Court concludes that “Vedanta is a ‘foreign company’ within the meaning of the Companies Act, 1956 and therefore, Vedanta and its subsidiaries are a ‘foreign source’ as contemplated under the Foreign Contribution (Regulation) Act, 1976”

The Delhi High Court on Friday asked the Centre and the Election Commission to take appropriate action against the Congress and the BJP for allegedly accepting foreign funds in violation of the law.

A division bench of Justice Pradeep Nandrajog and Justice Jayant Nath held that the two national political parties flouted the norms of the Foreign Contribution (Regulation) Act, rejecting the stand taken by the Union Home Ministry.

The High Court directed the Home Ministry and the EC to “relook and reappraise the receipts of the political parties” to identify foreign donations and take action within six months.

The order of the bench came in response to a PIL filed by the Association for Democratic Reforms through advocate Prashant Bhushan claiming the Britain-based Vedanta Resources and its subsidiary companies in India — including Sterlite Industries, Sesa Goa and Malco of allegedly donating several crores of rupees to major political parties like the Congress and the BJP.

The High Court came to the conclusion that “Vedanta is a ‘foreign company’ within the meaning of the Companies Act, 1956 and therefore, Vedanta and its subsidiaries — Sterlite and Sesa — are a ‘foreign source’ as contemplated under the Foreign Contribution (Regulation) Act, 1976.”

“Prima facie the acts of the respondents (Congress and BJP) inter se, clearly fall foul of the ban imposed under the Foreign Contribution (Regulation) Act as the donations accepted by the political parties from Sterlite and Sesa accrue from ‘foreign sources’ within the meaning of law,” the bench said.

The PIL filed by NGO and E.A.S. Sarma, a former secretary in the central government, alleged that Indian laws had been violated by the Congress and the BJP by allegedly receiving funding from Vedanta Resources.

The two parties breached the Representation of the People Act (RPA), 1951, and the FCRA, the PIL alleged. The RPA prohibits political parties from taking donations from government companies and from foreign sources, the PIL has said.

The FCRA prohibits any financial contribution from any foreign source or company to a political party registered in India.

It has asked the central government to “confiscate the illegal donations under the supervision of the High Court”.

According to Vedanta’s 2012 annual report, it made political donations to the tune of $2.01 million in 2011-12, the PIL said.

“Sterlite’s annual report of 2011-12 also states that during the year the group made political donations in India of Rs.5 crore either through a trust or directly.”

The PIL has alleged that since Finance Minister P. Chidambaram was a director in Vedanta till May 2004, the government might not take any action against the group on its own.