Court directs Congress to explain foreign donations by May 24

The Union home ministry has asked the Congress party to explain the source of foreign donations amounting to Rs 37.5 million received during 1994-95.

The home ministry informed the Delhi high court that if the Congress fails to furnish the information by May 24 further action will be taken against the party, including search of the party premises and seizure of documents.

Additional Solicitor General Abhishek Manu Singhvi appearing for the home ministry said the Congress, on March 31, had written to the Foreign Contribution Regulation Act cell, stating that the party had received contributions amounting to Rs 37.5 million 'from outside India through proper banking and official channels.' It added that due to 'oversight' it had failed to bring this to the notice of the FCRA.

However, as political parties are completely prohibited from receiving contributions from foreign sources, the Congress was issued a show cause notice on April 29. The party was directed to inform the home ministry within 14 days, the 'status' of the foreign companies from which the money had been received. The concerned central enforcement agencies were also asked to furnish their report.

The Congress later received an additional 14 days as it was unable to get the requisite information from the bank.

The public interest petition was filed by freelance journalist Madhuresh, seeking prosecution of Congress president Sitaram Kesri and other concerned party officials for violation of FCRA.

Prashant Bhushan, appearing for the petitioner, described the home ministry's stand as an 'eyewash' and said it was immaterial to indicate the donor as it was clearly established that the funds had come from a foreign source.

Quoting media reports, he said the Enforcement Directorate had revealed that the three companies --Decor, Dierra and Dominion -- from where three demand drafts were received on the same day were 'bogus companies' registered in 'tax havens' for the purpose of evading taxes.

The bench directed Additional Solicitor General K N Bhatt, appearing for the Central Board of Direct Taxes and counsel R D Jolly to file an affidavit by the next hearing, placing on record the material it had on the receipt of foreign donations by the Congress.

It said the confidential information should be placed before the court in sealed covers.

The bench asked the CBDT whether the Congress had received donations from these sources in the past.

The judges also told Bhushan to study the FCRA to see who is to be prosecuted for violations and to consider making the congress a party in the current proceedings.

Bhushan contended that under section 2 of FCRA, the contributions received by the Congress fell foul of the act and immediate criminal proceedings should be started against those responsible for the lapse.

Dr Singhvi, however, differed and said that under section 2 (1) (c) and 2 (1) (e) of FCRA, donations from non-resident Indians and companies incorporated abroad with less than 50 per cent foreign equity participation, could give donations to Indian political parties.

He added that the ministry wanted to satisfy itself about the source of the foreign donations as this was the 'condition precedent' before launching proceedings under FCRA. "It will not be in the general public interest to launch half-baked proceedings which would be quashed by the courts,'' he added.

The Congress has been told to furnish information regarding names, addresses and other details of the donors as also details of the persons who have received the contributions on behalf of the party.

The court was informed that while the demand drafts were deposited in the Union Bank of India, New Delhi, the drafts were made by the Indian Bank in Singapore, the Hong Kong and Shanghai Bank in Jakarta, Barclay Bank in London and the Isle of Man.

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