A Barrister,An Official Receiver And The Chief Justice-The Curious Tale Of Khwaja Nazir Ahmad

Sharath Chandran

6 May 2020 5:59 AM GMT

  • A Barrister,An Official Receiver And The Chief Justice-The Curious Tale Of Khwaja Nazir Ahmad

    On 17th October 1944, the Privy Council tendered its advice to the King on an appeal filed by the then Punjab Government against an order of the High Court of Lahore interdicting a police investigation in exercise of its inherent power under Section 561-A of the Code of Criminal Procedure, 1898. Allowing the appeal, the Board, in an oft quoted passage, reasoned that it is "of the...

    On 17th October 1944, the Privy Council tendered its advice to the King on an appeal filed by the then Punjab Government against an order of the High Court of Lahore interdicting a police investigation in exercise of its inherent power under Section 561-A of the Code of Criminal Procedure, 1898. Allowing the appeal, the Board, in an oft quoted passage, reasoned that it is "of the utmost importance that the judiciary should not interfere with the police in matters which are within their province and into which the law imposes upon them the duty of enquiry.[1]" This statement of the Privy Council has now become a formulaic mantra for law students, academics, lawyers and judges on the inherent powers of a High Court to interdict criminal investigations.

    It is, however, unfortunate that so little is known about the importance of this case vis-à-vis the clash between the High Court, the Magistracy, and police, and the parts played by its key dramatis personae in the making of this legal classic. In a sense, this piece is a flashback to a bygone era to re-examine the story of Nazir Ahmad and the stormy events of 1941-42 that eventually culminated in the undoing of the Lahore High Court Chief Justice Sir John Douglas Young.


    In the pre-independence era, Lahore (then a part of British India), a graceful and cultured city, was the intellectual capital of the then Punjab province with a sizeable Hindu and Sikh population. Lala Harkishen Lal, an industrialist, entrepreneur and politician, who in his heydays was popularly alluded to as the Napoleon of Finance[2], was the co-founder of the Punjab National Bank and the Bharat Insurance Company Limited (whose historic yet ruined branch office building lies at the heart of Mount Road in Chennai even today). In 1925, the Lala had founded the Peoples Bank of Northern India which was inaugurated by the Maharajah of Patiala amidst great pomp and splendour[3]. However, by the early 1930's the Lala's fortunes began to wane. Insolvency proceedings were commenced against him in 1932 and in due course he was adjudicated insolvent. Fortunately for the Lala, the order was overturned by the High Court[4]. This success was, however, short lived. The People's Bank soon floundered, and threat of winding up proceedings loomed large. To add to the Lala's ire, his eldest son Kanhaiya Lal Gauba (Gauba) had converted to Islam much against his wishes in 1933[5]. Gauba was a Barrister practicing in the Lahore High Court and was a controversial yet highly successful author.

    In early 1934 Sir Shadi Lal, the distinguished and highly respected Chief Justice of the Lahore High Court, retired. Overlooking the claims of the then senior-most Barrister judge Mr. Justice Dalip Singh, the then Government of the day superseded him and nominated Mr. Justice Douglas Young, a former middle weight boxing champion of England and a puisne judge of the Allahabad High Court, to take the place of Sir Shadi Lal. Justice Young had been appointed to the Allahabad High Court in 1928. He had gained a reputation of assiduously handling "company promoters" and "sedition-mongers". By April 1934, the "new proconsul had been installed on the seat of the Ceasars.[6]"

    In early 1935, a petition for winding up the People's Bank was heard by a bench of Young C.J, Addison and Tek Chand, JJ[7]. The Bench admitted the petition observing that the Lala had fabricated a compromise agreement deliberately for the purpose of deceiving the Court, and the creditors and shareholders of the Bank. More trouble followed. In early 1936, the Lala suffered a series of orders hauling him up for contempt. The charge was that the Lala had defied orders of injunction and received monies from third party creditors. In a complete shocker the Lahore High Court sentenced the Lala to an indefinite term of imprisonment. The Lala applied to have these orders reviewed on the ground that an indefinite sentence of imprisonment for contempt was patently illegal. A Full Bench of Young C.J, Monroe and Din Mohammad, JJ dismissed these applications observing that the power of the High Court, as a Court of Record, was not fettered by the provisions of the Contempt of Court Act, 1926, and that in the circumstances, the sentence of an indefinite term of imprisonment was quite in order[8].

