As per the case facts, these petitions primarily challenge the constitutional validity of amendments to the Foreign Contribution (Regulation) Act, 2010, made by the 2020 Amendment Act. The petitioners, including ...
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1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO. 566 OF 2021
NOEL HARPER & ORS. …PETITIONERS
VERSUS
UNION OF INDIA & ANR. …RESPONDENTS
WITH
WRIT PETITION (CIVIL) NO. 634 OF 2021
AND
WRIT PETITION (CIVIL) NO. 751 OF 2021
J U D G M E N T
A.M. KHANWILKAR, J.
1. These petitions under Article 32 of the Constitution of India
primarily assail the constitutional validity of the amendments to the
provisions of the Foreign Contribution (Regulation) Act, 2010
1 vide
the Foreign Contribution (Regulation) Amendment Act, 2020
2, which
has come into effect on 29.9.2020, in particular, Sections 7, 12(1A),
1
for short, “the 2010 Act” or “the Principal Act”, as the case may be
2
for short, “the 2020 Act” or “the Amendment Act”, as the case may be
2
12A and 17(1), being manifestly arbitrary, unreasonable and
impinging upon the fundamental rights guaranteed to the
petitioners under Articles 14, 19 and 21 of the Constitution.
2. Re: Writ Petition (Civil) No. 566 of 2021
(a) Petitioner No. 1 in this petition along with Carol Faison founded
a trust in the name of “The Care and Share Charitable Trust” in
Vijayawada, India (bearing Registration No. 242/1997), in the year
1997. It is the case of the petitioners that the Trust is also registered
with the Income Tax authorities and Ministry of Home Affairs,
Government of India including under the Foreign Contribution
(Regulation) Act, 1976
3 for receipt of foreign funds (FCRA No.
010260151 dated 8.12.1998 and renewed on 10.8.2016 under the
2010 Act). Petitioner No. 1 is serving as one of the trustees of the
said Trust and petitioner No. 2 (Nigel Mills) is a social worker and
one of the trustees of the stated Trust. The Trust is engaged in the
social upliftment activity such as helping children below the poverty
line in Vijayawada (Andhra Pradesh, India), street children, children
of sex workers, physically challenged kids, shelter orphans,
abandoned babies and assisting juveniles detained in the
3
for short, “the 1976 Act”
3
observation home (local reformatory). The Trust has built and is
running nine schools in different slums. It has rescued over 1000
street children, 165 infants, HIV positive and AIDS orphans of
Vijayawada. The Trust also engages in daily milk program for 500
kindergarten children since year 2000. The Trust has been awarded
National Award for Child Welfare by the Government of India,
Ministry of Women and Child Development in the year 2007, for its
exceptional work and contribution in the field of child welfare.
(b) The petitioner Nos. 3 and 4 are also trustees of National Worker
Welfare Trust (NWWT), which is registered under the Indian Trusts
Act, 1882
4 in Secunderabad, Telangana on 17.5.2016. Even this
trust is registered with Ministry of Home Affairs, Government of
India under the 2010 Act for receipt of foreign funds (FCRA
Registration No. 010230883). It is engaged in rehabilitation of
migrant workers, with International Labour Organisation (ILO) and
addresses the concerns of women workers from the marginalised
communities and prospective migrant workers (interstate and
oversees), families of migrants, communities, leaders of
communities, returnees, women organisations, trade unions, local
4
for short, “the 1882 Act”
4
panchayats, Mandal, district and State department connected with
labour and administration and governance related to these workers.
Both these trusts, it is urged, are dependent upon foreign
contributions to meet their day-to-day expenses. However, with the
amendments effected in year 2020 to the provisions of the 2010 Act,
a new dispensation has been set forth, which in their opinion, is
manifestly arbitrary. For, it entails in cancellation of certificate
5
of
the trust permitting receipt of foreign contributions for being utilised
towards the activities of the concerned trust. Similarly, the
operational “FCRA account” will be barred from receiving foreign
contribution. The petitioner-Trusts and similarly placed persons
6
(individuals/non-profit organisations) shall mandatorily have to
5
The expression “certificate” as defined in Section 2(1)(e) of the 2010 Act as amended, reads
thus:
“2. Definitions.—(1) In this Act, unless the context otherwise requires,—
(a) to (e) xxx xxx xxx
(e) “certificate” means certificate of registration granted under
sub-section (3) of section 12;”
6
The expression “person” as defined in Section 2(1)(m) of the 2010 Act as amended, reads thus:
“2. Definitions.—(1) In this Act, unless the context otherwise requires,—
(a) to (l) xxx xxx xxx
(m) “person” includes—
(i) an individual;
(ii) a Hindu undivided family;
(iii) an association;
(iv) a company registered under section 25 of the Companies Act, 1956
(1 of 1956);”
5
shift to new regime and open FCRA account(s) in the specified
branch on or before the designated date. There is no tangible
justification forthcoming for introducing such a change in the
dispensation.
(c) The petitioners have referred to the Circular issued by the
Reserve Bank of India (RBI) dated 6.2.2012 in exercise of its power
under Section 36(1)(a) of the Banking Regulation Act, 19 49,
containing detailed guidelines for implementation of the provisions
of the 2010 Act including the opening of FCRA accounts in all
scheduled commercial banks (excludi ng Regional Rural
Banks/RRBs) throughout India. Public notice dated 3.10.2020
issued by the respondent No. 2 after advent of the changed
dispensation owing to the amendment of the provisions of the 2010
Act in the year 2020 is, therefore, excessive and without jurisdiction
and, thus, unenforceable in law. Further, the amendment of Section
7 of the 2010 Act prohibits the registered person from transferring
any foreign contribution irrespective of whether such person is duly
registered or not, which was otherwise permitted under the
unamended provision. This change is also arbitrary and directly
affects the implementation of the social upliftment schemes of the
6
Trusts through foreign contribution. It is a blanket ban on transfer
of foreign contributions, thus affecting the collaborations in
developing eco-system(s), especially for smaller and less visible
grassroot organisations that may not meet the criteria or be able to
submit detailed proposals to get access to grants from foreign
countries. The grassroot organisations, in some cases, may not have
the track record or meet the eligibility criteria to obtain registration
under the Act and are entirely dependent on the funding/transfer by
foundations, such as the petitioner-Trusts. The intermediary
organisations, which provide the necessary identification,
monitoring and capability building of the smaller non-profit
organisations, which would be completely jeopardised because of the
changed dispensation. Resultantly, Section 7 read with Section
17(1), as amended, is violative of the rights guaranteed under
Articles 19(1)(c) and 19(1)(a) of the Constitution of India. These
provisions also suffer from the vice of ambiguity and overbreadth or
over-governance, thereby violating Article 14 as well.
(d) The petitioners have also assailed the validity of Section 12A,
whereby it is made mandatory to produce Aadhaar card details of
the office bearers/functionaries/directors of the societies/trusts as
7
identification document for the purpose of seeking registration, even
though they are expected to file application for grant of certificate
under Section 12 or get their certificate renewed under Section 16.
To buttress this assail, petitioners have relied upon the dictum of
Constitution Bench of this Court in K.S. Puttaswamy (Retired) &
Anr. (AADHAAR) vs. Union of India & Anr.
7
.
(e) The petitioners have also challenged the validity of Sections
17(1) and 12(1A) on the ground that the same suffer from the vice of
manifest unreasonableness, ambiguity, overbreadth and impose
unreasonable restrictions. Section 17(1) is also discriminatory, as it
mandates opening of “FCRA account” and receiving of foreign
contribution only at one bank at New Delhi, i.e., New Delhi Main
Branch
8
of the State Bank of India
9
, 11, Sansad Marg, New Delhi-
110001 on specious ground of logistical issues for verification of
accounts at different locations. Broadly on these assertions, the
petitioners have prayed for the following reliefs: -
“a. To hold and declare that the impugned Sections 7, 12A,
12(1A) and 17 as inserted in the FCRA, 2010 by the
Foreign Contribution (Regulation) Amendment Act, 2020
7
(2019) 1 SCC 1 (paras 490 and 494)
8
for short, “NDMB”
9
for short, “SBI”
8
are ultra vires Articles 14, 19 & 21 of the Constitution of
India and the same be struck down as unconstitutional.
b. A writ in the nature of certiorari and/or any other writ,
order or direction of like nature setting aside and
quashing the impugned public notice dated 13
th
October,
2020 issued by the Respondent No. 2 a s illegal and
unconstitutional.
c. To direct the Respondents not to interfere with the
acceptance and utilisation of foreign contribution,
operation of the existing bank accounts in the scheduled
banks and function of the petitioners and its bonafide
members, and
d. Pass such other order/orders as Your Lordships may
deem fit and proper in the facts and circumstances of the
case.”
3. Re: Writ Petition (Civil) No. 751 of 2021
(a) Petitioner Nos. 1 to 4 in this petition claim to be non-profit
organisations/Trusts from all over the country having registration
under the 2010 Act and petitioner No. 5 is an individual. The
petitioner-Trusts are voluntary organisations, duly registered under
the unamended 2010 Act. They are engaged in carrying out social,
educational and/or religious charitable activities for persons across
communities. Their activities range from providing educational and
vocational training and food, clothing and medicine for the destitute,
to support the disabled and the aged, conducting AIDS awareness
camps and taking care of the needs of widows and orphan ed
9
children. They claim to have played pivotal role in COVID-19 relief
efforts. Reliance is placed on the dictum of this Court in Public
Union for Civil Liberties vs. State of T.N. & Ors.
10
, as to the
recognition by this Court regarding indispensable role played by
non-profit organisations.
(b) Even these petitioners have assailed amended provisions of the
2010 Act, in particular, Section 17 of the Act being violative of
Articles 14, 19(1)(c), 19(1)(g) and 21 of the Constitution of India
insofar as it requires opening of primary FCRA account in SBI,
NDMB only. It is their case that non-profit organisations and
voluntary organisations such as the petitioner organisations
contribute enormously to India’s GDP and provide livelihood to
millions of people through direct employment and social welfare
activities undertaken by them. Their role ranges from service
delivery and welfare activities and welfare works for community
development, promoting democracy, human rights, equitable
governance and citizens’ participation. They focus their activities
particularly in low social sector spending in India by tapping into
10
(2004) 12 SCC 381 (para 5)
10
global philanthropy. It is stated that foreign contributions have
increased from Rs.10,282 crore in 2009-2010 to Rs.16,343 crore in
2018-2019, which is a significant contribution through foreign
funds. The amended provisions of the 2010 Act, however, have
altered the compliance procedure including the registration of the
Trusts receiving foreign contributions. That change, however, is
manifestly arbitrary, irrational and unreasonable. The purpose of
provisions such as Section 17 (unamended) and the relevant Rules
framed under the Act served the cause of effective monitoring of
foreign contribution received, in order to prevent misutilisation of
such funds. However, the amended provision is excessive,
irrational, arbitrary and falls foul of test of proportionality. It suffers
from the vice of disproportionate restrictions and failure to provide
fair procedure. To buttress the grounds of challenge, reliance is
placed on K.C. Gajapati Narayan Deo & Ors. vs. State of
Orissa
11; Maneka Gandhi vs. Union of India & Anr.
12; Ajay
Hasia & Ors. vs. Khalid Mujib Sehravardi & Ors.
13; Indra
Sawhney & Ors. vs. Union of India & Ors.
14; T.M.A. Pai
11
AIR 1953 SC 375
12
(1978) 1 SCC 248
13
(1981) 1 SCC 722 (para 16)
14
1992 Supp (3) SCC 217
11
Foundation & Ors. vs. State of Karnataka & Ors.
15; Natural
Resources Allocation, In Re, Special Reference No.1 of 2012
16;
Modern Dental College and Research Centre & Ors. vs. State of
Madhya Pradesh & Ors.
17; Shayara Bano vs. Union of India &
Ors.
18; Navtej Singh Johar & Ors. vs. Union of India
19; K.S.
Puttaswamy
20; Anuradha Bhasin vs. Union of India & Ors.
21;
and Indian Social Action Forum (INSAF) vs. Union of India
22.
(c) On such assertion, the petitioners have prayed for the following
reliefs: -
“a. A writ of mandamus or any other writ/order declaring
that Section 17 of the FCRA is violative of Articles 14,
19(1)(c), 19(1)(g) and 21 of the Constitution, in so far as
it requires that the primary FCRA account is to be opened
exclusively in a branch of the State Bank of India, New
Delhi, as notified by the Respondent No. 1;
b. A writ of certiorari or any other writ/order quashing the
MHA Notification No. S.O. 3479(E) dated 7 October 2020
issued by Respondent No. 1 as being violative of Articles
14, 19(1)(c), 19(1)(g) and 21 of the Constitution;
c. A writ of certiorari or any other writ/order quashing the
public notice bearing F.No. II/21022/23/(35)/2019 -
FCRA-III dated 13 October 2020 as being violative of
Articles 14, 19(1)(c), 19(1)(g) and 21 of the Constitution;
15
(2002) 8 SCC 481 (para 25)
16
(2012) 10 SCC 1 (para 107)
17
(2016) 7 SCC 353 (paras 60)
18
(2017) 9 SCC 1 (para 101)
19
(2018) 10 SCC 1
20
supra at Footnote No.7 (para 157)
21
(2020) 3 SCC 637 (paras 78 to 80)
22
AIR 2020 SC 1363 (for short, “INSAF”) (para 15)
12
d. A writ of certiorari or any other writ/order quashing the
public notice bearing II/21022/36/(58)/2021-FCRA-III
dated 18 May 2021 as being violative of Articles 14,
19(1)(c), 19(1)(g) and 21 of the Constitution.
e. Any other orders as deemed fit in the interests of justice.”
4. Re: Writ Petition (Civil) No. 634 of 2021
(a) This petition is filed as public interest litigation under Article
32 of the Constitution, challenging the decision of the competent
authority in extending the timeline for registration and compliance
as per the amended provisions of the 2010 Act being unnecessary
and in excess of the authority. It is a counter action filed by an
individual for issuing direction and peremptory writ of mandamus
against the respondent No. 1 (Union of India) to desist from granting
further extension to Non-Governmental Organisations
23
for
complying with the provisions of the 2020 Act; and to maintain
register of all NGOs receiving funds from the foreign countries
strictly as per the provisions of amended 2010 Act. This petitioner
is also relying upon the dictum in INSAF
24; adverting to the
objective of the 2010 Act. Reliance is also placed on the elucidation
of this Court in In Re: Distribution of Essential Supplies and
23
for short, “NGOs”
24
supra at Footnote No.22 (para 18)
13
Services During Pandemic
25, for issuing a peremptory writ. Also,
reliance is placed on the decision in Teesta Atul Setalvad vs. State
of Gujarat
26, to urge that in the past instances have come to the
fore regarding misappropriation of funds by NGOs. Lastly, reliance
is placed on Rev. Stainislaus vs. State of Madhya Pradesh &
Ors.
27.
(b) The principal relief claimed in this petition, however, does not
survive for consideration. For, the date of last extension granted by
the competent authority has expired; and no further extension had
been granted thereafter during the pendency of this writ petition.
Nevertheless, we reproduce the reliefs claimed in this writ petition,
which read thus: -
“A. Issue a Peremptory Writ of Mandamus directing
Respondent No. 1 not to grant any further extension to
the NGOs from complying with the mandate of the FCRA
(Amendment) Act, 2020.
B. Direct Respondent No. 1 and Respondent No. 2 to
maintain a register of all NGOs who are involved in the
receiving of funds received under FCRA, particularly
during Covid times.
C. Direct the Respondent No. 3 to place on record all
information about the steps taken by it with regard to the
FCRA violation by NGOs, in the context of Child Rights?
25
2021 SCC OnLine SC 339 (Suo Moto Writ Petition (C) No.3 of 2021)
26
(2018) 2 SCC 372
27
(1977) 1 SCC 677
14
D. Pass such other Order or directions as this Hon’ble Court
may deem fit in the facts and circumstances of the case
for doing complete justice in the matter.”
5. Common reply of Respondent-Union of India
(a) Respondents have filed a common affidavit in response to the
averments made in the three writ petitions. The thrust of their plea
is that the amendment does not bar any person to transact in foreign
contribution provided it is compliant with the parameters predicated
in the 2010 Act including concerning FCRA registration or prior
permission. The amendments were necessitated owing to past
experience of the executive and is a matter of legislative wisdom. The
amendments are intended to ensure effective regulatory measures
regarding inflow and utilisation of foreign funds. These are
uniformly applicable and do not discriminate any NGO receiving
foreign contribution from foreign donors and its utilisation. It is
stated that the amendments, in no manner, impact the fundamental
rights, much less under Articles 14, 19(1)(c), 19(1)(g) and 21 of the
Constitution, as contended.
(b) The 2010 Act lays down a clear legislative policy of strict control
in respect of foreign contributions and its utilisation for specified
15
activities in the country. This is so because the inputs from
concerned stakeholders and duty-holders made it evident that the
foreign contribution owing to its nature and vast expanse was being
abused by some registered organisations. Indisputably, no absolute
right inheres in any one, much less to receive foreign contribution
outside the framework delineated by the Parliament and
implemented by the executive. Every person receiving foreign
contribution is obliged to comply with the regulatory and procedural
preconditions. The regulatory and procedural preconditions have
been specified by law in the form of the 2010 Act and amendments
made thereto vide the 2020 Act. The same being quintessence are
required to be fulfilled for acceptance of foreign contribution and its
utilisation.
(c) Notably, in these petitions, no challenge is set forth in respect
of amended provisions, as obtained prior to coming into force of the
2020 Act. The same were complied with by all concerned without
any demur.
(d) The purpose behind the amendment of 2020, is to make
meaningful and effective regulatory arrangement and real-time
reporting of utilisation of the foreign contribution for the activity for
16
which it has been earmarked and permitted to be so used in terms
of the registration certificate or prior permission of the competent
authority.
(e) The permission to receive foreign contribution is granted to
persons for a definite cultural, economic, educational or social
programme meant for the benefit of the society, as mandated in
Sections 11 and 12 of the 2010 Act. The dispensation envisaged in
the Act is to seek registration or prior permission of the competent
authority to receive and utilise foreign contribution. The person
having obtained such certificate of registration or prior permission,
cannot complain about the regulatory provisions regarding
utilisation thereof for the prescribed activities. For, the legislative
intent behind enactment of the 2010 Act is that foreign contribution
cannot be allowed unless it is tightly regulated and controlled.
(f) The implementation of the 2010 Act increasingly revealed that
certain NGOs were involved primarily in routing of foreign
contributions only. They received and utilised foreign contribution
by transferring it to other NGOs, thereby establishing a principal-
client relationship. To overcome this mischief, it became necessary
to amend the provisions for effective regulatory and control
17
measures in respect of receipt and utilisation of foreign contribution.
These amendments were necessitated because of large -scale
transfers of foreign contribution and sudden rise in the inflow
thereof in the recent past creating several operational difficulties and
malpractices, that threatened to defeat the very purpose of the 2010
Act. The regulatory agencies were finding it difficult to monitor the
ultimate utilisation of foreign contribution by the transferee. To stop
such violations and malpractices and to fix accountability, it was
considered necessary to stop the transfer of foreign contribution and
thus ensure that the recipient of the foreign contribution itself
utilises the same.
