Politics · Banking Fraud · New Delhi · 1971–1978

Nagarwala Case 1971: The Rs 60 Lakh SBI Fraud and the Unanswered Questions

📅 Last updated: 5 November 2026📖 15 dated entries, 1971–1978✎ By Nazish Fatima

Written & reviewed by Nazish Fatima · Updated November 5, 2026

In short

Nagarwala case 1971: timeline of the Rs 60 lakh SBI fraud, the phone call in the Prime Minister's name, the three-day conviction, two deaths and the 1978

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The Nagarwala case began on 24 May 1971, when a caller purporting to be the Prime Minister’s principal secretary, and then the Prime Minister herself, told the chief cashier of the State Bank of India’s Parliament Street branch in New Delhi to hand over Rs 60 lakh for a secret Bangladesh operation. The money went to a courier, former army captain Rustom Sohrab Nagarwala, who was arrested that night. Within three days he had confessed, pleaded guilty and been sentenced. The conviction was later set aside, the investigating officer died in a road accident, Nagarwala died in custody in March 1972, and a commission of inquiry in 1978 faulted almost everyone without saying who made the call. This record separates what courts and the commission found from the theories that grew around the case.

💡 Short Answer

On 24 May 1971 SBI chief cashier Ved Prakash Malhotra withdrew Rs 60 lakh on telephone instructions from a caller purporting to be the Prime Minister’s office and handed it to Rustom Sohrab Nagarwala. Police recovered Rs 59,95,000 the same night. Nagarwala was convicted within three days, the conviction was set aside on appeal, and he died in custody in March 1972. The 1978 Reddy Commission found no evidence the money was Indira Gandhi’s but never established who made the call.

⚡ Nagarwala Case at a Glance

Date of the fraud24 May 1971

AmountRs 60 lakh

RecoveredRs 59,95,000 (High Court)

First conviction27 May 1971, set aside

Nagarwala diedMarch 1972, in custody

Inquiry report1978, about 820 pages

⚡ Quick Answers — AI Overview Ready

Nagarwala Case: Key Questions

What was the Nagarwala case?

A 1971 fraud in which Rs 60 lakh was taken from the State Bank of India’s Parliament Street branch in Delhi on a phone call purporting to come from the Prime Minister’s office. Rustom Sohrab Nagarwala, the courier, was arrested the same day.

Who made the phone call?

That was never established. The caller used the names of P.N. Haksar and Indira Gandhi. The police theory was that Nagarwala mimicked them, but the Reddy Commission said he could not mimic anyone and found no evidence the money was hers.

How fast was Nagarwala convicted?

Three days after the fraud, on 27 May 1971, he confessed before a magistrate, pleaded guilty and was sentenced, reportedly to four years. The conviction was later set aside on appeal and a fresh trial ordered.

What did the Reddy Commission find?

In 1978 it faulted the police, the courts and the bank, held that the confession should have been rejected, and found no evidence the money was the Prime Minister’s. It did not say who was behind the call or why.

📚 Key Takeaways

The Case in Nine Points

The trick: a phone call using the names of the Prime Minister and her principal secretary, with a Bangladesh cover story that fitted the moment.
The handover: Rs 60 lakh left the bank on a verbal order, with no cheque or voucher, and was given to a courier near Bible House.
The warning sign: Deputy Head Cashier Ruhel Singh signed the cash book but demanded a voucher that never came.
The arrest: Nagarwala was traced the same day and Rs 59,95,000 was recovered from Defence Colony.
The speed: confession, guilty plea and sentence came on 27 May, three days after the offence.
The reversal: on appeal the conviction was set aside and a fresh trial ordered; charges were framed again on 9 August 1971.
The cashier: the Delhi High Court held in November 1971 that Malhotra was duped and showed no dishonesty, though he may have broken bank rules.
The deaths: investigating officer D.K. Kashyap died in a road accident in November 1971; Nagarwala died in custody in March 1972.
The inquiry: the 1978 Reddy Commission criticised the process but left the central questions open.

