The Hyderabad Treasury Frauds (1890–1891)
Jaya Rao · Afzul Husain · Political Scandal · "Justice in Hyderabad is a Toss-Up"
The Hyderabad Treasury Frauds (1890–1891) was a major financial and political scandal that revealed deep-seated corruption in the Nizam's administration and was allegedly used as a weapon to ruin political opponents. The story unfolded in two distinct cases that exposed the "chronic maladministration" of the state and a judicial system where justice was often a "toss-up."
The scandal highlighted how the "party in power" could use the machinery of the state to persecute those who were "obnoxious" to them. A well-known barrister who had practice in the Hyderabad Courts famously stated: "It is a well-known fact that Justice in Hyderabad is a toss-up, and the Judges are all more or less partizans of the Government."
The scandal began when it was discovered that a lowly-paid mutsaddhi (clerk) in the Accountant General's office had systematically embezzled over Rs. 30,000 over the course of seven years.
The Method: The clerk took advantage of a lack of oversight, obtaining the signatures of the Assistant Accountant General and others on fraudulent requisitions. The sources note that high-ranking officials were in the habit of signing cheques "blind-folded" — without proper scrutiny of what they were signing.
The Accountant General's Office: One contemporary letter described the office as "one of the worst managed offices in the State — not one man therein has his duties defined but depends for work solely on the discretion of the Accountant General."
Jaya Rao, then the Deputy Accountant General, was the chief accused in this initial case. The case was disposed of by Mr. Afzul Husain, the Senior Puisne Judge of the Hyderabad Adawlat-ai-Aliya.
Despite arguments that the Treasury (the bank) had failed in its duty to verify endorsements on cheques, Judge Afzul Husain sentenced Jaya Rao to 10 years of rigorous imprisonment and a fine of Rs. 5,000.
The letter writer criticized the judgment severely: "This is the man who sat in judgment over Jaya Rao, once Deputy Accountant-General and sentenced him to 10 years' rigorous imprisonment and a fine of Rs. 5,000 and who sits in judgment over such men as the Nawab Imad Nawaz Jung and the Rajah Srinivas Rao, to award — God knows! — what punishment."
"What then were the steps taken by the Treasury to assure itself that the endorsements on the reverse of the fictitious cheques were genuine? The failure to ascertain the genuineness or otherwise of the cheques means connivance, collusion or culpable neglect of duty."
No Action Against Treasury Officials: The letter noted that no attempt had been made to make the Treasury Officer or his office people account for the failure. The reason given was that Munaver Khan, then Treasury Officer and later Officiating Accountant-General, was "a favourite of the Minister" and stood next only to the Nawab Intesar Jung. "A potent reason to be sure; and this is labelled Justice in Hyderabad," the writer remarked bitterly.
Jaya Rao's conviction was later viewed as a miscarriage of justice. On appeal, the well-known barrister Mr. Norton secured Jaya Rao's acquittal, with the High Court reversing the lower court's sentence. This reversal further highlighted the flaws in Judge Afzul Husain's original judgment.
As the first inquiry proceeded, a second, more sensational case emerged, involving high-ranking noblemen and officials including Nawab Imad Nawaz Jung (Hassan Bin Abdulla) and Rajah Srinivas Rao.
The "Discovery": The fraud was "discovered" by Munaver Khan, a favorite of the Minister who was subsequently promoted to Officiating Accountant General. He initially alleged that frauds totaling 7.5 lakhs of H.S. Rupees had been committed.
Grant of Pardon to Dilwar Nawaz Jung: In this case, Dilwar Nawaz Jung, the principal offender, was granted pardon by the Government. The letter writer questioned the nature of this pardon: "Whether the pardon secures to him immunity from punishment only, or immunity from punishment as well as the right to keep unto himself the 4,50,000 Hali Sicca rupees due from him to Government, those who were instrumental in the granting of the pardon alone could say."
The writer further alleged: "If the pardon has for its object the providing against Dilwar Nawaz Jung's being punished as well as parting with the money, then it would mean that that man who profitted by the frauds has been bribed to incriminate others."
The accused argued that no actual fraud had occurred. They explained that funds for the maintenance of troops under Alum Ali Khan had been paid from district treasuries but were accidentally over-deducted from central accounts; while errors were made, no money was missing. The defense eventually termed the entire prosecution a "mare's nest" — a discovery that turns out to be illusory.
Munaver Khan's Request for Remuneration: Munaver Khan even wrote to the government asking to be "remunerated" for his "victory" over these rivals, further revealing the personal motives behind the prosecution.
Systematic Omission of the Treasurer's Name: The letter writer noted the "systematic omission of the then treasurer's name from the list of the accused in this as well as the first case in connection with the frauds" — a fact that caused "not a little surprise in knowing circles here."
The second case eventually fell apart due to a lack of evidence. The government engaged Mr. Badrudeen Tyabji of the Bombay Bar as the prosecutor. After studying the evidence, Tyabji reportedly informed the government there was no case against the accused.
In September 1891, the government finally withdrew the criminal suit against Jaya Rao and others in connection with the second case. However, departmental inquiries continued to harass the officials for some time.