    There can be little doubt that the order of the Full Bench was plainly illegal in the teeth of Section 3 of the Contempt of Courts Act, 1926 which prescribed a maximum punishment of six months. The case caused such a furore that Act XII of 1937 was brought into force in March 1937 amending the Contempt of Courts Act,1926 by inserting a proviso to Section 3 to explicitly set out that a High Court had no power to sentence a contemnor to a term exceeding six months.


    Pursuant to the winding up of the People's Bank, Young C.J appointed one Bhagwati Shankar, an Advocate of the Allahabad High Court, as its Official Liquidator[9]. It appears that this Bhagwati Shankar was an acquaintance of Chief Justice Young from his Allahabad days[10], and had been "imported" to Lahore at the instance of the Chief Justice. Soon thereafter, by March 1936, Lala Harkishen Lal had been adjudged insolvent once again and one Khwaja Nazir Ahmad was appointed the Receiver of the vast estates of the Lala running into crores of rupees[11].

    The Khwaja soon came to enjoy the patronage of the Chief Justice and was made the Receiver of the properties of the Tribune newspaper. In June 1936, the Khwaja was elevated to the status of a "Special Official Receiver" under the Provincial Insolvency Act for the provinces of Punjab and Delhi. In time, the Khwaja came to head the "liquidation department" in the High Court. At the time of his appointment the Khwaja was appointed on a monthly salary of Rs 1000, a handsome figure in those days. In March 1937, the Chief Justice revised the terms vide an ex-parte order and authorized the Khwaja to draw 5 % of the net estate plus 2.5 % administrative charges, and that too with retrospective effect. Overnight, the Khwaja came into possession of fabulous sums of money!! Around the time of his appointment the Khwaja was a partner in a firm called Lulla and Co, a small time firm dealing with pencils and inks. With the Khwaja appointed as Special Receiver, his other partner Thakur Faqir Singh was appointed Court Auctioneer, and Lulla and Co soon went from a "bankrupt purveyor of inks and pencils" to "one of the most prosperous and flourishing businesses in the City of Lahore[12]."

    In his autobiography "Looking Back", former Chief Justice of India Mehr Chand Mahajan, who practiced in the Lahore High Court at that time, describes the Khwaja as "a lawyer of not much standing[13]" who boasted that "he could get from Sir Douglas whatever orders he liked at any time of the day or night[14]". Justice Mahajan adds that the Khwaja's interference was so patent that he started interfering with transfers of judges in the subordinate judiciary. When a District Judge refused to acknowledge his authority, he promptly used his influence and had him suspended[15]. Justice Mahajan adds " A reign of terror now began in the judicial administration of the Punjab. The reputation of the Lahore High Court had reached a very low ebb[16]."

    Justice Mahajan recalls that Young C.J, on the other hand, teamed up with Justice Monroe (who shared the views and ideas of the Chief Justice) and withdrew liquidation work from all other judges in the Lahore High Court. He adds that Justice Addision, and the Indian judges led by Sir Tek Chand soon began to protest against the arbitrariness of Young, CJ in liquidation matters[17].

