[dropcap]T[/dropcap]he Supreme Court of India has issued notice in a petition challenging the constitutionality of amendments made to the Foreign Contribution (Regulation) Act, 2010 (FCRA) via the Finance Acts of 2016 and 2018, passed by the incumbent NDA government.
A bench comprising of Chief Justice Dipak Misra, Justices A M Khanwilkar and D Y Chandrachud issued the notice in lieu of assertions made in public interest pertaining to the Acts’ substance and the manner in which they were passed by the Lok Sabha (as Money Bills).
The first of the two petitioners in this challenge is the Association for Democratic Reforms (ADR), an advocacy trust spearheading electoral reforms in India for over a decade by conducting research on the functioning and finances of political parties and their candidates. They were also the petitioners for the 2002 landmark judgment which mandated electoral candidates to publicly declare their criminal records and financial assets. The second petitioner is E A Sarma, a former Secretary to the Government of India, who has extensively researched FCRA violations of the Bharatiya Janata Party (BJP) and the Indian National Congress (INC) in the past, and was a co-petitioner in the 2014 Delhi High Court judgment which the impugned amendments aim to overturn.
Foreign donations violate ‘separation of powers’
The petitioners contend that the 2016 amendment, effective retrospectively till 2010, was passed by the legislature to contravene the 2014 Delhi High Court judgment which held BJP and INC guilty of accepting donations from “Indian companies which were subsidiaries of a foreign company”, hitherto prohibited by FCRA for being a “foreign source”. To attain this objective, the definition of the prohibited “financial source” as per Section 2 of the FCRA 2010 was altered, coming into force retrospectively from 2010.
Similarly, the 2018 amendment extended the applicability of the definition’s alteration all the way to 1976, when the FCRA was first enacted. The petitioners argue that apart from diluting the objective of the FCRA to prevent extraneous influences permeating and influencing the nation’s internal affairs via monetary donations, they are violative of the constitutionally entrenched “separation of powers” principle. They claim that “the legislature has tried to breach the basic structure of Constitution. It is a settled principle of law that it is well within the powers of the Legislature to remedy the defect or flaw which exists in the legislation. If such a defect or flaw is brought within the notice of Judiciary and if the decision is held against such legislation, then the Legislature has the duty to rectify it. But the Legislature cannot pass a retrospective amendment so as to nullify a judgment passed by any court.”
Incidentally, the donor companies in question in the Delhi High Court case are Sterlite Industries Limited and Sesa Goa Limited, subsidiaries of UK based Vedanta Resources PLC, the parent company of Sterlite Copper which has been at the centre of the recent protests in Tuticorin, in light of their operation’s negative environmental implications.
Undue influence over policy-making
As per the petitioners, these alterations to the FCRA avail grounds to “foreign companies, lobby groups and wealthy individuals” to exert influence over Indian politics and democracy vis-à-vis corruption. They claim that the amendments in question have “opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies” 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”.
The petitioners further claim that these availments to private entities are disturbing as they are “bound to be misused by special interest groups and corporate lobbyists”, and “can result in a situation that legislation, regulations etc. can be ultimately be passed and laws brought in to favour of these corporates and lobby groups at the expense of the common citizens of the country.” They also contend that apart from the threats posed to civil liberties and rights enshrined in the constitution, the amendments facilitate “creation of shell companies and rise of benami transactions to channelise the undocumented money into the political and electoral process in India” which “imperils our core liberties and rights guaranteed under the Constitution”.
Issue of Money Bills
Further, the petitioners’ question the constitutionality of the manner in which the impugned Acts were passed as well. Both the amendments were passed as money bills, which solely require assent from the Lok Sabha, currently dominated by the BJP, and by pass the Rajya Sabha altogether. They highlight the apparent incongruence of the amendments with the provisions of Article 110(1) which lays down the matters that are to be addressed via money bills and Article 117(1) which provides for the classification of matters to be dealt with via Finance Bills.
In light of the aforementioned, the petitioners’ represented by advocate Prashant Bhushan petitioned to the Court that the amendments introduced to FCRA 2010 via the impugned Finance Acts of 2016 and 2018 to be held as “void, illegal and unconstitutional”.