(g) The need to mandate the utilisation of foreign contribution by
the recipient NGO itself, is also on account of the purport of Sections
11 and 12 of the Act. The same predicate that FCRA registration be
offered to an association
28
having definite programme to spend the
foreign contribution on purposes useful to society. The NGOs merely
28
The expression “association” as defined in Section 2(1)(a) of the 2010 Act as amended, reads
thus:
“2. Definitions.—(1) In this Act, unless the context otherwise requires,—
(a) “association” means an association of individuals, whether incorporated
or not, having an office in India and includes a society, whether registered
under the Societies Registration Act, 1860 (21 of 1860), or not, and any other
organisation, by whatever name called;”
18
indulging in transfer of foreign contribution to other NGOs albeit
registered or persons having prior permission, is not the scheme of
the 2010 Act. In order to ensure that the purported legitimate
activities of NGOs do not result in foreign contribution being diverted
from one area of activity to other area leading to its misuse including
threatening the sovereignty and integrity of the country, the
Parliament opted the strict dispensation of restricted utilisation of
foreign contribution by the recipient NGOs itself for the permitted
activities. The amended provisions are intended to remedy the
mischief of endless chain of transfers of foreign contribution from
the recipient NGOs to other registered NGOs creating layered trail of
money making it difficult to trace the flow and legitimate utilisation
thereof.
(h) The successive multiple chain of transfers not only create a
layered trail of money, but also lead to substantive portion of foreign
contribution being utilised as administrative expenditure by the
concerned entity by claiming it as its own allowance for
administrative expenditure to the extent of 50 per cent of the receipt.
The aggregate of such administrative expenditure, if reckoned with
the aggregate quantum of inflow of funds by the original recipient,
19
would, in a given situation, far exceed the statutory bar of
50 per cent of total contribution received by the NGO from abroad.
Further, the wisdom of the Parliament was also in favour of reducing
the permissibility of administrative expenditure by limiting it to
20 per cent, so that maximum benefit is reaped by the society at
large due to its utilisation for permissible activities of the NGO.
(i) The subject amendment became necessary also to obliterate
the mischief of foreign powers and foreign State and non-State actors
indulging in activities resulting in interference in the internal polity
of the country with ulterior designs. Resultantly, sub-Section (1A)
has been inserted in Section 12 of the 2010 Act, making it essential
to furnish details of FCRA account. This is in consonance with the
manner specified in Section 17 of the Act. In other words, insertion
of sub-Section (1A) was to infuse compatibility with other provisions
of the 2010 Act. To that end, a new section – Section 12A has also
been inserted requiring furnishing of Aadhaar card details in lieu of
identification document. It is urged that the petitioners have
misapplied the exposition of the Constitution Bench in K.S.
Puttaswamy
29. The said decision does not completely rule out the
29
supra at Footnote No.7
20
possibility of intrusion into the privacy of a person, which is backed
by a just law.
(j) The core intent behind the provisions such as Section 12A is to
facilitate proper identification of person and associations with which
the persons are connected and also purposeful real-time monitoring
of activities for ensuring that the same are not detrimental to the
national interest. As a matter of fact, the 2010 Act (unamended)
itself mandates that benami and fictitious activities are prohibited
under the Act. Thus, proper identification of person at the time of
registration would ensure proper identification of functionaries of
FCRA/NGOs. Such a provision ought to stand the test of legitimate
aim and also proportionality test.
(k) The amended Section 17(1) speci fies receipt of foreign
contribution in designated FCRA account in the SBI, NDMB. An
NGO is required to open such account for the purpose of remittances
of foreign contribution. The proviso to Section 17(1) envisages that
the FCRA account holder is free to add any FCRA account in any of
the scheduled bank of his choice for the purpose of receipt and
utilisation of foreign funds received in his FCRA account with the
specified branch of the SBI at New Delhi i.e., SBI, NDMB. The
21
operation of the FCRA account would be controlled by the account
holder itself. The stipulation only requires the inflow of foreign
contribution through designated channel which is to ensure effective
implementation of proper regulatory and controlled measures.
Sufficient time was given to the FCRA account holder to comply with
the formalities as per the new dispensation.
(l) Initially, a public notice was issued on 13.10.2020 providing
for procedure and operation of the designated FCRA account, giving
time till 31.3.2021, which came to be extended from time to time
until December, 2021. It is stated that the respondent No. 1 also
informed all the FCRA registered association s/organisations
through SMS and e-mail on their registered mobile number and e-
mail address about the public notice dated 13.10.2020. The
competent authority also amended the Foreign Contribution
(Regulation) Rules, 2011
30
. It is urged that some individual hardship
may be caused to the registered associations on account of the
change, but that cannot be the basis to declare the law made by the
Parliament, vide the 2020 Act, invalid. Reliance is placed on M/s.
30
for short, “the 2011 Rules”
22
Laxmi Khandsari & Ors. vs. State of U.P. & Ors.
31 and All India
Council for Technical Education vs. Surinder Kumar Dhawan
& Ors.
32, wherein this Court held that the Court must refrain from
interfering with policy matters on the specious ground of individual
hardship to some persons.
(m) It is further stated that the 2010 Act mandates Ministry of
Home Affairs
33
to regulate the receipt and utilisation of foreign
contributions in the country. That process involves multiple steps
including audit, inspection and filing of annual return and
monitoring of fund flow. Accordingly, a systematic monitoring of
FCRA bank account is imperative part of the regulatory measures
provided in the Act and the rules made thereunder. It is elaborated
that presently there are about 22,600 NGOs holding registration or
prior permission for specific project/programme. These NGOs used
to receive foreign contribution in an exclusive bank account of their
choice in any bank in India. That resulted in opening of multiple
accounts in hundreds of branches spread across the country. This
inevitably caused enormous difficulty in monitoring of inflow or
31
(1981) 2 SCC 600
32
(2009) 11 SCC 726
33
for short, “the MHA”
23
outflow of amount from the respective accounts and also during
audit process. Even though the mandate of law obliges the NGOs to
file periodical annual return, however, the inflow and outflow details
at a particular point of time or on real-time basis, association-wise,
as well as, cumulatively, for all such organisations was not
forthcoming and monitoring thereof due to scattered distribution of
the FCRA accounts across the country seriously affect ed the
monitoring process. Notably, keeping in mind the convenience of
the registered associations, they have been given choice to open
another FCRA account in any scheduled bank/branch of their
choice after opening of FCRA account in SBI, NDMB, for receiving
foreign contribution from any foreign source. It is urged that the
legislative intent behind the 2010 Act and the object sought to be
achieved is to curb misuse of foreign contribution threatening the
sovereignty and integrity of the nation including impacting the
polity. As aforesaid, the amendments were necessitated on account
of past experience and to curb the mischief which was prevalent
despite the tight regulatory measures under the 2010 Act.
(n) The legislative history has also been highlighted in the common
reply filed by respondents. To address the scourge of foreign
24
contribution impacting the national interest was taken note of by
way of the 1976 Act. Certain changes were brought about to that
Act in the year 1985, making it more effective. The 2010 Act had
been the outcome of a bill drafted in 2006. The Statement of Objects
and Reasons, as mentioned in the said Bill titled as “Foreign
Contribution (Regulation) Bill, 2006” recognised that significant
developments had taken place since 1984, such as change in
internal security scenario, an increased influence of voluntary
organisations, spread of use of communication and information
technology, quantum jump in the amount of foreign contribution
being received and large-scale growth in the number of registered
organisations, necessitating comprehensive legislative approach.
The Bill was referred to the Department –related Parliamentary
Standing Committee on Home Affairs. Eventually, the 2010 Act was
perceived. This legislative history has been taken note of in the case
of INSAF
34
. The amendments effected in the year 2020 had become
necessary to ensure that the object of the Act is achieved efficiently.
(o) It is urged that the 2010 Act cannot be equated with any other
general legislation. The object behind this Act is to insulate the
34
supra at Footnote No.22
25
democratic polity and public institutions and individuals working in
the national democratic space from being unduly influenced with the
aid of foreign contribution or foreign hospitality received from foreign
source. The object behind the Act is to secure the sovereignty and
integrity of India including public order and public interests. This
wisdom of the Parliament cannot be lightly brushed aside being a
legislative policy. Reliance is placed on Rajeev Suri vs. Delhi
Development Authority & Ors.
35 to buttress this argument.
Reliance is also placed on Joseph Lochner vs. People of the State
of New York
36; New State Ice Company vs. Ernest A. Liebmann
37;
West Coast Hotel Company vs. Ernest Parrish
38; United States
of America vs. Carolene Products Co mpany
39; American
Federation of Labor, Arizona State Federation of Labor et al.
vs. American Sash & Door Company et al.
40; and Ferguson vs.
Skrupa
41
. It is urged that the doctrine that prevailed in Joseph
Lochner
42 that due process authorises Courts to hold laws
35
2021 SCC Online 7 (paras 570 and 571)
36
198 U.S. 45 (1905)
37
285 U.S. 262 (1932)
38
300 U.S. 379 (1937)
39
304 U.S. 144 (1938)
40
335 U.S. 538 (1949)
41
372 U.S. 726 (1963)
42
supra at Footnote No.36
26
unconstitutional whenever they believe the legislature has acted
unwisely - has long since been discarded.
(p) After having said so, reliance is also placed on the decision of
this Court in State of Himachal Pradesh & Ors. vs. Himachal
Pradesh Nizi Vyavsayik Prishikshan Kendra Sangh
43; Ravindra
Ramachandra Waghmare vs. Indore Municipal Corporation &
Ors.
44; State of Himachal Pradesh & Ors. vs. Satpal Saini
45;
and Union of India vs. Indian Radiological & Imaging
Association & Ors.
46, in support of the argument that Court should
be loath in interfering with the wisdom of the legislature adopting a
particular policy. Further, the Court cannot substitute such wisdom
in the guise of exercise of the power of judicial review. Reliance is
also placed on the enunciation in Dr. Ashwani Kumar vs. Union of
India & Anr.
47 to contend that the Constitution predicates that
legislature is supreme and has a final say in matters of legislation
when it reflects on alternatives and choices with inputs from
different quarters, with a check in the form of democratic
43
(2011) 6 SCC 597 (para 21)
44
(2017) 1 SCC 667 (para 46)
45
(2017) 11 SCC 42 (para 6)
46
(2018) 5 SCC 773 (para 16)
47
(2020) 13 SCC 585 (paras 25-27)
27
accountability and a further check by the Courts which exercise the
power of judicial review. It is further held in this decision that it is
not for the Judges to seek to develop new all-embracing principles
of law in a way that reflects the stance and opinion of the individual
judges when the society/legislature as a whole are unclear and
substantially divided on the relevant issues.
(q) Reliance is also placed on Rustom Cavasjee Cooper vs. Union
of India
48, restating the above principle and observing that the
Court will not sit in appeal over the policy of Parliament in enacting
a law. Reliance is also placed on R.K. Garg vs. Union of India &
Ors.
49, wherein it has been observed that the Courts have only the
power of destroying and not to reconstruct. Further, in respect of
economic regulation being replete with complexity, self-limitation
needs to be exercised by the Courts, thereby following the path of
judicial wisdom. Reliance is also placed on Peerless General
Finance and Investment Co. Limited & Anr. vs. Reserve Bank of
India
50
; Premium Granites & Anr. vs. State of T.N. & Ors.
51
;
48
(1970) 1 SCC 248 (para 63, 70)
49
(1981) 4 SCC 675 (para 8)
50
(1992) 2 SCC 343 (para 31)
51
(1994) 2 SCC 691 (para 54)
28
Delhi Science Forum & Ors. vs. Union of India & Anr.
52; BALCO
Employees’ Union (Regd.) vs. Union of India & Ors.
53; and State
of Madhya Pradesh vs. Narmada Bachao Andolan & Anr.
54.
Relying on said decisions, it is urged that the gravamen of grievance
of the writ petitioners is essentially about the operational
inconvenience being caused to them. That cannot be the basis to
declare the amended provisions being violative of fundamental rights
and more so, because the same are necessitated to overcome the
misuse of foreign contribution from foreign sources threatening the
sovereignty of the nation.
(r) Dealing with the plea regarding amended provisions being
violative of Article 14 of the Constitution, it is urged that the
Constitution does not predicate that all laws must be general in
character and universal in application. On the other hand, it is open
to the legislature to distinguish and classify persons or things for the
purposes of legislation. Indeed, such discrimination and
classification should not be arbitrary and ought to be in conformity
with the intelligible differentia having a reasonable relation to the
52
(1996) 2 SCC 405 (para 7)
53
(2002) 2 SCC 333 (para 38)
54
(2011) 7 SCC 639 (para 36)
29
object sought to be achieved by the law in question. The impugned
amendments of 2020 are fully compliant. The amendments fulfil the
“twin test of classification” founded on the factum of classification
between Indian citizens and foreigners, so much so, Ind ian
contribution and foreign contribution. The amendments fulfil the
permissible classification principle and are founded on intelligible
differentia and distinguish contributions to be received by the NGO.
In other words, if an NGO intends to receive foreign contribution, it
must fulfil the necessary conditions and comply with the formalities
specified therefor. Thus understood, the exposition in Shayara
Bano
55, pressed into service by the writ petitioners, will be of no
avail. Whereas, classification by law is not forbidden. It is not open
to belittle the legislative intent behind the amendments by giving it
the colour of manifest arbitrariness. The argument that the law
suffers from the vice of manifest arbitrariness, must be examined on
the touchstone of the enunciation by this Court in series of
judgments. Reliance is placed on Charanjit Lal Chowdhury vs.
The Union of India & Ors.
56; The State of Bombay & Anr. vs.
55
supra at Footnote No.18
56
AIR 1951 SC 41 (paras 8-10, 18, 27-29, 61-65)
30
F.N. Balsara
57; Kathi Raning Rawat vs. State of Saurashtra
58;
Gurbachan Singh vs. State of Bombay & Anr.
59; The State of
Punjab vs. Ajaib Singh & Anr.
60; Habeeb Mohamed vs. The State
of Hyderabad
61; Kedar Nath Bajoria vs. The State of West
Bengal
62; Baburao Shantaram More vs. Bombay Housing Board
& Anr.
63; Harman Singh & Ors. vs. Regional Transport
Authority, Calcutta Region & Ors.
64; Sakhawant Ali vs. State
of Orissa
65; Budhan Choudhry & Ors. vs. State of Bihar
66; D.P.
Joshi vs. State of Madhya Bharat & Anr.
67; Hans Muller of
Nurenburg vs. Superinten dent, Presidency Jail, Calcutta &
Ors.
68; Kishan Singh & Ors. vs. State of Rajasthan & Ors.
69; P.
Balakotaiah vs. Union of India & Ors.
70; Shri Ram Krishna
Dalmia vs. Shri Justice S.R. Tendolkar & Ors.
71; Express
Newspaper (Private) Ltd., & Anr. vs. Union of India & Ors.
72;
57
AIR 1951 SC 318 (paras 37-42, 47, 62)
58
AIR 1952 SC 123 (paras 7, 19, 32-36, 45-48)
59
AIR 1952 SC 221 (paras 3-6, 8)
60
AIR 1953 SC 10 (para 22)
61
AIR 1953 SC 287 (paras 4-6)
62
AIR 1953 SC 404 (paras 6-16)
63
AIR 1954 SC 153 (para 6)
64
AIR 1954 SC 190 (para 7)
65
AIR 1955 SC 166 (paras 9-10)
66
AIR 1955 SC 191 (paras 5, 7, 9)
67
AIR 1955 SC 334 (paras 14-16)
68
AIR 1955 SC 367 (paras 14, 24-25)
69
AIR 1955 SC 795 (paras 3-5)
70
AIR 1958 SC 232 (para 13(IIa), 14-16)
71
AIR 1958 SC 538 (paras 11-17)
72
AIR 1958 SC 578 (paras 210-218)
31
Khandige Sham Bhat vs. Agricultural Income-tax Officer,
Kasaragod & Anr.
73; Raja Bira Kishore Deb , hereditary
Superintendent, Jagannath Temple vs. The State of Orissa
74;
Ganga Ram & Ors. vs. Union of India & Ors.
75 ; Anant Mills Co.
Ltd. vs. State of Gujarat & Ors.
76; Mohan Kumar Singhania &
Ors. vs. Union of India & Ors.
77; Venkateshwara Theatre vs.
State of Andhra Pradesh & Ors .
78; Ombalika Das vs. Hulisa
Shaw
79; Dharam Dutt & Ors. vs. Union of India & Ors.
80; and
Basheer @ N.P. Basheer vs. State of Kerala
81
.
(s) In substance, it is the case of the respondents that during
implementation of the 2010 Act, it was experienced that there was
need to streamline the provisions, so as to achieve the desired
objective of the Act by improving the compliance mechanism,
enhancing transparency and accountability in the receipt and
utilisation of foreign contribution through effective monitoring and
facilitating genuine NGOs or associations working for the welfare of
73
AIR 1963 SC 591 (paras 7-9)
74
AIR 1964 SC 1501 (para 5)
75
(1970) 1 SCC 377 (para 2)
76
(1975) 2 SCC 175 (paras 24-25)
77
1992 Supp. (1) SCC 594 (paras 127, 130)
78
(1993) 3 SCC 677 (paras 20-23, 29)
79
(2002) 4 SCC 539 (para 11)
80
(2004) 1 SCC 712 (para 56)
81
(2004) 3 SCC 609 (paras 20, 23)
32
the society in ensuring maximum benefit to the intended population.
Indisputably, all the registered associations have been treated
equally in respect of receipt of foreign contribution and its utilisation
for the purpose for which it is so received. The law permits
utilisation of foreign contribution by the recipient NGO itself and
ensures that the spending of administrative expenses should not
exceed 20 per cent of such receipts, so that substantial portion of
the foreign contribution is spent on the activities for which it has
been so received and benefits the targeted population. The
amendment mandating receipt of foreign contribution only in a
designated FCRA account with the SBI, NDMB is to facilitate access
of data of foreign contribution from one source for effective
monitoring of fund flow received through foreign contribution. This
legislative intent, by no means, can be said to be in conflict with the
object of the Principal Act and in any case, cannot be labelled as
manifestly arbitrary as well. This is also because Section 17(1) of
the 2010 Act would permit the registered NGOs to open and operate
another FCRA account in any scheduled bank/branch of their
choice in the country. Accordingly, it is urged that the argument
33
regarding amended provisions being violative of Article 14, is devoid
of merits.
(t) While countering the challenge on the ground of Article 19(1)(c)
and 19(1)(g), it is stated that there exists no right to seek a foreign
contribution without regulation. Further, the 2010 Act does not
prohibit the foreign contributions or the right to form the
associations itself or the right to practice any profession. Rather, it
merely seeks to provide efficacious regulatory regime regarding
foreign contributions to be received by such associations. The rights
under Article 19(1)(c) and 19(1)(g), therefore, remain unaffected. It
is urged that right to form an association and right to freedom of
trade and profession do not include right to receive unbridled and
unregulated foreign contributions and more so its utilisation for
activities other than permissible activities. In other words, the law
in question is squarely covered by the exceptions provided for within
the meaning of Article 19(4) and 19(6) of the Constitution.
