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There were fears the tour might be cancelled after Indian officials demanded the ICC to overturn its decision to suspend Harbhajan for three tests for allegedly calling Australian all-rounder Andrew Symonds 'a monkey' during the second test.
However, the crisis was averted on Tuesday when independent New Zealand high court judge John Hansen dismissed the charge after a 5-1/2 hour hearing at Adelaide's Federal Court.
Hansen ruled that there was not enough evidence to convict Harbhajan of racial abuse but charged him with the lesser offence of using abusive language.
Harbhajan pleaded guilty and was fined half his match fee but is clear to play in the triangular one-day series with Australia and Sri Lanka.
"We are very happy with the proceedings, we are very satisfied," Indian board secretary Niranjan Shah told Reuters in New Delhi.
"Now the team must concentrate on the game."
Cricket Australia spokesman Peter Young said the Australians were pleased with the outcome and happy to put the incident behind them.
"All parties will move on with the cricket," Young said. "The game is the important thing."
ICC communications officer Sami-ul-Hasan had earlier read a brief statement to reporters in Adelaide confirming the decision and saying Hansen would deliver his full verdict on Wednesday.
"Justice Hansen said he was convinced that on all evidence submitted before him the charge of level 3.3 was not proven but that Harbhajan Singh should be charged with a level 2.8 offence," the statement said.
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