. The rea;on was stated by retired Wing Commander R. H. Chawdhry, Chief Executive of Maruti Limi-ted : "that car was not capable of going tbJ;ough tl>e test", Shrl S. M. Ghosh, then JQ!!!t Secretary in the ?.1inistry of Heavy In-dustry, admits that in his e,_perience "so much correspondence all rbuod has not been excha1iged for testing any other prototype car" .

(g) One of the tentahve decisions reached in the meeHogs held in October 1972 between the representatives of Maruti Limited and the ollj.cers of th~ DGTD and VR[)E v,ai, that "after receip.t of the report of the first 10?00!>. kms. a \1ew could be taken on the relia~iJity of the vehicle with erence to the condi~on .Nf!. 4 of the letter of. intent t" Maruti L1m1ted" and "at the same time furth~r running could continue and reporl subnutted at the appropriate time" Even ~ a tentative decision it was somewhat am-biguous because it did not state who was

, to take the view, However, the matter was con~luded hy the recommendation made b} Shr1 V. P . Gupta, Under Secretary, Ministry ~f Industrial Development, in his note dated

23

anuary ~. 1973 that in view of the "likely rep~rcuss10ns" the condition regarding the !:;sung of prototype should not be waiv~d Ill any 0i:ie case" and Maruti Limited

should be mformed that their letter of intent w~uld "!' con~erted into an industxial licei::ce : Yb aft.r then prototype had been approv-

y VRDE, Ahmednagar. Gupta's note w~s seeSI bl' N. Radhakrishnan, Deputy Sec-~'i, a.ry R Vm S. M. Ghosh, Joint Secretary n Subrahmaniar., Additional Sec: reta~Y. and fin.al!Y approved by Sbri C. Sub-

ramanam, Mimstcr of Industrial Develop de~ntbyB\!J subsequently another note record-eputy S~cretary N, Radhakrishnan

on May 3, 1974 at the instance of Secretary,

Shri Mantosh Sondbi led to the reopening of ihe matter which seemed closed with V. P. Gupta's note. . For no appreciable reason Radhakrishnan was; askeG by Shri Manto$h Sondhi to re-examine the point whether on the basis of the. interim report received from VRDE ihe letter of intent issued to Maruti Limited could be converted into an industrial licence. ln his note Radha-krishnan said illler a/ia that ihe interim re-port "will say whether the prototype is ap-proved for roadworthiness or not". Jn his deposition Radhakrishnao admits that it was only VRDE that was entitled to give a cer-tificate of roadwcrthincss but says that in this particular case he thought VRDE might gram a certificate after a run of 10,000 Kms. It is not clear what made him think so, he must have been aware that VRDE had been insistiiig on the completion of the reliability mileage test upto 3.0,000 kms.

(h) Maruti 1:imited received c~nsiderable help from ~~1 S. M. Ghosh, Jomt Secretary in the. Mmis~ ?f Hea" Industry in getting an mdustnal lic~l!ce without complying with the fourth cond111on. of ihe J..,tter of intent. On May 8, 1974 he wrote to VRDE that Government would consider ihe issue of licence after 10,000 Kms. run as had "already been agreed" ; it was not stated when anI '!Jetween whom this agreement was entered !> On July. 4, 1974; he recorded a note m consultation with Shri Sondhi recolllDl~nd

~ convenio!} of the letter of iqtent into a li~c.ice saying that continuance of the reli-a~ility tes.l up to 30,QOQ,,Kms.,,~')Vas not con-stdeied w:i mtegral1 el~ of .i:oadworthl ness O,n W/lich the lettel'i .06;intent WBs to be converted' In the note' he sent on July 22 197~ to R. K. ~,l.Dlrector;. SIA (Sec-'. retariat for :lnP~lriab..,.pprova~).; he said ~ 1111 lbe cond1t1ons.laid doWI! in the Jetter of mteliednt h~.dth. ... )leen. full;. Y \andi1;satisfactorily comp , . WJ All.~ stateinerits in 'Shri Ghosh s D;Otes are incorrect. He could not

_ have possibly forgotten that he had earlier , e.ndors~ V. P. Guplij.:S, note of,January 6 1~?3 . recollJ.!DCnding 'rejection of Maruri'~

