Why Was Chidambaram Given a Clean Chit?
This article originally appeared in CRI content has now been subsumed in The views expressed here are personal and do not necessarily reflect those of the editors of

On February 3, 2012, my attention was drawn by someone I consider close, to the resignation of a UK Cabinet Minister, Chris Huhne. I asked myself, why was this financial journalist-turned-politician putting in his papers? Turns out he was accused of “perverting the course of justice”.

How exactly did he do that?

Apparently, in 2003, Huhne had committed a “speeding offense”; simply put, he had crossed a speed limit while driving. Instead of owning up to it, he lied to the authorities that his then wife was the driver of the vehicle at the time of the commission of the offense. Thanks to mounting public pressure, Huhne was forced to tender his resignation.

Unless the High Court reverses the trial court’s decision, the 2G trial will begin to unravel and go off-course.

Cut to Patiala House District Court in Delhi on February 4, 2012- the trial judge in charge of the 2G spectrum case delivered a judgment, shooting down Dr.Subramanian Swamy’s application under Section 311 of the Code of Criminal Procedure to examine Palaniappan Chidambaram.  The rest of the day the image that was seared in my mind was the exasperated derision on Chidambaram’s face which said “When will you guys learn-We are above the law.. We can’t be touched…”

The contrast between the resignation of the UK Minister and the smugness of the Indian Home Minister couldn’t have been starker. One steps down for “perverting the course of justice” for a speeding offense, and the other has absolutely no qualms warming his seat despite the growing chorus about his lack of integrity.

What explains Chidambaram’s smugness?

To find an answer, we must read between the lines of the judgment and understand its true import.

Dr.Swamy’s application was made under Section 311 of the Code of Criminal Procedure which empowers a Court to summon any person, even if not as a witness, to examine him (I am not sure which other provisions of the IPC or CrPC were invoked by Dr.Swamy along with Section 311).

Section 311 is a broadly worded provision, with the intention being that if a person’s testimony is essential to arrive at a just decision in a matter, the Court must have the power to summon and examine him.

It must be understood that strictly speaking, under Section 311,  Dr.Swamy’s application was not an application to name Chidambaram as a co-accused. It was to have Chidambaram examined on the issue of fixing the spectrum price. To me, this is a very reasonable application since Chidambaram was the Finance Minister when the spectrum price was fixed.

Not just that, as the material in the decision reveals, he was responsible for jointly deciding the price of the spectrum with Raja. This was pursuant to a cabinet decision taken on October 31, 2003, which reads as follows:

”Sub-clause (3): The Departmental of Telecom and the Ministry of Finance would discuss and finalize spectrum pricing formula, which will include incentive for efficient use of spectrum as well s disincentive for suboptimal usages”.

Dr.Swamy contended that it would be absurd for Chidambaram to feign ignorance of this decision, which empowered him to jointly fix the price of the spectrum. To further support this contention, Dr.Swamy brought to the Court’s attention a letter dated January 15, 2008 addressed by Chidambaram to Dr.Manmohan Singh. In this letter, Chidambaram informed Dr. Singh as follows:

“DoT and MoF would discuss and finalize the pricing formula for spectrum, which will include incentive for the efficient use of spectrum”.

Again, in a letter dated April 21, 2008, Chidambaram wrote to Raja as follows:

”after you have had an opportunity to examine the same may we meet and discuss and reach some conclusions? These conclusions could then be presented to the Hon’ble Prime Minister”.

This was corroborated by Dr.Singh’s statement in the Rajya Sabha on February 24, 2011, which reads as follows:

”the Government’s policy on the pricing of spectrum was taken on the basis of the Cabinet decision of 2003, which specifically left this issue to be determined by the Ministry of Finance and Ministry of Telecommunications”. …..’The two Ministers had agreed on this because of legacy considerations and I accepted their recommendation.”

Also, Chidambaram and Raja met on three separate occasions to discuss the price of the spectrum. The first of these meetings was held on January 30, 2008, the minutes of which read as follows:

”Minister for Communications met the Finance Minister today on the subject of spectrum charges. Secretary, DoT, Advisor (Wireless) and I (Sh. D. Subbarao, the then Finance Secretary), were present….FM said that for now we are not seeking to revisit the current regimes for entry fee or for revenue share”

The simple meaning of the underscored portion is that Chidambaram was of the opinion that telecom operators, who already held licenses to operate, would not be charged a shilling as entry fee if they decided to bid for 2G licenses, nor would they be expected to share their revenues!