    In March 1937, Young C.J had the term of Nazir Ahmed extended by a period of 4 years despite the fact that the outgoing Government had merely 4 days in office. Scandal after scandal followed. The Khwaja liquidated the estate of one Fazal Elahi and sold some of the estate to two of his friends. When the wife of Fazal Elahi challenged the sale, he threatened her with contempt and got her to withdraw the suit[18]. There were debates in the Punjab Legislative Assembly about the large commissions received by Nazir Ahmad and that a "big personage" had a share in this booty.[19] Despite all of this, the Chief Justice recommended Nazir Ahmed for judgeship. This literally brought the roof down. Justice Abdul Rashid and Justice Din Mohammad put their foot down and the proposal was fortunately stalled[20]. In the midst of all this Gauba, whose family had been reduced to penury on account of the Court sanctioned excesses of the Khwaja decided to set the cat amongst the pigeons. The stage was set for a showdown between the Khwaja and his old nemesis Gauba.


    On 8th August 1941, Gauba presented a complaint to the District Magistrate Mr. Henderson alleging, inter alia, that the activities of the Khwaja had become a "province wide scandal" and proceeded to set out 17 transactions where the Khwaja had abused his power. Gauba also enclosed the affidavit of his client one Md. Saleh, a friend of the Khwaja, which set out the details of abetment of various offences by public servants acting hand in glove with the Khwaja. Gauba also alleged that in the Fazal Elahi estate matter the Khwaja had blackmailed Begum Fazal Elahi to withdraw proceedings challenging the sale effected by the Khwaja.

    The Magistrate recorded the statement of Gauba and proceeded to direct the police to investigate the matter under Section 202 Cr.P.C. The Khwaja, who was no small fry and had friends in high places, sensed that trouble was brewing and quickly slipped away to Manali where the Chief Justice was holidaying. On 27th August 1941, acting on the orders of the Magistrate the police raided the office of the Khwaja and retrieved valuable papers relating to the land sales. An urgent wire was sent to the Khwaja, care of the Chief Justice at Manali, by his uncle Abdul Haq. On the night of 28th August 1941, the Magistrate received a telegram from Manali which reads as under

    "District Magistrate : Lahore

    Re: Khwaja Nazir Ahmed I order you to stop all proceedings until further orders from me and to return all records immediately which have been taken by the police, as they are required in the High Court. Wiring –

    Chief Justice[21]"

    The next morning, the District Magistrate passed the following order

    "As I have no power to revise my own order, I presume that the telegram is a judicial order of the Hon'ble Chief Justice quashing my order under Section 202 Cr.P.C.[22]"

    The other consequence was that the police returned the files, but not before they had made copies notes and taken statements from the Begum Fazal Ali. The telegram of the Chief Justice was followed by a telegram of the Registrar of the Lahore High Court indicating that the case would be heard by the Chief Justice himself upon his return from Manali. Gauba's client Md. Saleh proceeded to lodge a two complaints with the police. Two cases under Section 420 and 409 IPC were registered against the Khwaja followed by a second raid of the office of the Special Official Receiver. A distraught Khwaja rushed to the High Court and had the FIR's stayed by the vacation bench[23]. Gauba challenged the order of the District Magistrate terminating proceedings alleging that the Chief Justice had no power to pass any orders while vacationing in Manali especially in view of the fact that a bench of Abdul Rashid and Beckett, JJ were already holding Court as vacation judges[24].

    Strangely, despite the fact that the Magistrate had terminated the proceedings, the Khwaja filed a revision challenging the order passed by the Magistrate under Section 202 Cr.P.C. The Sessions Judge, D. Falshaw (later Mr. Justice Falshaw) adjourned Gauba's revision holding that he could not sit in judgment over the orders of the Chief Justice. He then made a reference to the High Court on the question of whether the Magistrate could order an investigation under Section 202 Cr.P.C against the Khwaja without prior sanction under Section 197 Cr.P.C[25].

    In the meantime, Young, CJ had descended from the rarefied hills of Manali and was actively negotiating with the Punjab Government for the extension of Nazir Ahmed's tenure which was to expire in 1941. Young , CJ must have sensed that in hearing the case arising out of the District Magistrate's order he would, in effect, be sitting in appeal over his own order. Good sense appears to have prevailed and all the cases relating to the Khwaja were ordered to be listed before a bench of Blacker and Sale, JJ.