(u) The challenge to the amendments made on the touchstone of
Article 19(1)(c), needs to be considered in light of the object of the
Principal Act. It is an Act to protect umbrella terms of “sovereignty
and integrity of India” and “public order”. Reliance is placed on O.K.
34
Ghosh & Anr. vs. E.X. Joseph
82, wherein it has been noted that
clause (4) of Article 19 refers to the restriction imposed in the
interests of public order. The restriction, proximate and direct, must
have causal connection with public order.
(v) Reliance is also placed on exposition in following decisions: -
Saghir Ahmad & Anr. vs. State of U.P. & Ors.
83; Babulal Parate
vs. The State of Maharashtra & Ors.
84; Daya vs. Joint Chief
Controller of Imports & Exports & Anr.
85; Akadasi Padhan vs.
State of Orissa & Ors.
86; Municipal Committee, Amritsar & Ors.
vs. State of Punjab & Ors.
87; Madhu Limaye vs. Sub-Divisional
Magistrate, Monghyr & Ors.
88; Daruka & Co vs. Union of India
& Ors.
89; Md. Serajuddin & Ors. vs. State of Orissa
90; Municipal
Corporation of the City of Ahmedabad & Ors. vs. Jan
Mohammed Usmanbhai and Anr.
91; Sushila Saw Mil vs. State
of Orissa and Ors.
92; Laxmikant vs. Union of India & Ors.
93;
82
AIR 1963 SC 812 (paras 9-10)
83
AIR 1954 SC 728 (para 23)
84
AIR 1961 SC 884 (paras 26, 28-32)
85
AIR 1962 SC 1796 (paras 14-19)
86
AIR 1963 SC 1047 (paras 1, 14-15)
87
(1969) 1 SCC 475 (paras 10, 14)
88
(1970) 3 SCC 746 (paras 12-16, 24, 26-28, 46)
89
(1973) 2 SCC 617 (paras 16-20, 24-25)
90
(1975) 2 SCC 47 (para 28)
91
(1986) 3 SCC 20 (paras 15-24)
92
(1995) 5 SCC 615 (para 4)
93
(1997) 4 SCC 739 (para 10)
35
Krishnan Kakkanth vs. Gov ernment of Kerala & Ors.
94; Indian
Handicrafts Emporium & Ors. vs. Union of India & Ors.
95; Om
Prakash & Ors. vs. State of U.P. & Ors.
96; People’s Union for
Civil Liberties & Anr. vs. Union of India
97; State of Gujarat vs.
Mirzapur Moti Kureshi Kassab Jamat & Ors.
98; Kerala Bar
Hotels Association & Anr. vs. State of Kerala & Ors.
99; and
Anuradha Bhasin
100.
(w) It is urged that the impugned amendments are directly related
to the object sought to be achieved by the 2010 Act. The object
behind the Principal Act is to secure the interests of sovereignty and
integrity of the country, public order and interests of general public.
That objective being consistent part of the legislative policy of the
country for the past five decades, is beyond judicial review. As the
impugned amendments have a direct and proximate relationship
with the stated object of the Principal Act, they are fully protected
within the meaning of Article 19(4) and 19(6).
94
(1997) 9 SCC 495 (paras 27-29)
95
(2003) 7 SCC 589 (paras 31-41)
96
(2004) 3 SCC 402 (paras 31-40)
97
(2004) 9 SCC 580 (paras 40-45)
98
(2005) 8 SCC 534 (paras 73-79, 135-137)
99
(2015) 16 SCC 421 (paras 30-38)
100
supra at Footnote No.21 (paras 154-159)
36
(x) It is further contended that right to life and liberty within the
meaning of Article 21 of the Constitution, cannot and does not
include the right to receive unregulated funds and contributions;
misuse of which inevitably threatens the polity and sovereignty and
integrity of the country. The amended provisions, by no stretch of
imagination, prohibit the inflow of foreign contributions or the right
to form associations itself or the right to practice any profession. The
same merely provide for tight regulatory mechanism to ensure that
the foreign contribution received from foreign source is utilised only
for the purpose by the recipient itself for which it has been so
permitted, and that restriction is only to secure the sovereignty and
integrity of the nation and public order. In any case, it (regulatory
mechanism) being procedural matter, would come within the
purview of procedure established by law. Being a reasonable
restriction for accomplishing the objectives of the Principal Act and
founded on intelligible differentia, it must be regarded as rational
and proportionate, and as furthering the State interests.
(y) The respondents have also placed reliance on K.S.
Puttaswamy & Anr. vs. Union of India & Ors.
101 in support of the
101
(2017) 10 SCC 1 (paras 310-311, 377, 380, 526, 558, 582 and 639)
37
argument that the amended provisions are in furtherance of the
legitimate State interests encompassed in the regulatory measures
provided for in the Principal Act. Reliance is also placed on Gobind
vs. State of Madhya Pradesh & Anr.
102, wherein this Court had
observed that even though privacy and dignity claims must receive
scrutiny with due care, but that claims will necessarily have to go
through a process of case-by-case developments. Reliance is also
placed on Chintamanrao & Anr. vs. The State of Madhya
Pradesh
103; The State of Madras vs. V.G. Row
104; Teri Oat
Estates (P) Ltd. vs. U.T., Chandigarh & Ors.
105; Ramlila Maidan
Incident, In re
106; Sahara India Real Estate Corporation
Limited & Ors. vs. Securities and Exchange Board of India &
Anr.
107; and Excel Crop Care L imited vs. Competition
Commission of India & Anr.
108 to contend that Article 21 is
extremely wide. Whereas, the prohibition on transfer of foreign
contribution and receipt of foreign contribution in the manner
specified in the amended provisions are intended to improve
102
(1975) 2 SCC 148 (paras 22-23, 28)
103
AIR 1951 SC 118 (para 7)
104
AIR 1952 SC 196 (para 15)
105
(2004) 2 SCC 130 (paras 40, 44-46, 49)
106
(2012) 5 SCC 1
107
(2012) 10 SCC 603
108
(2017) 8 SCC 47 (paras 29, 92, 94-95)
38
compliance mechanism, enhance transparency and accountability
in the receipt and utilisation thereof. In that sense, it does not
impinge upon the fundamental rights of the petitioners, much less
Article 21 of the Constitution. The regulation and control are directly
relatable to activities/programmes detrimental to the sovereignty
and integrity of India, public order and interests of general public
and for matters connected therewith or incidental thereto. It being
a reasonable and proportionate restriction having clear nexus with
the object of the Principal Act without impacting the right of the
registered associations to continue to receive foreign contribution
from foreign donors and also utilise the same by opening accounts
in different scheduled banks/branches of their choice in the
country, by no stretch of imagination, can be said to impinge upon
the fundamental rights of the registered associations or persons
having prior permission of the competent authority.
(z) As regards the grievance of the writ petitioners being forced to
open and operate account in the designated bank and branch i.e.,
SBI, NDMB, it is stated in the reply affidavit that for outstation FCRA
organisations located in remote areas and for operational ease of any
FCRA organisation, MHA and SBI have put in place a system to
39
enable the associations/FCRA organisations/NGOs to open main
bank account in SBI, NDMB without any need to physically come to
Delhi. It certainly dispels and redresses the principal grievance of
the writ petitioners about they being forced to visit Delhi to open
account in the designated branch coupled with the enabling
provision allowing the registered associations to utilise and transact
from any scheduled bank/branch of their choice in the country. The
fundamental basis of assail to the amended provisions, therefore,
falls to the ground.
(aa) The respondents have relied on the Standard Operating
Procedure (SOP) issued by the appropriate authority in regard to the
opening of FCRA account in the designated branch (SBI, NDMB) to
receive the inflow of foreign contribution including to permit the
registered associations to open FCRA account in other scheduled
banks/branches of their choice across the country. Further, it is
asserted that until the filing of the common response in October,
2021, around 19,000 accounts were already open ed in the
designated branch at New Delhi. That was possible even without
physical visit of the authorised persons of the concerned
associations to New Delhi. This facility of opening account in the
40
designated bank and branch is provided on free/gratis basis without
any bank charge on real-time basis by the SBI on the instructions
of the recipient organisations through digital or internet banking. As
aforesaid, these arrangements are necessitated for the purposes of
effective enforcement and operational angle and to monitor the flow
of foreign contributions and information concerning the same on
real-time basis from one centralised location. This has reasonable
nexus and proximate relationship with the object sought to be
achieved by the Act and to ensure transparency and accountability
of all concerned. The registered associations/NGOs are not put to
any undue hardship or extra financial costs/compliance burden.
The challenge to the amended provisions, therefore, is based on
tenuous assertions.
(bb) It is also asserted that application for effecting any change of
details furnished while opening the main account in the designated
branch (i.e., SBI, NDMB) is to be submitted only through online
mode on the FCRA web portal i.e., fcraonline@nic.in. It is
highlighted that the assertion made by the writ petitioners that there
are close to 50,000 persons registered under FCRA, is false and
misleading. In fact, the FCRA website itself would reveal that out of
41
close to 50,000 persons registered under FCRA, registration
certificates of less than 23,000 are active. Further, registration of
20,600 non-compliant persons has already been cancelled.
Furthermore, following the changed dispensation as per the
amended provisions (of 2020 Act), over 19,000 accounts have
already been opened in the designated branch (i.e., SBI, NDMB) until
October, 2021. It is, thus, urged that the amended provisions are
intended to further the object of the Principal Act and are regulatory
in nature concerning the receipt and utilisation of foreign
contribution or foreign hospitality by certain individuals or
associations or companies and incidental matters ; and are
consistent with the underlying principles expounded in the Principal
Act.
(cc) After having said as above, the affidavit goes on to highlight
that none of the amended provisions even remotely permit or
attempt to oversee the banking functions. The amended provisions
of the Act, as well as, the Regulations, are intended to only bring out
clarity on crucial role assigned to the banks in respect of the
implementation of the Principal Act of 2010. Similarly, the stated
42
circular is only an administrative gu idance for better
implementation of the provisions of the 2010 Act.
(dd) The respondents have, thus, prayed for dismissal of the writ
petitions
109
filed by the registered associations, consequently leaving
nothing for consideration in the writ petition filed by Vinay Vinayak
Joshi
110
.
6. Counter affidavit filed by respondent No. 3-SBI
111
(a) SBI has also filed counter affidavit dated 20.10.2021 in Writ
Petition (C) No.751 of 2021 sworn by one Anjana T andon, Dy.
General Manager, SBI, New Delhi Main Branch . This affidavit
essentially deals with the issues concerning SBI. It is stated that
SBI is the largest public sector bank in India with network of 22,219
branches in India and spread across the length and breadth of the
country, including rural and urban areas/branches. SBI also has
223 foreign offices and about 230 overseas branches in around 40
countries.
109
W.P. (C) No.566 of 2021 and W.P. (C) No.751 of 2021
110
W.P. (C) No.634 of 2021
111
in W.P. (C) No.751 of 2021
43
(b) It is stated that FCRA account is not a normal current/savings
account. The transactions effected in this account ought to be
strictly regulated, as predicated in the 2010 Act. SBI works in
tandem with the instructions issued by the Government of India in
that regard. The Government of India has issued a Standard
Operating Procedure (SOP) with regard to opening and operation of
FCRA account. The information in that regard has been
disseminated to account holders and is in public domain, including
by conducting Webinars from time to time. The main Branch of SBI
has created a dedicated cell having over forty officials to deal with all
the FCRA accounts at SBI, NDMB. They exclusively deal with FCRA
accounts and have been provided with requisite infrastructure. SBI
has made internal arrangements regarding sharing of details of
23,000 entities with branches of SBI all over India; liaising with
foreign offices of SBI for credential verification of the overseas
stakeholders; and have designated Nodal Officer up to the rank of
Assistant General Manager in 17 local Head Offices, spread all over
India for operating FCRA accounts. By this affidavit, SBI has refuted
the grievance of the writ petitioners/registered associations about
operational and other difficulties being faced by them in
44
transacting/opening account in the designated Branch at New
Delhi.
(c) It is emphatically stated that the entities, desirous of opening
FCRA account or for accessing funds, are not required to visit Delhi
as has been clearly indicated in the communication dated 9.6.2021.
This is also duly notified on the official website of the MHA. SBI has
streamlined the entire process for the convenience of the
organizations to open/operationalize FCRA accounts. It is stated
that the entities can do banking activities including internet banking
activity anywhere and anytime, aided with the power and
convenience of the internet. The entities can avail CINB and may
customize their authority matrix f or making any financial
transactions. It is also open to the entities to open and operate FCRA
account (utilization account) at one or more branches of scheduled
banks of their choice. Alternatively, they are free to use their
previous accounts as utilization accounts, to which funds can be
transferred from the designated FCRA account at SBI, NDMB.
(d) It is also asserted that the entities are not required to maintain
minimum balance in FCRA accounts. Further, they are free to
operate their account without physically approaching SBI Branch on
45
regular basis as in the case of any other normal account holder, if
they intend to access internet banking facility. It is denied that the
registered associations/concerned entities are required to appoint a
designated person in New Delhi and make frequent trips for offline
KYC verification as alleged. Instead, they can approach the nearest
SBI Branch and get the offline verification of document done at the
said Branch itself. In other words, the argument of inconvenience
put forth by the writ petitioners and similarly placed persons have
not only been refuted, but information regarding sufficient logistical
arrangements made by the respondent -Bank (SBI) to facilitate
opening as well as operating of FCRA account by authorised persons
has been delineated in the response filed before this Court. The
same is indicative of the fact that the services are offered to the
concerned entities at the local level itself without requiring the FCRA
account holders to visit the main Branch at New Delhi.
(e) This affidavit also reveals that SBI has more than two lakh
employees working in branches in different parts of the country with
network all over the country as well as abroad. It is stated that for
the purposes of operating 23,000 FCRA accounts, there is no need
to incur high administrative expenses. Instead, the Bank has
46
augmented additional infrastructure required for that purpose in the
designated Branch at New Delhi.
(f) It is further stated that by the time the affidavit was filed, about
20,000 FCRA accounts have already been opened, out of
approximately 23,000 active organizations, and that the remaining
registered associations were in the process of getting their accounts
opened by approaching the main Branch at New Delhi. It is urged
that the respondent-Bank (SBI) is offering all banking facilities as
requested/demanded by the concerned account holder. SBI has
denied that there is any delay in the process of opening of account
and receiving of foreign remittances due to the volume of
transactions or that it does not have necessary infrastructural
capacity to handle queries from thousands of organizations, as
alleged by the writ petitioners. At the same time, it has been fairly
accepted that during the second phase of COVID -19, due to
extraordinary situation, there may have been delay in some cases,
but all the accounts have been made operational and are being
accessed by the concerned FCRA account holders. The affidavit also
mentions about the steps taken to streamline the operational issues
in respect of FCRA accounts. The substance of this affidavit is to
47
demonstrate that no inconvenience is being caused to the FCRA
account holders, in any manner; and the Bank is fully equipped to
handle the logistical issues concerning FCRA accounts in the main
Branch as well as other branches across the country.
7. Rejoinder affidavit filed by the writ petitioners
(a) The writ petitioners have filed rejoinder affidavit whereby
assertions made in the writ petitions are reiterated. The emphasis
is essentially in respect of grounds to assail the validity of the
amended provisions of the 2010 Act, in particular Sections 7, 12(1A),
12A and 17(1). The rejoinder affidavit also points out the reason for
rejection of application for registration and opening of bank account.
Those matters, however, cannot be the basis to test the validity of
the provisions. Hence, it is not necessary to elaborate the same.
They are more in the nature of inconvenience caused in respect of
process of registration and of operating the FCRA accounts.
8. Submissions of the writ petitioners
112
(a) The registered associations/writ petitioners would urge that
the argument of legislative policy being inviolable cannot be
112
in Writ Petition (C) Nos.566 and 751 of 2021
48
countenanced. For, this Court in A.K. Gopalan vs. State of
Madras
113, noted that the Court is obliged to consider the effect of
the law on the citizens and whether the same impacts the
fundamental rights guaranteed under Part III of the Constitution.
(b) It is urged that this Court in INSAF
114 has already recognised
the right to receive foreign contribution. Thus, it is not open to
contend that no fundamental right exists to receive foreign
contribution. The amended provisions are arbitrary and overbroad
restrictions on the right to receive foreign funding, thus, it is violative
of Article 14 of the Constitution. Further, this Court in the case of
INSAF
115 did not examine the effect of the impugned provisions on
the fundamental rights under Article 19 of the Constitution as there
was no petitioner in individual capacity before the Court. The
amendments effected vide the 2020 Act are not only hit by the vice
of Article 14 of the Constitution, but also Article 19(1)(a), 19(1)(c) and
19(1)(g) as well as Article 21 of the Constitution.
(c) As regards Section 7 of the Act, it is submitted that
pre-amendment, transfer of foreign contribution to other person
113
AIR 1950 SC 27
114
supra at Footnote No.22 (paras 18 to 22)
115
supra at Footnote No.22
49
duly registered and had been granted the certificate or obtained the
prior permission under the 2010 Act was permissible. The proviso
permitted the transfer of foreign contribution by the recipient
registered association. This has been completely prohibited by the
amended provision, which is overbroad restriction. For, this
prohibition would inevitably impact the funding of the entities who
were otherwise allowed to receive foreign contribution. Having so
permitted, the regulatory measures at best can be to ensure that the
foreign contribution is eventually utilised for the purpose for which
it has been so permitted. The total prohibition in terms of the
amended Section 7 is manifestly arbitrary and has no causal
connection with the object sought to be achieved by the Principal Act
or the Amendment Act. In support of this contention, reliance is
placed on K.S. Puttaswamy
116. In that, being a case of total
prohibition, it impacts the very utilisation of foreign contribution by
any organisation. The expression “person” in Section 2(1)(m) of the
Act posits an expansive meaning. Thus, post amendment transfer
of foreign contribution to individual or organisation will be affected.
Significantly, the word “transfer” has not been defined. In other
116
supra at Footnote No.7 (paras 105 and 106)
50
words, there is no clarity about the manner of utilisation of foreign
contribution by the registered entities who had been allowed to
receive the same for utilisation for specified purposes. The ordinary
meaning of expression “utilisation” would include transfer of foreign
contribution to another entity; and, thus, there is apparent conflict
between Section 7 and Section 8 of the Act. As a result, amended
Section 7 is not only absurd, but defeat the very object of the
Principal Act, which allows regulated use of foreign contribution. In
absence of any definition of expressions “transfer” and “utilisation”,
use of foreign contribution by the entity would be risking violation of
the provisions of the Act.
(d) It is urged that Section 7 is overbroad and vague. There is
ambiguity as to what constitutes various social or educational or
cultural or economic or religious purpose under Section 11(1) of the
Act and at the same time, Section 35 of the Act invites punishment
for contravention of any provision of the Act. For that reason,
Section 7 suffers from the vice of manifest arbitrariness and hit by
Article 14 of the Constitution. To buttress this argument, reliance
is placed on the enunciation of this Court in Shreya Singhal vs.
51
Union of India
117. Further, the amended Section 7 would not
permit collaboration between registered non-profit organisations to
serve larger social needs across the country with any other entity or
person. That is bound to hamper work of grassroot organisations
which receive sub-grants in India from a consortium lead partner in
international development projects. Those projects will be affected
at the grassroot level where the registered organisations may not be
able to cater on its own.
