NEW DELHI: Justice A P Shah, the former chairman of the law commission, has written a letter to Prime Minister Narendra Modi seeking his intervention to restore the original provisions of the Companies Act, which puts a cap on political donations by companies.

Shah also asked Modi to prevent de-criminalising of economic offences in India even as a panel set up by the ministry of corporate affairs considers easing some of the penalties under the Companies Act. In his letter sent to the PM on Monday, Justice Shah has said that the Finance Act 2017 had "surreptitiously done away with the limits on political donations" which had earlier, under Section 182 of the Companies Act, put a cap of 7.5% of the company's average net profit of the last three financial years.

The companies are no longer required to disclose the names of political parties to which donations are to be made which may lead to increase in black money and corruption, he said. "This will also lead to the creation of shell companies and rise of benami transactions to channelise the undocumented money into the political and electoral process in India," he said.

Justice Shah said removal of the cap would also result in even loss-making companies to make donations of any amount out of their capital at the cost of poor shareholders.

The use of electoral bonds , which is exempt from disclosure under the Representation of People's Act, "will open the doors for unchecked, unknown funding to political parties". He said amendment in the foreign contribution regulation act has further exposed Indian politics and the democracy to international lobbyists. Justice Shah urged the PM to urgently intervene as this goes contrary to the campaign he started against corruption.

