The judgment establishes the interpretation of the Foreign Contribution (Regulation) Act, 1976, and its application to donations made by foreign companies to political parties, clarifying the definition of 'Foreign Source' and 'Corporation' under the Act.

Pradeep Nandrajog, J.

1. Filed in public interest, the petitioner asserts that there is a blatant violation of the Foreign Contribution (Regulation) Act, 1976 (hereinafter referred to as ‘FCRA’) by political parties which include the Respondent No.3 and the Respondent No.4. It is asserted that Section 29(b) of the Representation of People Act, 1951 prohibits political parties from taking donations from Government Companies as also from a foreign source. The petitioner asserts that FCRA prohibits acceptance of foreign contributions by political parties as per the mandate of Section 4(1)(e) thereof.

2. Since the writ petition drew attention to donations made to political parties for the period up to the year 2009, we record at the outset that our concern is not with the Foreign Contribution (Regulation) Act, 2010 which has come into force on September 26, 2010. Our discussion of the legal position would be with respect to the Foreign Contribution (Regulation) Act, 1976.

3. By way of illustration, the petitioner relies upon the annual report of Vedanta Resources plc, a company incorporated under the Companies Act, 1985 and registered in England and Wales with registration No.04740415 as also the annual report of M/s Sterlite Industries India Ltd. (hereinafter referred to as Sterlite), a company registered in India under the Companies Act, 1956 evidencing donation made by Sterlite to political parties in India. The petitioner also refers to a company by the name of M/s Sesa Goa Ltd. (hereinafter referred to as Sesa), which is incorporation in India under the Companies Act, 1956 but controlling shareholding whereof is owned by Vedanta Resources plc. The said company has also made donations to political parties. The petitioner brings home with reference to the annual report of Vedanta Resources plc that it owns 55.1% of the issued share capital of Sterlite. The petitioner would concede that Sh.Anil Aggarwal, an Indian National and a citizen of India holds more than 50% issued share capital of Vedanta Resources plc. As regards the Respondent No.3 the petitioner brings out that two Government Companies: State Trading Corporation and Metals & Minerals Trading Corporation of India have donated money to the Respondent No.3, a fact admitted to by Sh.Motilal Mehra, the Treasurer of the party in his communication dated September 29, 2008 to the Election Commission of India. Section 293(a) of the Companies Act, 1956 is alleged to have been violated by the Respondent No.3 when it accepted donations from the State Trading Corporation and Metals & Minerals Trading Corporation of India.

4. The Respondent No.3 admits that `1,00,000/- each paid by State Trading Corporation and Metals & Minerals Trading Corporation of India finds a mention in the return submitted by its Treasurer to the Election Commission of India, but seeks to explain that the donations were actually made to the National Student Union of India (NSUI) as a part of a national campaign form Centenary Celebration of Satyagaraha which was sponsored by said two Corporations, which were conceded to be Government Companies. In other words, the defence is one of it being an inadvertent mistake. A donation required to be entered in the account of NSUI has been erroneously entered in the account of the Respondent No.3.

5. We shall be discussing the effect thereof at the end of our decision, but would highlight at this stage that with respect to petitioner’s pleading concerning the two Government Companies, the parties were not at variance on any question of law or fact. The only question would be to consider whether the defence of inadvertent mistake is plausible.

6. The major concern would be the interpretation of FCRA keeping in view the admitted fact that Sterlite and Sesa are companies registered in India under the Companies Act, 1956 and more than 50% of their issued share capital is held by Vedanta Resources plc a company incorporation under the Companies Act, 1985 and regist