(e) It is then urged that even if the purpose of Section 7 is to
prevent misutilisation of funds, it violates the fundamental rights
guaranteed in Article 19(1)(a), 19(1)(c) and 19(1)(g) under Part III of
the Constitution, being an unreasonable restriction. Such
restriction serves no legitimate Government purpose. It has no
rational nexus with the object of the enactment, including the
Principal Act. The unamended provision was less restrictive and was
working very well, serving the objective of the Principal Act.
Furthermore, being a case of complete prohibition, the registered
organisations would not be able to continue collaboration with other
entities at the grassroot level, even if those entities are also duly
117
(2015) 5 SCC 1
52
registered under the Act. This is bound to denude the recipient
(registered organisation) of foreign contribution from reaching out
and undertaking specified activities at the grassroot level through
such entity. Such onerous restriction does not stand the test of
proportionality or being reasonable restriction as held in the case of
K.S. Puttaswamy
118. Reliance is also placed upon a recent decision
of this Court in Manohar Lal Sharma vs. Union of India &
Ors.
119, to contend that the State had failed to specifically establish
national security issues to justify the amendments to the 2010 Act.
In absence thereof, no omnibus prohibition can be validated by the
Court. It is urged that Section 7, being manifestly arbitrary and
lacking any determining principle, is wholly unreasonable and,
therefore, violative of Article 21 of the Constitution.
(f) On similar lines, Section 12(1A) read with Section 17(1) has
been assailed, being manifestly arbitrary and unreasonable. The
challenge is limited to the stipulation of opening a bank account only
at one specific branch of SBI at New Delhi for all organisations
across the country receiving foreign contribution. Such a
118
supra at Footnote No.7 (paras 157 and 158)
119
W.P. (Crl.) No.314 of 2021 etc., decided on 27.10.2021 (paras 49 and 50)
53
requirement is absurd, irrational and serves no legitimate purpose
under the 2010 Act or any other law. It is urged that the challenge
is not to the amended sub-Section (2) of Section 17 requiring
reporting to the authority. That being a Bank’s obligation can be
taken forward by the Bank. No tangible logic is forthcoming to
justify the need for Section 12(1A) read with Section 17(1), as to how
national interest would be jeopardised by not adhering to that regime
especially when all the scheduled banks are regulated by the Reserve
Bank of India, including other Government owned public sector
banks or even local branches of SBI. Each one of them is obliged to
report all such transactions within 48 hours to the MHA. Such a
provision, therefore, is simply absurd and irrational.
(g) It is argued that the impact of amended provisions is to denude
the registered associations to have physical access to their primary
account at Delhi along with a host of other restrictions. It is further
urged that the amended provision does not stand the test of
legitimate goal for which such dispensation is necessary nor spells
out the causal connection for compelling the persons seeking foreign
contribution to open bank accounts only in specified branch at New
Delhi and how it would further the cause of the State interests.
54
Even, the principle of necessity has not been substantiated by the
State, especially when there are already existing restrictions and
proper mechanism to achieve the object of the Principal Act
whereunder each organisation is mandated to open a FCRA account
in a scheduled bank of its choice, which account details were
required to be reported to the MHA and linked to the FCRA
registration number of the organisations. All the registered
organisations were already complying with that requirement and
have been registered on an electronic portal known as ‘DARPAN’
having unique ID provided to them. Further, the registered
organisations were also obliged to submit regular returns as
specified in Section 18 read with Rule 17 of the 2011 Rules. The
said dispensation requires furnishing of necessary details and
reporting within 48 hours to the appropriate authority. The specious
plea of national security cannot be countenanced. The same has not
been substantiated and there can be no presumption in that regard
in favour of the legislation.
(h) Further, respondent No.3-SBI has admitted that only 40
personnel are assigned with the work of operating FCRA accounts at
the main Branch. It is unfathomable as to how such a low number
of personnel would be able to handle the workload of transaction of
55
thousands of persons for 23,000 registered organisations. Relying
on the expositions in Anuradha Bhasin
120 and Maneka Gandhi
121,
it is urged that Section 12(1A) read with Section 17(1) is
unconstitutional, being manifestly arbitrary and irrational.
(i) Even, the provision in the form of Section 12A is violative of
fundamental rights guaranteed to the office bearers of the registered
organisations as it requires mandatory disclosure of Aadhaar
number as an identity document for grant of FCRA certificate under
Section 12, or renewal under Section 16 or to open a bank account
under Section 17. Such a provision clearly falls foul of the test of
proportionality as held in K.S. Puttaswamy
122. Inasmuch as,
overseas citizens of India or foreign nationals serving as office
bearers can provide an identity alternate to the Aadhaar card for the
same purposes. There is no legitimate goal set forth for inserting
Section 12A in the Principal Act. It is urged that even this provision
has no nexus with the object sought to be achieved under the
Principal Act and suffers from the vice of violation of Article 19 of the
Constitution.
120
supra at Footnote No.21
121
supra at Footnote No.12
122
supra at Footnote No.7
56
9. We have heard Mr. Gopal Sankaranarayanan, learned senior
counsel and Mr. Gautam Jha, learned counsel for the petitioners
and Mr. Tushar Mehta, learned Solicitor General and Mr. Sanjay
Jain, learned Additional Solicitor General for the respondents.
Legislative History
10. In the first place, we must advert to the legislative history
culminating with the 2010 Act, as amended in 2020. A Bill was
introduced in the Rajya Sabha in the year 1973 titled as “the Foreign
Contribution (Regulation) Bill, 1973”. The Statement of Objects and
Reasons appended to the said Bill read thus: -
“STATEMENT OF OBJECTS AND REASONS
There has been widespread concern about the unregulated
receipt of funds from foreign agencies by individuals and
organisations in the country. The Bill seeks to regulate the
acceptance and utilisation of foreign contribu tion or
hospitality with a view to ensuring that our parliamentary
institutions, political associations, academic and other
voluntary organisations as well as individuals working in
important areas of national life may function in a manner
consistent with the values of a sovereign democratic republic.”
(emphasis supplied)
On 19.2.1974, the House referred the Bill to a Joint Committee of
the Houses consisting of 60 members, of whom 20 were to be
nominated from Rajya Sabha. While introducing the Bill, the
Minister outlined the contours of the regulatory measures felt
57
essential in respect of the foreign contributions. He adverted to three
options. The first of outright prohibition; the second being
acceptance subject to prior permission of Government; and the third
of acceptance subject to intimation being given to Government. He
expressed that the Government felt that it was an important
measure and believed that the deliberations in the Joint Committee
of both the Houses would enable formulation of a well-conceived Bill,
on the basis of informed representative public opinion desirous of
securing the objectives, as stated in the Bill. There was broad
unanimity between the members that the issue need ed in-depth
examination.
11. The then Minister of Home Affairs presented the
recommendation of the Rajya Sabha before the Lok Sabha on
25.3.1974. The motion was duly adopted by the Lok Sabha and 40
members of the said House were nominated to the Joint Committee
of the Houses.
12. The report of the Joint Committee on the Bill to regulate the
acceptance and utilisation of foreign contribution or hospitality by
certain persons or associations and for matters connected therewith
58
or incidental thereto, was presented before the Lok Sabha on
6.1.1976. Similarly, the report of the Joint Committee of the Houses
on the Bill was presented in the Rajya Sabha on 6.1.1976.
13. The deliberations regarding the proposed Bill and the report of
the Joint Committee took place in the Lok Sabha on 29.3.1976.
During the discussion, there was unanimity amongst all members
cutting across party lines that the penetration of foreign money into
country is a serious threat and danger to the sovereignty of the
country. The members variously expressed concern about the
unregulated inflow of foreign contribution. It was noted that its
penetration was so widespread that generally, anyone interested in
the sovereignty of our country and in democracy was bound to feel
concerned about the same. The experience of other countries was
also discussed by the members. The members mentioned about the
inflow of foreign contribution from many countries and noted that
some times it was being received directly and some times indirectly,
through other countries. It was coming in many forms including
receipt by religious organisations. It was agreed that the foreign
contribution can be permitted in regulated man ner without
completely prohibiting the inflow thereof. Eventually, to address the
59
mischief of growing foreign influence owing to influx of foreign
donations in our country, the Bill was passed which took the form
of the Act i.e., the Foreign Contribution (Regulation) Act, 1976. This
Act came into force on 5.8.1976
123
as a shield in our legislative
armoury. The preamble of the 1976 Act reads as under:
“An Act to regulate the acceptance and utilization of foreign
contribution or foreign hospitality by certain persons or
associations, with a view to ensuring that parliamentary
institutions, political associations and academic and
other voluntary organisations as well as individuals
working in the important areas of national life may
function in a manner consistent with the values of a
sovereign democratic republic, and for matters connected
therewith or incidental thereto.”
(emphasis supplied)
Over the course of time, this Act came to be amended. One such
amendment was in 1985. The Statement of Objects and Reasons of
the stated amendment read thus:
“STATEMENT OF OBJECTS AND REASONS
The Foreign Contribution (Regulation) Act, 1976, seeks to
regulate the acceptance and utilisation of foreign contribution
or foreign hospitality by certain categories of persons or
associations. To remove certain inadequacies and practical
difficulties in the administration of the Act, a Bill to amend
the Act was introduced in the Rajya Sabha in May, 1984. The
Bill was passed by the Rajya Sabha with certain amendments.
But it could not be passed by the Lok Sabha before it
adjourned at the end of its Monsoon Session and the Bill has
now lapsed. As it was considered necessary to give effect to
the provisions of the Bill as passed by the Rajya Sabha
urgently, the Foreign Contribution (Regulation) Amendment
Ordinance, 1984, was promulgated by the President on the
123
Vide notification No. GSR 755(E), dated 5.8.1976 published in the Gazette of India,
Extraordinary, Part-II, section 3(i)
60
20th October, 1984. The said Ordinance, inter alia, made the
following amendments in the Act, namely:—
(i) The definition of “foreign contribution”, as
contained in the Act, included only the donation,
delivery or transfer made by any foreign source. It did
not include donation or contribution received by an
organisation from another organisation from out of
foreign contribution received by the lat ter
organisation. The definition was enlarged to include
such contributions also for the purpose of tracing the
utilisation of foreign contribution down the line.
(ii) The definition of “political party”, as contained
in the Act, did not include political parties in the State
of Jammu and Kashmir and political parties which are
not covered by the Election Symbols (Reservation and
Allotment) Order, 1968. The Ordinance amended this
definition to include such political parties also.
(iii) Section 6(1) of the Act provided that every
association having a definite cultural, economic,
educational, religious or social programme s, may
receive foreign contribution, but was required to send
intimation regarding such receipt to the Central
Government within such time and such manner to be
prescribed by the rules made under the Act. It had been
observed that a number of associations had not sent
such intimation. In order to effectively monitor the
receipt of foreign contribution, this sub-section was
amended to provide that associations referred to
therein shall accept foreign contribution only after
they are registered with the Central Government
specifically for the purpose and accept such
contributions only through a specified branch of a
bank. They would, however, be required to give, within
such time and in such manner as may be prescribed,
intimation to the Central Government as to the
amount of foreign contribution received by them, the
source from which and the manner in which such
foreign contribution was received by them, etc. Where
any registered association does not accept foreign
contribution through the specified branch of a
specified bank or does not submit intimations, etc., in
time, the Central Government has been empowered to
direct that such association shall not accept foreign
contribution without the prior permission of the
61
Central Government. A new sub -section (1A) had also
been included in this section to provide that an
association not so registered with the Central
Government shall obtain p rior permission of the
Central Government before accepting any foreign
contribution and also give intimation to the Central
Government as to the amount of contribution received
by it.
(iv) The Act only enabled the Central Government
to inspect the accounts of certain persons or
associations. It did not provide for any power to audit
the accounts of any organisation if it is considered
necessary to do so. The Ordinance amended the Act by
inserting a new section 15A, to take specific power to
audit the accounts of certain persons, organisations or
associations, if the prescribed returns are not
furnished in time by such persons, organisations or
associations or the returns so furnished by them are
not in accordance with law or their scrutiny gives room
for suspicion that the provisions of the Act have been
contravened.
(v) A new section 25A had also been inserted in the Act to
provide that where any person is convicted of an offence
relating to the acceptance or utilisation of foreign
contribution for a second time, he shall be prohibited from
accepting any foreign contribution for a period of three
years from the date of the second conviction.
2. The Bill seeks to replace the aforesaid Ordinance.”
(emphasis supplied)
14. After the coming into force of the 1976 Act including the
subsequent amendments thereto , the experience gained and the
significant developments having taken place since 1984 such as
change in internal security scenario, an increased influence of
voluntary organisations, spread of use of communication and
information technology, quantum jump in the amount of foreign
62
contribution being received and large-scale growth in the number of
registered organisations, a Bill known as “the Foreign Contribution
(Regulation) Bill, 2006” came to be introduced. The proposal in the
Bill was to repeal the 1976 Act and replace it with the provisions of
the proposed Bill. The Statement of Objects and Reasons for the Bill
are as under:
“STATEMENT OF OBJECTS AND REASONS
The Foreign Contribution (Regulation) Act, 1976 was
enacted to regulate the acceptance and utilisation of
foreign contribution or hospitality with a view to
ensuring that our parliamentary institutions, political
associations, academic and other voluntary
organisations as well as individuals working in
important areas of national life may function in a
manner consistent with the values of a sovereign
democratic republic. The Act was amended in 1984 to
extend the provisions of the Act to cover second and
subsequent recipients of foreign contribution and to
the members of higher judiciary, besides introducing
the system of grant of registration to the associations
receiving foreign contribution.
2. Significant developments have taken place since
1984 such as change in internal security scenario, an
increased influence of voluntary organisations, spread
of use of communication and information technology,
quantum jump in the amount of foreign contribution
being received, and large scale growth in the number of
registered organisations. This has necessitated large
scale changes in the existing Act. Therefore, it has
been thought appropriate to replace the present Act by
a new legislation to regulate the acceptance, utilisation
and accounting of foreign contribution and acceptance
of foreign hospitality by a person or an association.
3. The Foreign Contribution (Regulation) Bill, 2006
provides, inter alia, to —
63
(i) consolidate the law to regulate, acceptance and
utilisation of foreign contribution or foreign hospitality
and prohibit the same for any activities detrimental to
the national interests;
(ii) prohibit organisations of political nature, not being
political parties from receiving foreign contribution;
(iii) bring associations engaged in production or
broadcast of audio news or audio visual news or
current affairs through any electronic mode under the
purview of the Bill;
(iv) prohibit the use of foreign contribution for any
speculative business;
(v) cap administrative expenses at fifty per cent. of the
receipt of foreign contribution;
(vi) exclude foreign funds received from relatives living
abroad;
(vii) make provision for intimating grounds for refusal
of registration or prior permission under the Bill;
(viii) provide arrangement for sharing of information
on receipt of foreign remittances by the concerned
agencies to strengthen monitoring;
(ix) make registration to be valid for five years with a
provision for renewal thereof, and also to provide for
cancellation or suspension of registration;
(x) make provision for compounding of certain
offences.
4. The Bill seeks to achieve the above objects.”
(emphasis supplied)
Finally, the Bill after being scrutinised by the Committee appointed
by the House, presented it in the Lok Sabha on 27.8.2010, titled as
“Foreign Contribution (Regulation) Act, 2010”. The members
expressed that India is an emerging economic power and the Bill, as
64
propounded, was a welcome step towards prohibiting organisations
with political agenda from destabilising the country through foreign
funding. The members shared their experience and finally accepted
the Bill which became the 2010 Act. This Act repealed the 1976 Act.
The introduction for the 2010 Act recognised that some of the foreign
countries were funding individuals, associations, political parties,
candidates for elections, correspondents, columnists, editors,
owners, printers or publishers of newspapers. They were also
extending hospitality. The introduction of the Act reads thus: -
“It had been noticed that some of the foreign countries
were funding individuals, associations, political parties,
candidates for elections, correspondents, columnists,
editors, owners, printers or publishers of newspapers.
They were also extending hospitality. The effects of such
funding and hospitality were quite noticeable and to have
some control over such funding and hospitality and to
regulate the acceptance and utilisation of foreign
contribution or foreign hospitality by certain persons or
associations, with a view to ensuring that Parliamentary
institutions, political associations and academic and
other voluntary organisations as well as individuals
working in the important areas of national life may
function in a manner consistent with the values of a
sovereign democratic republic the Foreign Contribution
(Regulation) Act, 1976 (49 of 1976) was enacted. Since its
enactment in 1976 several deficiencies had been found and it
was proposed to enact a fresh law on the subject by repealing
the Act 49 of 1976. Accordingly the Foreign Contribution
(Regulation) Bill was introduced in the Parliament.”
(emphasis supplied)
65
It will be useful to advert to the preamble of the 2010 Act. The same
reads thus: -
“An Act to consolidate the law to regulate the acceptance and
utilisation of foreign contribution or foreign hospitality by
certain individuals or associations or companies and to
prohibit acceptance and utilisation of foreign contribution or
foreign hospitality for any activities detrimental to the national
interest and for matters connected therewith or incidental
thereto.”
The underlying reason discernible from the Statement of Objects and
Reasons and the concerns expressed by the members during the
debate in the concerned Houses, make it amply clear that there was
need to strictly regulate the inflow of foreign contribution in the
manner specified by the Act. Intrinsic in the regulatory provisions
of the 2010 Act is to permit inflow of foreign contribution only in the
manner specified in the Act including its utilisation; and any activity
inconsistent with the 2010 Act was to visit with penal consequences.
The preamble of the 2010 Act restates the need to strictly regulate
the inflow of foreign contribution, as lack of it would inevitably affect
the national interests including the sovereignty and integrity of the
country.
66
15. The 2010 Act came to be amended on two occasions until
recently, vide Finance Act, 2016 (28 of 2016) and Finance Act, 2018
(13 of 2018).
16. The Central Government in exercise of powers conferred by
Section 48 of the 2010 Act framed the 2011 Rules, which came into
force on 1.5.2011. Further, the Central Government also framed
rules known as “The Foreign Contribution (Acceptance or Retention
of Gifts or Presentations) Rules, 2012”, which came into force on
17.6.2012. The 2011 Rules were amended by (Amendment) Rules,
2020. We shall advert to these Rules including the amended
provisions at the appropriate place.
17. In the present cases, we are concerned with the challenge to
the latest amendment effected vide the Foreign Contribution
(Regulation) Amendment Act, 2020, which has come into effect from
29.9.2020. Vide the 2020 Act, clause (c) in Section 3(1) came to be
amended. The amendment has been effected also to Sections 7, 8,
11, 12, 13, 15, 16 and 17 of the 2010 Act. The assail is limited to
the amended provisions (vide Amendment Act of 2020) on the
ground of abridgement of fundamental rights of the petitioners
67
guaranteed under Articles 14, 19(1)(a), 19(1)(c), 19(1)(g) and 21 of
the Constitution of India.
18. Notably, we are called upon to deal with the validity only of
amendment concerning Section s 7, 12(1A), 17 and insertion of
Section 12A in the Act. The unamended Sections 7, 12 and 17 read
thus: -
“7. Prohibition to transfer foreign contribution to other
person.- No person who — (a) is registered and granted a
certificate or has obtained prior permission under this Act;
and
(b) receives any foreign contribution,
shall transfer such foreign contribution to any other person
unless such other person is also registered and had been
granted the certificate or obtained the prior permission under
this Act:
Provided that such person may transfer, with the prior
approval of the Central Government, a part of such foreign
contribution to any other person who has not been granted a
certificate or obtained permission under this Act in
accordance with the rules made by the Central Government.
