2019 (9) TMI 162 - HC - FEMA

CBI investigation for violation of provisions of FCRA - Cancellation of registration under FCRA - diversion of the funds for personal benefit of the office bearers or any other individuals - Constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 ( FCRA ) and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 (FCRR) - whether they are arbitrary, unreasonable, ultra vires and violative of Articles 14 and 21 of the Constitution of India? HELD THAT - It is equally well settled principle of law that laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power. In fact, it must be presumed, unless the contrary is proved, that administration and application of a particular law would be done not with an evil eye and unequal hand . There is a principle and/or policy for guidance of exercise of discretion by the Government in the matter of selection of an investigative agency and there is no arbitrary, vague and uncontrolled power with the Government so as to enable it to discriminate between persons or things similarly situated. Accordingly, this Court is of the view that Petitioner s reliance upon State of Punjab vs. Khan Chand 1973 (12) TMI 91 - SUPREME COURT is misconceived. Also as the Notification dated 27th October, 2011 is neither an interpretation nor an understanding of Section 43 of FCRA but a convention/practice/policy to be followed by the Union of India while implementing Section 43, this Court is of the view that judgment of the Apex Court Bhuwalka Steel Industries Ltd. vs. Bombay Iron and Steel Labour Board Anr. 2009 (12) TMI 697 - SUPREME COURT is inapplicable to the present case. Consequently, the Notification dated 27th October, 2011 as well as the consistent practice followed by the Central Government lay down a principle and/or policy in the matter of appointment/selection of an investigative agency under Section 43 of FCRA and saves it from attack on the ground that it violates Articles 14 and 21 of the Constitution. Just because out of thirteen thousand NGOs, whose licences had been cancelled under FCRA, only thirty two had been referred to CBI for investigation, this Court is of the view that the petitioner cannot claim negative equality and that too without disclosing the nature of violations by the thirteen thousand NGOs. Authorisation letter dated 07th February, 2017 issued under Section 23 of FCRA, the officer appointed in the present cases had been authorised to exercise power under Sections 23 to 26 and 42 of FCRA only. No power to investigate offences under Section 43 had been conferred upon the said officer. Just because the inspecting authority has been empowered to seize the account or record and produce the same before the Court, does not mean that it has to mandatorily carry out investigation under Section 43 of FCRA also. Additionally, the proceedings under Chapter V of FCRA cannot be termed as investigation as the provisions under the said Chapter pertain to inspection and seizure of accounts/records only. Under Chapter V of FCRA, no procedure for filing of a complaint/charge-sheet has been mentioned. There is also nothing to suggest either in the FCRA or in the letter dated 7th February, 2017 that investigation under Chapter VIII of FCRA had to be carried out by the Inquiry Officer. Even in the letter dated 04th August, 2017 while referring the matter for investigation to CBI, the Ministry of Home Affairs had opined that its inquiry had prima facie and not conclusively revealed violation of various provisions of FCRA. Since the officer authorized under Section 23 FCRA did not have any power to investigate offences under Chapter VIII, the judgment in Directorate of Enforcement vs. Deepak Mahajan Anr. 1994 (1) TMI 87 - SUPREME COURT does not apply to the present cases. The officer authorised to carry out inspection of records and accounts under Section 23 of FCRA in the present cases was authorised and had carried out inspection and enquiry only under Chapter V of FCRA. Departmental inquiry report concluding that an officer has committed malfeasance or violations to benefit himself personally can lead to subsequent criminal investigation and prosecution by the police. Similarly a sexual harassment committee report can lead to subsequent investigation by police into allegation of rape or outraging modesty of a woman. Even under FCRA for instance, it is possible that an inspection ordered by Central Government may reveal that foreign funds received by an organisation certified by the Central Government had been used to fund terror activities in the country and in such circumstances, no one can say that investigation under Chapter VIII offences as well as IPC and other terror acts cannot be transferred to specialised agencies like CBI midstream . In fact, the officer appointed by the Central Government under Section 23 of FCRA would neither have the wherewithal nor the expertise to carry out such an investigation. Consequently, to submit that once the Central Government has chosen the route of empowering and authorising a particular officer/authority to conduct inquiry under Sections 23 to 26 and 42 of the FCRA, then it is only that authority which can investigate and file a criminal complaint, if so warranted, is untenable in law. The argument that the power of arrest has been given to officers under Customs Act, Central Excise Act, PMLA etc. and not under FCRA is fallacious as in Customs Act, Central Excise Act, PMLA Acts, the power is given to the officer conducting investigation in the said Acts who is not a police officer. In the present cases, the power to investigate has been given to the CBI which has all the powers which an officer in charge of a police station has while making an investigation into a cognizable offence. This Court has no doubt that the investigative agency and the Trial Courts shall keep in mind the maxim that bail is the rule and jail is an exception . In any event, absence of power to arrest, if any, cannot be a ground either for seeking declaration that Section 43 of FCRA is ultra vires or for quashing of the impugned FIR. In the present cases, all the offences which are mentioned in the RC 36/2017 are not non-cognizable by virtue of Part-II of First Schedule of Cr.P.C, as contended by the learned counsel for the petitioners, because as per Schedule II of Cr.P.C., if any offence is punishable with imprisonment for less than three years or with fine, then only it shall be classified as non-cognizable. In the present cases, the impugned RC 36/2017 had been registered even under Section 35 of FCRA which provides for imprisonment upto five years or fine or both. Further not all offences punishable with imprisonment or with fine or both are non-cognizable. For instance, Section 429 IPC which prescribes imprisonment for five years or fine or both is cognizable. In any event, as this Court is of the opinion that Section 43 of FCRA is constitutionally valid, the offences punishable under FCRA will have to be investigated as cognizable offences irrespective of anything contained in the Cr.P.C. The argument of the petitioners that Sections 33, 35 and 37 of FCRA encompass and imbibe the substance and spirit of penal provisions and hence, external penal provisions like Sections 199, 468, 471 and 511 IPC cannot be invoked is untenable in law. This Court is of the view that offences mentioned in FCRA essentially relate to mis-utilisation of the Foreign Contribution and giving false information, whereas the offences in IPC like Section 468 relate to forging of the documents for purpose of cheating. Consequently, IPC offences are not subsumed in offences under FCRA. Even if it is assumed that some of the IPC offences mentioned in the FIR overlap with the offences under FCRA, yet the same will not render the registration of the impugned FIR illegal. In any event, the said plea will have to be decided after the investigation is over and that too by the appropriate court. Further, this cannot be a ground to challenge the constitutional validity of the provisions of FCRA. Upon perusal of RC 9/2013, ECIR 10/2017 and RC 36/2017, this Court is of the opinion that while RC 9/2013 and ECIR 10/2017 have been registered in relation to undue pecuniary advantage given to Airbus Industry which has caused corresponding loss to the Government, impugned RC 36/2017 relates to violation of FCRA provisions as well as the offences committed under IPC in the process of committing violations under FCRA by the petitioners. In fact, the primary allegation in RC 9/2013 and ECIR 10/2017 is that the concessions obtained by the Empowered Group of Ministers (for short EGOM ) regarding setting up of training centre for US 75 million and creation of Maintenance, Repair and Overall facility (for short MRO ) for US 100 million were deliberately not made part of the final agreement signed by Indian Airlines with Airbus Industries. Accordingly, RC 36/2017 has nothing to do with pecuniary advantage given to Airbus Industry by the public servants by abusing their official positions. This Court is of the view that present batch of writ petitions are without any merit.

