The two largest political parties — the Congress and the BJP — heaved a sigh of relief on Friday as the Supreme Court decided to examine a Delhi High Court verdict faulting them for failing to disclose receipts of foreign contributions over the years to the Election Commission.
In its appeal, the Congress, led by senior advocate Kapil Sibal, argued that the High Court verdict of March 28, 2014 failed to consider a crucial aspect whether an Indian citizen living abroad who owns majority stake in a foreign company can contribute to a political party, which will not be classified as a contribution from a “foreign source” and hence, will not attract prosecution under Foreign Contribution Regulation Act, 2010 (FCRA).
The bench headed by Chief Justice RM lodha was quick to point out, “This was not argued in High Court,” even as it admitted the appeal and issued notice to the Centre, BJP and Election Commission besides Association of Democratic Rights (ADR), the NGO that approached the High Court.
While the matter got posted for hearing after eight weeks, Sibal pleaded for stay on operation of the HC direction to launch prosecution against the party. The Bench, also comprising Justices Kurian Joseph and Rohington Nariman did not favour a stay. Instead, it granted liberty to the party concerned to approach the Court as and when any “coercive action” was undertaken either by the Ministry of Home Affairs or the poll panel.
Bhushan said that Sibal’s argument was misconceived as a company which is registered outside India is a foreign entity. The law treats it as a legal entity for purposes of making contributions. If such a company had made contributions into the coffers of the two national parties, it amounted to contribution from a foreign source. As this amount was undisclosed to the EC, the parties were liable for prosecution under FCRA.
While there was no dispute over the sums of crores of rupees received by the political parties from UK-based Vedanta and its Indian subsidiaries - Sterlite and Sesa Goa, Sibal suggested that Vedanta’s majority stakes were held by an Indian Anil Aggarwal, who is situated abroad. Bhushan protested that such an interpretation would render the FCRA meaningless as contributions are seen from companies and not individuals manning the companies.