Timeline: The Nagarwala Case, 1971–1978

Entries are colour-coded by track and run newest first. Where sources differ, the entry says so.

BackgroundThe heist, 24 May 1971Trial and courtsDeath and inquiry

1978

The Reddy Commission reports: fault everywhere, no answer Death and inquiry

820-page reportJustice P. Jaganmohan Reddy

What happened: Retired Supreme Court judge P. Jaganmohan Reddy submitted a report of about 820 pages in 1978. It found fault with the police investigation, the court proceedings, the bank’s procedures and official replies. It found no evidence that the Rs 60 lakh belonged to Prime Minister Indira Gandhi, said Nagarwala could not mimic anyone, and held that his confession should have been rejected as unsupported by evidence.

Why it matters: The commission said a proper investigation would have shown whether the money was the bank’s own or was held by the bank for someone else. It also found that Nagarwala’s death was caused by a heart attack and gave no reason to suspect foul play. It never established who was behind the call or why. Reddy reportedly likened the affair to Churchill’s ‘riddle wrapped in a mystery inside an enigma’.

Key point: the commission fixed blame on process, not on any named conspirator.

1977

The Janata government orders a fresh inquiry Death and inquiry

After the EmergencyCommission of Inquiry

What happened: After the Janata government took office in 1977, it appointed several commissions to examine the Indira Gandhi years. Retired Supreme Court judge Pingle Jaganmohan Reddy was asked to look into the Nagarwala affair.

Why it matters: Giving evidence, Indira Gandhi said the episode did not embarrass her because she ‘had nothing to do with it’ and did not know any of the persons concerned, according to a 2024 book review.

Why it matters: the inquiry could examine the case without the person at its centre, who had died five years earlier.

22 Mar 1972

Nagarwala dies in custody Death and inquiry

Reported dateCause given: heart attack

What happened: Rustom Sohrab Nagarwala died on 22 March 1972, his fiftieth birthday, according to a Business Standard review of the Reddy record. Some accounts give 2 March. The official cause was a cardiac infarction. He had been in and out of hospital in early 1972.

Why it matters: His death ended the criminal case. His appeal and the retrial never reached a verdict, so his account was never tested in a completed trial. The Reddy Commission later found no reason to suspect foul play, but speculation has continued.

Key point: sources differ on the exact date, 2 or 22 March 1972; the cause, a heart attack, is consistent.

Early 1972

Nagarwala recants and refuses bail offers Death and inquiry

Tihar JailAppeal pending

What happened: Nagarwala recanted his confession. A review of the Reddy record says he stayed in jail, refusing offers from friends to arrange bail.

Why it matters: Letters he wrote from jail, reported later, said he wanted to reveal the truth behind the crime. He never did.

Why it matters: the one man who knew the facts first-hand left no tested account.

24 Nov 1971

The Delhi High Court rules on the Malhotra application Trial and courts

R.S. Nagarwala v. StateDelhi High Court

What happened: The High Court dismissed Nagarwala’s revision. It held that Malhotra had been duped, that taking out the money might breach bank rules but did not show dishonesty, and that no prima facie case of criminal misappropriation was made out against him.

Why it matters: The judge also remarked that police had finished Nagarwala’s case within three days, yet the investigation against Malhotra was incomplete after about six months. He said the police showed no similar diligence, which gave the accused reasonable grounds for doubt.

Key point: the court criticised the uneven pace of the two investigations, though it did not stay the trial.

Nov 1971

Investigating officer D.K. Kashyap dies in a road accident Death and inquiry

Assistant Superintendent of PoliceMonth reported

What happened: D.K. Kashyap, the police officer who led the investigation, died in a road accident in November 1971. Accounts agree on the month but I found no source for the exact date.

Why it matters: His death, followed by Nagarwala’s within months, fed suspicion. The Reddy Commission is reported to have found no foul play in Nagarwala’s death; I found no official finding that Kashyap’s accident was anything other than an accident.