***
12. Grant of certificate of registration.- (1) An application
by a person, referred to in section 11 for grant of certificate or
giving prior permission, shall be made to the Central
Government in such form and manner and along with such
fee, as may be prescribed.
(2) On receipt of an application under sub-section (1), the
Central Government shall, by an order, if the application is
not in the prescribed form or does not contain any of the
particulars specified in that form, reject the application.
68
(3) If on receipt of an application for grant of certificate or
giving prior permission and after making such inquiry as the
Central Government deems fit, it is of the opinion that the
conditions specified in sub-section (4) are satisfied, it may,
ordinarily within ninety days from the date of receipt of
application under sub-section (1), register such person and
grant him a certificate or give him prior permission, as the
case may be, subject to such terms and conditions as may be
prescribed:
Provided that in case the Central Government does not
grant, within the said period of ninety days, a certificate or
give prior permission, it shall communicate the reasons
therefor to the applicant:
Provided further that a person shall not be eligible for grant
of certificate or giving prior permission, if his certificate has
been suspended and such suspension of certificate continues
on the date of making application.
(4) The following shall be the conditions for the purposes of
sub-section (3), namely: —
(a) the person making an application for registration or
grant of prior permission under sub-section (1),—
(i) is not fictitious or benami;
(ii) has not been prosecuted or convicted for
indulging in activities aimed at conversion through
inducement or force, either directly or indirectly,
from one religious faith to another;
(iii) has not been prosecuted or convicted for creating
communal tension or disharmony in any specified
district or any other part of the country;
(iv) has not been found guilty or diversion or mis-
utilisation of its funds;
(v) is not engaged or likely to engage in propagation
of sedition or advocate violent methods to achieve its
ends;
(vi) is not likely to use the foreign contribution for
personal gains or divert it for undesirable purposes;
(vii) has not contravened any of the provisions of this
Act;
69
(viii) has not been prohibited from accepting foreign
contribution;
(b) the person making an application for registration under
sub-section (1) has undertaken reasonable activity in its
chosen filed for the benefit of the society for which the
foreign contribution is proposed to be utilised;
(c) the person making an application for giving prior
permission under sub -section (1) has prepared a
reasonable project for the benefit of the society for which
the foreign contribution is proposed to be utilised;
(d) in case the person being an individual, such individual
has neither been convicted under any law for the time
being in force nor any prosecution for any offence pending
against him;
(e) in case the person being other than an individual, any
of its directors or office bearers has neither been convicted
under any law for the time being in force nor any
prosecution for any offence is pending against him;
(f) the acceptance of foreign contribution by the person
referred to in sub-section (1) is not likely to affect
prejudicially—
(i) the sovereignty and integrity of India; or
(ii) the security, strategic, scientific or economic
interest of the State; or
(iii) the public interest; or
(iv) freedom or fairness of election to any Legislature;
or
(v) friendly relation with any foreign State; or
(vi) harmony between religious, racial, social,
linguistic, regional groups, castes or communities;
(g) the acceptance of foreign contribution referred to in
sub-section (1),—
(i) shall not lead to incitement of an offence;
(ii) shall not endanger the life or physical safety of
any person.
(5) Where the Central Government refuses the grant of
certificate or does not give prior permission, it shall record in
70
its order the reasons therefor and furnish a copy thereof to the
applicant:
Provided that the Central Government may not
communicate the reasons for refusal for grant of certificate or
for not giving prior permission to the applicant under this
section in cases where is no obligation to give any information
or documents or records or papers under the Right to
Information Act, 2005.
(6) The certificate granted under sub-section (3) shall be
valid for a period of five years and the prior permission shall
be valid for the specific purpose or specific amount of foreign
contribution proposed to be received, as the case may be.
***
17. Foreign contribution through scheduled bank .- (1)
Every person who has been granted a certificate or given prior
permission under section 12 shall receive foreign contribution
in a single account only through such one of the branches of
a bank as he may specify in his application for grant of
certificate:
Provided that such person may open one or more accounts
in one or more banks for utilising the foreign contribution
received by him:
Provided further that no funds other than foreign
contribution shall be received or deposited in such account or
accounts.
(2) Every bank or authorised person in foreign exchange
shall report to such authority as may be specified—
(a) prescribed amount of foreign remittance;
(b) the source and manner in which the foreign remittance
was received; and
(c) other particulars,
in such form and manner as may be prescribed.”
19. As aforementioned, the need to amend certain provisions of the
2010 Act was felt necessary, as is discernible from the Statement of
71
Objects and Reasons appended to Bill No. 123/2020, which finally
culminated in the Amendment Act of 2020. The same reads thus: -
“STATEMENT OF OBJECTS AND REASONS
The Foreign Contribution (Regulation) Act, 2010 was enacted
to regulate the acceptance and utilisation of foreign
contribution or foreign hospitality by certain individuals or
associations or companies and to prohibit acceptance and
utilisation of foreign contribution or foreign hospitality for any
activities detrimental to the national interest and for matters
connected therewith or incidental thereto.
2. The said Act has come into force on the 1st day of May,
2011 and has been amended twice. The first amendment was
made by section 236 of the Finance Act, 2016 and the second
amendment was made by section 220 of the Finance Act,
2018.
3. The annual inflow of foreign contribution has almost
doubled between the years 2010 and 2019, but many
recipients of foreign contribution have not utilised the
same for the purpose for which they were registered or
granted prior permission under the said Act. Many of
them were also found wanting in ensuring basic statutory
compliances such as submission of annual returns and
maintenance of proper accounts. This has led t o a
situation where the Central Government had to cancel
certificates of registration of more than 19,000 recipient
organisations, including non -Governmental
organisations, during the period between 2011 and 2019.
The criminal investigations also had to be initiated
against dozens of such non-Governmental organisations
which indulged in outright misappropriation or mis -
utilisation of foreign contribution.
4. Therefore, there is a need to streamline the
provisions of the said Act by strengthening the
compliance mechanism, enhancing transparency and
accountability in the receipt and utilisation of foreign
contribution worth thousands of crores of rupees every
year and facilitating genuine non -Governmental
organisations or associations who are working for the
welfare of the society.
72
5. The Foreign Contribution (Regulation) Amendment Bill,
2020, inter alia, seeks to provide for—
(a) amendment of clause (c) of sub-section (1) of section 3
to include "public servant" also within its ambit, to provide
that no foreign contribution shall be accepted by any
public servant;
(b) amendment of section 7 to prohibit any transfer of
foreign contribution to any association/person;
(c) amendment of sub-section (1) of section 8 to reduce the
limit for defraying administrative expenses from existing
"fifty per cent." to "twenty per cent.";
(d) insertion of a new section 12A empowering the Central
Government to require Aadhaar number, etc., as
identification document;
(e) insertion of a new section 14A enabling the Central
Government to permit any person to surrender the
certificate granted under the Act;
(f) amendment of section 17 to provide that every person
who has been granted certificate or prior permission under
section 12 shall receive foreign contribution only in an
account designated as ‘‘FCRA Account’’ which shall be
opened by him in such branch of the State Bank of India
at New Delhi, as the Central Government may, by
notification, specify and for other consequential matters
relating thereto.
6. The Bill seeks to achieve the above objects.”
(emphasis supplied)
When the Bill proposed for amendment to the said provisions was
being considered, the members expressed their concern about the
volume of inflow of foreign contribution. It was noted that NGOs
have been formed, who in turn receive foreign contribution and
spend the funds as per their own desire and the same is being
73
misused, threatening the security apparatus and sovereignty of the
country.
20. Consequent to the 2020 Act, the relevant provisions including
the newly inserted clauses read thus: -
“7. Prohibition to transfer foreign contribution to other
person.- No person who —
(a) is registered and granted a certificate or has obtained
prior permission under this Act; and
(b) receives any foreign contribution,
shall transfer such foreign contribution to any other person.
***
12. Grant of certificate of registration.- (1) An application
by a person, referred to in section 11 for grant of certificate or
giving prior permission, shall be made to the Central
Government in such form and manner and along with such
fee, as may be prescribed.
(1A) Every person who makes an application under sub-
section (1) shall be required to open “FCRA Account” in the
manner specified in section 17 and mention details of such
account in his application.
(2) On receipt of an application under sub-section (1), the
Central Government shall, by an order, if the application is
not in the prescribed form or does not contain any of the
particulars specified in that form, reject the application.
(3) If on receipt of an application for grant of certificate or
giving prior permission and after making such inquiry as the
Central Government deems fit, it is of the opinion that the
conditions specified in sub-section (4) are satisfied, it may,
ordinarily within ninety days from the date of receipt of
application under sub-section (1), register such person and
grant him a certificate or give him prior permission, as the
case may be, subject to such terms and conditions as may be
prescribed:
74
Provided that in case the Central Government does not
grant, within the said period of ninety days, a certificate or
give prior permission, it shall communicate the reasons
therefor to the applicant:
Provided further that a person shall not be eligible for grant
of certificate or giving prior permission, if his certificate has
been suspended and such suspension of certificate continues
on the date of making application.
(4) The following shall be the conditions for the purposes of
sub-section (3), namely: —
(a) the person making an application for registration or
grant of prior permission under sub-section (1),—
(i) is not fictitious or benami;
(ii) has not been prosecuted or convicted for
indulging in activities aimed at conversion through
inducement or force, either directly or indirectly,
from one religious faith to another;
(iii) has not been prosecuted or convicted for creating
communal tension or disharmony in any specified
district or any other part of the country;
(iv) has not been found guilty or diversion or mis-
utilisation of its funds;
(v) is not engaged or likely to engage in propagation
of sedition or advocate violent methods to achieve its
ends;
(vi) is not likely to use the foreign contribution for
personal gains or divert it for undesirable purposes;
(vii) has not contravened any of the provisions of this
Act;
(viii) has not been prohibited from accepting foreign
contribution;
(b) the person making an application for registration under
sub-section (1) has undertaken reasonable activity in its
chosen filed for the benefit of the society for which the
foreign contribution is proposed to be utilised;
(c) the person making an application for giving prior
permission under sub -section (1) has prepared a
75
reasonable project for the benefit of the society for which
the foreign contribution is proposed to be utilised;
(d) in case the person being an individual, such individual
has neither been convicted under any law for the time
being in force nor any prosecution for any offence pending
against him;
(e) in case the person being other than an individual, any
of its directors or office bearers has neither been convicted
under any law for the time being in force nor any
prosecution for any offence is pending against him;
(f) the acceptance of foreign contribution by the person
referred to in sub-section (1) is not likely to affect
prejudicially—
(i) the sovereignty and integrity of India; or
(ii) the security, strategic, scientific or economic
interest of the State; or
(iii) the public interest; or
(iv) freedom or fairness of election to any Legislature;
or
(v) friendly relation with any foreign State; or
(vi) harmony between religious, racial, social,
linguistic, regional groups, castes or communities;
(g) the acceptance of foreign contribution referred to in
sub-section (1),—
(i) shall not lead to incitement of an offence;
(ii) shall not endanger the life or physical safety of
any person.
(5) Where the Central Government refuses the grant of
certificate or does not give prior permission, it shall record in
its order the reasons therefor and furnish a copy thereof to the
applicant:
Provided that the Central Government may not
communicate the reasons for refusal for grant of certificate or
for not giving prior permission to the applicant under this
section in cases where is no obligation to give any information
or documents or records or papers under the Right to
Information Act, 2005.
76
(6) The certificate granted under sub-section (3) shall be
valid for a period of five years and the prior permission shall
be valid for the specific purpose or specific amount of foreign
contribution proposed to be received, as the case may be.
***
12A. Power of Central Government to require Aadhaar
number, etc., as identification document .-
Notwithstanding anything contained in this Act, the Central
Government may require that any person who seeks prior
permission or prior approval under section 11, or makes an
application for grant of certificate under section 12, or, as the
case may be, for renewal of certificate under section 16, shall
provide as identification document, the Aadhaar number of all
its office bearers or Directors or other key functionaries, by
whatever name called, issued under the Aadhaar (Targeted
Delivery of Financial and Other Subsidies, Benefits and
Services) Act, 2016 (18 of 2016), or a copy of the Passport or
Overseas Citizen of India Card, in case of a foreigner.
***
17. Foreign contribution through scheduled bank .- (1)
Every person who has been granted certificate or prior
permission under section 12 shall receive foreign contribution
only in an account designated as "FCRA Account" by the bank,
which shall be opened by him for the purpose of remittances
of foreign contribution in such branch of the State Bank of
India at New Delhi, as the Central Gover nment may, by
notification, specify in this behalf:
Provided that such person may also open another “FCRA
Account” in any of the scheduled bank of his choice for the
purpose of keeping or utilising the foreign contribution which
has been received from his “FCRA Account” in the specified
branch of State Bank of India at New Delhi:
Provided further that such person may also open one or
more accounts in one or more scheduled banks of his choice
to which he may transfer for utilising any foreign contribution
received by him in his “FCRA Account” in the specified branch
of the State Bank of India at New Delhi or kept by him in
another “FCRA Account” in a scheduled bank of his choice:
Provided also that no funds other than foreign contribution
shall be received or deposited in any such account.
77
(2) The specified branch of the State Bank of India at New
Delhi or the branch of the scheduled bank where the person
referred to in sub-section (1) has opened his foreign
contribution account or the authorised person in foreign
exchange, shall report to such authority as may be
specified,—
(a) the prescribed amount of foreign remittance;
(b) the source and manner in which the foreign remittance
was received; and
(c) other particulars,
in such form and manner as may be prescribed.”
21. It is well-established that rights guaranteed under Part III of
the Constitution and Article 19 in particular, are not absolute rights.
The same are subject to reasonable restrictions, as predicated in
clauses (2) and (6) of Article 19. For, it is open to the State to make
a law, so as to impose reasonable restrictions on the exercise of such
right [under Article 19(1)(a)] in the interests of the sovereignty and
integrity of India, the security of the State, friendly relations with
Foreign States, public order, decency or morality or in relation to
contempt of Court, defamation or incitement to an offence; in case
of Article 19(1)(c) - in the interests of the sovereignty and integrity of
India, public order or morality; and in case of Article 19(1)(g) - in the
interests of the general public. It is rightly urged by the respondents
that whenever the challenge is to the amended provisions, the scope
of enquiry, inter alia, ought to be as to whether the same is in
78
consonance with the Principal Act, achieve the object and purpose
of the Principal Act and are otherwise just, rational and reasonable.
Further, there is no fundamental right vested in anyone to receive
foreign contribution (donation) or foreign exchange; and that the
purport of the Principal Act and the impugned amendments are only
to provide a regulatory framework and not one of complete
prohibition.
22. Indisputably, serious concern about the impact of widespread
inflow of foreign contribution on the values of a sovereign democratic
republic had been repeatedly expressed at different levels including
in the Parliament. To that end, the Bill was introduced in the
Parliament in 1973. The legislative intent behind the enactment of
the 1976 Act has remained unchanged even to this day — nay it has
become more relevant now. In that, the experience gained aftermath
implementation of the 1976 Act revealed that more stringent
dispensation was needed to minimise the negative impact owing to
the surge in the inflow of foreign donation and for upholding the
values of a sovereign democratic republic, for which the 2010 Act
came to be enacted. In that, even the amendment effected in 1985
to the 1976 Act was found to be insufficient to deal with the
79
shortcomings in the law in force, for regulating the inflow and
sustained moderate utilisation of foreign contribution. For that
reason, the Parliament eventually decided to replace the regulatory
dispensation by enacting a new law (the 2010 Act) to address the
mischief.
23. In due course of time, however, it was realised that the
dispensation enunciated in the 2010 Act was also not yielding the
desired result. This impelled the Parliament to amend the 2010 Act
(vide 2020 Act) to make it more stringent and effective to subserve
the cause and intent of the Principal Act — not only in regard to the
modality of acceptance of foreign contribution in the prescribed
manner but also making it imperative for the recipient of foreign
contribution to utilise the same “itself” for the designated or specified
purposes for which it was so permitted.
24. Philosophically, foreign contribution (donation) is akin to
gratifying intoxicant replete with medicinal properties and may work
like a nectar. However, it serves as a medicine so long as it is
consumed (utilised) moderately and discreetly, for serving the larger
cause of humanity. Otherwise, this artifice has the capability of
80
inflicting pain, suffering and turmoil as being caused by the toxic
substance (potent tool) — across the nation. In that, free and
uncontrolled flow of foreign contribution has the potentials of
impacting the sovereignty and integrity of the nation, its public order
and also working against the interests of the general public.
25. To eradicate misuse and abuse of foreign contribution in the
past, despite the firm regime in place in terms of the 2010 Act, the
Parliament in its wisdom has now (vide Amendment Act of 2020)
adopted the path of moderation by making it mandatory for all to
accept foreign contribution only through one channel and to utilise
the same “itself” for the purposes for which permission has been
accorded. Undeniably, the sovereignty and integrity of India ought
to prevail and the rights enshrined in Part III of the Constitution
must give way to the interests of general public much less public
order and the sovereignty and integrity of the nation. It must be
borne in mind that the legislation under consideration must be
understood in the context of the underlying intent of insulating the
democratic polity from the adverse influence of foreign contribution
remitted by foreign sources.
81
26. The Statement of Objects and Reasons for the Amendment Act
of 2020 makes it amply clear that the annual inflow of foreign
contribution had almost doubled between the years 2010 and 2019
and many recipients of foreign contribution had not utilised the
same for the purposes for which they were registered or granted prior
permission under the Act. Further, many recipients had also failed
to adhere to and fulfil the statutory compliances — which resulted
in cancellation of as many as 19,000 certificates of concerned
persons/organisations during the stated period, including initiation
of criminal investigation concerning outright misappropriation or
misutilisation of foreign contribution. It was increasingly reported
that some of the NGOs were primarily involved in routing of foreign
contribution accepted by them and not utilising the same itself for
the purposes for which certificate of registration was issued. Such
transfer created several operational issues bordering on
malpractices impacting the very intent of the Principal Act. For,
routing of foreign contribution entails in diverting it to another area
of activity including misuse thereof. There had been cases of
successive transfers and creation of a layered trail of money making
it difficult to trace the flow and final utilisation. In this backdrop, to
82
strengthen the compliance mechanism and enhancing transparency
and accountability in the matter of acceptance and utilisation of
foreign contribution, the Parliament had to once again step in to
restructure the dispensation, making it more meaningful and
effective, so as to deal with the increasing impact of foreign
contribution.
27. It is unnecessary to underscore the distinction between foreign
contribution and foreign investment. By its very nature, foreign
contribution is a donation accepted from a foreign source
purportedly for definite cultural, economic, educational, religious or
social programme and to serve the cause of humanity. The
expression “foreign contribution” has been defined in Section 2(1)(h)
of the 2010 Act to mean donation, which can be in the form of
delivery or transfer made by any foreign source of any article,
currency, security, etc.