    Before the Division Bench Gauba contended that the Khwaja wanted the High Court to adopt a procedure unknown to the criminal law. He added that the Khwaja wanted the High Court to adjudicate the evidence before it was led, and had gone to the extent of claiming that the documents in his possession were privileged and were not open for the inspection of the police. Most notably, added Gauba, the Khwaja was appointed as the Special Official Receiver in every instance by an order of the High Court and not by virtue of his office. Referring to his complaint before the Magistrate, Gauba added that there was a specific allegation that the Khwaja was taking bribes and also that in the blackmail case concerning Mrs. Fazal Elahi, a case under Section 506 IPC was clearly made out on a reading of the compliant[26].

    The learned judges then summoned a report from the Magistrate Henderson who promptly pointed out that he was in possession of a file regarding the sale of Multan lands, belonging to Lala Harkishen Lal, by the Khwaja. The Khwaja, despite a valuation of Rs 45,000 by the Collector, sold the property by a private treaty to one Habib Kordad Khan for a pittance of Rs 4275. This statement of the District Magistrate was read out in open Court by the Public Prosecutor Mr. Raja Kishen. One would have expected that this was the last nail in the Khwaja's coffin[27].

    The Division Bench delivered its judgment on 24th October 1941 allowing the petition of the Khwaja setting aside the order of the Magistrate under Section 202 Cr.P.C and dismissing Gauba'a complaint on the ground that the Magistrate had no jurisdiction to proceed in view of the bar under Section 197 Cr.P.C . The Division Bench also quashed the FIR's registered by the police at the instance of Md. Saleh. Delivering the judgment of the Bench Sale, J held

    "We've been invited by Khwaja Nazir Ahmed to use are inherent power under Section 561-A to quash the police investigation into Mohammed Saleh's first information report. This prayer raises a difficult point of law, viz. whether the High Court has any powers under Section 561-A or any other provision of law to interfere with a police investigation. It is clear that the only section that might be invoked for this purpose is Section 561-A. We find it unnecessary for the purposes of this case to decide either the broad question whether the police investigation is 'a process of the court' for the purposes of Section 561-A Cr.P.C or the question whether the police are barred as contended by Mr. Anand, from investigating an offence, of which a Magistrate is precluded from taking cognizance by virtue of Section 197 Cr.P.C not do we propose to extend the use of Section 561-A beyond its proper purpose of saving such inherent powers as the Court already possesses. All that is necessary is to consider whether these inherent powers can and should be invoked in the peculiar circumstances of the present case.[28]"

    In other words, the learned judges appear to have begged the question by quashing proceedings invoking Section 561-A Cr.P.C without deciding whether they had the jurisdiction to do so in the first place !! Interestingly, the proceedings and the final order of the Lahore High Court will not be found in any official law report. The order was marked "not approved for reporting", with the result that the full text of the judgment was strangely printed in a newspaper "The Civil and Military Gazette" on 25th October, 1941.

    The Punjab Government decided to petition the Privy Council against the orders quashing the FIR registered at the instance of Saleh. No appeal was preferred against Gauba's petition which had been dismissed on the ground that no sanction under Section 197 Cr.P.C had been accorded[29]. Leave to appeal was granted but the case was, unfortunately, not heard until October 1944. In the meantime, the immediate outcome of the Khwaja case was a head on clash between Gauba and Chief Justice Young.


    Commenting on the state of affairs in the Lahore High Court in 1941, Gauba says "vast estates had disappeared; eminent personages had bitten the dust of humiliation; whispers were loudest and fear rampant[30]." For Gauba it was a personal loss as well. Young C.J had started a crusade against his father Lala Harkishen Lal and presided over the liquidation of the Bank headed by his father. The Lala eventually died a pauper. Gauba's brother J.L Gauba had also been dispatched to prison. Gauba followed suit, and when released faced the threat of insolvency. He warded off proceedings for two years and was finally adjudicated insolvent by a Special bench appointed by the Chief Justice. For Gauba "it could not have been worse than this". He, therefore decided to pull a few unorthodox punches on the middle weight champion of England.

