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East Bengal entered the 1997 Indian Federation Cup as the defending champions. In the pre-quarter finals, East Bengal faced Integral Coach Factory and won 3–0 with goals from Naushad Moosa, Renedy Singh and Arumugam Saravanan.[3] In the quarter-finals, East Bengal defeated Mohammedan Sporting 4–0 as Nazimul Haq scored twice, Naushad Moosa and Bhaichung Bhutia scored the other two.[4] In the semi-finals, East Bengal defeated their arch-rivals Mohun Bagan 4–1 in the famous Diamond Derby in front of a record 131,781 crowd at the Salt Lake Stadium.[5] Bhaichung Bhutia scored a hattrick while Nazimul Haq scored the other for East Bengal. Chima Okorie scored the only goal for Bagan as East Bengal reached their fourth consecutive final.[6]
Salgaocar entered the 1997 Indian Federation Cup as one of the National League teams. In the pre-quarter finals, Salgaocar defeated Mizo Highlanders 6–0 to reach the last eight of the tournament where they faced Border Security Force. In the quarter-finals, Salgaocar defeated Border Security force 4–3 via penalty shootout after the game ended 1–1 after added extra time. Bruno Coutinho scored for Salgaocar while Prasanta Das had scored for BSF.[7] In the semi-finals, Salgaocar faced the runner-up from the previous edition Dempo and won 1–0 courtesy of a solitary goal from Bruno Coutinho as they reached the final.[6]
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