28. It is open to a sovereign democratic nation to completely
prohibit acceptance of foreign donation on the ground that it
undermines the constitutional morality of the nation, as it is
indicative of the nation being incapable of looking after its own
83
affairs and needs of its citizens. The third world countries may
welcome foreign donation, but it is open to a nation, which is
committed and enduring to be self-reliant and variously capable of
shouldering its own needs, to opt for a policy of complete prohibition
of inflow/acceptance of foreign contribution (donation) from foreign
source. This was the first option noted by the Parliament while
considering the Bill concerning the 1976 Act.
29. When the 1976 Act was enacted, the Parliament had discussed
about three options. The first was of outright prohibition; the second
being acceptance subject to prior permission of Government; and the
third — acceptance subject to intimation being given to Government.
The Parliament opted for the second option and that continues to
this day in the form of 2010 Act, as amended in 2020. At the same
time, from the experience gained aftermath implementation of the
dispensation predicated for regulating the inf low of foreign
contribution from foreign source and its utilisation, the need to
make it more stringent was felt. The amendments vide the 2020 Act,
are the product of that experience and the Parliament, for
accomplishing the objectives of the Principal Act and to uphold the
sovereignty and integrity of the nation as well as public order and in
84
the interests of the general public, introduced the regime requiring
acceptance of foreign contribution from foreign source only through
one channel and utilising the same by the recipient itself for the
activities for which prior permission has been granted to him in that
regard. The permission to be granted by the Central Government
can be a general permission for definite cultural, economic,
educational, religious or social programme or a special permission
in respect of particular activity in that regard. In either case, it has
to be a prior permission in the form of obtaining certificate of
registration from the Central Government or obtaining prior
permission of the Central Government for the specific purpose by
person not so registered.
30. Suffice it to observe that considering the legislative history and
the need for the Parliament to periodically intervene to arrest the
increasing influence on the polity of the nation due to the high
volume of inflow of foreign contribution and large-scale improper
utilisation and misappropriation thereof, as noticed by the
authorities and keeping in mind the objective of the principal
enactment being to uphold the values of sovereign democratic
republic, the dispensation as altered to make it more strict
85
compliance mechanism for ensuring that the foreign funds are
accepted in the prescribed manner and utilised by the recipient itself
and more so, for the purposes for which it was allowed to be received
by that person, the amended provisions ought to pass the muster of
reasonable restriction. Certainly, such a change cannot be labelled
as irrational much less manifestly arbitrary, especially when it
applies uniformly to a class of persons without any discrimination.
We need to remind ourselves the dictum of this Court in Rustom
Cavasjee Cooper
124 and also R.K. Garg
125 – that it is not for the
Court to consider relative merits of the different political theories or
economic policies including that an economic legislation may be
troubled with crudities, inequities, uncertainties or the possibility of
abuse cannot be the basis for striking it down.
31. It must follow that acceptance of foreign contribution is
otherwise prohibited by law and violation of such restriction has
been made an offence under Chapter VIII of the 2010 Act. Nothing
prevents the organisations interested in doing charitable work in
raising contribution within the country. In that sense, the 2010 Act
124
supra at Footnote No.48
125
supra at Footnote No.49
86
deals with a class of persons accepting foreign contribution from
foreign source. All such persons are treated equally and without any
discrimination.
Relevant provisions of the 2010 Act as amended
32. We may now broadly delineate the contours of the provisions
of the 2010 Act before we proceed to examine the challenge specific
to the amended provisions vide the 2020 Act. Chapter I of the 2010
Act deals with short title, extent, application and commencement of
the Act as well as definitions of certain expressions referred to
therein.
33. Chapter II is about regulation of foreign contribution and
foreign hospitality. Section 3
126
deals with prohibition to accept
126
3. Prohibition to accept foreign contribution .—(1) No foreign contribution shall be
accepted by any—
(a) candidate for election;
(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a
registered newspaper;
(c) public servant, Judge, Government servant or employee of any corporation or any
other body controlled or owned by the Government;
(d) member of any Legislature;
(e) political party or office-bearer thereof;
(f) organisation of a political nature as may be specified under sub-section (1) of section
5 by the Central Government;
(g) association or company engaged in the production or broadcast of audio news or
audio visual news or current affairs programmes through any electronic mode, or any
other electronic form as defined in clause (r) of sub-section (1) of section 2 of the
87
foreign contribution by specified persons. Section 4
127
is to declare
that nothing in Section 3 shall apply to the acceptance, by any
Information Technology Act, 2000 (21 of 2000) or any other mode of mass
communication;
(h) correspondent or columnist, cartoonist, editor, owner of the association or company
referred to in clause (g).
Explanation.1—For the purpose of clause (c), “public servant” means a public servant as defined
in section 21 of the Indian Penal Code (45 of 1860).
Explanation 2.—In clause (c) and section 6, the expression “corporation” means a corporation
owned or controlled by the Government and includes a Government company as defined in
clause (45) of section 2 of the Companies Act, 2013 (18 of 2013).
(2) (a) No person, resident in India, and no citizen of India resident outside India, shall accept
any foreign contribution, or acquire or agree to acquire any currency from a foreign source, on
behalf of any political party, or any person referred to in sub-section (1), or both.
(b) No person, resident in India, shall deliver any currency, whether Indian or foreign, which
has been accepted from any foreign source, to any person if he knows or has reasonable cause
to believe that such other person intends, or is likely, to deliver such currency to any political
party or any person referred to in sub-section (1), or both.
(c) No citizen of India resident outside India shall deliver any currency, whether Indian or
foreign, which has been accepted from any foreign source, to—
(i) any political party or any person referred to in sub-section (1), or both; or
(ii) any other person, if he knows or has reasonable cause to believe that such other
person intends, or is likely, to deliver such currency to a political party or to any person
referred to in sub-section (1), or both.
(3) No person receiving any currency, whether Indian or foreign, from a foreign source on behalf
of any person or class of persons, referred to in section 9, shall deliver such currency—
(a) to any person other than a person for which it was received, or
(b) to any other person, if he knows or has reasonable cause to believe that such other
person intends, or is likely, to deliver such currency to a person other than the person
for which such currency was received.
127
4. Persons to whom section 3 shall not apply.—Nothing contained in section 3 shall apply
to the acceptance, by any person specified in that section, of any foreign contribution where
such contribution is accepted by him, subject to the provisions of section 10,—
(a) by way of salary, wages or other remuneration due to him or to any group of persons
working under him, from any foreign source or by way of payment in the ordinary course
of business transacted in India by such foreign source; or
(b) by way of payment, in the course of international trade or commerce, or in the
ordinary course of business transacted by him outside India; or
88
person specified in that section, of any foreign contribution where
such contribution is accepted by him, subject to the provisions of
Section 10 in respect of matters provided therein. Section 5 is about
the procedure to notify an organisation of a political nature. Section
6 deals with restriction on acceptance of foreign hospitality. Section
7 is about prohibition on transfer of foreign contribution to other
persons. Section 8
128
is about restriction to utilise foreign
(c) as an agent of a foreign source in relation to any transaction made by such foreign
source with the Central Government or State Government; or
(d) by way of a gift or presentation made to him as a member of any Indian delegation,
provided that such gift or present was accepted in accordance with the rules made by
the Central Government with regard to the acceptance or retention of such gift or
presentation; or
(e) from his relative; or
(f) by way of remittance received, in the ordinary course of business through any official
channel, post-office, or any authorised person in foreign exchange under the Foreign
Exchange Management Act, 1999 (42 of 1999); or
(g) by way of any scholarship, stipend or any payment of like nature:
Provided that in case any foreign contribution received by any person specified under
section 3, for any of the purposes other than those specified under this section, such
contribution shall be deemed to have been accepted in contravention of the provisions of section
3.
128
8. Restriction to utilise foreign contribution for administrative purpose .—(1) Every
person, who is registered and granted a certificate or given prior permission under this Act and
receives any foreign contribution,—
(a) shall utilise such contribution for the purposes for which the contribution has been
received:
Provided that any foreign contribution or any income arising out of it shall not be used
for speculative business:
Provided further that the Central Government shall, by rules, specify the activities or
business which shall be construed as speculative business for the purpose of this section;
(b) shall not defray as far as possible such sum, not exceeding twenty per cent. of such
contribution, received in a financial year, to meet administrative expenses:
89
contribution for administrative purpose. Section 9
129
speaks about
power of Central Government to prohibit receipt of foreign
Provided that administrative expenses exceeding twenty per cent. of such contribution may
be defrayed with prior approval of the Central Government.
(2) The Central Government may prescribe the elements which shall be included in the
administrative expenses and the manner in which the administrative expenses referred to in
sub-section (1) shall be calculated.
129
9. Power of Central Government to prohibit receipt of foreign contribution, etc., in
certain cases.—The Central Government may—
(a) prohibit any person or organisation, not specified in section 3, from accepting any foreign
contribution;
(b) require any person or class of persons, not specified in section 6, to obtain prior
permission of the Central Government before accepting any foreign hospitality;
(c) require any person or class of persons not specified in section 11, to furnish intimation
within such time and in such manner as may be prescribed as to the amount of any foreign
contribution received by such person or class of persons as the case may be, and the source
from which and the manner in which such contribution was received and the purpose for
which and the manner in which such foreign contribution was utilised;
(d) without prejudice to the provisions of sub-section (1) of section 11, require any person
or class of persons specified in that sub-section to obtain prior permission of the Central
Government before accepting any foreign contribution;
(e) require any person or class of persons, not specified in section 6, to furnish intimation,
within such time and in such manner as may be prescribed, as to the receipt of any foreign
hospitality, the source from which and the manner in which such hospitality was received:
Provided that no such prohibition or requirement shall be made unless the Central
Government is satisfied that the acceptance of foreign contribution by such person or class of
persons, as the case may be, or the acceptance of foreign hospitality by such person, is likely to
affect prejudicially—
(i) the sovereignty and integrity of India; or
(ii) public interest; or
(iii) freedom or fairness of election to any Legislature; or
(iv) friendly relations with any foreign State; or
(v) harmony between religious, racial, social, linguistic or regional groups, castes or
communities.
90
contribution and matters connected therewith. Section 10
130
is
about the power of the Central Government to prohibit payment of
currency received in contravention of the Act.
34. The provisions of Chapter III deal with the subject of
registration. Section 11
131
is about registration of certain persons
130
10. Power to prohibit payment of currency received in contravention of the Act.—Where
the Central Government is satisfied, after making such inquiry as it may deem fit, that any
person has in his custody or control any article or currency or security, whether Indian or
foreign, which has been accepted by such person in contravention of any of the provisions of
this Act, it may, by order in writing, prohibit such person from paying, delivering, transferring
or otherwise dealing with, in any manner whatsoever, such article or currency or security save
in accordance with the written orders of the Central Government and a copy of such order shall
be served upon the person so prohibited in the prescribed manner, and thereupon the
provisions of sub-sections (2), (3), (4) and (5) of section 7 of the Unlawful Activities (Prevention)
Act, 1967 (37 of 1967) shall, so far as may be, apply to, or in relation to, such article or currency
or security and references in the said sub-sections to monies, securities or credits shall be
construed as references to such article or currency or security.
131
11. Registration of certain persons with Central Government. — (1) Save as otherwise
provided in this Act, no person having a definite cultural, economic, educational, religious or
social programme shall accept foreign contribution unless such person obtains a certificate of
registration from the Central Government:
Provided that any association registered with the Central Government under section 6 or
granted prior permission under that section of the Foreign Contribution (Regulation) Act, 1976
(49 of 1976), as it stood immediately before the commencement of this Act, shall be deemed to
have been registered or granted prior permission, as the case may be, under this Act and such
registration shall be valid for a period of five years from the date on which this section comes
into force.
(2) Every person referred to in sub-section (1) may, if it is not registered with the Central
Government under that sub-section, accept any foreign contribution only after obtaining the
prior permission of the Central Government and such prior permission shall be valid for the
specific purpose for which it is obtained and from the specific source:
Provided that the Central Government, on the basis of any information or report, and after
holding a summary inquiry, has reason to believe that a person who has been granted prior
permission has contravened any of the provisions of this Act, it may, pending any further
inquiry, direct that such person shall not utilise the unutilised foreign contribution or receive
the remaining portion of foreign contribution which has not been received or, as the case may
be, any additional foreign contribution, without prior approval of the Central Government:
91
with Central Government. Section 12 is about grant of certificate of
registration and the procedure therefor. Section 12A has been
inserted vide the 2020 Act providing for power of Central
Government to require Aadhaar number etc. , as identification
document at the time of registration or for renewal of certificate.
Section 13 deals with situations where certificate of registration can
be suspended and Section 14
132
is about cancellation of such
Provided further that if the person referred to in sub-section (1) or in this sub-section has
been found guilty of violation of any of the provisions of this Act or the Foreign Contribution
(Regulation) Act, 1976 (49 of 1976), the unutilised or unreceived amount of foreign contribution
shall not be utilised or received, as the case may be, without the prior approval of the Central
Government.
(3) Notwithstanding anything contained in this Act, the Central Government may, by notification
in the Official Gazette, specify—
(i) the person or class of persons who shall obtain its prior permission before accepting the
foreign contribution; or
(ii) the area or areas in which the foreign contribution shall be accepted and utilised with
the prior permission of the Central Government; or
(iii) the purpose or purposes for which the foreign contribution shall be utilised with the
prior permission of the Central Government; or
(iv) the source or sources from which the foreign contribution shall be accepted with the
prior permission of the Central Government.
132
14. Cancellation of certificate.—(1) The Central Government may, if it is satisfied after
making such inquiry as it may deem fit, by an order, cancel the certificate if—
(a) the holder of the certificate has made a statement in, or in relation to, the application
for the grant of registration or renewal thereof, which is incorrect or false; or
(b) the holder of the certificate has violated any of the terms and conditions of the certificate
or renewal thereof; or
(c) in the opinion of the Central Government, it is necessary in the public interest to cancel
the certificate; or
(d) the holder of certificate has violated any of the provisions of this Act or rules or order
made thereunder; or
92
certificate. Section 15 deals with issues of management of foreign
contribution of person whose certificate has been cancelled and
Section 16
133
is about the process of renewal of certificate of
registration.
35. We are not so much concerned with the other Chapters,
namely, Chapters IV to IX of the 2010 Act, except Section 17 (in
Chapter IV) which deals with foreign contribution through scheduled
(e) if the holder of the certificate has not been engaged in any reasonable activity in its
chosen field for the benefit of the society for two consecutive years or has become defunct.
(2) No order of cancellation of certificate under this section shall be made unless the person
concerned has been given a reasonable opportunity of being heard.
(3) Any person whose certificate has been cancelled under this section shall not be eligible for
registration or grant or prior permission for a period of three years from the date of cancellation
of such certificate.
133
16. Renewal of certificate.—(1) Every person who has been granted a certificate under
section 12 shall have such certificate renewed within six months before the expiry of the period
of the certificate.
Provided that the Central Government may, before renewing the certificate, make such
inquiry, as it deems fit, to satisfy itself that such person has fulfilled all conditions specified in
sub-section (4) of section 12.
(2) The application for renewal of the certificate shall be made to the Central Government in
such form and manner and accompanied by such fee as may be prescribed.
(3) The Central Government shall renew the certificate, ordinarily within ninety days from the
date of receipt of application for renewal of certificate subject to such terms and conditions as
it may deem fit and grant a certificate of renewal for a period of five years:
Provided that in case the Central Government does not renew the certificate within the said
period of ninety days, it shall communicate the reasons therefor to the applicant:
Provided further that the Central Government may refuse to renew the certificate in case
where a person has violated any of the provisions of this Act or rules made thereunder.
93
bank. The other provisions in Chapter IV are about accounts,
intimation, audit and disposal of assets, etc.
36. As aforesaid, the 2010 Act is to regulate foreign contribution as
defined in Section 2(1)(h). As the petitioners are desirous of engaging
in definite cultural, economic, educational, religious or social
programme and for doing so accept foreign contribution, they had to
seek certificate of registration from the Central Government in terms
Section 11. The certificate of registration refers to definite activities
which will be undertaken by the concerned organisation/trust for
utilisation of foreign contribution. Having shown interest in
obtaining such certificate of registration or for renewal thereof, it is
obligatory for the organisation to comply with the formalities,
including as specified in Sections 7, 12(1A) read with Section 17 or
Section 12A. We shall deal with this aspect in detail a little later.
37. Besides complying with the formalities for registration under
Section 11, the persons interested in receipt/acceptance of foreign
contribution from foreign source after grant of such certificate of
registration, are obliged to do so only through the FCRA account
which is required to be opened under Section 17 being a
precondition for grant of certificate of registration or renewal thereof,
94
in terms of Section 12(1A) read with Section 17 of the 2010 Act. That
apart, after grant of certificate of registration and acceptance of
foreign contribution from foreign source through the specified
account, the same is required to be utilised by the recipient itself
only for the purposes for which such permission had been granted,
with prohibition to transfer such foreign contribution to any other
person by virtue of Section 7 of the 2010 Act.
Validity of Section 7
38. Having said this, now we may revert to the grounds on which
Section 7, as amended vide the 2020 Act, has been challenged. It is
urged that the unamended provision though restricted the transfer
of foreign contribution, yet it did not completely prohibit the same
unlike the amended Section 7. The amended Section 7 postulates
complete prohibition on the transfer of foreign contribution to other
person — not even to a person having certificate of registration under
the Act. In other words, a person who is registered and granted a
certificate or has obtained prior permission under the Act to receive
foreign contribution will henceforth be required to utilise the amount
“itself” and not through any other person.
95
39. Be it noted that the proviso to the unamended Section 7
envisaged that if a part of foreign contribution was to be transferred
to some other person who had not been granted a certificate or
obtained prior permission under the 2010 Act, that could be made
possible by obtaining prior approval of the Central Government.
Even that option is done away with on account of the amended
Section 7.
40. This plea has been countered by the respondents on the
argument that the Parliament in its wisdom has decided to introduce
a strict regime in the backdrop of the experience gained from the
implementation of the unamended Section 7 of the 2010 Act; and to
eradicate the mischief which had unfolded. Hence, t he new
dispensation became necessary to introduce a strict er regime
(amended Section 7). Indisputably, the new regime does not
completely prohibit the inflow of foreign contribution as such.
Whereas, it is a firm dispensation regarding utilisation of the funds
so accepted/received from foreign source only for the purposes for
which the recipient is registered and granted a certificate or had
been given prior permission under the Act in that regard.
96
41. The expressions “foreign contribution”
134
and “foreign
source”
135
have been defined in Sections 2(1)(h) and 2(1)(j) of the
2010 Act as amended.
134
2. Definitions.—(1) In this Act, unless the context otherwise requires,—
(a) to (g) xxx xxx xxx
(h) “foreign contribution” means the donation, delivery or transfer made by any foreign
source,—
(i) of any article, not being an article given to a person as a gift for his personal use, if the
market value, in India, of such article, on the date of such gift, is not more than such sum
as may be specified from time-to-time, by the Central Government by the rules made by it
in this behalf;
(ii) of any currency, whether Indian or foreign;
(iii) of any security as defined in clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) and includes any foreign security as defined in clause
(o) of section 2 of` the Foreign Exchange Management Act, 1999 (42 of 1999).
Explanation 1.—A donation, delivery or transfer of any article, currency or foreign security
referred to in this clause by any person who has received it from any foreign source, either
directly or through one or more persons, shall also be deemed to be foreign contribution
within the meaning of this clause.