Why it matters: two deaths within five months turned an unusual fraud case into a mystery, though neither has been shown to be foul play.

5 Oct 1971

Nagarwala asks for the cashier to be tried with him Trial and courts

Application before the trial courtDismissed

What happened: Nagarwala applied to have Ved Prakash Malhotra made a co-accused for criminal breach of trust. The trial magistrate refused, holding the record did not show Malhotra’s involvement in any crime. The Sessions Judge dismissed a revision.

Why it matters: Malhotra had been arrested a few days after Nagarwala on the bank’s first report, and that investigation was still open after about six months. Nagarwala’s counsel argued the police wanted a quick conviction and kept the cashier under pressure. I found no record in the sources checked that Malhotra was ever charged.

Key point: the prosecution’s main witness was himself under police investigation at the time.

9 Aug 1971

Fresh charges framed after the retrial order Trial and courts

Additional Chief Judicial Magistrate N.L. KakkarSections 419 and 420 IPC

What happened: After the appeal court set aside the first conviction and ordered a fresh trial, new charges of impersonation and cheating were framed against Nagarwala on 9 August 1971.

Why it matters: The remand wiped the 27 May sentence. The retrial was still unfinished when he died.

Why it matters: the speedy conviction was set aside, so the case never ended in a final verdict.

Mid 1971

The appeal court sets aside the 27 May conviction Trial and courts

AppealRemand for fresh trial

What happened: On appeal, Nagarwala’s conviction and sentence were set aside and the case was sent back to an Additional Chief Judicial Magistrate for a fresh trial in accordance with law. The High Court’s later judgment records the remand but not the date.

Why it matters: The first trial had run on a guilty plea, entered after a confession recorded the same day. The remand shows the appeal court did not treat that process as final.

Key point: the date of the remand order is not in the sources I could check.

27 May 1971

Confession, guilty plea and sentence in a single day Trial and courts

Magistrate K.P. KhannaConfession before G.R. Aggarwal

What happened: On 27 May Nagarwala made a confessional statement before a magistrate, which he later recanted. The same day police filed a chalan under Sections 419 and 420 IPC, charges were framed before a first-class magistrate, he pleaded guilty and was sentenced. He is widely reported to have received four years.

Why it matters: Within three days of the offence, the case had a conviction. The author S.K. Aggarwal called the speed ‘unique in legal history’. The Reddy Commission later said the confession should have been rejected.

Why it matters: the speed of the trial, not only the fraud, became the central controversy.

24 May 1971, night

Nagarwala is traced and arrested The heist, 24 May 1971

Parsi Dharamshala, DelhiRs 59,95,000 recovered

What happened: Police traced Nagarwala to a Parsi dharamshala in Delhi where he was staying, and arrested him. They recovered Rs 59,95,000 from a house in Defence Colony where he had left the box with a friend. A Business Standard review says all but about Rs 6,000 was recovered.

Why it matters: A fraud against a nationalised bank was solved within hours, which was part of why its later handling looked odd.

Key point: the recovery figure of Rs 59,95,000 comes from the Delhi High Court judgment.

24 May 1971, afternoon

Malhotra goes for the receipt and learns he was duped The heist, 24 May 1971

Prime Minister’s residenceParliament House

What happened: Malhotra went to the Prime Minister’s residence but could not get access, then to Parliament House. There he met Principal Secretary P.N. Haksar and asked for the receipt. Haksar said neither the Prime Minister nor anyone for her had asked for money. Malhotra told senior police officers.

Why it matters: At the bank, Deputy Head Cashier Ruhel Singh had signed the cash book but demanded a voucher, was told it would come, and repeated the request. When no voucher arrived and Malhotra did not return, he reported it to superiors and to the police.

Why it matters: the bank’s own staff flagged the missing paperwork before anyone checked with the Prime Minister’s office.

