The Supreme Court on Tuesday issued notices to the Centre and the Election Commission on a PIL challenging the recent amendments made to various laws which allegedly have legitimised electoral corruption and have lead to illicit funding of political parties.
The amended statutes, introduced through the Finance Act, 2017 and Finance Act, 2016, include the Income Tax Act, 1961, Representation of People’s Act, 1951, Reserve Bank of India Act, 1934, Foreign Contribution (Regulation) Act, 2010 (FCRA) and Companies Act, 2013.
A bench led by Chief Justice Dipak Misra sought response from Association for Democratic Reforms (ADR), an NGO, which also opposed the method of making the amendments. It alleged that the amendments introduced through the Finance Act, 2017 were passed as a money bill and were unconstitutional and in violation of the doctrine of separation of powers.
Seeking setting aside of the amendments, it said that the changes are also “patently arbitrary, capricious and discriminatory” as crucial information regarding electoral funding is not disclosed to the public, it said.
It further added that legitimising electoral funding would adversely affect electoral transparency, encourage corrupt practices in politics and make the nexus between politics and corporate houses more opaque and subject to misuse by corporate houses and lobby groups.
Counsel Prashant Bhushan, appearing for the NGO, said that the amendment has removed the cap that barred corporates from donating more than 7.5% of their average net profit to a political party. He also said that the political parties can now take unlimited donations in the form of election bonds without disclosing the source.
According to the NGO, by amending the RP Act, the donations made by way of electoral bonds are exempted from disclosure to the ECI and this would “adversely affect electoral transparency and encourage corrupt practices in politics”.
“The companies are no longer required to disclose the break-up of contributions made to different political parties. Removal of the statutory ceiling of 7.5% of average profits on donation to political parties now enables even loss-making companies to make donations of any amount to political parties out of their capital or reserves.
Further, it opens up the possibility of companies being brought into existence by unscrupulous elements primarily for routing funds to political parties through anonymous and opaque instruments like electoral bonds,” the petition claimed.
The new amendments are a mala fide attempt to bypass the approval of the Rajya Sabha, which holds an important place in the Constitutional and democratic framework of law-making, Bhushan stated.
The Lok Sabha had in March this year approved a proposal by the government, as part of amendments to the Finance Bill, 2017, relaxing conditions for corporate funding to political parties.