Today, I am writing about the first major scam involving members of Indira Gandhi’s family, which was then known as the Maruti Scam.
On 16th November 1970, a company was formed known as Maruti Technical Services Pvt Ltd. (MTSPL). The promoters of this company were Sanjay Gandhi & Sonia Gandhi. The Company was set up to provide technical know-how for the design, manufacture and assembly of a wholly indigenous car. The Articles of Association of MTSPL named Sanjay & Sonia Gandhi as the first & permanent directors, with share capital of 20 shares of Rs 10 each held between them. That means the paid-up capital of the company was only Rs 200 at the time of formation.
Afterwards MTSPL enters into agreement with Sanjay Gandhi (who owned 50% of MTSPL), under this agreement Sanjay Gandhi will supply company the know how for manufacturing car in India for a fees of Rs 3 lacs. Subsequently MTSPL issues 1500 shares of 10 each to Sanjay Gandhi.
Immediately after this in June 1971, another company Maruti Ltd was launched, incorporated under Companies Act with Sanjay Gandhi as MD, This company will avail know how from MTSPL to manufacture cars.
Friends, see this :
–MTSPL is formed to provide technical know how to provide technical know how to manufacture indigenous cars. Sanjay Gandhi is one of the directors.
–Now MTSPL signs an agreement with Sanjay Gandhi who will supply the know how for manufacturing cars.
–Sanjay Gandhi is Managing Director of Maruti Ltd, who will manufacture car in India with the technical know how supplied by MTSPL.
So Sanjay Gandhi will provide technical know how to the company, where he is one of the director, and this company will provide the same technical to know how to a company, where Sanjay Gandhi is MD, to manufacture cars in India.
In June 1972, MTSPL entered into agreement with Maruti Ltd, by which Maruti Ltd will pay Rs 5 lacs to MTSPL for providing the know how. MTSPL is also entitled to technical fees of 2% of net sales of motor cars. Six week later Maruti Ltd pays Rs 5 lacs to MTSPL, and who in turn pay Sanjay Gandhi Rs 3 Lacs in order to purchase know how.
After a year or so, Sonia Gandhi is appointed MD of MTSPL for 5 years, with a salary of Rs 2,000 pm plus one percent commission on the net profits, plus perquisites. She is also allotted 2000 equity shares of 10 each, in two share certificates of 1900 and 100 shares each. Also 4000 shares each were allotted in the names of Priyanka Gandhi & Rahul Gandhi( both minors at that time).
Even more surprising and fascinating was the decision to launch one more company by Gandhi family to manufacture Road Rollers. This company Maruti Heavy Vehicles Pvt Ltd was launched with Sonia Gandhi as managing Director. This company had many share holders but controlling interests were with Gandhi family.
In April 1975,this company MHVPL also enters into agreement with MTSPL for providing know how for manufacturing Road Rollers, as per agreement the MHVPL pay MTSPL agreed fees and 2% of net sales of Road Rollers and Spare parts.
These things mainly happened discretely in the beginning and the later period happened to be Emergency. But after the Emergency, when Janata Govt took over many facts about this Maruti scam became public, and following questions were raised:
—How Sonia Gandhi, who was Italian citizen then, could become the MD of the Indian Company and acquiring its shares?
—Was the company floated by Sanjay & Sonia Gandhi was capable of providing know how for manufacturing Cars and Road Rollers
–Was Sonia Gandhi capable of managing the company as MD?
A Commission of Enquiry was constituted By Janata Govt under the Chairmanship of Justice AC Gupta, to probe Maruti Scandal. In the report submitted by commission in 1978, the following points were raised:
1 It was a fact known to all the concerned that Sonia Gandhi was an Italian citizen, in view of Foreign Exchange Regulation Act (FERA), she could neither hold shares of any Indian Company nor hold office of profit in such company, without prior approval of RBI. It was very surprising that Sonia Gandhi who did not have any technical qualifications should be appointed as MD of Technical Services Company, and large sum of money was paid to her as salary and perks. It was further stated in report the Income tax officer disallowed part of amount paid to her as excessive as she did not have qualifications to be able to render technical service to the company. She had to resign as MD.
2 The commission also probed whether MTSPL floated by Sanjay and Sonia Gandhi had requisite knowledge to manufacture Cars & Road Rollers. The commission reported that company did not have any know how knowledge, they manufactured some prototypes by procuring parts from here and there and no prototype was identical. There was no fixed design for cars, and company did not have any R&D facility.
3 Even though both Maruti Ltd and MTSPL knew that they have not finalized the design of any car , yet they started to recruit Dealers for selling the cars, to create the impression in the market that the Maruti Car will be launched very shortly in near future. Two of the selected dealers were given cars to display, one of the dealer had to push the car to his show room, as the car did not start. The car at the another dealers’ show room had brake problem and car was sent back. Neither the car nor the money was refunded to him. One of the dealer who wanted to terminate the dealership was threatened by Sanjay Gandhi, and finally he had to apologise to Sanjay Gandhi. One dealer who asked for interest on his security deposit was arrested under MISA. Commission also reported that the company did not have any qualified person or specialist on Road Rollers or Cars.
This scam would not have come to the light, if Janata Dal had not come to power in 1977.
After Indira Gandhi came back to power in 1980, and Sanjay Gandhi died in a training plane accident. Indira Gandhi revived the Maruti car project in her son Sanjay Gandhi’s memory, but this time the company tied up with Suzuki Company of Japan for the manufacture of small cars in India. This project became joint venture between Suzuki company of Japan and Maruti Ltd ( which had then become a government backed company).
Waiting for your review on this blog.
Anil Malik
Mumbai, India
6th October 2025