24 May 1971, ~1 pm

Rs 60 lakh is handed over near Bible House The heist, 24 May 1971

Parliament Street, New DelhiCode words exchanged

What happened: Malhotra had the box taken from the strong room by two cash coolies, put it in a bank car and drove off. Near Bible House on Parliament Street he met R.S. Nagarwala, who said he was the courier and gave the code words. A review quotes them as ‘Bangladesh ka babu’ and ‘Bar-at-law’.

Why it matters: The money left the bank on a verbal order with no cheque, voucher or written authority.

Key point: the courts record the courier as Nagarwala; the caller’s identity is the unresolved question.

24 May 1971, ~noon

The telephone call The heist, 24 May 1971

SBI Parliament Street branchChief cashier Ved Prakash Malhotra

What happened: At about noon Malhotra received a call from someone purporting to be P.N. Haksar, Principal Secretary to the Prime Minister, saying she needed Rs 60 lakh for Bangladesh and that it was top secret. When Malhotra hesitated, a female voice purporting to be the Prime Minister told him to take the money out himself and hand it to a courier who would use code words. He was promised a voucher and receipt.

Why it matters: East Pakistan was in turmoil and war with Pakistan was widely expected, so a secret payment for Bangladesh sounded plausible to him.

Why it matters: the caller used the Prime Minister’s name; no one has proved whose voice it was.

Mar to May 1971

India and the Bangladesh crisis Background

East PakistanRefugees and war risk

What happened: After the Pakistani military crackdown in East Pakistan in March 1971, millions of refugees crossed into India and a war between India and Pakistan was widely expected. India was backing the Bangladesh liberation movement.

Why it matters: That is the background against which a secret payment for Bangladesh looked believable. The State Bank of India had been state-owned since 1955, and Indira Gandhi had nationalised fourteen other major banks in 1969.

Key point: the plausibility of the story, not any forged document, is what opened the vault.

How the Fraud Worked, and Why It Worked

One afternoon, five steps, and no written authority at any point.

Call, about noon→Box from strong room→Handover near Bible House→No receipt at Parliament House→Arrest that night

1. The cover story

Bangladesh, in May 1971

Refugees were pouring in and war looked likely.
A secret payment for Bangladesh sounded plausible.

2. The voices

Haksar, then the PM

A caller claimed to be P.N. Haksar, then a female voice claimed to be the Prime Minister.
Whose voices they were is unresolved.

3. The bank

No voucher, no cheque

Ruhel Singh asked for a voucher and did not get one.
Reddy criticised the bank’s procedures.

4. The cashier

Duped, said the court

The High Court held his conduct showed no dishonesty.
It said he may have broken bank rules.

5. The police

Fast on one case

Nagarwala’s investigation took three days.
Malhotra’s was incomplete after about six months.

6. The courts

A one-day trial

Confession, plea and sentence on 27 May 1971.
Set aside on appeal; retrial never finished.

Infographic: timeline of 24 May 1971, from the noon phone call and the strong-room box to the Bible House handover, the denial at Parliament House and the night arrest with Rs 59,95,000 recovered — One afternoon, 24 May 1971.

Infographic: the Reddy Commission 1978 found police, courts and bank at fault, said the confession should have been rejected and found no evidence the money was the Prime Minister; it left open who made the call, whose voice was used and why — What the Reddy Commission found and left open.

The Numbers, and Where They Come From

Every figure is attributed. Reports differ on some details.

Measure	Figure	Source / note
Amount taken	Rs 60 lakh	Delhi High Court judgment, 24 Nov 1971
Amount recovered	Rs 59,95,000	High Court; a Business Standard review says all but about Rs 6,000
Value in 2024 terms	About Rs 170 crore	Estimate in a 2024 book review; depends on the inflation measure
Time to conviction	3 days (24 to 27 May 1971)	Wikipedia, Business Standard; confession and plea on 27 May per the High Court
Sentence	Four years (reported)	Wikipedia and Business Standard; the High Court says only ‘various terms’; set aside on appeal
Death	22 Mar 1972 (some accounts: 2 Mar)	Business Standard review; cause reported as heart attack
Reddy Commission report	About 820 pages, 1978	Wikipedia; Asian Age book review

Infographic: Rs 60 lakh taken, Rs 59,95,000 recovered per the High Court, convicted within 3 days, four-year sentence later set aside, Reddy Commission report of about 820 pages in 1978 — The case in numbers.

