2012 (6) TMI 433 - HC - FEMA

Writ petition for declaring sections 5(1) and 5(4) of the Foreign Contribution (Regulation) Act, 2010 and Rules 3(i), 3(v) and 3(vi ) of the Foreign Contribution (Regulation) Rules, 2011 (for short, the 2011 Rules ) as ultra vires the Articles 14, 19(1)(a), 19(1)( c) and 21 of the Constitution of India. Held that - Reading the Rule as a whole, we really fail to fathom, how it can be urged that it travels beyond the statutory provision. What is urged before us is that the right to raise the voice of the people to advance public causes is curtailed. The provision under section 5(1) carves out an exception when an organisation can be notified and thereafter barred from accepting foreign contribution section 3(1)(f), section 5(1) and Rule 3 have to be read together in harmony. The Rule effectuates the two sections and complements them. The Rule at every place refers to the political actions. Therefore, the Rule, according to us, is within the rule making power of the statutory authority. It confirms to the provisions of the statute and comes within the scope of purview of the rule making power of the authority of framing the Rule. Therefore, the Rules cannot be declared as ultra vires the Act. It is trite law that there is a distinction between conferment of power and exercise of power. If the power by an authority is not properly exercised, the same can always be assailed in a court of law. It has nothing to do as regards the constitutional validity of a Rule or a guideline. The apprehension in the mind of the petitioner that there would be abuse of power and some organizations may be unnecessarily harassed, we are disposed to think, is not to be taken note of while dealing with the validity of a statutory provision or the Rule made thereunder. The same shall be subject to judicial scrutiny when the order is passed. Thus, the aforesaid submission, being bereft of merit, is rejected. Ex-consequenti, the writ petition, being sans substratum, stands dismissed without any order as to costs.

Summary

Issues Involved:
1. Constitutional validity of Sections 5(1) and 5(4) of the Foreign Contribution (Regulation) Act, 2010.
2. Constitutional validity of Rules 3(i), 3(v), and 3(vi) of the Foreign Contribution (Regulation) Rules, 2011.
3. Alleged violation of Articles 14, 19(1)(a), 19(1)(c), and 21 of the Constitution of India.

Detailed Analysis:

1. Constitutional Validity of Sections 5(1) and 5(4) of the Foreign Contribution (Regulation) Act, 2010:
The petitioner, Indian Social Action Forum (INSAF), challenged the constitutional validity of Sections 5(1) and 5(4) of the Foreign Contribution (Regulation) Act, 2010, claiming they were ultra vires Articles 14 and 19 of the Constitution of India due to their vague terms and unbridled power conferred on the executive. Section 5(1) allows the Central Government to specify an organization as one of a political nature based on its activities, ideology, or program, while Section 5(4) involves forwarding representations to any authority for a report.

Court's Analysis:
- The court noted that Section 3(1)(f) prohibits foreign contributions to organizations of a political nature as specified under Section 5(1).
- Section 5(1) provides ample guidance by referring to the activities, ideology, and program of the organization, which are not considered vague or uncertain.
- The court held that the Legislature has not abandoned its legislative power but has allowed the rule-making authority to specify grounds, which does not constitute an abdication of legislative function.
- The terms used in Section 5(1) are broad but not abstract, providing sufficient guidance to avoid arbitrary application.
- The court concluded that Sections 5(1) and 5(4) do not contravene Articles 14 and 19 of the Constitution.

2. Constitutional Validity of Rules 3(i), 3(v), and 3(vi) of the Foreign Contribution (Regulation) Rules, 2011:
The petitioner argued that these rules are arbitrary, lack checks and balances, and confer wide discretion on authorities, thereby violating Articles 14 and 19(1)(a).

Court's Analysis:
- Rule 3 specifies grounds for declaring an organization as one of a political nature, including having political objectives, promoting political goals, and engaging in political activities like 'bandh', 'hartal', 'rasta roko', etc.
- The court found that these rules do not travel beyond the statutory provisions of Section 5(1) and are within the scope of the rule-making authority.
- The rules complement Sections 3(1)(f) and 5(1), ensuring they are read harmoniously.
- The court held that the rules are not arbitrary and do not confer unbridled power, as they are grounded in the statutory framework and provide specific guidelines.

3. Alleged Violation of Articles 14, 19(1)(a), 19(1)(c), and 21 of the Constitution of India:
The petitioner contended that the impugned provisions and rules violate the fundamental rights to equality, freedom of speech and expression, and the right to form associations.

Court's Analysis:
- The court emphasized that Article 19(1)(a) is not absolute and is subject to reasonable restrictions in the interest of sovereignty, integrity, and public order.
- The Foreign Contribution (Regulation) Act, 2010, aims to regulate foreign contributions to ensure national interest and democratic values.
- The court noted that the restrictions imposed are on accepting foreign contributions, not on the freedom of speech or the right to protest.
- The court referenced several judgments to highlight that reasonable restrictions are permissible and necessary for maintaining public order and national interest.
- The court dismissed the petitioner's apprehensions about potential abuse of power, stating that any misuse can be challenged in a court of law.

Conclusion:
The High Court of Delhi dismissed the writ petition, holding that Sections 5(1) and 5(4) of the Foreign Contribution (Regulation) Act, 2010, and Rules 3(i), 3(v), and 3(vi) of the Foreign Contribution (Regulation) Rules, 2011, are constitutionally valid and do not violate Articles 14, 19(1)(a), 19(1)(c), and 21 of the Constitution of India. The court found the provisions and rules to be reasonable, providing sufficient guidance and checks to prevent arbitrary application.