HC says Congress, BJP violated FCRA and RP Act norms

FCRA prohibits acceptance of foreign contribution by political parties in India, while the RP Act prohibits donations to political parties by government owned companies.

New Delhi | Updated: March 28, 2014 6:29:46 pm

The Delhi High court on Friday held that the Congress and the BJP had “prima facie” violated the provisions of the Foreign Contribution Regulation Act and directed the Central government and the Election Commission to probe into their funding receipts within 6 months.

“we have no hesitation in arriving at the view that prima-facie the acts of the respondents inter-se, as highlighted in the present petition, clearly fall foul  of the ban imposed under the Foreign Contribution (Regulation) Act, 1976 as the donations accepted by the political parties from Sterlite and Sesa  accrue from ‘Foreign Sources’ within the meaning of law,” held the court of Justice Pradeep nandrajog and Justice Jayant Nath.

The judgment was given on a PIL filed by the Association for Democratic Reforms (ADR) last year, seeking action against the two parties for allegedly violating foreign funding norms and illegally recieving contributions from Government owned companies.

The ADR had made allegations with regard to donations received by the two political parties in 2009 from companies such as Vedanta PLC, Sesa Goa, Malco etc. Vedanta PLC is a company incorporated in London, with 50% of its issues shares owned by an NRI Indian Citizen. Sterlite and SEsa Goa are incorporated in India, but more than 50% of shares in Sterlite and Sesa Goa are owned by Vedanta.

the ADR had said that the two National parties had indulged in “a blatant violation” of the Foreign Contribution (Regulation) Act, 1976 and Representation of People Act, 1951 by taking donations from foreign sources and from government owned companies. The FCRA prohibits acceptance of foreign contribution by political parties in India, while the RP Act prohibits donations to political parties by government owned companies.

The government in its response to the plea had argued that since an Indian citizen owned Vedanta, the donations from the company and its subsidiaries would not be counted under “foreign donations.”  With regard to the allegation that the Congress had recieved donation from the State Trading Corporation and Metals & Minerals Trading Corporation of India, the Party had claimed that the donation had been for a function organised by the National Students Union of India(NSUI) and had been “incorrectly shown” in the accounts of the Indian National Congress.

The High court bench has however held that Vedanta and its subsidiaris would be considered “foreign companies” under the FCRA since Vedanta is a company incorporated outside India. The court also held that under Section 2(e)(vi) of the Foreign Contribution (Regulation) Act, 1976, if more than one-half of the nominal value of the  share capital of a donor company is held by “corporations incorporated in a foreign country or territory,” it would be considered a “foreign contribution”.

The court also pulled up the government, observing that “the response by the Union of India” and the two political parties was “found to be based on a wrong understanding of the law.”

The court also referred to the serious issues raised during Parliamentary debates on the FCRA in 1976, observing that the members of parliament had expressed “Deep concern” regarding the “extra terrestrial loyalty” being encouraged among Indian Politicians, NGOs and Journalists by “foreign Powers” which were contributing large sums as “donations.”

“It had dawned that India had denigrated into a playground for the world powers; who were coining ingenious means to latently push across huge sums of money through puppet organisations and destabilize the country. The Members of the House unanimously supported the Aim and Object(s) of the legislation and the mischief of pervasive foreign influence on our polity that it sought to suppress,” observed the court.

The Government has now been directed to “relook and reappraise the receipts of the political parties and would identify foreign contributions received by foreign sources as per law” and to “take action as contemplated by law.” Further, the Government and the ECI have been directed to “investigate” the accounts of the Congrees and the NSUI “with respect to the justification given to find out whether the same is a stray incident and possibly a mistake or otherwise.”

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