Two Investigations, Two Speeds

The Delhi High Court itself drew attention to the gap.

What the High Court observed (24 Nov 1971)

Police finished Nagarwala’s case and filed the chalan within three days.
The investigation against Malhotra was still incomplete after about six months.
Had police shown similar diligence there, Nagarwala would have had no reasonable grounds for doubt.

What the court did not do

It did not stay Nagarwala’s trial.
It did not find a case against Malhotra.
It left the weight of Malhotra’s evidence to the trial court.

Bar comparison: Nagarwala investigation completed in 3 days versus Malhotra investigation still incomplete after more than 6 months, as noted by the Delhi High Court on 24 November 1971 — Three days against six months, per the High Court.

What Is Established and What Is Theory

Theories below are labelled as such. None was proved by a court or by the Reddy Commission.

Established by courts or the commission

On the record

Nagarwala collected the money and was arrested that night.
The confession should have been rejected (Reddy).
No evidence the money was the Prime Minister’s (Reddy).
Malhotra was duped, with no dishonesty shown (High Court).

Left open

Unanswered

Who made the call and whose voice was used.
Whether the money was the bank’s or held for someone else.
Why the payment was sought.

Theories, unproved

Speculation

A covert fund for the Bangladesh war.
Money for a political or private project.
That Nagarwala did not die in custody.
Indira Gandhi told the commission she knew none of the persons involved.

Key People and Bodies

Being named is not, by itself, a finding against anyone.

Name	Role	Part in the story
Ved Prakash Malhotra	Chief cashier, SBI Parliament Street	Took out the money; held duped, with no dishonesty shown, by the High Court
Rustom Sohrab Nagarwala	Former army captain	Recorded as the courier; convicted 27 May 1971, set aside; died in custody 1972
Ruhel Singh	Deputy Head Cashier	Signed the cash book, demanded a voucher and reported the payment
P.N. Haksar	Principal Secretary to the Prime Minister	Name used by the caller; told Malhotra no money had been requested
D.K. Kashyap	Assistant Superintendent of Police	Led the investigation; died in a road accident, Nov 1971
R.K. Maheshwari	Counsel for Nagarwala	Argued for Malhotra to be tried with him
Justice P. Jaganmohan Reddy	Retired Supreme Court judge	Headed the 1977 inquiry; report of 1978

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Frequently Asked Questions

Dated facts, and the points on which accounts of the case differ.

What was the Nagarwala case?

A 1971 fraud in which Rs 60 lakh was taken from the State Bank of India’s Parliament Street branch in New Delhi after a telephone call purporting to come from the Prime Minister’s office. Rustom Sohrab Nagarwala, a former army captain, was identified as the courier and arrested the same day.

When did the Nagarwala scandal happen?

On 24 May 1971. The call came at about noon, the money left the bank soon after, and Nagarwala was arrested that night after the chief cashier failed to get a receipt from the Prime Minister’s office.

Who was Ved Prakash Malhotra?

The chief cashier of the SBI Parliament Street branch who took the money out and handed it to the courier. The Delhi High Court held in November 1971 that he had been duped and there was no prima facie case of criminal misappropriation against him, though he may have broken bank rules.

Who was Rustom Sohrab Nagarwala?

A former Indian Army captain, born around 1922 according to reports that he died on his fiftieth birthday in 1972. Courts recorded him as the courier who collected the money. Some accounts say he had links to intelligence circles; that is not established by any court finding.

How much money was taken and how much was recovered?

Rs 60 lakh was taken. The Delhi High Court judgment records Rs 59,95,000 recovered from a house in Defence Colony. A Business Standard review says all but about Rs 6,000 was recovered.

