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P Chidambaram as FM? PM hits a new low!

August 07, 2012 08:36 IST

As a sentinel of the nation's finances, he failed to prevent the loot of our exchequer, writes M R Venkatesh.

As luck would have it, I was seated next to a local Congress party leader at a local function. The topic invariably veered to the role of P. Chidambaram in 2G scam, the related Trial Court judgement and the impending one by Hon'ble SC.

"But sir he did not do anything at all" the party faithful remonstrated. "Exactly that is the point," I retorted and added "Can the sentinel of nation's finance – the Finance Minister (FM) - be absolved of all responsibilities while his cabinet colleague loots the national exchequer?"

As he wrenched his hand I riled him further "Is he not one of our most efficient ministers?" Before I could proceed further I noticed, palpable tension in my friend's face. His clenched fists and grinding teeth were a dead giveaway. Choosing not to embarrass him any further I swiftly concluded the conversation. 

But larger questions remain unanswered to this day - was he "directly" involved or was his sheer incompetence that allowed Raja to scoot with the loot? These were succinctly captured by the Trail Court in its Order dated 4th February 2012 as hereunder [Para 64]:

To understand all that is stated above a reference at the outset to the Prevention of Corruption Act (PCA) would be in order. Accordingly, a "public servant" is said to commit the offence of "criminal misconduct" under sub-clause (ii) of clause (d) of sub-section (1) of Section 13 where by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or under sub-clause (iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest.

Readers may well be aware that the entire 122 2G spectrum licenses granted by the Ministry of Telecommunications were held to be void by the Hon'ble Supreme Court.

The reason? These licenses - "read valuable thing or pecuniary advantage" - were fradulently obtained by these companies as public servants (A Raja and other officials) in Telecom ministry abused their positions. Consequently, these officials attracted the provisions of S 13(1)(d)(ii) of PCA.

The moot question now is the role of Chidambaram. Was he completely oblivious of the loot and hence innocent? Assuming for a moment that he was indeed oblivious and hence innocent, does that absolve him of all ministerial obligations, duties and responsibilities under the Constitution as also charges of "criminal misconduct" under PCA?

Trial court judgment:

Sidestepping these profound questions the Trial Court summarily concluded:

As per Cabinet note dated 31.10.2003, the decision regarding spectrum pricing was to be taken by Finance Minister and MOC&IT and after this decision was taken, Mr. P. Chidambaram agreed that it would be the price as discovered in the year 2001 and also told Mr. A. Raja that there is no need to revisit the same. This decision was subsequently conveyed to the Hon'ble Prime Minister also. To that extent, there is material on record. [Para 66]

However, there is no material on record to show that Mr P Chidambaram was acting malafide in fixing the price of spectrum at the 2001 level or in permitting dilution of equity by the two companies. These two acts are not per se illegal and there is no further material on record to show any other incriminating act on the part of Mr P Chidambaram. A decision taken by a public servant does not become criminal for simple reason that it has caused loss to the public exchequer or resulted in pecuniary advantage to others. [Para 67]

In the end, Mr P Chidambaram was party to only two decisions, that is, keeping the spectrum prices at 2001 level and dilution of equity by the two companies. These two acts are not per se criminal. In the absence of any other incriminating act on his part, it cannot be said that he was prima facie party to the criminal conspiracy.

There is no evidence on record that he was acting in pursuit to the criminal conspiracy, while being party to the two decisions regarding non-revision of the spectrum pricing and dilution of equity by the two companies. [Para 69]

In short, while conceding that he was party to all the decisions taken by A Raja, in the absence of demonstrable Mens Rea - that is guilty mind - the Court held party his action did not constitute "Criminal Misconduct" within the provisions of PCA.

Naturally, students of law wonder how the learned judge came to such a sweeping conclusion especially when evidence of Mens Rea and criminal conspiracy is an outcome of sustained interrogation and detailed investigation.

Matters in Supreme Court and people's court

But there is a fundamental question of Law that remains unasnwered to this date - whether Mens Rea is necessary in the first place for cases falling within S 13(1)(d)(ii) and (iii) of PCA. Crucially, will its existence have to be proved beyond doubt even before commencing an investigation?

The Delhi HC recently had an occasion to go into these complex issues in Runu Ghosh. Readers may recall that Runu Ghosh was the Director in Telecommunications ministry when Shuk Ram was the minister.

The question confronting the HC was in the absence of adverbs like wilfully, fraudulently, dishonestly, corrupt or illegal means to qualify the verb, whether any act of a public servant would constitute "criminal misconduct" if he while holding such office obtains for any person any pecuniary advantage which is - without any public interest?

The Court holding that public servants are an entirely different class, and therefore opined that they must have a higher standard of behavior. Therefore, when a public servant's decision exhibits complete and manifest disregard to public interest with the corresponding result of a third party obtaining pecuniary advantage or valuable thing, he is fastened with responsibility for "criminal misconduct" under Section 13 (1) (d) (iii).

The Court came to a conclusion that the offence- under Section 13 (1) (d) (iii) "advisedly does not require proof of intent, or mens rea, because what Parliament intended was to punish public servants for acts which were without public interest." [Para 78]

Consequently, the courts opined: "the silence in the statute, about the state of mind, rules out applicability of the mens rea or intent standard," and therefore concluded, "a decision is said to be without public interest, if that action of the public servant is the consequence of his or her manifest failure to observe those reasonable safeguards against detriment to the public interest, which having regard to all circumstances, it was his or her duty to have adopted." [Para 81]

Now this judgement of the Delhi HC is under appeal with Hon'ble SC. Yet the ratio is simple - Public Servants taking any decision that is opposed to public interest, with or without Mens Rea, are bound to be held accountable.  

Forget the technicalities for a moment. Will we exonerate a watchman who simply looked away while the house he was supposed to guard got burgled? Will he not be accountable? Will he not also be a suspect? Will he not be questioned by the police? 

That brings us to the reappointment of Chidambaram as FM. Whether Chidambaram is guilty of "commission" (pun unintended) or not is under the active consideration of  Hon'ble SC. But on "omission" there is little doubt - as a sentinel of the nation's finances, he failed to prevent the loot of our exchequer. And by appointing him the PM has surely hit a new low. 

Nevertheless, this interpretation of PCA in Runu active case by Hon'ble Delhi HC is perhaps the most important development in our fight against corruption. Naturally, this implies that any public servant cannot act against public interest and should he chose to do so, it shall be held to be "Criminal Misconduct" under PCA.

That implies an FM cannot, innocently or otherwise, look the other way while his cabinet colleagues loot the public exchequer. Crucially, this opens the door for prosecuting a public servant should he act contrary to public interest - even if it were a case of inaction, guilty mind or no guilty mind.

No wonder the decision of Hon'ble SC is awaited with bated breath. Should Chidambaram be held guilty by Hon'ble SC, by extension the PM too shall be guilty. That explains why the ruling combine is increasingly getting nervous.

Photograph: Adnan Abidi/Reuters


The author is a Chennai-based Chartered Accountant. Views expressed are the author's own. Comments can be sent to mrv@mrv.net.in