Finance Minister P Chidambaram finds himself caught in what the Opposition and some Congress leaders describe as a "domestic torpedo" from Tamil Nadu.

The Opposition has demanded Chidambaram's resignation because his lawyer wife Nalini appeared as a counsel for the revenue department -- which falls within the finance ministry's purview -- in an income-tax case in Chennai.

Chidambaram in a jam

The controversy that has rattled the Manmohan Singh government for the last few days shows no sign of dying down though the monsoon session of Parliament ended on Tuesday.

At the end of the cannon firing salvos against Chidambaram is the All India Anna Dravida Munnetra Kazhagam. Led by AIADMK Rajya Sabha member N Jothi, the Opposition charges the finance minister with nepotism.

What are the AIADMK charges against Chidambaram?

• That the finance minister forced the income-tax department to appoint his wife to fight the cases against several spinning mills in Tamil Nadu. She lost the case.
• That the cases Nalini Chidambaram fought and lost resulted in major gains for the spinning mills.
• That the finance minister's family runs the Karpagambal Mills at Rajapalyam in Tamil Nadu.
• That one K Subramaniam was on the panel of the income-tax department's lawyers to appear in the cases that were represented by Nalini Chidambaram, but he did not appear.

Chidambaram told Parliament on Tuesday that he had no knowledge of his wife representing a department that reports to him.

What prompted the AIADMK to unleash an attack on Chidambaram?

"These are not mere allegations. It is the height of nepotism that Chidambaram is involved in. No finance minister in India has done what Chidambaram has done to Tamil Nadu for his family business interests," Jothi, who promised to reveal more, told rediff.com

Since Nalini Chidambaram had lost the cases, he said the government had suffered losses worth several crore rupees.

"The real beneficiaries have been the spinning mills," Jothi alleged.

AIADMK insiders say the attack on Chidambaram has been deftly planned by Tamil Nadu Chief Minister J Jayalalithaa.

"Chidambaram's days as finance minister are numbered. The whole Opposition is behind us in Jayalalithaa's fight against Chidambaram," added a senior political functionary at the AIADMK headquarters in Chennai.

According to him, what prompted Jayalalithaa to target Chidambaram should be viewed in the context of what the latter did to her in 1996. "Jayalalithaa has been waiting for an opportunity to attack Chidambaram for almost 10 years now. She is utilising the golden opportunity now," the AIADMK leader said, speaking on condition that he would not be identified.

On December 7, 1996, M Karunanidhi, then Tamil Nadu chief minister, had Jayalaithaa arrested. Karunanidhi's Dravida Munnetra Kazhagam government eventually slapped 32 cases against the dethroned Jayalalithaa, her associates and other AIADMK leaders. She spent 28 days in jail. She could not contest the 2001 assembly election because she was not cleared of the corruption charges.

It was then hinted that Karunanidhi had support for his campaign against Jayalalithaa from Chidambaram, finance minister in the United Front governments between 1996 and 1998.

Chidambaram left the Congress party -- then headed by P V Narasimha Rao -- in early 1996 after it entered into an electoral alliance with the AIADMK. He joined the Tamil Maanila Congress formed by G K Moopanar, who also left the Congress in protest against the AIADMK alliance.

Moopanar is dead, but his son G K Vasan currently heads the Congress party in Tamil Nadu. Chidambaram is said to be very close to Prime Minister Manmohan Singh, but "not very friendly" with Congress president Sonia Gandhi.

An interesting outcome of the volley against Chidambaram -- whose integrity has rarely been questioned before -- is that some Congress leaders are silently supporting the onslaught.

"Chidambaram is not very popular with many Congress leaders," pointed out a Congress member of Parliament from the South. "He simply walked into the Congress after the 2004 election and became finance minister."

The support the Congress is extending Chidambaram, the MP added, is technical. Nevertheless, the Congressman felt, "he may continue as finance minister because of his closeness to the prime minister."