COMPOUNDING OF OFFENCES UNDER FOREIGN CONTRIBUTION REGULATION RULES, 2010

[Mr. M. GOVINDARAJAN]

Offences under Foreign Contribution (Regulation) Act

The following are the offences liable to punishment under the Foreign Contribution (Regulation) Act, 2010 (‘Act’ for short)-

• Section 35 - Whoever accepts, or assists any person, political party or organization in accepting, any foreign contribution or any currency or security from a foreign source, in contravention of any provision of this Act or any rule or order made there under, shall be punished with imprisonment for a term which may extend to five years, or with fine, or with both.
• Section 37 - Whoever fails to comply with any provision of this Act for which no separate penalty has been provided in this Act shall be punished with imprisonment for a term which may extend to one year, or with fine or with both.

Compounding of certain offences

Section 41(1) of the Act provides for the composition of certain offences under the Act.   Any offence punishable under this Act, whether committed by an individual or association or any officer or employee thereof, not being an offence punishable with imprisonment only, may, before the institution of any prosecution, be compounded by such officers or authorities and for such sums as the Central Government may, by notification in the Official Gazette, specify in this behalf.

The procedure for compounding of offences under this Act is detailed as below-

• An application for compounding of an offence may be made to the Secretary, Ministry of Home Affairs, New Delhi in electronic form and shall be accompanied by fee of Rs.3,000/- only, which shall be paid through the payment gateway specified by the Central Government (with effect from 10.11.2020 – before that application may be filed in a plain paper and the fee payable is only Rs.1000/-).
• The application to compound offences specified above may be processed in physical or electronic form as may be specified by the Government.
• Every officer or authority shall exercise the powers to compound an offence, subject to the direction, control and supervision of the Central Government.
•  Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, against the offender in relation to whom the offence is so compounded.
• Every officer or authority while dealing with a proposal for the compounding of an offence for a default tin compliance with any provision of this Act which requires by an individual or association or its officer or other employee to obtain permission or file or register with, or deliver or send to, the Central Government or any prescribed authority any return, account or other document, may, direct, by order, if he or it thinks fit to do so, any individual or association or its officer or other employee to file or register with, such return, account or other document within such time as may be specified in the order.

Non applicability

Section 41(1) shall not apply to an offence committed by an individual or association or its officer or other employee within a period of 3 years from the date on which a similar offence committed by it or him was compounded under this section. 

Subsequent offence

Any second or subsequent offence committed after the expiry of a period of three years from the date on which the offence was previously compounded, shall be deemed to be a first offence.

Penalty under compounding of offences

Vide Notification No. S.O. 2291(E), dated 05.06.2018 the Government of India prescribed the penalty payable on compounding of the following offences committed under the Act-

1. Offence punishable under section 35 for accepting any hospitality in contravention of section 6 of the Act – Rs.10,000/-;
2. Offence punishable under section 37 for transferring any foreign contribution to any other person in contravention of section 7 of the Act or any rule made thereunder  - Rs. 1,00,000/- or 10% of such transferred foreign contribution, whichever is higher.
3. Offence punishable under section 37 for defraying of foreign contribution beyond fifty per cent of the contribution received for administrative expenses in contravention of section 8 of the Act - Rs. 1,00,000/- or 5% of such foreign contribution so defrayed beyond the permissible limit, whichever is higher
4. Offence punishable under section 35 for accepting foreign contribution in contravention of section 11 of the Act - Rs. 1,00,000/- or 10% of the foreign contribution received, whichever is higher
5. Offences punishable under section 37 read with section 17 of the Act for-

1. receiving foreign contribution in any account other than specified account in his application for grant of certificate - Rs. 1,00,000/- or 5% of the foreign contribution received in such account, whichever is higher;
2.  non-reporting the prescribed amount of foreign remittance or source and manner of such remittance by banks and authorized persons - Rs. 1,00,000/- or 3% of the foreign contribution received or deposited in such account, whichever is higher.
3. (c) receiving & depositing any fund other than foreign contribution in the account or accounts opened for receiving foreign contribution or for utilizing the foreign contribution - Rs. 1,00,000/- or 2% of such deposit, whichever is higher

6. Offence punishable under section 37 for non-furnishing of intimation of the amount of each foreign contribution received and the source from which and in the manner in which, such foreign contribution is received as required under section 18 of the Act - Rs. 1,00,000/- or 5% of the foreign contribution received during the period of non submission, whichever is higher.
7. Offence punishable under section 37 for not maintaining the account and records of foreign contribution received and manner of its utilisation on required section 19 of the Act - Rs. 1,00,000/- or 5% of the foreign contribution during the relevant period of non maintenance of accounts, whichever is higher.

