Reflection of Political Brotherhood in Law


When followers of two major Indian Political parties are using abusive language for mothers and others of opponent, their “leaders united” is working for their brotherhood causes silently, continuously and legally. One of the most popular narrative from both political side on social media claims, media do not show “their” truth. Here, we will discuss one aspect of this year’s budget unreported in conventional media.

We have discussed two year earlier here on 31st March 2014 Foreign Donation to political parties.

Association for Democratic Reforms and another vs. Union of India and others is a very important decision because two powerful parties Indian National Congress and Bhartiya Janata Party are accused.  The decision is a result of a writ Petition and we can find original decision here.

In this case two biggest national political parties and ruling alternatively this nation, was held guilty of accepting foreign contribution from foreign source which are subsidiaries of foreign companies in India in violation of the Foreign Contribution (Regulation) Act, 1973. Presently, the Foreign Contribution (Regulation) Act, 2010 is in force which retains earlier provision and effectively bans foreign contribution from foreign source.

More interestingly, the Companies Act, 2013 was passed in year 2013 with much hyped provisions of corporate Social Responsibilities which extended to companies which are technically foreign sources under the Foreign Contribution (Regulation) Act, 2010.   FCRA Law is applicable if a ‘person’ having a definite cultural, economic, educational, religious or social programme receives any foreign contribution from any foreign source. This create legal problem of compliance for these “Foreign Source” companies to comply CSR Law.

Now this budget, solve the legal problem of this holy provision of Corporate Social Responsibilities Law. No issue, if this benefits Social causes in India and in turn Indian political parties also.  However, to solve this legal compliance problem of these “Foreign Source” companies, an amendment with retrospective effect from 1st April 2013 was required; either exempts these companies from CSR Law or from FCRA Law.

In this year Budget, with all wisdom, Government decided to amend this FCRA Law. Clause 233 of the Finance Bill, 2016 read:

In the Foreign Contribution (Regulation) Act, 2010, in section 2, in sub-section (1), in clause (j), in sub-clause (vi), the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 26th September, 2010, namely:—

“Provided that where the nominal value of share capital is within the limits specified for foreign investment under the Foreign Exchange Management Act, 1999, or the rules or regulations made thereunder, then, notwithstanding the nominal value of share capital of a company being more than one-half of such value at the time of making the contribution, such company shall not be a foreign source;”.

This effectively bring all Indian companies which are subsidiaries of foreign government, foreign citizen or foreign company, trust, societies or other association of person, out of definition of foreign sources.

Most interesting thing is retrospective nature of amendment that too beyond 1st April 2013 to with effect from the 26th September, 2010 the date on which this Act came into force.

This retrospective amendment in the Foreign Contribution (Regulation) Act, 2010 seems to be made to protect political parties using excuse of Corporate Social Responsibilities.

This amendment became interesting when there was hue and cry against Non Government Organisations accepting Foreign Fund. This may be debated, whether Greenpeace may accept contribution from an Indian companies owned and controlled by Ford Foundation or other Foreign Source.

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3 responses to “Reflection of Political Brotherhood in Law

  1. Pingback: Index of Companies Law Posts | AishMGhrana

  2. Very good Analysis. Sir. It is unfair that political party ruling country which is sovereign function is permited to accept the foreign contribution. It may even compromise country security issues. We don’t know where our country is heading.

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