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The Supreme Court has sought a response from the Centre on a plea challenging changes in law – with retrospective effect – to allow political parties to receive foreign funding.

The petition filed by Association for Democratic Reforms (ADR) and others alleges that the amendments to the Foreign Contribution Regulation Act, 2010, through the Finance Act, 2016 and the Finance Act, 2018, have opened the doors to unlimited political donations from foreign firms.

A bench comprising Chief Justice Dipak Misra and Justices AM Khanwilkar and DY Chandrachud issued a notice to the Union Ministry of Home Affairs on the plea.

“The said amendments have been made in an attempt to overturn the judgment passed by the Delhi High Court (in a PIL filed by petitioners herein) holding the two major political parties (the BJP and the Congress) guilty of taking foreign funding, against which the special leave petitions were dismissed by this court,” the petitioners argued.

“The said amendments have opened doors to unlimited political donations from foreign companies and thereby legitimizing financial contributions received from foreign sources,” they alleged.

They said the way amendments were brought in also violates the doctrine of separation of powers: they were introduced through the new Finance Act, 2018, which was passed as a Money Bill, bypassing the Rajya Sabha. Petitioners said the amendment does not qualify as Money Bill.

They also said the amendments would lead to creation of shell companies and give rise to benami transactions. By extending the applicability of a retrospective amendment from 1976, the legislature has tried to breach the basic structure of Constitution, the petitioners said.

The government will now have to file a formal reply defending the amendments. The amendments were made after a Delhi High Court judgement, delivered on March 28, 2014, which had declared as illegal donations made by some NRI-led companies such as Vedanta to the BJP and Congress.

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