Explanation 2.—The interest accrued on the foreign contribution deposited in any bank
referred to in sub-section (1) of section 17 or any other income derived from the foreign
contribution or interest thereon shall also be deemed to be foreign contribution within the
meaning of this clause.
Explanation 3.—Any amount received, by any person from any foreign source in India, by
way of fee (including fees charged by an educational institution in India from foreign
student) or towards cost in lieu of goods or services rendered by such person in the ordinary
course of his business, trade or commerce whether within India or outside India or any
contribution received from an agent of a foreign source towards such fee or cost shall be
excluded from the definition of foreign contribution within the meaning of this clause;
135
2. Definitions.—(1) In this Act, unless the context otherwise requires,—
(a) to (i) xxx xxx xxx
(j) “foreign source” includes,—
(i) the Government of any foreign country or territory and any agency of such
Government;
(ii) any international agency, not being the United Nations or any of its
specialised agencies, the World Bank, International Monetary Fund or such
other agency as the Central Government may, by notification, specify in this
behalf;
(iii) a foreign company;
(iv) a corporation, not being a foreign company, incorporated in a foreign
country or territory;
97
42. Section 11 of the Act, as applicable vide the Amendment Act of
2020, is in one sense complete prohibition to receive foreign
contribution unless have obtained certificate of registration or prior
permission from the Central Government in that regard. Further,
Section 11 allows receipt or acceptance of foreign contribution only
for definite purposes such as cultural, economic, educational,
religious or social programme.
(v) a multi-national corporation referred to in sub-clause (iv) of clause (g);
(vi) a company within the meaning of the Companies Act, 1956 (1 of 1956), and
more than one-half of the nominal value of its share capital is held, either singly
or in the aggregate, by one or more of the following, namely:—
(A) the Government of a foreign country or territory;
(B) the citizens of a foreign country or territory;
(C) corporations incorporated in a foreign country or territory;
(D) trusts, societies or other associations of individuals (whether
incorporated or not), formed or registered in a foreign country or territory;
(E) foreign company;
Provided that where the nominal value of share capital is within the limits
specified for foreign investment under the Foreign Exchange Management Act,
1999 (42 of 1999), or the rules or regulations made thereun der, then,
notwithstanding the nominal value of share capital of a company being more than
one-half of such value at the time 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;
(vii) a trade union in any foreign country or territory, whether or not registered in
such foreign country or territory;
(viii) a foreign trust or a foreign foundation, by whatever name called, or such
trust or foundation mainly financed by a foreign country or territory;
(ix) a society, club or other association of individuals formed or registered outside
India;
(x) a citizen of a foreign country;
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43. A person desirous of receiving/accepting foreign contribution
for such definite purposes had to seek a certificate of registration
from the Central Government even under the unamended provision.
After obtaining such certificate of registration, the recipient of
foreign contribution could transfer it to another person who is also
registered and had been granted a certificate or obtained prior
permission under the 2010 Act. However, that is not permissible
under the new dispensation (amended Section 7). For, the legislative
intent is now one of complete prohibition regarding transfer of
foreign contribution to third party.
44. Significantly, as per the scheme of the 2010 Act, a certificate of
registration is not granted for acting as an intermediary between the
donor (foreign source) and the grassroot level organisation. The
amended provision, therefore, completely rules out such transfer of
foreign contribution by the person who has received/accepted the
same in the first place. That does not prevent the recipient from
utilising the foreign contribution “itself” for the purposes for which
he has been granted a certificate of registration or obtained prior
permission under the Act.
99
45. The expression “transfer” has not been defined in the Act. The
meaning of expression “transfer” in the subject enactment would
presuppose giving away of the foreign contribution in whole or in
part to third person without retaining any control thereon; and such
change of hands is obviously without offering any services in return,
namely, free of costs. The third person would then be free to deal
with such transferred foreign contribution in the manner he chooses
to do so, whilst adhering to the conditions specified in his certificate
of registration or the conditions specified in the prior permission
under the Act, as the case may be. In this scenario, it had been
possible that the transferor (who had accepted the foreign
contribution) may have persuaded the foreign source to donate for
one permitted purpose, but without consulting the donor (foreign
source) could transfer the whole or part amount (foreign donation)
to third person (transferee) for being utilised for altogether another
purpose, which in a given case may not be acceptable to the donor.
It, thus, paved way for misutilisation of foreign contribution and the
possibility of abuse thereof.
46. There is no restriction regarding utilisation of foreign
contribution, leave alone complete prohibition. The rationale of
100
Section 7 as amended, inter alia, is that the donor (foreign source) is
made fully aware of the definite purposes already declared by the
recipient and permitted by the competent authority and
corresponding obligation upon the recipient regarding utilisation of
the funds itself for stated purposes and none else.
47. Indeed, even the expression “utilisation” has not been defined
in the Act. The ordinary meaning of expression “utilisation” must be
understood in the context of the purpose for which a certificate of
registration or prior permission under the Act has been granted by
the Central Government. If the foreign contribution is utilised for
such definite purposes
136
, including administrative expenses
136
Illustrative list of activities permitted as mentioned in the Annual Report (2004-2005) prepared by
Ministry of Home Affairs, Foreigners’ Division, FCRA Wing read thus:
“1. Religious
• Celebrations of religious functions/festivals etc.; • Construction/repair/maintenance of
places of worship, religious schools.; • Education of priests and preachers (dissemination of
the message of good will etc. from the holy books).; • Publication and distribution of religious
books/ literature.; • Maintenance of priests / preachers / other religious functionaries.; • Any
other activities related to the above.
2. Educational
• Construction and maintenance of schools/colleges.; • Construction and running of hostels for
poor students.; • Grant of stipends/ scholarships/ assistances in cash or kind to poor/deserving
children.; • Purchase and supply of educational material-books, notebooks etc.; • Conducting
adult literacy programs.; • Conducting research.; • Non-formal education/schools for the
mentally challenged.; • Non-formal education projects/coaching classes.; • Any other activities
related to the above.
3. Economic
• Following but not being commercial or profit making activities: • Micro-finance projects,
including setting up banking co-operatives and self-help groups.; • Self-sustaining income
generation projects/schemes. • Agricultural activities.; • Rural development
programmes/schemes.; • Animal husbandry projects.; • Setting up and running handicraft
101
permissible under Section 8, even though it may theoretically entail
in transfer of foreign contribution, it would not be a case attracting
the rigors of Section 7. In other words, Section 7 may be attracted
if the utilisation is not for the definite or permitted purposes for
which the certificate of registration or permission under the Act has
been granted by the competent authority. Indeed, if the recipient of
foreign contribution engages services of some third party or
centres/cottages and khadi industry/social forestry projects.; • Vocational training, tailoring,
motor repairs, computers etc.; • Projects for income generation activities or any other
developmental projects for urban slum development.; • Any other activities related to the above,
not being commercial activities.
4. Social
• Construction/running of hospitals/dispensaries/clinics.; • Construction of community halls
etc.; • Construction and management of old age homes.; • Welfare of the old aged persons or
widows.; • Construction and management of orphanage.; • Welfare of the orphans.; •
Construction and management of dharamshalas/shel ters.; • Holding of free
medical/health/family welfare/immunisation camps.; • Supply of free medicine, and medical
aids, including hearing aids, visual aids, family planning aids etc.; • Provision of aids such as
tricycles, callipers etc. to the handicapped.; • Treatment/rehabilitation of drug addicts.;
• Welfare/empowerment projects/schemes for women.; • Welfare of children.; • Provision of free
clothing/food to the poor, needy and destitutes.; • Relief/rehabilitation of victims of natural
calamities.; • Help to the victims of riots/other social disturbances.; • Digging of bore wells.; •
Sanitation including community toilets etc.; • Awareness camps/ seminars/ workshops /
meetings / conferences.; • Providing free legal aids/running legal aid centres.; • Holding sports
meet.; • Promoting awareness about Acquired Immune Deficiency Syndrome (AIDS)/treatment
and rehabilitation of persons affected by AIDS.; • Welfare of the physically and mentally
challenged.; • Welfare of the Schedules Castes.; • Welfare of the Scheduled Tribes.; • Welfare of
the Backward Classes.; • Environmental programs.; • Survey for socio-economic and other
welfare programs.; • Preservation and maintenance of wild life.; • Preservation of natural
resources.; • Awareness against social evils.; • Rehabilitation of victims of heinous crimes.; •
Rehabilitation of beggars, bootleggers, child labour etc.; • Creating awareness of Government
schemes & laws to general public.; • Any other activities related to the above.
5. Cultural
• Celebration of national events (Independence/Republic day/festivals).; • Theatre/films/puppet
show/road show etc.; • Maintenance of places of historical and cultural importance.; •
Preservation of ancient/tribal art forms.; • Preservation and promotion of cultural heritage or
literature of India.; • Cultural shows.; • Any other activities related to the above.”
102
outsources its certain activities to third person, whilst undertaking
definite activities itself and had to pay therefor, it would be a case of
utilisation. The transfer within the meaning of Section 7, therefore,
would be a case of per se (simplicitor) transfer by the recipient of
foreign contribution to third party without requiring to engage in the
definite activities of cultural, economic, educational or social
programme of the recipient of foreign contribution, for which the
recipient had obtained a certificate of registration from the Central
Government. On this interpretation, it must fo llow that the
argument regarding amended Section 7, being ultra vires, must fail.
48. Concededly, Section 8 permits the recipient of foreign
contribution to utilise only specified portion thereof for
administrative purposes, to the extent permissible. As per Section
8, the administrative expenses qua foreign contribution received by
the registered person ought not to exceed twenty per cent (instead of
fifty per cent under the unamended provision) of such contribution
in the concerned financial year. The proviso to Section 8(1),
however, enables spending beyond twenty per cent towards
administrative expenses with prior approval of the Central
103
Government. Be it noted, the validity of amended Section 8 is not
put in issue in these petitions.
49. On conjoint reading of Sections 7 and 8, as amended, the
legislative intent of mandating utilisation of foreign contribution by
the recipient itself for the purposes for which it had been permitted
gets reinforced. Additionally, Sections 12(4)(b) and 18 of the 2010
Act also reinforce such a view — which predicates that the person
who has been granted certificate of registration or given prior
approval under the Act, is obliged to give intimation to the Central
Government and such other authorities as may be specified by the
Central Government as to the amount of each foreign contribution
received by it, the source from which and the manner in which such
foreign contribution was received, and the purposes for which, and
the manner in which such foreign contribution was utilised by him.
This information may facilitate inquiry mechanism and to reassure
that the foreign contribution accepted by the person has been
utilised for definite purposes permitted by the competent authority.
Any breach of this stipulation may entail in penal action under the
Act.
104
50. It was vehemently urged before us that since the transferee
would also possess certificate of registration and bound by the
provisions of the 2010 Act, it would serve no legitimate purpose by
prohibiting transfer of foreign contribution to such person.
Accepting this argument would be completely glossing over the
legislative intent for which the amendment has been effected. The
legislative intent is to introduce strict dispensation qua the recipient
of foreign contribution to utilise the same “itself” for the purposes for
which it has been permitted as per the certificate of registration or
permission granted under the Act by the Central Government. In
addition, by the same Amendment Act, utilisation of foreign
contribution for administrative purpose by the recipient has been
lowered to twenty per cent only with a view to ensure maximum
spending on the purposes for which the foreign contribution has
been accepted by the recipient having certificate of registration.
51. Absent such stringent provision, some of the recipient
organisations were reportedly indulging in successive chain of
transfers to other organisations, thereby creating a layered trail of
money and also utilisation of funds towards administrative costs of
successive transfers upto fifty per cent leaving very little funds for
105
spending on the purposes for which it was permitted. Hence,
providing complete restriction on transfer simplicitor, was the just
option to fix accountability of the recipient organisation and
maximise utilisation for the permitted purposes. Such being the
avowed objective and purpose of the amendment, the challenge to
the amended Section 7 must fail.
52. Be that as it may, the fact that earlier transfer of foreign
contribution was permitted as per the unamended provision, that by
itself cannot be the basis to challenge the validity of the amended
provision. For, it is open to the Parliament to change the benchmark
of restriction from higher standard to lower standard or vice versa
on the basis of the exigencies and experience gained during the
implementation of the applicable provision at the relevant time.
53. Indubitably, foreign contribution is qualitatively different from
foreign investment. Receiving foreign donation cannot be an
absolute or even a vested right. By its very expression, it is a
reflection on the constitutional morality of the nation as a whole
being incapable of looking after its own needs and problems. The
question to be asked is: “in normal times”, why developing or
106
developed countries would need foreign contribution to cater to their
own needs and aspirations? Indisputably, the aspirations of any
country cannot be fulfilled on the hope (basis) of foreign donation,
but by firm and resolute approach of its own citizens to achieve the
goal by sheer dint of their hard work and industry. Indeed,
charitable activity is a business. Receiving contribution within India
to do charitable activity can be and is being regulated differently. It
is not possible to have a similar approach relating to foreign
contribution from foreign source. In short, no one can be heard to
claim a vested right to accept foreign donation, much less an
absolute right.
54. We say so because the theory of possibility of national polity
being influenced by foreign contribution is globally recognised. For,
foreign contribution can have material impact in the matter of socio-
economic structure and polity of the country. The foreign aid can
create presence of a foreign contributor and influence the policies of
the country. It may tend to influence or impose political ideology.
Such being the expanse of the effect of foreign contribution coupled
with the tenet of constitutional morality of the nation, the
presence/inflow of foreign contribution in the country ought to be at
107
the minimum level, if not completely eschewed. The influence may
manifest in different ways, including in destabilising the social order
within the country. The charitable associations may instead focus
on donors within the country, to obviate influence of foreign country
owing to foreign contribution. There is no dearth of donors within
our country.
55. Pertinently, the 1976 Act came to be repealed by the 2010 Act,
as it had become necessary to do so because of the experience gained
that in the name of foreign contribution, attempts were made by
unscrupulous entities to disturb the economy and sovereignty of our
country. That being the underlying reason, it must follow that the
legislative intent behind the Act and constant effort of the
Government and of the Parliament is to discourage foreign
contribution generally, but allow it for specific definite purposes
mentioned in Section 11 of the Act; and for which, the person
receiving or accepting foreign contribution is obliged to obtain a
certificate of registration under the Act or prior permission, as the
case may be. Further, such person is obligated to comply all the
stipulations attached to the certificate of registration or prior
permission, without any exception.
108
56. Apparently, receiving “foreign exchange” is itself completely
prohibited and made subject to exceptions provided for in terms of
the Foreign Exchange Management Act, 1999
137
. On conjoint
reading of the provisions of the 1999 Act and the regulatory
mechanism provided for in the 2010 Act, it is a clear pointer to the
strict regime to be followed by all concerned for allowing inflow of
“foreign contribution” (donation) in the manner prescribed and its
utilisation only for definite purposes permitted by the competent
authority.
57. We fail to understand as to how such a provision (amended
Section 7) can be regarded as discriminatory or so to say vague or
irrational much less manifestly arbitrary. The restriction therein
applies to a class of persons who are permitted to accept foreign
donation for being utilised by themselves for the definite purposes,
without any discrimination and it is so done to uphold the objective
of the Principal Act. Thus, there is clear intelligible differentia with
a direct nexus sought to be achieved with the intent of the Principal
Act. Such strict regime had become inevitable because of the
137
for short, “the 1999 Act”
109
experience gained by the concerned authorities over a period of time,
including about the abuse of the earlier dispensation under the
unamended provision.
58. The change not only completely prohibits transfer, but also
enhances the efficacy of the foreign contribution by mandating
utilisation thereof by the person granted certificate of registration
itself, for the purposes for which it had been accepted in terms of the
certificate of registration or prior permission granted under the Act,
as the case may be, including upto prescribed administrative
expenses. This restriction inevitably fixes the accountability of the
recipient organisation and mandating maximum utilisation by itself
for permitted purposes. This is the procedure established by law. It
can neither be said to be arbitrary nor discriminatory much less
manifestly arbitrary — within the meaning of Article 14 or impinging
upon Article 21 of the Constitution. As a matter of law, since the
subject Act deals with a distinct class of persons
(accepting/receiving foreign contribution) and it is founded on an
intelligible differentia having object sought to be achieved by the
110
Principal Act, it fulfils the test predicated in Shayara Bano
138. For
the same reason, the amended provision under challenge is neither
capricious, irrational or lacking determining principle, nor suffers
from the vice of excessiveness and being disproportionate.
59. We need to bear in mind that there is presumption that the
Parliament understands and reacts to the needs of its own people as
per the exigencies and experience gained in the implementation of
the law. Mere plea of inconvenience is not enough to attract the
constitutional inhibition. The Courts ought not to adopt a
doctrinaire approach in construing the amended provisions and
undermine the legislative intent of strengthening the regulatory
mechanism concerning foreign contribution. The legislature enjoys
considerable latitude while exercising its wisdom on the basis of
inputs collated from different quarters
139. There is intrinsic evidence
to indicate that the change effected by the amendments is to serve
the legitimate Government purpose and has a rational nexus to the
object of the Principal Act and the amendments, and that the pre-
amendment dispensation (unamended Section 7) was not sufficient
138
supra at Footnote No.18
139
see Ombalika Das vs. Hulisa Shaw (supra at Footnote No.79)
111
to effectively regulate the acceptance and utilisation of foreign
contribution as predicated by the Principal Act.
60. Reliance placed by the petitioners on the dictum in Shreya
Singhal
140 and K.S. Puttaswamy
141 to urge that it is open to the
Court to test the amendment on the touchstone of manifestly
arbitrary, need not detain us in light of the conclusion noted
hitherto, keeping in mind the legislative history and the compelling
necessity to adopt strict regime for prohibiting “transfer” of foreign
contribution and insistence of “utilisation” thereof by the recipient
himself/itself. For the same reasons, the dictum in Anuradha
Bhasin
142 that the underlying consideration of appropriateness,
necessity and the least restrictive measure compliant law, will also
be of no avail.
61. The argument that this Court in the case of INSAF
143, while
dealing with the provisions of the 1976 Act had recognised the
absolute right to receive foreign contribution is misplaced and
misreading of that decision. For, the said decision examined the
140
supra at Footnote No.117
141
supra at Footnote No.7
142
supra at Footnote No.21 (paras 154-159)
143
supra at Footnote No.22
112
arguments pursued before the Court in the context of challenge to
the validity of Section 5(1) and 5(4) of the 2010 Act and Rule 3(i), 3(v)
and 3(vi) of the 2011 Rules as being violative of Articles 14, 19(1)(a),
19(1)(c) and 21 of the Constitution. The provisions in Rule 3(v) and
3(vi) were read down to mean that the expression “political interests”
occurring therein be construed to mean that it would apply only to
those organisations which have connection with active politics or
take part in party politics. Strikingly, even in this decision the Court
noted the object sought to be achieved by the 2010 Act. To wit, to
ensure that Parliamentary institutions, political associations and
academic and other voluntary organisations as well as individuals
working in the important areas of national life should function in a
manner consistent with the values of a sovereign democratic
republic without being influenced by foreign contributions or foreign
hospitality. The Court went on to observe that long title of the Act
makes it clear that the regulation of acceptance and utilisation of
foreign contribution is for the purpose of protecting “national
interests” and to prohibit organisations of a political nature from
receiving foreign contributions.
