Political Funding: SC Issues Notices To Centre, EC On PIL Challenging Finance Act Amendments [Read Petition]

The Supreme Court on Tuesday issued notices to the Centre and Election Commission of India on a petition filed on behalf of Association of Democratic Reforms (ADR) and Centre for Public Interest Litigation (CPIL) challenging various amendments made through the Finance Act 2017 and the Finance Act 2016 in the Companies Act, Income Tax Act, Representation of People’s Act, Reserve Bank of India Act and Foreign Contribution Regulations Act.

The petitioners submitted that the amendments in question had opened floodgates to unlimited corporate donations to political parties and anonymous financing by Indian and foreign companies, which can have serious repercussions on the Indian democracy. The said amendments have removed the caps on campaign donations by companies and have legalised anonymous donations.

The petition, filed through advocates Prashant Bhushan and Neha Rathi, also sought a direction that political parties must not be allowed to accept any cash donations.

“The Finance Act of 2017 has introduced the use of electoral bonds which is exempt from disclosure under the Representation of Peoples Act, 1951, opening doors to unchecked, unknown funding to political parties. The Finance Act, 2016 has also amended the Foreign Contribution Regulation Act (FCRA), 2010, to allow foreign companies with subsidiaries in India to fund political parties in India, effectively, exposing the Indian politics and democracy to international lobbyists who may want to further their agenda. These Amendments pose a serious danger to the autonomy of the country and are bound to adversely affect electoral transparency, encourage corrupt practices in politics and have made the unholy nexus between politics and corporate houses more opaque and treacherous and is bound to be misused by special interest groups and corporate lobbyists,” it said.

The petitioners also submitted that such wide-ranging amendments in various statutes were brought in illegally as a Money Bill, in order to bypass the Rajya Sabha.

The details of the amendments made to various statutes introduced through Finance Act, 2017 and Finance Act 2016 are:

1. Section 31, the Reserve Bank of India Act, 1934 through Part  III, Section 135 of the Finance Act, 2017,


2. Section 29C, the Representation of the People Act, 1951 through Part – IV, Section 137 of the Finance Act, 2017,


3.  Section 13A, the Income Tax Act, 1961 through Chapter III, Section 11 of the Finance Act, 2017 and in


4. Section 182 of the Companies Act, 2013 through Part-XII, Section 154, the Finance Act, 2017.


5. Section 2 of the Foreign Contribution Regulation Act, 2010 (FCRA) through Finance Act, 2016.

According to the petitioners, the above amendments were unconstitutional and violative of the doctrine of separation of powers and a citizen’s fundamental right to information, which are parts of the basic structure of the Constitution.