0 iection agamst the tests -that VRDE pro-, =Ifto: '!Ul, Q/l tbe Pro~typ.e, .that he D , ~~n, '1!>1 Mliruti Llllllted 01;1 ecember 2!, 1973 telling them that t:1e must get thell' pr!ltotype; tested and approi-ed ~or roadworthin~s l!lld .. the licence would ~ r~ued ~~~ .praj11_1)tio.n of'll' ~ertific;ate

wo In recrunmending th v~rsio!1 of the. le~, of Jntellt:illio an ~d:: tria,l licence he sa1q in his note dated-J 1 4 1974 that all ma1'01 components. d u Y ' blies th M . an , assem-iruli m e . aruti J?.(Pt!iltyPC ,car, ,were of on ~C::~f!i~C$JgDd ~!~IAtement ~as based

, Maruti car Hrna - e , Y ~{manufacturers of . ow, unw1511, h~ -had been t

accept tl!e s!atement without making a proo lb: ~~~;o~ l!e J?rov~ by 1he fact tha~ lll!, !lDPOrt.ed NSU engine.

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Ghosh did not make over the main file dealiJlg with the Maruti's letter of inten1 to SIA as was the usual practice. It rs remarkable that so many "not wholly unusual" or "not totally unusual" features have com-[)inco in one case. Shri V~nkatcsan, Under Secretary in SIA, says that they had to act on the basis o( the recommendation of tbe Joint Secretary Shri S. M. Ghosh. If they had the file the SIA couJd have examin-ed the facts and come to their own conclusion as to whether the condi.tions of the 'letter of intent had been complied with to justify the issue of a licence, tliough they were not entitled to go behind the views of the administrative Ministry.

It seems all the steps Shri Ghosh had taken after December 21, 1973 were calculated to help Maruti in getting an industrhl licence without complying with tbe condition of the letter of intent. Ghosh denies that he had been under any pressure. But there musl have been some reason prompting him to act in the manner he did, but it has remained undfaclosed. Whatever t!Jc rea,son was it is clear t~at having kl!Own Sanjay G(lndlu s reluctance to submtt the Marull prototype to the reliability test, Ghosh did all he couJd to spare the trouble for Sbri Gandhi.

The evidence given by Sbrl Mamosh Sondhi, Sec-retary in the Ministry of Aeavy Industry, and Shli T. A. Pai who was Minister of Heavy Industry frOlll

F~bruary 5, 1973 till March 1977, is lhat the reli-ab1hty test upto 30,000 Kms. was not essential in view of the decisio1_1 taken in the. meetings held in October 1972. Accordmg to them as a result of this decision lhe administrative Ministry was entitled to take a view on .the roadworthiness of the prototype on the com-pletion of I 0,000 Kms. run. On the fil1:5 however it does not appear that either of them had taken this stand ~t .any ~ prior to giving evidence before the Com.missto1_1. Neither ~. Radhakrishnao, nor R. V . Subrahmwuan nor Sbr1 C. Subromaniam thought that thC? .October 1972 decision gave the administrative M1rustry a!1y S!1ch power. In any event the contro-versy on this pomt was set at rest by Shri V. P. Gupta's note dated ~ll!luary 6, 1973 which was approved by tbe then !'Jmtster of Industrial Development Shri C. Subram~am. Of .fourse, there is nothing to Indicate

,lhat S1!1'1 T. A. Pll! s attention was drawn to Shri v. P. -Ouptas DC!te If 1t .was. decided in October 1972, as -Shi1 Sondh1 an~ Sbn Pa1 seem to think, that the Minis-.try would. be competent to take a view as to the 1road'.l"ort1noi:ss of the prototype, the decision was 'in-

~nsistent w1!h the fourth condition of the Jeiter of mte'!t acccm:ling to which only the testing agency J10IU1Dated ~Y the 9overom~nt could take any such ".;~~ If Sb;i Sondh1 and Shn Pai were right, the con-...,tion reqwr~ an amendment which normal! could not be done WJ.thout reference to the licensing ~mmitte!l. Even Shn N. Radhakrishnan who thought that a b1ew :s to the roadworthiness of the prototype niight Jini~ after a run of I 0,000 Kms. _only, said that

. one was cc:>mpetent to take this view. Radha-krishnan .furtb:r said that even if VRDE had taken such a view . it. would not have been a decision of gfn~ app&cat1on but. rest~icted only to the case Javour ~~ M=s the mtenl~on was to. do a special exception only i,; M~ttl~su cas~~t 1tb:1b~~sem~~e Shrl

