Foreign Donations to Political Parties: Retrospective amendment of FCRA challenged in SC

The central government’s move to validate past foreign contributions made to political parties through retrospective amendment of the Foreign Contribution (Regulation) Act, 2010 (FCRA) has been challenged in the Supreme Court..The Bench comprising of Chief Justice Dipak Misra, Justices AM Khanwilkar and DY Chandrachud has issued a notice in a writ petition filed by the Association for Democratic Reforms and former bureaucrat, EAS Sarma..The Foreign Contribution Regulation Act, enacted originally in 1976, prohibits political parties from accepting contributions from foreign companies/sources. While the 2010 FCRA Act eventually repealed the 1976 Act, the Act remained the same insofar as the bar on receiving foreign donations was concerned. The amendments under challenge were made in 2016 and 2018..The 2016 amendment was brought in the backdrop of a 2014 Delhi High Court judgement, which had held both the Indian National Congress (Congress) and the Bharatiya Janata Party (BJP) guilty of having received foreign funds in violation of FCRA 2010..In that case, the petitioner had highlighted that both parties had received donations from companies such as Sterlite and Sesa Goa, in which the UK-based Vedanta Resources PLC held significant shares..Whereas the Union Ministry of Home Affairs was directed to take action against the errant parties within six months, the petitioner notes that no such action has been taken till date. Special Leave Petitions filed against this verdict were also dismissed as withdrawn in 2016..As per the petitioner, the 2016 Amendment was then introduced in a bid to absolve both parties from any wrongdoing. As stated in the petition,.“The Finance Act [Amendment of 2016] brought in a retrospective amendment to the FCRA, 2010…to change the definition of what constitutes a foreign company in such a way that key beneficiaries of UK-based Vedanta group — the BJP and Congress — would not face legal scrutiny for donations, with effect from 26.09.2010.”.Effectively, the amendment ensured that the political parties would not face legal scrutiny for foreign donations made from the year 2010 onwards..In due course, the Delhi High Court issued a notice in a PIL challenging this amendment in 2017. Further, in a contempt notice issued that same year, the High Court had also emphasised that the 2016 Amendment would not aid the Congress or the BJP so as to evade liability..While this was the case, another amendment was passed in 2018, which made the 2016 amendment to the FCRA 2010 retrospectively operative from 1976. This amendment was notified by the Finance Ministry on March 30 and came into force on April 1, 2018..Objecting to the same, the petition contends that by the said amendments, Indian politics and democracy are now effectively exposed to corporate lobbyists who may want to further their agenda. .“The said amendments have opened doors to unlimited political donations from foreign companies and thereby legitimizing financial contributions received from foreign sources.”.What makes the amendments all the more contentious is the fact they were both passed as Money Bills, i.e. through the Finance Bill of 2016 and the Finance Bill of 2018. This means that these amendments were only passed in the Lok Sabha (dominated by the BJP), thereby bypassing the Rajya Sabha altogether..ADR has argued that the challenged amendments do not deal with matters that fall under the purview of Money Bills. Therefore, the manner in which the 2016 and 2018 FCRA amendments were made has been challenged as unconstitutional as well..The legal propriety of passing the said amendments has also been questioned on the ground that they were only introduced to overcome the effect of the 2014 Delhi High Court judgment..“The same is also against the principle of separation of powers since it has overruled the Delhi High Court judgment (against which SLPs were dismissed).”.Further, as noted in the petition, the 2018 Finance Act seeks to extend the effect of an amendment which is currently under challenge before the Delhi High Court. The extension itself involves a statute that has since been repealed by the 2010 FCRA. In this light, the petition argues,.“Extending the scope of the same challenged amendment to the act which was repealed eight long years ago unambiguously show the desperation with which the Respondents are trying to condone their guilt….By extending the applicability of a retrospective amendment from 1976, the legislature has tried to breach the basic structure of Constitution. .It is a settled principle of law that it is well within the powers of the Legislature to remedy the defect or flaw which exists in the legislation. If such a defect or flaw is brought within the notice of Judiciary and if the decision is held against such legislation, then the Legislature has the duty to rectify it..But the Legislature cannot pass a retrospective amendment so as to nullify a judgment passed by any court….The Legislature by taking this extraordinary measure of extending the applicability of the amendment introduced in the Finance Act, 2016 with effect from 1976 by Finance Act, 2018 has violated the principle of separation of powers.”.In light of these contentions, the petitioners have prayed that the Court declare the amendments introduced in FCRA 2010 by the Finance Acts of 2016 and 2018 as void, illegal and unconstitutional..Read the petition: