New Delhi

The Supreme Court today sought the response of the Centre and the Election Commission on a joint petition filed by NGOs challenging amendments to the 2016 and 2017 Finance Acts that allegedly allow unfettered donations by corporate houses in India and foreign entities to parties in the name of "political bonds".

According to advocates Prashant Bhushan and Neha Rathi, appearing for the NGOs Association of Democratic Reforms and Centre for Public Interest Litigation, amendments have also been made through the two budgets to the Companies Act, Income Tax Act, Representation of People's Act, Reserve Bank of India Act and the Foreign Contribution (Regulation) Act, seriously affecting the sanctity of the democratic election process and governance.

The petitioners submitted that if the recent amendments are not set aside, corporate houses and extremely wealthy lobby groups can gain a stranglehold on the electoral process and governance.

"Such activities, if allowed, can result in a situation that legislation, regulations, etc, can be ultimately passed and laws brought in to favour these corporates and lobby groups at the expense of the common citizens of the country," the petition stated.

The Finance Act, 2017, which was enacted as a money bill, has introduced a system of electoral bonds to be issued by scheduled banks for the purpose of poll funding. The Act has removed the donation ceiling of 7.5 per cent of a company's average three-year net profit, which means unlimited political donations can be made by corporate houses without having to divulge the name of the parties they are funding.

The new amendments are a mala fide attempt to bypass the approval of the Rajya Sabha by routing it as a money bill, the NGOs alleged.

"The consequence of these amendments is that corporates can make unlimited donations to political parties and need not give details of such donations. Also, now the annual contribution reports of political parties to be furnished to the Election Commission need not mention the names and addresses of those contributing by way of electoral bonds. This will have a major implication on transparency in political funding," the petition said.

After going through the petition, the bench of Chief Justice Dipak Misra and Justices A.M. Khanwilkar and D.Y. Chandrachud issued notices to the Centre and the poll panel for their response within four weeks.

According to the NGOs, the Finance Act of 2017 has introduced electoral bonds, which are exempt from disclosure under the Representation of Peoples Act, 1951. They also alleged that the Finance Act, 2016, had amended the Foreign Contribution (Regulation) Act, 2010, to allow foreign companies with subsidiaries in India to fund political parties, effectively exposing Indian politics and democracy to international lobbyists who may want to further their agenda.

"These amendments pose a serious danger to the autonomy of the country and are bound to adversely affect electoral transparency, encourage corrupt practices in politics. (They) 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," the petition said.

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