I didn't understand one thing..

It wasnt shown in the film, but I guess Raj must have told her since he already knew that Judge Raghunath was his father and he knows his own life story ofcourse.

Awaara is not really a realistic film and it is perhaps pointless to judge it on such details. The use of the lawyer's supposed narrative to introduce the flashback is simply a cinematic trope. One reason why the film rates highly - and deservedly highly - is its huge importance in the history of Indian film and for that matter of film worldwide, since Awaara was hugely popular throughout the Middle East and in Russia.

It is not insignificant for a popular film of that period for to attack questions of social class and caste (albeit perhaps somewhat sentimentally) and it is perhaps a shame that Hindi films today are so rarely prepared to do so (by comparison see the excellent Tamil film Kaadhal for a superb modern appraoch to such questions). It is not insignificant that Nargis portrays a woman advocate in 1951 and provides (in this and other films) a female role-model much superior to that provided, for instance, by the current generation of Bollywood babes. And the film'sapproach to the portrayal of a sexual relationship (radical for its time and still I think electrifying to watch) and its use of expressionistic imagery still command my respect and admiration.

The film is best seen within the entire oeuvre of Raj Kapoor and Nargis during these years (from Mehboob Kahn's Andaz through Barsaat and Shree 420 to Thakur's Chori Chori in 1956). It would be difficult to view these films and not appreciate the enormous contribution that the pairing made to Indian cinema.

Nargis found out everything from Raj's mother. She meets her twice - once at the house and once after her accident. You don't see the whole tale told to Nargis but it is obvious from the end of the convo that Nargis has with his mother.