December 2nd, 2016
On Tuesday, Bhartiya Janta Party and Congress withdrew their respective pleas in the Supreme Court against the verdict of the Delhi High Court holding them guilty of a violation of the Foreign Contribution Regulation Act (FCRA) by accepting donations from a foreign company.
In March 2014, based on the petition filed by Association for Democratic Reforms (ADR), Delhi High Court had indicted both the parties for receiving foreign funds in violation of provisions of Foreign Contribution (Regulation) Act (FCRA). They received funds from the subsidiaries of London-based mining company Vedanta.
The parties challenged the Delhi high Court judgement by moving to Supreme Court on March 28, 2014. Both BJP and Congress were united in opposing the Delhi High Court order saying that the court delivered its verdict on the basis of a 1976 Act and did not take the amendment from 2010 (which was done in 2016) into purview.
FCRA, 1976 and the amendment
The FCRA ,1976 was enacted with the prime objective of regulating the acceptance and utilization of foreign funds by any person or association or company. It clearly stated that the Foreign contribution cannot be accepted for election, correspondent, columnist, cartoonist, editor, printer, owner, judge, publisher of a registered newspaper, government servant or employee of any corporation or office bearer thereof.
In April 2016, Finance Minister Arun Jaitely slipped in an unnoticed clause in the Finance Bill as a part of Union Budget which amended the FCRA to redefine foreign companies; in effect from September 26, 2010. The new provision said that so long as the foreign company’s ownership of an Indian entity is within the foreign investment limits prescribed by the government for that sector, the company will be treated as “Indian” for the purposes of the FCRA.
Clarifications from both the parties
Senior counsels Shyam Divan and Kapil Sibal appeared for BJP and Congress respectively and told the bench headed by Justice JS Khehar, Arun Mishra and A M Khanwilkar that the parties had obtained clarifications from the government referring to the amendment made in FCRA in 2016 which applies from 2010. Armed with Finance Act 2016 that made the change in FCRA, both the parties informed the court that the changes were to be implemented retrospectively and therefore they could not be held guilty for accepting donations from the company, as reported by The Tribune.
BJP’s counsel Shyam Diwan elaborated that Vedanta’s subsidiaries were incorporated in India and an Indian citizen owns it and therefore it cannot be considered as a foreign company under FCRA.
The bench made it clear that if the parties wanted to move to the Supreme Court, then it would ask the Election Commission to find the truth and probe into this matter further to find out the shareholder of the company which granted funds to them.
Both the parties had challenged the Delhi high Court judgement by moving to Supreme Court on March 28, 2014. The HC had requested the government to relook the issue. Under the 2010 amendment, the government relaxed both the parties for receiving grants from foreign companies.
Points to ponder
- It is hypocritical to welcome foreign funding for political parties who spend their money on campaigns and other miscellaneous costs which barely has any benefits for the society as a whole while blocking the same for NGOs who could potentially use it for social causes.
- Corporate funding of political parties has already strengthened the corporate – politics nexus.
- Accepting such donations dilutes the power the political party might want to have. The corporate would want cases and laws to be passed in their favour, even if guilty of any wrongdoing. For example, Mining giant Vedanta consistently violated several laws in bauxite mining at Niyamgiri, encroached upon government land, got clearances on the basis of false information and illegally built its aluminium refinery at Lanjigarh, Orissa. As the company engaged in these violations, the Orissa government colluded with it and the Centre turned a blind eye. These are some of the findings of the four-member N C Saxena committee, which recommended that the company not be allowed to mine in the hills.
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