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62. That being the underlying purpose for which the Act has been
enacted, whilst interpretating the amended provisions, we cannot be
oblivious to the concern expressed by the Parliament, about the state
of affairs and the fallout of the implementation of the dispensation
enunciated under the unamended Act. As the Parliament took a well
informed and conscious decision to alter that position — to make it
a strict regulatory regime of not permitting the recipient of foreign
contribution to transfer the funds to third party for the reasons
weighed with it, it must follow that the provision is in the interests
of the sovereignty and integrity of the country, public order and in
the interests of the general public.
63. The question posed to us was: whether such restriction can be
said to be reasonable restriction or impinges upon the right of any
person? While examining the issue as to whether the amended
provision is a reasonable restriction, the Court cannot be oblivious
to the concern of the Parliament/Legislature backed by the past
experiences including cancellation of registration of substantial
number of registration certificates after due inquiry and for tangible
reasons owing to abuse and misutilisation of foreign contribution
(donation); and especially when receipt or acceptance of foreign
114
exchange or be it foreign contribution, is otherwise understood to be
ordinarily prohibited. For, the “foreign exchange” and more so
“foreign contribution” can be received or brought within the territory
of India only as per the dispensation provided for in the municipal
law. There can be no absolute right in that regard. The fact that
transfer was permitted under the unamended Section 7, it does not
follow that the Parliament is not competent to amend that
dispensation to make it more stringent, including to completely
prohibit the inflow of foreign contribution. The amended provision
is not to completely prohibit inflow of foreign contribution, but is a
regulatory measure to permit acceptance by registered persons or
persons having prior permission to do so with condition that they
must themselves utilise the entire contribution including for
administrative expenses within the limits provided under Section 8
of the Act. The subject enactment is essentially conceived in the
interests of public order and also general public as the intent is to
prevent misuse and misutilisation of foreign contribution coming
from foreign sources to safeguard the values of a sovereign
democratic republic.
115
64. Thus understood, it is a reasonable restriction as it does not
hinder with the right of forming associations as well as to engage in
business of charity. Being a regulatory measure necessitated
because of past experience and to uphold the intent of the Principal
Act, insisting for utilisation, spending of foreign contribution by the
recipient itself cannot be said to be irrational, arbitrary,
discriminatory, or unreasonable restriction as such.
65. The restriction or complete prohibition on transfer to third
party, by no standards deprive acceptance of foreign contribution
and utilisation thereof in the manner permitted for definite
purposes, such as cultural, economic, educational or social
programme. Such a provision must be understood as being
procedure established by law in the interests of the general public
and in the interests of sovereignty and integrity of the country,
including public order. Resultantly, there is no infraction even of
Article 19(1)(c) or 19(1)(g) of the Constitution as urged by the writ
petitioners before us, including Articles 14 and 21 of the
Constitution. Consistent with this view, we must reject the
challenge to the amended Section 7 on all counts.
116
66. For the same reason, the argument of the writ petitioners about
lack of rational nexus with the object sought to be achieved by the
Principal Act much less the Amendment Act, must also fail. The
rationale is of larger public interests and more particularly to obviate
adverse impact on the economy, public order, sovereignty and
integrity of the country. Such amendment has been necessitated
because of the past experience consequent to implementation of the
unamended Section 7 of the 2010 Act. It is so highlighted in the
objects and reasons and the introduction of the Amendment Act. It
can also be culled out from the debates in the Parliament whilst
considering the Amendment Bill in the respective Houses. To
overcome the mischief and to enhance transparency and
accountability regarding acceptance and also utilisation of foreign
contribution which is quite substantial every financial year having
proliferating effect on the economy of the nation, it had become
necessary to enact amended Section 7. In other words, there is a
clear rationale behind the amendment which is consistent with the
purpose of the Principal Act and the object sought to be achieved
under the enactments. The fact that unamended provision was less
restrictive, cannot be the basis to test the constitutional validity of
117
the provision on the touchstone of Article 19(1)(c) or 19(1)(g) or
Articles 14 and 21 of the Constitution. The amended Section 7,
being plain and clear and having nexus with the object sought to be
achieved and is necessitated because of sovereignty and integrity of
India or security of the State, public order and in the interests of the
general public. It is unfathomable as to how the amended provision
can be regarded as unconstitutional on any parameter.
67. It is urged that Rule 24 of the 2011 Rules came to be deleted
with effect from 10.11.2020. This rule enabled the registered
organisations to transfer foreign contribution to any unregistered
person in the manner pro vided therein. However, in light of
amendment to Section 7 prohibiting transfer of foreign contribution
to any person, the need for the dispensation predicated in Rule 24
had become non-existent. In other words, as per amended Section
7, there is no need to continue Rule 24 on the statute book and its
continuance for some time would also make no difference in the
wake of express prohibition in amended Section 7 of the 2010 Act.
118
Validity of Section 12(1A) and Section 17(1)
68. Section 12(1A) has been inserted by Act 33 of 2020, which
envisages that every person who makes an application under sub-
Section (1) of Section 12 is obliged/required to open FCRA account
in the manner specified in Section 17 and mention details of such
account in his application. Section 17, in particular sub-Section (1)
as amended, mandates that every person who ha d been granted
certificate or prior permission under Section 12 shall receive foreign
contribution only in an account designated as FCRA account in the
specified bank. The unamended Sections 12 and 17 did not impose
such restriction. Notably, as per the new regime foreign remittances
are being received through SWIFT platform by international banking
wherein certain mandatory fields are required to be captured apart
from other details transaction wise. Further, foreign remittances do
not have structured framework, including disclosures regarding
purposes. All these deficiencies will stand r esolved thereby
enhancing the monitoring mechanism in real-time basis, remittance
wise by adopting the new dispensation predicated in the amended
provisions.
69. Once again, the need to strictly regulate the inflow of foreign
funds and to oversee utilisation thereof for the purposes for which it
119
has been received having been recognised and being the rationale
behind the Amendment Act, including owing to the experience
regarding abuse of the regime under the unamended provision, the
challenge to such amendment cannot be taken forward.
70. There is force in the argument of the respondents that Section
17 came to be amended aftermath realisation of clear and discernible
lacunae had cropped in due to the presence of FCRA accounts of
scores of registered organisations, in different scheduled banks
across the country. The challenge became more pronounced due to
doubling of foreign contribution inflow in the last decade which had
impacted the efficiency of monitoring and achieving the object of the
Principal Act. The amended provision now mandates that FCRA
accounts of all the registered persons/organisations are required to
be opened in one particular branch in the country providing for
essential information and fields, thereby ensuring a complete and
transparent check on the inflow and utilisation of foreign
contribution towards a single point source on real-time basis.
71. The fact that earlier FCRA account could be opened in any
scheduled bank, cannot preclude the Parliament from legislating a
law which requires inflow of foreign contribution in some other
manner specified by law. Merely because the framework of
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acceptance of foreign contribution had been changed cannot be the
basis to question the validity of the amended provisions. Introducing
change for the betterment of governance is the prerogative and
wisdom of the Parliament. The FCRA account operators cannot
claim right of continuity of a deficient and flawed framework.
Ordinarily, convenience of business and persons engaged in doing
business must be uppermost in the mind of the
Parliament/Legislature — to effectuate the goal of ease of doing
business. However, the strict regime had become essential because
of the past experience of abuse and misutilisation of the “foreign
contribution” and cancellation of certificates of as many as 19,000
registered organisations on the ground of being grossly non-
compliant. Despite such cancellation of large number of certificates
of registration, until December 2021 there were reportedly 22,762
FCRA registered organisations presumably compliant with new
dispensation. Further, as many as 12,989 organisations have
applied for the renewal of the FCRA licence between 30.09.2020 and
31.12.2021. And as many as 5,789 organisations had not applied
for renewal of FCRA licence, whose FCRA licence has ceased to be
valid. A fortiori, it would certainly justify the need to have a holistic
121
approach to ensure that the objective of the Principal Act is fulfilled,
namely, of strict regulation of the inflow and utilisation of foreign
contribution for the purposes for which it is so permitted, such as
only cultural, economic, educational or social programme.
72. In fact, the Parliament must be credited with for having taken
recourse to corrective dispensation for eradicating the mischief,
which any sovereign country can ill-afford. The Parliament is
supreme and has a final say in matters of legislation when it reflects
on alternatives and choices with inputs from different quarters, with
a check in the form of democratic accountability and a further check
by the Courts which exercise the power of judicial review
144. We find
force in the argument that it had become necessary for the
Parliament to step in and provide a stringent regime for effectively
regulating the inflow and utilisation of foreign contribution. Hence,
there had been legitimate goal for amending the subject provisions
of acceptance of funds through one channel. Concededly, despite
the requirement of opening FCRA account in the designated bank, it
is open to the organisation to utilise the amount so received in the
144
Dr. Ashwani Kumar (supra at Footnote No.47)
122
FCRA account through multiple accounts in the scheduled
branches. In that sense, it is a balanced approach.
73. A priori, opening of main FCRA account in the designated bank
as per the law made by the Parliament in that regard, cannot be
brushed aside on the specious argument of some inconvenience
being caused to the registered associations
145. Assuming that some
inconvenience is likely to be caused to few applicants, but the
constitutionality of a statute cannot be assailed on the basis of
fortuitous circumstances and more so when it being only a one-time
exercise to ensure inflow of foreign contribution through one channel
only, being a precondition for grant of permission. There is no
restriction regarding utilisation of the funds only through that
(primary) FCRA account. For, it is open to the recipient to operate
multiple accounts in other scheduled banks for its utilisation.
74. As a matter of law, the validity of the amendments must be
tested on the touchstone of tenets underlying Articles 14, 19 and 21
of the Constitution. The permission is a precondition for acceptance
145
In Laxmi Khandsari (supra at Footnote No.31) and All India Council for Technical
Education (supra at Footnote No.32), this Court had expounded that on the plea of individual
hardships, Court cannot interfere with policy matters (and in present cases a just law made by
Parliament).
123
and utilisation of foreign contribution. Such persons are a separate
class and engage in specified activity. It cannot be a usual or
ordinary business for everyone and anyone wanting to accept foreign
contribution. Permitting inflow of foreign contribution, which is a
donation, is a matter of policy of the State backed by law. In this
case, it is governed by the 2010 Act as amended. It is open to the
State to have a regime which may completely prohibit receipt of
foreign donation, as no right inheres in the citizen to receive foreign
contribution (donation).
75. The provision such as Section 12(1A) and Section 17(1)
introduced by the Amendment Act, is a holistic approach adopted by
the Parliament to provide for strict regulatory measure and for
ensuring transparency and accountability in the matter of foreign
contribution. Notably, there was unanimity amongst the members
of both the Houses cutting across party lines to have such a strict
regime as indiscriminate receipt/inflow and more so utilisation of
foreign contribution had been threatening the sovereignty and
integrity of the country itself. Being a matter of security of the State,
public order and in the interests of the general public, it is not open
to question the validity of such a law on the touchstone of Article
124
19(1)(c) or 19(1)(g) of the Constitution. It is not a provision to
completely prohibit forming of the associations or engaging in
business of charity as such. It is a provision for regulating the
manner of doing business more importantly, concerning foreign
contribution.
76. Opening of main FCRA account in the designated bank, as has
been rightly contended by the respondents, is only a one-time
exercise and for which instructions and protocols have been issued
by the competent authority, not to insist for physical presence for
complying with the formalities. It can be organised even at the local
branches of the designated bank in the manner specified in the
instructions issued in that regard. Moreover, the provision does not
prohibit the person/registered association from opening multiple
accounts in other scheduled banks, wherein the amount received in
(primary) FCRA account in NDMB can be transferred; and from
where day-to-day activities can be then carried on by them. In any
case, the designated bank being conscious of its banking obligations
and to provide best services to the registered associations, have
issued instructions (Standard Operating Procedure) for making it
convenient to open FCRA account in NDMB as also to operate the
125
foreign contribution received in such an account. If any further
improvement in the operational convenience is required, it is open
to the petitioners and all other interested persons to request the
designated bank to improve upon such facility. However, merely
because the registered association has been compelled to open FCRA
account in the designated bank at the centralised location for
receipt/inflow of foreign contribution from foreign source, it does not
follow that such a requirement would be manifestly arbitrary or
unreasonable. It is only a one-time exercise to be complied with for
availing the permission accorded by the Central Government under
the Act to be a certified association or person given permission to
receive foreign contribution as a precondition.
77. The need to have only one entry point for the inflow of foreign
contribution had been viewed by the Parliament as the best option
for regulating the inflow of foreign contribution. This process is
expected to increase the efficiency in continual supervision of the
inflow of foreign contribution on real-time basis by the concerned
Authorities and to enable them to take immediate corrective
measures to deal with and pre-empt the impending threat perceived
because of its volume including undesirable source of remittance. It
126
is not open to the Court to have a second-guess approach in that
regard.
78. In the context of the law made by the Parliament in the
interests of the sovereignty and integrity of the country and security
of the State, public order, as also in the interests of the general
public, such a provision cannot be lightly viewed much less on the
specious plea of manifestly arbitrary. The Parliament in its wisdom
had deemed it essential to have such a provision because of the
prevalent discernible circumstances referred to in the introduction
of the Bill.
79. It was vehemently urged that there is lack of infrastructure at
the designated bank and that the bank branch is manned only by
40 odd personnel. To buttress this plea, reference is made to the
observation made by the Reserve Bank of India — that voluminous
data on Foreign Remittances will put an extra financial burden on
the Bank and increase its costs including divert focus on monitoring
of suspicious transactions. This argument does not commend to us
at all. In digital banking operations, it is not the head count
dispensing physical services that would matter, but the effectiveness
127
of the software is important. We are also not impressed by the plea
that for organisations located in remote parts of the country, there
would be impediments and for that reason, Section 7 violates test of
fairness and reasonableness. In any case, respondent No.3 (SBI) has
on affidavit explained as to the extent of measures taken for ensuring
efficient servicing of FCRA accounts of all the registered
associations/account holders. Respondent No.3 has also assured
that if need arises, suitable corrective measures including to
upgrade the facilities/services would be taken at its end. Suffice it
to observe that the argument under consideration cannot be the
basis to doubt the constitutional validity of the provisions in the form
of Section 12(1A) and Section 17(1), as amended vide the
Amendment Act. Needless to underscore that respondent No.3 has
stated on affidavit before this Court that FCRA accounts opened in
its designated branch can be operated online on real-time basis
without the need for physical presence of the account holder or its
officials.
80. Having noted that the provision became necessary for efficient
regulation of foreign contribution on real-time basis, it can neither
be said to be manifestly arbitrary nor irrational much less without
128
legitimate objective of the State. Accordingly, we have no hesitation
in negating the challenge to these provisions as being violative of
Articles 14, 19 and 21 of the Constitution.
81. The fact that the registered associations were already
complying with the statutory formalities of furnishing of accounts,
intimation, audit and disposal of assets to the satisfaction of the
concerned Authorities, it would not follow that the
Parliament/Legislature is denuded of its power of changing the
regulatory mechanism or framework to make it more effective and to
make it real-time regarding the inflow or receipt of foreign
contribution and utilisation thereof for the purposes for which it has
been so permitted. Accepting the argument of the registered
associations would not only be undermining the legislative intent,
but also disregarding the object sought to be achieved by the
Principal Act.
82. The argument of compelling necessity may have arisen for our
consideration only if we were to find that the dispensation provided
in the amended provisions is in the nature of complete prohibition
to form association or to engage in business. As mentioned earlier,
129
these provisions are only for effective regulatory measures
concerning and limited to foreign contribution, in the larger public
interests, public order, and more particularly for safeguarding the
sovereignty and integrity of the country. Taking any other view
would entail in undermining the legislative intent and cannot be
countenanced.
Validity of Section 12A
83. Reverting to the challenge to the insertion of Section 12A vide
the Amendment Act of 2020, it mandates that the person concerned
who seeks prior permission or prior approval under Section 11, or
makes an application for grant of certificate under Section 12,
including for renewal of certificate under Section 16, to provide as
identification document, the Aadhaar number of all its office bearers
or Directors or other key functionaries. The Statement of Objects
and Reasons of the Amendment Act are testimony about the past
experience of abuse of foreign contribution receipts and spending on
activities not connected with the purposes for which it was so
permitted. It had been noticed that the inflow of foreign contribution
had almost doubled between the years 2010 and 2019 and many of
the registered associations had failed to comply with basic statutory
130
formalities necessitating cancellation of certificates of registration of
more than 19,000 registered organisations. This is a staggering
(substantial) number indicative of gross violations by large number
of registered associations. More so, this amendment had been
necessitated to safeguard the sovereignty and integrity of the
country, and public order, including in the interests of the security
of the State and of the general public. It is a law made by the
Parliament which is competent to make such a law concerning the
activities related to foreign donations and more particularly about
its acceptance in prescribed manner and utilisation for the purposes
defined in the certificate/permission granted by the competent
authority. It has a legitimate purpose and nexus sought to be
achieved with the objective underlying the Principal Act and the
subject amendment. It is not open to argue that associations
desirous of obtaining certificate of registration under this Act need
not furnish official identification document pertaining to its key
functionaries.
84. Regardless of the above, the provision (Section 12A) envisages
that a copy of the Passport can also be provided as identification
document of all its office bearers or Directors or other key
131
functionaries or Overseas Citizen of India Card, in case of a
foreigner. The underlying purpose of this provision is merely to
identify the key functionaries of the registered association so that
they can be made accountable for violations, if any. We are of the
view that as the Passport in case of a foreigner is accepted as
sufficient identification document, there is no reason why such
Passport of Indian national cannot be relied upon for the same
purpose. Thus understood, the challenge to this provision being
unreasonable need not detain us nor is required to be taken any
further. Whereas, we hold that the provision needs to be construed
as permitting furnishing of the Indian Passport of the key
functionaries of the applicant who are Indian nationals, for the
purpose of their identification.
85. Having said this, it is not necessary to dilate on other
arguments pressed into service dealing with matters of privacy or
the provisions under consideration being manifestly arbitrary.
86. For the view that we have taken, we do not wish to dilate on
every single authority cited across the Bar as the view taken by us
is in no way different than the principle expounded therein.
132
Conclusion
87. To sum up, we declare that the amended provisions vide the
2020 Act, namely, Sections 7, 12(1A), 12A and 17 of the 2010 Act
are intra vires the Constitution and the Principal Act, for the reasons
noted hitherto. As regards Section 12A, we have read down the said
provision and construed it as permitting the key functionaries/office
bearers of the applicant (associations/NGOs) who are Indian
nationals, to produce Indian Passport for the purpose of their
identification. That shall be regarded as substantial compliance of
the mandate in Section 12A concerning identification.
88. Accordingly, Writ Petition (Civil) Nos. 566 and 751 of 2021 are
disposed of in the aforementioned terms. Writ Petition (Civil) No.634
of 2021 also stands disposed of. No order as to costs.
Pending application(s), if any, are also disposed of.
..……………………………J.
(A.M. Khanwilkar)
………………………………J.
(Dinesh Maheshwari)
………………………………J.
(C.T. Ravikumar)
New Delhi;
April 08, 2022.
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