24

Manubhai H. Tbakker whose 'Maya' prototype car .was made to go through the reliability test for the entire 30,00Q )Qns. and whose request for a licence after the prototype had run for about 22,600 Kms. was turned down, would prove conclusively that no change in the fourth condition of the letter of intent was in "tended. Shri Sondhi, Se

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IDbawan, Additiol)al Private Secretary to the Prime Minister, that he (Dhawan) would report Sondbi w the "highest". Shri Sondhi has said in his deposition thatsome of bis "actions were not liked by the autho-rities" and suggested that the delay in the issue of a licence to Maruti Limited might be one of them. It is a fact that Shri Sondhl was harassed. He says : " .... not only my family and I were kept under police SLl,l'VeiUance, but soon after the declaration of emer-gency CBI registered a case against me". Another reason why he incurred the displeasure of the "autho-rities", according to him, was that he tried to protect one of his officers, Shri Krishnaswmy, who was being harassed by the former government. The case register-ed against Shri Sondhi was dropped in August 1977 because on inquiry no evidence was found to support the allegations made against him.

2S

(i) Shri Sondhi and Shri S. M. Ghosh had taken the view that reliability test could con tinue after the llcencc was issued to Maruti Linllted. After the issue of licence Maruti

~IC?PPed !b~ sup1>lY of fuel and oil making 1t 1mposs1ble for VRDE to continue the test. There was nothing that the authorities could

~o to ~ompel Maruti to continue the reliabi lity mileage. This was a situation brouoht about en~~ely by unauthorised meddling ~th the . condmo11s. of the letter of inte.nt, may be m good faith so far as Shri Sondhi was concer1:1ed. One should have expected in such c1rcum.stances the Minister or the Sec-rz,talJ,' to sununc;in the entrepreneur and insist on. ~!s. completmg the test, but Shri T. A. Pat d!d n

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CHAPTER JI

The third item ln the li't of matt~rs for inquiry re-lates to:-

"All matters pert~ilting to the propriety and ~e legality cf acquisition or allotment of land in Gurgaon district in the State of Haryana, incluilli.g :

(a)

(b)

the propr\ety of allowing the lo~at!o~ of 11,.- complex of l>uilding' of Maruu I.11111tC'd al i:~ present site, the circumstances relating to and the

mann~r of the dispossession of the erst-while occupants/owner~ of the land, and

(c) th~ nature and adc

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the dis~ussion tl1at as Sanjay Gandhi had, made no ftlllal application for allotment of .land and the Direc-leirate of Town and Country Planning had no idea about the proposed car proicct, it was not possible

.) .. for hil)l to. take any decision. A few days thereafter Mishra.informed Mann that no action need be taken

: ; on.Ailawadi's letter. Mann made a note on the file on September 29, 1970 placing on record the fact that

Sa!Jjay Gandhi had made . no application a~kiog for land to. be acquired for him ; this note was SfeD by

\ Chief Minister Ban;i I.al on October 26, 1970. '-

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To appreciate the rvents that followed it will be necessary at this stage to refer to some provisions of the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963. This Act which was extended to the State of Haryana, is, as its preamble shows, an "Act to prevent haphn-i:iml and sub-standard development along scheduled roads and in controlled areas". Section 3 of the Act prohibits, among other things, erection of buildings within 30 meters on either side of the road reservatiCln of any scheduled road. Road reservation in relation to a scheduled road has been defined as . the !and, whether metalled or unmetalled, which vests in the Government or the Central Government or a local authority for the purposes of such road and the boundaries of which are demarcated by pillars, posts or in any other manner. It may be mentioned here that Delhi-Gurgaon road is part of Delhi-Alwar road which is orie of such scheduled roads. Section 3 also mentions certain exceptions where the prohibition would not apply, but these are not relevant for the present purpose. The area around Gurgaon was declared a controlled area under section 3 of the Act. sometime in July 1964. Under section 5, lhe Director of Town and Country Planning is required to prepare plans showing the controlled area and signifying therein the nature of restrictions and conditions proposed to be made applicable to such area and submit .the plans to the Government. The Govcinmcn.t may approve the plans with or without modifications or reject the plans with direction to the Director to propare fresh plans. After the plans are approved by the Govern-ment, they are published for the purpose of inviting objections. After objectfons, suggestions and repr~sentations have been considered, the plans as finally approved, are published in the official gazette and in such other manner as may be prescribed. Section 6 of the Act forbids erection of buildings in a controlled area except in accordance with the plans and the restrictions and conditions referred to in section S and with the previous permission of the Director.

