The Supreme Court on Monday issued notice on a petition challenging the amendments made to the Foreign Contributions (Regulation) Act, 2018 (FRCA) through the Finance Act, 2016, and Finance Act, 2018, which has been passed as a Money Bill with retrospective effect from the year 1976.
The notice was issued by a Bench comprising Chief Justice of India Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud on the petition filed by the Association for Democratic Reforms and former Secretary to the Government of India Mr. E.A.S. Sarma.
Represented by Advocates Prashant Bhushan, Kamini Jaiswal and Pranav Sachdeva, the petitioners allege that the amendments have been introduced in order to overturn the judgment passed by the Delhi High Court in March, 2014, finding BJP and Congress of having taken foreign funding and violating the FCRA. SLPs against the High Court judgment were also dismissed as withdrawn by the Supreme Court.
The amendments
The clause in question originally prohibited political parties from accepting foreign donations, and defined a “foreign source” as a company that has “more than one-half of the nominal value of its share capital held” by “corporations incorporated in a foreign country or territory”.
Through the 2016 amendment, the Government had allowed foreign-origin companies to finance non-governmental organisations and had cleared the way for donations to political parties by redefining foreign companies as “Indian” if their ownership in an Indian entity was within the foreign investment limits prescribed by the government for that sector. This amendment not only got the BJP and Congress off the hook from the Delhi High Court’s order but also opened the doors for hundreds of foreign companies to make contributions to Indian political parties.
This amendment was, however, made retrospective only from 2010, which is when the latest version of the FCRA was introduced. The new amendment now lets the BJP and the Congress off the hook for any donation received after August 5, 1976 – the date of the commencement of the original Foreign Contribution (Regulation) Act of 1976.
Parties trying to “condone their guilt”
The petitioners have now alleged that the amendments have been introduced by the parties in a desperate effort to “condone their guilt”. They allege violation of the doctrine of separation of powers, pointing out that the amendments were introduced through the new Finance Act, 2018, which was passed as a Money Bill, thereby bypassing the Rajya Sabha.  The amendment to FRCA, they go on to assert, certainly does not qualify as a Money Bill, submitting,
“By misusing the legislative powers vested in them, the political parties have moulded their usage for fulfilling their own personal motives than using them for the betterment of the people and improving their standard of living. By extending the applicability of a retrospective amendment from 1976, the legislature has tried to breach the basic structure of Constitution…
…But the Legislature cannot pass a retrospective amendment so as to nullify a judgment passed by any court. The decision of Hon’ble High Court was based on the law existing at that time and which very well recognised the guilt on the part of BJP and INC for accepting donations from the Indian Companies which were subsidiaries of a Foreign Company. 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.”
The petition further contends that the amendments would lead to creation of shell companies and rise of benami transactions to channelize the undocumented money into the political and electoral process in India. Besides, it claims violation of Articles 14 and 21 of the Constitution of India, alleging that the amendments “pose a serious danger to the autonomy of the country and are bound to adversely affect electoral transparency, encourage corrupt practices in politics and have made the unholy nexus between politics and corporate houses more opaque and treacherous and is bound to be misused by special interest groups and corporate lobbyists, and thus are in violation of Articles 14 and 21 of the Constitution of India.”
It, therefore, demands that the amendments be struck down as being “void, illegal and unconstitutional”.