    "The New Magna Carta" was written by Gauba in the summer of 1941. It was his dossier on the state of affairs in the Lahore High Court under the regime of Sir Douglas Young. The book was never officially published and was proscribed by the Government of Punjab as it scandalized the learned judges of the High Court. Gauba dispatched a copy to the King enclosing a covering note and a petition to the King-in-council, praying for an enquiry into the matters stated therein[31]. Turning to the conduct of Young C.J, Gauba states

    "If Sir Douglas Young has acted judicially and bona fide in giving sanctions and approvals to Khwaja Nazir Ahmed's palpably dishonest transactions how did the High Court call for protection? What objection could there be to the police investigating the affairs of a dishonest receiver? Is there no Magistrate or Sessions Judge in the entire province good or honest enough to take a judicial view of the Special Receiver's acts? And if Khwaja Nazir Ahmed and his gang went to jail, how would the reputation of Sir Douglas Young be affected, except that the Chief Justice may be sympathized with for having put so much misplaced trust in them? On the other hand, so long as Sir Douglas Young stands in the way of the ordinary processes of the law and the due course of justice, it will unfortunately be suspected that he affords them the protection of his high office, not because the dignity of the High Court is concerned, for the dignity of the Court would be better served without such men, but because he is himself one of them.[32]"

    The New Magna Carta was the last straw. On 2nd February 1942, the Chief Justice dispatched a short order which ran thus

    'In Re: K.L Gauba

    Issue notice for Contempt of Court for 16th Feb


    The Chief Justice constituted a Full bench comprising of himself, Justice Munroe and Justice Mohammed Munir. Gauba was not told the charge against him nor was he permitted to lead evidence to justify the facts set out in the book. The conclusion was a foregone one. Gauba refused to apologize and was sentenced to six months imprisonment[34]. The judgment in Re K.L Gauba[35] offers a stellar example of self-vindication through the judicial process. By refuting factual allegations concerning themselves, the judgments caused greater damage to the learned judges than the book had. In an unprecedented move the Punjab Legislature passed a resolution condemning the decision and setting out that judges who claim to be scandalized ought not to have sat to hear the contempt for that would be akin to sitting in judgment over their own cause[36]. The trial and sentence of Gauba proved to be the undoing of Chief Justice Young.

    Gauba unsuccessfully appealed to the Privy Council. While declining to grant leave, the Board, it is understood, is said to have directed that the matters complained of in the book warranted an enquiry. This strengthened the hands of the viceroy Lord Linlithgow who promptly sent for the Chief Justice and told him that he must either face an enquiry or resign. There is some ambiguity over the resignation of Young, CJ. In a recent book T.C.S Raghavan[37] corroborates Gauba's version that Young, CJ resigned. But the official notification of 1942 appears to show that he retired. [38] In any event, the British Government had decided to put its house in order. The Crown transferred Chief Justice Arthur Trevor Harries, a respected and much liked Chief Justice of the Patna High Court and appointed him as the Chief Justice of the Lahore High Court[39].

    In the meantime, the appeal filed by the Punjab Government against the quashing of FIR's lodged at the instance of Saleh was heard by the Privy Council in October 1944. The Privy Council quashed the orders of the High Court, and directed investigation to proceed.