According to Mann a number of development plans for the controlled area in Gurgaon were prepared but for various reasons these could not be given a definite shape. One such plan, Plan No. 5, he submitted to th: Government on November 11, 1970. After this, M. L. Batra called him to his room and made enquiries about Sanjay Gandhi's propos~I to set up a car factory on the. qurgaon-Delhi road. Besides beine; Financial Comm1ss1oner (Revenue), Batra was also Secretary of a number of dcoartments including the departments of Town and Country Plannin~ and Urban Estates fn t~e course of discussion Mann pointed out thai

- the sit~ where the factory was proposed to be located S/8 HA/79-5 l

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fell in .the yea shown as.ilif\11 ZOJ,l~:~#); prp~ developmeqt, plan:. To..1B111J"S 'l. U$~. ' . ~~.~.'l~ . '.'.'~1g~Jd be any difficulty !D ti)e ev!=!lt SiU,!JaY;, , ... , ,,, . , . Y decided to set .up his factory tb~re;.,,, ,, ""'&~~r was that, in that case a portion f _tl\!1 ,~~~0'1\'ll}Jl the plan as rural zone. could be convet(~;w'.!R;j.9,d~toal zone. Mann. !so to!d him that ti)~ ~YF~~;;~ad decided not to take any step lo regard to !lie.~ proiect as there was no application trom .~

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in his depositim has said that he had received a tele-phone call from R. C. Mehtani, Officer on Special Duty to the Chief Minister, telling him that Haryana Government's concurrence to 1hc ch.m~c of Iocntion should be communicated on that very day. Shri Abdul Gafoor Khan who was then the Minister for l'ndustries, Government of Haryana, later questioned the compe-tence' of the Director of Industries to take a decision on his own in the matter of the change of site from Faridabad to Gurgaon. The explanation subniitted to

th~ Minister by Gupta to this charge did not refer to the instruction he had received from Mehtar.i ; Gupta was told this Commission that he did not mention Mehtani's name because he thought that Chief Min!ster Bansi Lal would not like it.

Soon after the receipt of Sanjay Gandhi's letter dated November 14, 1970 M. L. Batra, Financial Commis-sioner (Revenue), R. S. Mann, Director of Town and Country Planning, and L. whether ~00 ac~es of Iand'~~iJll;l,~01\s:,qu~~, unmediately for mdusq1al p~.~~by the Director of Industries ilml, if &O;

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Back from leave Mann. Director of Town and Conntry Planning, wrote to Gupta, pirec.tor of. ll!-dustries on Feliruary 9, 1971 requesting him ~o md1-cate th~ location of the 400 acres of land which was to be acquired for industrial purposes. Ma,nn. also got in touch with Aflawadi, Deputy Comm1>s10ner, Gurgaon, to find o~t if San)a: Ga11Jh1 had chose~ any new site for h1~ cac proiect. The Deputy Co_m missioner informed him on telephone that San1ay Gandhi had selected a new site which . should be acquired immediately. Subsequently, wnh a letter written on February 17, 1971 Ailawa~i sent _Mann the necessary papers fo; acquiring land m the villages of Inayatpur, Muilallera, Shahpu~, . Sarhaul and IDundahera all situated in Gurgaon district. The total area proposed for acquisitioJt was . 444.51 a~r~s and this comprised the land that Saniay Ganahi h~d earlier selected, excluding of course the 157 acres m the oecupation of the Defence Department. The Director of Industries was satisfied that the area was suitable for industrial purposes. This area was already covered by a notllicaUo:t under section 4 of the Lane! Acquisition Act issued in 1969. In a note recorded on February 19, 1971 Mann suggest~d that .the earlier notification which seemed defective be with-drawn and a fresh notification under section 4 issued. Mann also suggested in his note that the cost. of. 11e9uisition might be provided in the suppleme'!.!ary esUmates. Batra approved both the suggesuons. Aceordingly the earlier notification was withdraw,n _a?n a new notification, under secti!>n 4 of tl!e .Lli'!d Acquisition Act was issued whil:h was published m tho Gazette on February 22 and 24, 1971. ' . The provision of section 17 of the Act was also invoked for taking early possession of the land.

