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he Delhi High court on Friday held that the Congress and the BJP had “prima facie” violated the provisions of the Foreign Contribution Regulation Act by accepting donations from companies like Vedanta and Sesa Goa and directed the Central government and the Election Commission to probe their funding receipts within six months.
However, the Congress in its defence said there had been no violation of the law. The head of the Congress Legal Cell, KC Mittal said: “there is no violation of the law. Under section 591(2) of the Companies Act, if a company is incorporated abroad but has Indian share holding above 50 per cent then it is deemed to be an Indian company.” He added that the same issue came up in 2009 when Vedanta had made a donation earlier.
BJP spokesperson Sudhanshu Trivedi claimed he was yet to see the High Court order. "But it is our party's stated policy that we do not accept any funding from abroad. We are trying to follow this to the best of our understanding and the best of our capability," said he, adding any investigation that the High Court may order into the issue should be welcomed. "All political parties are answerable to the Election Commission about their funding and the EC can ask any party to explain the source of their funding," said Trivedi.
Aam Aadmi Party leader Arvind Kejriwal was jubilant. "the Congress and the BJP accused us of taking foreign funding. The High Court now finds it is they who are guilty of violating the FCRA" he tweeted after the court gave its order.
The High Court in its order today said: “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 Congress said that while the Election Commission had been given all the details of donations to the Congress, in the case of this particular order, “the Congress was still studying it”.
In Mumbai, Chief Election Commissioner V Sampath said the Election Commission was also studying the order and would take any action only after that.
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 per cent of its issues shares owned by an NRI Indian Citizen. Sterlite and SEsa Goa are incorporated in India, but more than 50 per cent of shares in Sterlite and Sesa Goa are owned by Vedanta.
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 and 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 subsidiaries 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 degenerated into a playground for world powers; which 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.”
However, the Congress in its defence said there had been no violation of the law. The head of the Congress Legal Cell, KC Mittal said: “there is no violation of the law. Under section 591(2) of the Companies Act, if a company is incorporated abroad but has Indian share holding above 50 per cent then it is deemed to be an Indian company.” He added that the same issue came up in 2009 when Vedanta had made a donation earlier.
BJP spokesperson Sudhanshu Trivedi claimed he was yet to see the High Court order. "But it is our party's stated policy that we do not accept any funding from abroad. We are trying to follow this to the best of our understanding and the best of our capability," said he, adding any investigation that the High Court may order into the issue should be welcomed. "All political parties are answerable to the Election Commission about their funding and the EC can ask any party to explain the source of their funding," said Trivedi.
Aam Aadmi Party leader Arvind Kejriwal was jubilant. "the Congress and the BJP accused us of taking foreign funding. The High Court now finds it is they who are guilty of violating the FCRA" he tweeted after the court gave its order.
The High Court in its order today said: “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 Congress said that while the Election Commission had been given all the details of donations to the Congress, in the case of this particular order, “the Congress was still studying it”.
In Mumbai, Chief Election Commissioner V Sampath said the Election Commission was also studying the order and would take any action only after that.
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 per cent of its issues shares owned by an NRI Indian Citizen. Sterlite and SEsa Goa are incorporated in India, but more than 50 per cent of shares in Sterlite and Sesa Goa are owned by Vedanta.
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 and 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 subsidiaries 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 degenerated into a playground for world powers; which 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.”