The Comptroller and Auditor General had some serious observations to make on this decision of Chidambaram, which is reflected in the now-famous CAG report as follows:

“The Ministry of Finance should have insisted for Cabinet decision, in view of the following:

* Treating the authorization allowed by the Cabinet in 2003 for calculation of entry fee for migration of existing operators (BSOs and CMPs) to UASL regime based on the formula given by the TRAI (October 2003) as an open-ended one was a wrong interpretation of the DoT and particularly when Cabinet in the same decision had defined the role of MoF in the matter of spectrum pricing.

* Government of India (Transaction of Business) Rules 1961 provided for necessity of matter being placed before the Cabinet in case either involving financial implication on which the Minister of Finance desires or a difference of opinion arises between two or more Ministers.”

There are several other telling documents which have been alluded to in the judgment, but let’s make sense of what all of this material broadly points to:

1. Today Raja alone is being guillotined for the 2G scam, with the oft-repeated defense being that Chidambaram had nothing to do with the spectrum pricing.

2. This defense is seriously circumspect given the cabinet decision empowering both Raja and Chidambaram to decide the price of the spectrum.

3. The above communications amply suggest that Chidambaram was actively involved along with Raja in deciding the price of the spectrum. If at all there was a difference of opinion between Raja and Chidambaram, the Rules of transaction of business ought to have been followed and the matter ought to have been placed before the cabinet.

4. Since the matter was never placed before the cabinet, the plausible conclusion that any reasonable person is entitled to and is bound to come to is that Chidambaram and Raja had decided the spectrum price together.

Now the question which Dr.Swamy was posing through his application was, why is Raja alone being prosecuted? Why isn’t Chidambaram even being examined?

What surprises me is that, in the simplest of bank fraud cases, the CBI typically does not give the benefit of doubt to all those involved in a dubious transaction, even if it borders on professional negligence at best. Such being the case, why is Chidambaram being given the benefit of doubt when all the material points to the contrary?

After all, if a prima facie case is made out against Chidambaram, he should have been named as co-accused and he should have been left to defend himself. At the minimum, he must be summoned and examined. This is what happens in most CBI cases (and I say this from my experience as a lawyer having handled economic offenses cases). Why is a different yardstick being applied to Chidambaram?

Instead of addressing the issue of whether or not there was enough material to summon Chidambaram to examine him, the Court went on a tangent discussing the law of conspiracy for over 19 pages in a decision which runs into 64 pages! Even if the Court was of the opinion that Chidambaram was not a co-conspirator, I am flabbergasted at the Court’s conclusion that there was not even enough material to summon and examine him to understand his version of the story in the Court!

The Court in fact spent the last 6 pages of the judgment virtually exonerating Chidambaram of any wrongdoing. Here are excerpts of the relevant portions of the judgment:

“60. Now the question arises as to what is the role of Mr. P. Chidambaram. The acts attributed to him by the complainant are, his complicity in fixing the price of the spectrum licence at 2001 level and permitting two companies, which received the licence, namely, Swan and Unitech, to dilute their shares even before roll-out of their services.

61. However, both of these acts, attributed to him, are not per se illegal or violative of any law. He agreed with Mr. A.Raja not to revise or revisit the entry fee or spectrum charge as discovered in 2001. Non-revision of prices is not an illegal act by itself. The competent authority is always at liberty to decide in its discretion to not to revise the prices or fee for any goods or services. The same entry fee/ spectrum charges continued even after 2007-08. Same is the case with dilution of equity by a company. It is not per se illegal nor was it prohibited at the relevant time. However, such acts may acquire criminal colour overtones when done with criminal intent.”

At such a nascent stage in the trial, for the Court to hand out a clean chit to Chidambaram is extremely disappointing. The practical consequence of this is bound to be that the investigating agency will think twice before exploring any angle of the scam that involves Chidambaram directly or indirectly. This means crucial evidence will not be available for the CBI to piece together the entire conspiracy. What is also worse is that the very same arguments which the Court has marshalled in favour of Chidambaram, can also come to the aid of Raja!

For me, the trial Court’s judgment is a sign of things to come, which is obviously not very encouraging. Unless the High Court reverses the trial court’s decision, the 2G trial will begin to unravel and go off-course.

I, for one, am fervently hoping, that the Judiciary realizes what the 2G trial means for the movement against corruption in the Establishment, and brings a semblance of perspective to the trial by reversing the order. The 2G trial is being keenly watched by observers outside the country and the fortunes of Brand India will turn not only on the outcome of this case, but also in the manner in which it is conducted by the Judiciary.

And yet, there isn’t enough brouhaha in our public debates about the actual implication of this decision…why is our media relatively mum? Has the 2G trial lost its appeal or is there a deliberate effort to hush things up?