Some of those whose land was. proposed to be acquired challenged the notification by filing a writ petition in the Punjab and Haryana High Court. . One. of the grounds llf challen.i:e was that the emergency provision of section 17 had been invoked without there beiag any real urgency. Mann sought the opinion of the Advocate G~t1eral who was of the Yiew that if recour5e to section 17 was not given up, the High Conrt was likely to allow the writ petition. Accorcfing to Mann it was not the intention of the Government to invoke the provisions of section 17. but the draft notification prepared by the Deputy Commissioner, Gurgaon, had referred to section 17 which inadvertently was not c.lelcted when the noti-fication was sent for publication. On legal advice tlti.s notification was also withdrawn on March 23, 1971 and the writ petition was disposed of as infruc-tuous on March 24, 197!. But on the very next day, March 25, a fresh notification under section 4 cover-ing the same land but. without reference to section 17 was published in the Gazette.

On April 2, 1971 Mann put up the file for appridng the Public Works Minister of the action taken so far lijld seeking orders on several matters including the subject of funds to meet th~ cost of acquisition. Mann pointed out, as Kulwalll. Singh had done earlier, that tn the Budget for 1971-72 of the Urban Estates Uc-partment there was no provision for acqui~ition of the la.nd in question, adding that if the Government

so desired a provision might be made in the su~plementary estimates; this was aho what Kulv:ant Smgl;t had suggested. On Mann's note on the pomt, Batr~, Financial Comml~sioner (Revenue),. rccomn!endc~ that the matter mighl be taken up with the Fm~ncc Department. The Minister saw the file on April 9, 1971.

Before traciag the cout~e of the land acquisition proceedings, it will be convenient to r;fer to. twu other matters here : (a) L. C. Guota s experiifi.ence when as Director of Industries he wanted iust ca-tion for the alleged requirement. of .300 acres of land for the car factory; and (b) finalisatt

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Minister, when he saw the file on March .81 .1971, raised certain queries relating to the aequ1s111on of land for the car project. According to Shri Gupt.a before these queries involving a "fundamental" issue were answered, iL was not possible to s~n~ the leller, It appears from the file that the Minister wanted . to know why it had take11 so long to reply to Sa!11ay . Gandhi's letter of November 14, I 970. He also obiect-ted to t.he allotment of land to Sanjay qan~ '?I). the terms proposed l;>y Shrj Gan~hi-paymenl. m 1ns.tal ments and the first instalment payable five ye_ars after the acquisition of land. He express!:d the view that there was a:> . moral or other juspjicalion !or dispossessing the tillers of the la,nd.

The letter that was . ultimately issued did not conform to the draft, not however as a result of th" view taken by the Industries Minister, nor was its despatch consequent on hi~ approval; the draft \\'.llS changed and the letter sent exactly as the Chief Mmmer wanted. A note r''~'''d~d by Shri L. C. Gupta on April 21, 197 l shows that Shri S. K. Misra, Principal Secretary to th Chief Mi1>istcr, conveyed to him on that day that the Chief Minister wanted the reply to Sanjay Gandhi's letter of Nove.mber 14, 1970 to be sent on. tha~ very day and complia.n~e reported to him. Gupta was also told that Sanjay Gandhi had cxprc;sed great annoyance to the Chief Minister for the delay in replying to his letter and allotment of land to him. Later on the S3JJ1e day Shri Misra further informed Shrl Gupta that the Chief Minister desired ihat no question of justifica-tion for the requirement of 300 acres should be ralcd in the letter to be is.;ued. A reply as desired by Uie Chief Minister was sent to Shn Sanjay Gandhi on the same day and compliance with the Chief Minister's order was reported to his Principal Secre-tary. The letter issued informed Sanjay Gandhi that "it would be possible"' to give him land "with pro-vislon of roads, wa:~r, power and drainage etc." for his proposed factory, that the price charged was "re-coverable in in$talmcnls", and that there "would be M difficulty in issuinJl private carrier permits tor trucks and buses rcquireu by him. As regard; other facili-ties and concessions available for new industry in 'the State, a note on the current policy was enclosed. The letter ended with the assurance, "we shall be only t90 glad to ~ive any turther clarilkation' which muy be required' . In explainin!l why in the matter of allot ment of land to Sanjay Gandhi, he had to h~ve every action that he proposed to take approved by the Chief Minister, Shr1 Guptd says : ''This was treated as _a sp~ci.al ca;e ao

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(ii) The small land owners would lose their onlv source of livelihood as a result o( the acqui-sition.

