New Delhi

The Supreme Court on Tuesday issued notices to the Centre and the Election Commission on a PIL demanding transparency in funding of political parties.

A bench headed by Chief Justice Dipak Misra asked the Centre and the poll panel to respond to the PIL filed by Association for Democratic Reforms (DAR) and Centre for Public Interest Litigation (CPIL) challenging the government’s attempt to legalise anonymous donations and relax cap on corporate donations to political parties for election funds.

The petitioners questioned the validity of various amendments made through Finance Act, 2017 and Finance Act, 2016 in Companies Act, Income Tax Act, Representation of People Act, Reserve Bank of India Act and Foreign Contribution Regulations Act.

On behalf of the petitioners, advocate Prashant Bhushan told the bench that political parties must not be allowed to accept any cash donations. The amendments removed the cap that barred corporate entities from donating more than 7.5% of their average net profit to a political party, he pointed out.

Political funding has been a major concern as the system lacked transparency. Most political parties prefer not to disclose the names of their donors and have devised their own mechanism to circumvent existing laws that have proved to be inadequate to enforce transparency.

The Election Commission in its 255th Report submitted to the government in March 2015 recommended that political parties should “fully and clearly” disclose all the amounts received and the expenditure incurred by them. It also recommended that the EC should then upload these audited accounts online or keep them on file for public inspection on payment of fee. But the report has been hanging fire.

According to the petitioners, Finance Act, 2017 introduced the use of electoral bonds which is exempt from disclosure under the Representation of People Act, 1951.

Finance Act, 2016 amended the Foreign Contribution Regulation Act (FCRA) allowing foreign companies with subsidiaries in India to fund political parties. This exposed Indian politics and democracy to international lobbyists who might want to further their own agenda, the petitioners contended.

Introduced as a Money Bills in the Lok Sabha, the amendments were a mala fide attempt to bypass the Rajya Sabha, which held an important place in the Constitutional and democratic framework of law-making, the petitioners submitted.

These amendments made it possible for corporates to make unlimited donations to political parties without giving details of such donations, the petitioners said.

Further, the annual contribution reports of political parties to be furnished to the Election Commission need not mention names and addresses of those contributing by way of electoral bonds, the petitioner NGOs said, adding, “This will have a major implication on transparency in political funding.”

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