The Delhi High Court today held that BJP and Congress prima facie violated the foreign funding law by receiving donations from UK-based Vedanta Resources' subsidiaries and directed the Centre and Election Commission (EC)to take appropriate action against them within six months.

A bench of justices Pradeep Nandrajog and Jayanth Nath also directed the government and EC to "relook and reappraise the receipts of the political parties", identify the funding from all foreign sources and take action "as contemplated by law".

"For the reasons extensively highlighted in the preceding paragraphs, we have no hesitation in arriving at the view that prima-facie the acts of the respondents (BJP and Congress) inter-se, as highlighted in the present petition, clearly fall foul of the ban imposed under the Foreign Contribution (Regulation) Act, 1976 as the donations accepted by the political parties from Sterlite and Sesa accrue from foreign sources within the meaning of law," the court said.

The bench also said, "Respondents 1 and 2 (Centre and EC) would relook and reappraise the receipts of the political parties and would identify foreign contributions received by foreign sources as per law declared by us hereinabove and would take action as contemplated by law."

The court also held that Vedanta is a foreign company as per the Companies Act and therefore, the Anil Aggarwal-owned company and its subsidiaries, Sterlite and Sesa, are foreign sources as per Foreign Contribution (Regulation) Act (FCRA).

The 33-page verdict was delivered on a PIL by a NGO, Association for Democratic Reforms and E A S Sarma, a former secretary of the Government of India, who had alleged that the two political parties violated the Representation of People's Act and FCRA by taking donations from government companies and foreign sources.

They had also alleged that Vedanta and its subsidiaries donated several crores of rupees to major political parties such as the Congress and BJP. 

The PIL had also alleged that according to Vedanta's annual report of 2012, it had made political donations to the tune of USD 2.01 million either through a trust or directly in respect of the Indian general elections.

BJP and Congress in their defence had contended that Vedanta is owned by an Indian citizen, Aggarwal, and its subsidiaries are incorporated here, therefore they are not foreign sources.

Congress had also submitted that a donation of Rs one lakh to its coffers by State Trading Corporation and Metals and Minerals Trading Corporation of India were made by mistake as the same was meant for the National Student Union of India (NSUI).

Regarding this aspect, the court directed the Centre and EC to "investigate the matter" and find out whether the same was a stray incident and possibly a mistake or otherwise.

"Depending upon the decision taken further action would be taken as per law," the court directed and disposed of the petition.