(iii) The ac411isition would result in a heavy !Jss to ma\Jy amonJ the interested partks who had invested a lot of money in deveh>ping the land.

(iv) Acquisition of the fertile land was not neces-sary whm fallow lands were available in the vicinity-in villages '"athupur and Chakra-pur on the Dclhi-M~hrauli Road. .

(v) Near l!Je land proposed to be acquired, an ammunition depot and other air force instal-lations were lccatetl .ind th~ area was a restricted zone as would appear from a letter issued from Air Headquarters, No. AIR-HQj 20851/ll4/0RG/.\'v7l;I/D (Air Force), dated August 13, 1956 and the Ccntrd Government Gazette Notification S.R.O. 6, dated January 11, 1969 which prescrilled a safet: belt of I 000 yards around the am-munition depot.

lo his report the Land Acquisitior: Collector agreed tjiat the land sought tc be acquired was of wry good quality and highly productive. He also found that most Qf the interested parties were uneducated small land owners and except 50 all the other interested parties numbering 1086 were entirely dependent on agricul-ture. Referring 1(1 th~ "semi-hilly" area on Dclhi-Mch-rauli Road which the objectors had pointed out as un alternative site, he said that he had visited the place

~nd agreed th?t the Government might acquire land m that. areas 111st7ad. of the fertile land in question. Regarding the ob1ect1on that the fond was within rhe safety belt of 1000 yards around the ammunition depot the Land Acquisition Collector found that the land of villa.!IC ~nayatpur, ~nd perhaps that of village Sarhaul, was ms1de the safety belt but ltc said that as the in-

t~rested partjcs did not produce the relevant notilica-t1~n, he was unable, to commr.n: on this objection. He did not try to obtam a copy of the notification from lhe office of the Deputy Commissioner, Gurgaon,

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possession given to Shri Sanjay Gandhi. I was aware that w~ had recently decided to issue the notification u/s 6 of the Land Acquisition Act but as I could not remem-ber off hand the exact date .-if the publica-tion of the notification u/s 6, I told the C.M. that the notification u/s 6 had been issued and the possession of the land would be taken immediately after completing all the legal formalities including the announce-ment of the award. Upon this, the C.M. ordered that (a) it may be cn;urcd that lhc acquisition proceedings are completed with-out a single day'o delay and that the pcs-session of the land is delivered to Shri Sanjay Gandhi lat~st bv 10th Julv, 197t and (b) the Dir

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'"91}Uisi-.iiOWCVCr Ill_ "land ... ilnc!hi" . io1;1 Col~ "icdingS. piilou>IY "'seems '"'iir did !>l!ion of: "Sanjay 'r Mann -tquisi-i'adher-

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/not served personally. In village Sarhaul, for ple, out of 117 persons-interested only 12 were

, the other notices were pasted on the walls of I buildi1Jg ; the explanation offered is that the

had ref\lsed to accept the notice. It is not dis-that a large number of persom holding land in

. e Mullahei;a did not Jive in the village and had 11.0 agents authorized to receive notice on their behalf ;

il~-- '"~' ,., IDepartmet obtaiited. He said '.thaL.ifcrU!e;ipartyiwanted any modi~ation, of the tenps anit~qi1l9J1S,~uggest ed, !he matter could~ considcred!Ja~9'";',',A[~t.e'1~or.ded by Mann on :June '30; '1971\1

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in Sector 10, Circuit House of the Hatyaua Go\:er11-ment" at Chandigarh between Sanjay. Gandhi and ~he representatives of the Haryana Government. Jagd1sh

Prasad, a dil"..ctor of Maruti Limited, accompanied Sanjay Gandhi ; Haryana Government was repres~nted by the Chief Miniliter, Financial Commissioner t Reve-nue) M. L. Batra, Finance Secretary .J. K; Sarohia, Director of Industries L. C. Gupta, Chairman of State Electricity Board P. N. Sawhney and, Director of Town and Country Planning R. S. Mann. Before the meeting with Sanjay Gandhi was held, the Chief Minis-ter called the oJlicers to his rcsidenc;dJr a discussion. Mann in his deposition has said that the Chief Minister suggested in this conferen