What would Rs 60 lakh be worth today?

A 2024 book review put it at about Rs 170 crore in 2024 terms. Treat that as a rough estimate, since the figure depends on the inflation measure used.

What were the code words?

As quoted in a 2024 book review, the courier was to say ‘Bangladesh ka babu’ and Malhotra to reply ‘Bar-at-law’. The Delhi High Court judgment records only that code words were exchanged.

How fast was Nagarwala convicted?

On 27 May 1971, three days after the offence. He made a confessional statement, was charged, pleaded guilty and was sentenced the same day. He is widely reported to have received four years.

Was the first conviction upheld?

No. On appeal the conviction and sentence were set aside and the case was sent back for a fresh trial before an Additional Chief Judicial Magistrate. Fresh charges were framed on 9 August 1971.

Did Nagarwala ever face a final verdict?

No. The retrial was unfinished when he died in custody in March 1972, so there was no completed trial after the remand.

When did Nagarwala die?

Business Standard reports 22 March 1972, his fiftieth birthday; some accounts say 2 March. The cause was a cardiac infarction, according to the reports, and the Reddy Commission found no reason to suspect foul play.

Who was D.K. Kashyap?

The police officer who led the investigation. He died in a road accident in November 1971. I found no official finding that the accident was anything other than an accident.

What did the Delhi High Court say on 24 November 1971?

It dismissed Nagarwala’s plea to make Malhotra a co-accused, but noted that the police had completed Nagarwala’s investigation in three days while Malhotra’s was incomplete after about six months, and said the police showed no similar diligence.

Why did Malhotra’s role raise questions?

He took Rs 60 lakh out of the bank on a phone call without a voucher, and police arrested him a few days after Nagarwala on the bank’s first report. The High Court said his conduct showed no dishonesty, though he may have broken bank rules.

What was the Reddy Commission?

A commission of inquiry headed by retired Supreme Court judge P. Jaganmohan Reddy, appointed after the Janata government took office in 1977. Its report of about 820 pages was submitted in 1978.

What did the Reddy Commission find?

It faulted the police, the court proceedings and the bank, found no evidence that the money belonged to Indira Gandhi, said Nagarwala could not mimic anyone, and held his confession should have been rejected. It did not establish who was behind the call.

Did Indira Gandhi make the call?

No court or commission has found so. The Reddy Commission found no evidence the money was hers, and she told the commission she had nothing to do with it and knew none of the persons involved.

Could Nagarwala really imitate the Prime Minister?

The Reddy Commission was of the view that Nagarwala could not mimic anyone, which is at odds with the original police theory. The question of whose voice was on the line remains unresolved.

Was the money for Bangladesh?

That was what the caller said. No inquiry has shown it was true. Some writers suggest it was a covert fund tied to the 1971 war; others point to other explanations. These are theories, not findings.

Was Nagarwala’s confession reliable?

The Reddy Commission said it should have been rejected and was unsubstantiated by any evidence. The speed of the proceedings was criticised by courts and commentators.

Why is the Nagarwala case still discussed?

Because of the oddities: a huge payment on a verbal order, a conviction within three days, two deaths within months, and an inquiry that criticised many parties but did not say who made the call or why.

Is there a book on the Nagarwala case?

Yes. ‘The Scam That Shook a Nation: The Nagarwala Scandal’ by Rasheed Kidwai and Prakash Patra, published by HarperCollins in 2024, draws on the Reddy Commission report and National Archives files. Reviewers differ on its value.

⚠️ Editorial Note

This case involves public figures, including a former Prime Minister. Court findings and the commission’s conclusions are kept apart from theories, which are labelled as unproved. Some details, including Nagarwala’s exact date of death, the sentence length and Kashyap’s date of death, differ by source and are flagged. Information current as of 5 November 2026.

Sources & Further Reading

Sources & further reading

Every dated entry above was checked against these references. Last reviewed 5 November 2026.