A Petition has been filed before the Kerala High Court challenging the Constitutional validity of provisions allowing companies and foreign institutions to fund political parties and candidates in elections in the country.

The Petition, filed by Mr. Victor T. Thomas, challenges Section 182 of the Companies Act, 2013, Section 29 B of the Representation of People’s Act 1951, and Section 2(1)(j)(vi) Proviso in the Foreign Contribution (Regulation) Act, 2010.

While prior to 2017, Section 182 of the Companies Act permitted a company to contribute up to 7.5% of its average profit of the last three years to political parties, this ceiling has been removed now. The value of donations can, therefore, be unlimited. Section 29B of the Representation of People's Act entitles political parties to accept contributions. The proviso to Section 2(1)(j)(vi) of the Foreign Contribution (Regulation) Act exempts from scrutiny foreign funds received by political parties with retrospective effect from 1976.

Challenging these provision, Mr. Thomas alleges that political parties receiving funds from corporate and foreign institutions will be "obliged" to act as the "representatives" of the said institutions. He submits, "...by the receipt of the funds from these corporates and foreign institutions it is definite that the elected candidates of the political party that forms the Government will act to protect the interest of these corporates and foreign institutions and the political and economic policies and regulations would be favoring them and the resultant losers are the citizens of India, and by large it is the failure of Indian democracy."

He then contends that the impugned provisions violate the basic structure of the Constitution of India, asserting, "Democracy is a basic and fundamental feature of our Constitution. Democracy aspires to establish an egalitarian social order. Opacity of election funding and the lifting of maximum limit of corporate funding and influence of foreign fund to political parties are posing great threat to the democratic polity of our Nation."

Mr. Thomas further alleges violation of Articles 14, 19 and 21 of the Constitution of India, averring, "...there are different sectors of corporate entities and there are large, small and medium sectors of these corporate entities. Now it is seen that it is the large corporate sectors in various fields that which fund the political parties and the said corporate in the sectors get the support from the government by direct and indirect means.

The corporate sectors which do not donate money may not get undue help or advantage from these government, thereby these corporates who do not fund the political parties would gradually be eliminated from the market by the undue favors done by the elected government and elected representatives to the other sectors which fund the political parties. Thereby the corporates who do not fund would be discriminated under Article 14 and it would also be an infringement of the principles under Article 14 and 19 of the constitution of India."

Besides, he contends that the impugned provisions corrupt the right of citizens to have free and fair elections, submitting, "The aftermath of the election would be that the Indian corporates and the foreign institutions would have a direct or indirect control over the elected government and the elected representatives, thereby influencing the policies and regulations in their favour and that would be detriment to the welfare of the citizens."

With these contentions, Mr. Thomas demands that the impugned provisions be declared unconstitutional and that as an interim relief, companies and foreign institutions be prohibited from funding political parties pending the disposal of the petition.