Revised penalty amount under compounding

In supersession of the above said Notification, the Government of India specified the compound fee payable for the following offences, before the initiation of prosecution, vide Notification No. SO 3025(E), dated 01.07.2022-

1. Offence punishable under section 35 for accepting any hospitality in contravention of section 6 of the Act – Rs.10,000/-;
2. Offence punishable under section 37 for transferring any foreign contribution to any other person in contravention of section 7 of the Act or any rule made there under – Rs.1 lakh or 10%  of such transferred foreign contribution, whichever is higher;
3. Offence punishable under section 37 for defraying of foreign contribution beyond 20% of the contribution received for administrative expenses in contravention of Section 8 of the Act – Rs. 1 lakh or 5% of such contribution so defrayed beyond the permissible limit, whichever is higher;
4. Offence punishable under section 35 for accepting foreign contribution in contravention of Section 11 of the Act – Rs. 1 lakh or 30% of the foreign contribution received, whichever is higher;
5. Offences punishable under section 37 read with section 17 of the Act for-

1. Receiving foreign contribution in any account other than specified in his application for grant of certificate – Rs. 1 lakh or 5% of the foreign contribution received in such amount, whichever is greater;
2. Non reporting of the prescribed amount of foreign remittance or source and manner of such remittance by banks and authorized persons – Rs. 1 lakh or 3% of the foreign contribution received or deposited in such account, whichever is higher;
3. Receiving and depositing any fund other than foreign contribution in the account or accounts opened for receiving foreign contribution or for utilizing the foreign contribution – Rs. 1 lakh or 2% of such deposit whichever is higher;

6. Offence punishable under section 37 for non furnishing of information of the amount of each foreign contribution received and the source from which and in the manner in which, such foreign contribution is received as required under section 18 of the Act – Rs. 1 lakh or 5% of the foreign contribution received during the period of non submission, whichever is higher;
7. Offence punishable under section for not maintaining the account and records of foreign contribution received and manner of its utilization as required under section 19 of the Act – Rs.1 lakh or 5% of the foreign contribution received during the relevant period of non maintenance of accounts, whichever is higher;
8. Offence punishable under section 3, 11 and 35 of the Act read with Rule 6 for failure to intimate about the receipt of foreign contribution within the prescribed time limit – 5% of such foreign contribution received in a financial year;
9. Offence  punishable under section 37, section 17 and section 19 of the Act read with Rule 9(1)(e) for failure to intimate about opening of account or accounts within the prescribed time – Rs.10,000/- per utilization account for failure to intimate within the prescribed time;
10. Offence punishable under section 37, section 17 and section 19 of the Act read with Rule 9(2)(e)  for failure to intimate about opening of account or accounts within the prescribed time – Rs.10,000/- per utilization account for failure to intimate within the prescribed time;
11. Offence punishable under section 37, section 11 and section 17 of the Act read with rule 17A for failure to intimate about details within the prescribed time – Rs.10,000/- for each violation or failure to intimate within the prescribed time;
12. Offence punishable under section 37 and section 19 of the Act read with Rule 13 for failure to place on website as prescribed in Rule 13(a) within the prescribed time – Rs.10,000/- for each violation.

The amount of penalty computed as above of the Table in respect of any offence or offences thereof shall not be more than the value of the foreign contribution received.

The transfer of foreign contribution (inclusive of more than one instances of transfer, if any) under point No. 2 shall be compoundable only once.

Compounding Authority

Director or the Deputy Secretary in charge of the respective section indicated in the previous para, responsible for the Administration Act is the compounding authority for all the offences indicated in the previous para.