    The Khwaja was eventually charge sheeted, found guilty and sentenced to 20 years rigorous imprisonment by the Special Magistrate A.A. Williams I.C.S. His appeal to the High Court was eventually allowed by Harries C.J and Abdul Rehman, J giving him the benefit of doubt since the transactions had the sanction of Young C.J and Monroe, J[40]. Chief Justice Young left "unwept and unmourned"; no address was given to him by the Bar, nor was a farewell held in his honor[41]. After partition, Gauba migrated to Bombay and continued his law practice. He was once again hauled up for contempt by Gajendragadkar and Vyas, JJ and temporarily suspended from practice[42]. He resumed practice, and continued writing. But his eccentric ways finally caught up with him. When he died, Kushwant Singh, a fellow citizen from Lahore, wrote "Fifty years ago, K.L. Gauba's cortege would have been followed by half the city of Lahore; last week he did not have a dozen to mourn his departure.[43]"

    The Khwaja case presents a powerful illustration of Lord Acton's axiom that all power corrupts and absolute power corrupts absolutely. Its judicial manifestation is explained by Gauba in a timeless passage which reads as under

    "Of all forms of excess or oppression, the judicial species is the worst, for it has the semblance of legality without the candour of executive need or dictatorial authority. Excess or oppression by an inferior court is open to correction and remedy, but such transgression by a superior court strikes at the very foundation of that confidence upon which the edifice of Justice stands. No words and no intriguing formulae declared to justify illegal or high-handed acts can carry the conviction, or the authority, that justice is being dispensed and law conscientiously interpreted.[44]"

    Views Are Personal Only
    (Author is practicing Lawyer at Madras High Court)

    [1] The Emperor v Khawaja Nazir Ahmad; AIR 1945 PC 18

    [2] K.L Gauba, The Rebel Minister, Premier Publishing House, Lahore, 1938, page 38

    [3] Ibid at page 139

    [4] Harkishen Lal v Peoples Bank of Northern India Ltd, Lahore, AIR 1932 Lahore 643

    [5] Gauba (1938) at page 186

    [6] Ibid at page 194

    [7] Madan Gopal v The Peoples Bank of Northern India, AIR 1935 Lahore 779

    [8] Crown v Lala Harkishen Lal, AIR 1937 Lahore 497

    [9] In Re: Bhagwati Shankar , AIR 1944 12 ITR 193

    [10] See Dehra Dun Mussorie Electric Tramway Co, AIR 1934 All 189

    [11] K.L Gauba, Battles at the Bar, N.M Tripathi, Bombay, 1956, at page 130

    [12] Ibid at pages 132-134

    [13] Mehr Chand Mahajan, Looking Back, Asia Publishing House, 1963, pg 88

    [14] Id

    [15] Ibid at page 89

    [16] Id

    [17] Id

    [18] Gauba (1956) at page 134, 137-38

    [19] Id page 134

    [20] Id page 135-136

    [21] Id at page 138. Also referred to in passing in AIR 1945 PC 18

    [22] Id

    [23] AIR 1945 PC 18; ILR 1945 26 Lahore Page 1 at page 6

    [24] Gauba, Battles at the Bar, page 139; ILR 1945 26 Lahore Page 1 at page

    [25] Id at page 140, See also; Emperor v Khwaja (PC); ILR 1945 26 Lahore Page 1 at page 5

    [26] Gauba (1956), at page 149

    [27] Id at page 161

    [28] Id at page 162

    [29] ILR 1945 26 Lahore Page 1 at page 8

    [30] Gauba (1956), at page 168

    [31] Id page 170-171

    [32] Id at page 173-174

    [33] Id at page 177

    [34] Id page 191

    [35] AIR 1942 Lahore 105 (FB)

    [36] Gauba (1956) at page 208

    [37] T.C.S. Raghavan, The People Next Door : The Curious History of India's Relations with Pakistan, Hurst and Co, 2019, at page 28

    [39] Id at page 209

    [40] Gauba (1956), at page 166

    [41] Mahajan (1963), page

    [42] In Re: Gauba; AIR 1954 Bombay 478

    [43] Singh, Khushwant; Singh, Rohini (1992). Sex, scotch & scholarship. UBS Publishers' Distributors Ltd. pp. 79–81

    [44] Gauba (1956) at page 172

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