BJP & INC’s foreign funding; Delhi HC issues contempt notice to Centre for inaction

The Delhi High Court today issued notice to the Home Secretary, Government of India in a contempt petition filed by the Association for Democratic Reforms and retired bureaucrat Dr. EAS Sarma..The matter was heard by Justice Manmohan. Advocate Pranav Sachdeva appeared for the petitioners..The petition arises out of the Delhi High Court judgment dated March 28, 2014 in which the court had held that the Bharatiya Janta Party and the Indian National Congress are guilty of taking foreign funding in violation of the Foreign Contribution (Regulation) Act, 1976 (FCRA)..The parties were accused of accepting “donations” from Sterlite and Sesa, subsidiaries of the foreign company Vedanta registered in the United Kingdom..Vide the 2014 judgment, the Union was directed to take action against the two political parties. They were directed to relook and reappraise the receipts of the political parties to identify contributions received from foreign sources within six months..In addition to this, the bench of Pradeep Nandrajog and Jayant Nath, JJ. had also faulted the Congress party for taking donations from the public sector undertakings – State Trading Corporation of India and the Metals and Minerals Corporation of India..Both the parties had filed Special Leave Petitions in Supreme Court against the High Court’s judgment but had withdrawn the same in November 2016..Now, this is where things get interesting..The petition in which the landmark judgment was passed by the division bench drew attention mainly to the donations made to political parties up till 2009. During the hearing, the court recorded that FCRA, 2010 which came into force in September 2010 would not apply to the present case and instead provisions of the FCRA, 1976 would be attracted..It was then that the Union government decided to “amend” the FCRA, 2010 with the Finance Act, 2016. Through this amendment, the government changed the definition of “foreign source” and enforced it retrospectively with effect from September 2010..According to the old Act, any company that is a multi-national or has subsidiaries in other countries was considered to be a foreign company. According to the new amended Act, any company with less than 50% share capital with a foreign entity will not be considered to be a foreign source anymore..The reasons given by the government for introducing such amendments were that many companies wanted to give funds to fulfill their Corporate Social Responsibility and weren’t able to do so due to the restrictions under the FCRA..During the debate on the Finance Bill, 2016 in the Lok Sabha, MP Asaduddin Owaisi questioned the validity of the amendment proposed by the government. Owaisi argued that the Act comes under the Home Ministry and amending it through a Finance Bill goes against the provisions of the Constitution. He demanded that the discussion should be suspended immediately since the bill is flawed..Unfortunately, Owaisi’s interjection to the amendments made no difference and the bill was passed..Three years after the judgment, the petitioners have now approached the Delhi High Court in a contempt petition questioning the government’s inaction despite the ruling of the Court..The bench has issued notice to the Home Secretary and the case has been listed for hearing on July 20.