It was the media that first hinted there might be a scam involving the sale of shares to LIC.
Feroz Gandhi sourced the confidential correspondence between the then Finance Minister T.T. Krishnamachari and his principal finance secretary, and raised a question in Parliament on the sale of 'fraudulent' shares to LIC by a Calcutta-based Marwari businessman named Haridas Mundhra.
The then Prime Minister, Jawaharlal Nehru, set up a one-man commission headed by Justice MC Chagla to investigate the matter when it became evident that there was a prima facie case. Chagla concluded that Mundhra had sold fictitious shares to LIC, thereby defrauding the insurance behemoth to the tune of Rs. 1.25 crore.
Mundhra was sentenced to 22 years in prison. The scam also forced the resignation of T.T.Krishnamachari.