Foreign funding: Congress to clarify on FCRA amendment in Supreme Court

Amendment brought in the 2010 Act is aimed at easing the flow of donations from foreign companies in the name of CSR

Congress, which has challenged a Delhi High Court verdict holding it and BJP prima facie guilty of violating the law on foreign funding, on Tuesday sought time from the Supreme Court to clarify the effect of the amendment brought this year to the Foreign Contribution Regulation Act, 2010 in their matter.

"The counsel for petitioner (Congress party) has sought adjournment to seek instructions about the effect of amendment to the Foreign Contribution Regulation Act in their matter. The prayer is allowed," a three-judge bench headed by Justice J S Khehar said.

The bench, also comprising Justices Arun Mishra and A M Khanwilkar, fixed the matter for hearing on November 29 after senior advocate Mohan Parasaran, representing Congress, said he would argue the matter after seeking instructions.

Congress told the bench that the amendment introduced in February this year has retrospective effect and their appeal against the Delhi High Court judgement has become infructuous.

To this, the bench asked whether the party wants to argue the matter or simply say that their petition has become infructuous, then it will dispose it of.

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.

During the hearing today, the bench asked Parasaran, "If you are saying that amendment has made the petition infructuous, then its over. If you will ask us the determine the issue, we will hear it."

To this, Parasaran said, "We will argue this matter. 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 prohibition to make any contribution to a candidate or a political party or office-bearers thereof relates
 to foreign citizens and Indian entities, if more than one half of the nominal value of share capital of such entities are held either singly or in the aggregate by citizens of a foreign country," the petition had said.

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.