Delhi high court issues show-cause notice to Congress

The Delhi high court on Monday issued a show-cause notice to the Congress party for July 15 on alleged violation of the Foreign Contribution Regulation Act (FCRA) by the party in receiving Rs 37.5 million in foreign contributions from 1993-95.

A division bench consisting of acting Chief Justice Mahinder Narain and Justice S K Mahajan directed the party to file its reply to the notice before the next date of hearing on July 15.

Meanwhile, Additional Solicitor General A M Singhvi on Monday told the bench that the Union home ministry received a reply from the Congress on May 24 regarding the foreign contributions received by it.

Asked whether the ''source'' of the contribution was not known, Singhvi said the reply only stated that FCRA provisions would not be applicable to the present case.

Singhvi said the ministry received the party's reply late on Saturday evening, the last date set by it to furnish the information. The FCRA cell under the home ministry needs time to examine the reply and take appropriate action, the senior counsel told the bench.

Counsel Prashant Bhushan, appearing for petitioner Madhuresh, a freelance journalist, however, charged the government with ''wasting time'' and said that action should be immediately initiated against the Congress for receiving foreign contributions in violation of the FCRA, which completely bars political parties or their office-bearers from accepting such donations.

Senior counsel G L Sanghi appearing for Congress president Sitaram Kesri, who was the party treasurer when the foreign contributions were received, sought time to file a reply on Kesri's behalf.

The Central Board of Direct Taxes, represented by Additional Solicitor General K N Bhatt, on Monday submitted to the court in sealed covers the material in its possession regarding the alleged FCRA violations by the Congress.

Pleading for the prosecution of the Congress as the fourth respondent in the petition, Bhushan told the bench that he had initially made Kesri as the respondent because he was the party treasurer at the relevant time and would normally have been responsible for the receipts of donations, including those from foreign sources, by the party.

However, section 26 of the FCRA provides that where the offence has been committed by a company, which includes associations like political parties, every person in charge of the company at the time of the offence, as well as the company shall be liable to be proceeded against and punished.

''In view of this provision in the FCRA, 1976, there would be other persons in the Congress party who would also be held responsible and guilty under the act. Apart from this, the party itself could be held guilty and fined under the act for an amount which is upto five times the foreign contributions received. In these circumstances, it would be appropriate and in the interest of justice that the Congress be made a respondent in this petition,'' the application filed by Bhushan said.

According to the home ministry, the Congress received foreign contributions from several sources for varying amounts between 1993 and 1995. It received a demand draft each from Decor Trading Ltd, Diora Trading Ltd (both from Antigua and Barbados) and Dominion Trading Ltd (Isle-of-Man) on December 21 1993. The drafts were drawn on the Indian Bank, Singapore. While the first two companies contributed Rs 3 million, the third gave Rs 4 million.

According to Bhushan, these are ''bogus companies'' registered in ''tax havens'' for purpose of evading taxes.

The Congress received two demand drafts of Rs 10 million each, drawn on the Hong Kong and Shanghai Bank, Jarkarta, Indonesia, sent by a ''non-resident Indian''.

It also received demand drafts worth Rs 2.5 million each on January 16, 1995, February 13, 1995 and April 13, 1995 drawn on the Barclays Bank in London and Isle of Man.

In a letter to the home ministry on March 31, 1997, the Congress admitted that it had received donations from overseas through official banking channels and had failed to bring it to the notice of the FCRA cell due to ''oversight''.

However, as section four of FCRA completely bars political parties from receiving contributions from foreign sources, the home ministry issued notice to the Congress on April 29 and 30 directing it to furnish information regarding the status of the companies and individuals from whom it received the contributions and also the names, destinations and addresses of persons who received these on behalf of the party.