The counsel representing the political parties informed the apex court that in view of the 2010 amendment made in the Foreign Contribution Regulation Act (FCRA), they cannot be held liable for receiving alleged foreign funds in violation of the law.
"The petitions are dismissed as withdrawn," a bench comprising Justices J S Khehar, Arun Mishra and A M Khanwilkar said when senior advocates Shyam Divan and Kapil Sibal, representing BJP and Congress respectively, sought to withdrew the petitions.
Divan said that the 2010 amendment in the FCRA provides that a contribution to a political party is not a foreign contribution if an Indian holds 50 per cent or more shares in that firm.
He further said that the Indian subsidiary of a company, registered in foreign country can donate funds and those donations cannot be regarded as foreign contribution in view of the changed law.
Earlier, on November 22, Congress, which had challenged the Delhi HC verdict, sought time from the apex court to clarify the effect of the amendment brought this year to the FCRA in their matter.
The amendment brought in the 2010 Act is aimed at easing the flow of donations from foreign companies in the name of corporate social responsibility.
The high court, in its judgement pronounced on March 28, 2014, had said that by receiving donations from UK-based Vedanta Resources' subsidiaries, the two mainstream political parties had violated the law concerned.
It had also directed the Centre and Election Commission to take appropriate action against them within six months.
Challenging the judgement, Congress had contended that
the high court had erred in interpreting the law and "there is no concealment or suppression of such contribution which were duly reflected in the returns submitted to the Election Commission".
It had contended that Vedanta was owned by an Indian citizen, Anil Aggarwal, and its subsidiaries were incorporated here. Hence, they were not foreign sources.
The high court had held that Vedanta was a foreign company as per the Companies Act and therefore, the Anil Aggarwal-owned firm and its subsidiaries, Sterlite and Sesa, were foreign sources as per the FCRA.
The verdict was delivered on a PIL by a NGO, Association for Democratic Reforms and E A S Sarma, a former Secretary in the government, who had alleged that the two parties had violated the Representation of the People Act and FCRA by taking donations from government companies and foreign sources.