The Commission Appointed: The Government, influenced by public opinion, appointed a commission to try the accused instead of committing them to the "tender mercies" of Afzul Hussain. The letter writer sarcastically noted: "On what principle the self-same Afzul Hussain has been nominated President of the commission, God only knows."
The Hyderabad Record reproduced the letter on the Treasury frauds in its issue of November 24, 1890. The letter writer noted that the paper reserved its remarks on the case for a future occasion as it "was still sub-judice."
Government Pressure on the Press: The writer revealed that a threat had been held out to the former proprietors of the Record in a confidential letter from the Home Secretary to withhold all Government patronage in the shape of job-work. This was on the occasion of the publication of a paragraph to the effect that Mushtak Hussain was more anxious to add a few ciphers to his own salary than to do justice by the living representative of an old illustrious Hindu family.
The Safeeri Dekhan published a translation of the letter, and for this, the Editor was "severely rated by one of the smaller fry of the present Government at the race stand."
The Deccan Standard, the government organ, attempted a reply but "only tended to expose the extreme weakness of the cause it essayed to advocate."
The letter writer contrasted the local press with the Hindu published hundreds of miles away from Hyderabad, which "evinces greater interest in its affairs and the welfare of the Hyderabadees than the papers in the place" — a "curious commentary upon the way in which the local Journalists discharge their 'solemn trust.'"
The local papers were full of a horrible murder committed in the city. A native Christian woman (a Mahomedan convert) was, in the absence of her husband, decoyed into an out-of-the-way part of the city on Saturday evening last, and there, stripped of the valuables about her person, was inhumanly tortured to death.
The Mangled Heap: The mangled heap was carefully packed up in a box and sent the next day to the Hyderabad Goods Shed to be booked to Lahore as a consignment of wearing apparel. The booking office being closed — it being a Sunday — the box was taken back to the city, but it was brought to the Goods Shed on Monday, the 8th instant, and was duly booked.
A receipt being granted therefor, the consignee, by name Abool Hoossain, walked away without in the least betraying himself. Hours passed and the murderous deed remained unsuspected until the stench sent forth by the dead body in an advanced state of decomposition attracted attention.
The Discovery: Then the City Kotwal and others were sent for, and in their presence the box was opened and the mutilated corpse was pulled out of a gunny bag in which it had been tied up to unfold its frightful tale.
The Arrests: Those concerned in the murder, including the man who presented the package at the Goods Shed to be booked to Lahore, have — thanks to the energy of the City Kotwal — since been apprehended.
The Connection to the Treasury Frauds: The chief actor of this blood-curdling tragedy is said to be a pleader related to the person who acted as crown-prosecutor in the first of the Treasury frauds cases.
The Treasury Frauds are cited as a prime example of "chronic maladministration" and a judicial system where justice was often a "toss-up." The scandal highlighted how the "party in power" could use the machinery of the state to persecute those who were "obnoxious" to them.
Key takeaways from the scandal:
- Judicial Bias: Judge Afzul Husain was accused of misinterpreting evidence, indulging in gratuitous reflections on witnesses, and allowing prejudice to influence his judgment.
- Selective Prosecution: The Treasury Officer, a favorite of the Minister, was systematically omitted from the list of accused in both cases.
- Political Motivation: The prosecution was allegedly orchestrated to destroy political rivals, with Munaver Khan seeking "remuneration" for his victory.
- Suppression of Evidence: In the Tirumal Rao case, crucial documents were ignored in the précis to justify confiscation.
- Press Intimidation: The government used threats of withholding patronage to pressure newspapers.
- Bravery of Individuals: The Jamedar who refused to give false testimony ("my honor is my own") and Tirumal Rao who managed to appeal directly to the Nizam demonstrated that individuals could resist the system.
- Jaya Rao: Deputy Accountant General; chief accused in first case; sentenced to 10 years rigorous imprisonment and Rs. 5,000 fine; later acquitted on appeal by Barrister Norton.
- Judge Afzul Husain: Senior Puisne Judge of the Hyderabad Adawlat-ai-Aliya; presided over both cases; accused of misinterpreting evidence and judicial bias.
- Munaver Khan: Treasury Officer later promoted to Officiating Accountant General; favorite of the Minister; "discovered" the frauds and sought remuneration for his "victory."
- Nawab Imad Nawaz Jung (Hassan Bin Abdulla): Accused in the second case; had the courage to state publicly that administration of justice in Hyderabad Courts was "a farce."
- Rajah Srinivas Rao: Accused in the second case.
- Dilwar Nawaz Jung: Principal offender in second case; granted pardon by Government.
- Mushtak Hussain (Vicar-ul-Mulk): Minister de facto; signed the précis in Tirumal Rao case; accused of protecting his proteges.
- Mr. Norton: Well-known barrister who secured Jaya Rao's acquittal on appeal.
- Mr. Badrudeen Tyabji: Prosecutor engaged by Government; reportedly found no case against the accused.
- Tirumal Rao: Former clerk whose Muktas and Rasoons were confiscated; appealed directly to Nizam and got his property restored.
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