Summary

Issues Involved:
1. Constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 (FCRR).
2. Quashing of the letter dated 4th August 2017 entrusting the investigation to the Central Bureau of Investigation (CBI).
3. Quashing of the investigation carried out by CBI and Enforcement Directorate.
4. Allegation of multiple, parallel, and re-investigation.
5. Allegation of arbitrary, vague, and uncontrolled power conferred by Section 43 of FCRA.
6. Allegation of the second FIR amounting to reinvestigation.
7. Delegation of investigation authority.
8. Nature of offences under FCRA and their classification as cognizable or non-cognizable.
9. Applicability of IPC provisions in conjunction with FCRA provisions.

Detailed Analysis:

1. Constitutional Validity of Section 43 of FCRA and Rule 22 of FCRR:
The court held that the principles for adjudicating the constitutionality of an enactment are well settled. An Act can be declared unconstitutional only if the petitioner makes a case that the legislature lacked competence, violated fundamental rights, or was arbitrary, unreasonable, or vague. The court emphasized that there is always a presumption in favor of the constitutionality of an enactment. The court found that there is a principle and/or policy for the guidance of the exercise of discretion by the Government in the matter of selection of the investigative agency. Thus, Section 43 of FCRA and Rule 22 of FCRR were not found to violate Articles 14 and 21 of the Constitution.

2. Quashing of the Letter Dated 4th August 2017:
The court noted that the letter dated 4th August 2017, issued by the Ministry of Home Affairs, FCRA Wing, signed by the Director (FC & MU), suggested that the inquiry conducted by the Ministry had prima facie revealed violations of various provisions of FCRA. The court found that both the letters under Sections 23 and 43 were issued by the same authority, i.e., the Government of India, Ministry of Home Affairs, FCRA Wing, Director (FC & MU). Therefore, the court held that the letter requesting the CBI to investigate was valid.

3. Quashing of the Investigation by CBI and Enforcement Directorate:
The court held that the investigation by the CBI was valid as the Central Government had authorized the CBI to investigate offences under FCRA involving receipt of foreign contribution of an amount of ?1 crore or more. The court found that there was no arbitrary, vague, and uncontrolled power with the Government in selecting the investigative agency.

4. Allegation of Multiple, Parallel, and Re-investigation:
The court found that there was no possibility of multiple, parallel, or re-investigation as the investigation of offences under Chapter VIII of FCRA is carried out either by CBI or Crime Branch officials exclusively depending upon the pecuniary value of the alleged violation. The court noted that the principle and/or policy in the matter of appointment/selection of an investigative agency save it from attack on the ground of violation of Articles 14 and 21 of the Constitution.

5. Allegation of Arbitrary, Vague, and Uncontrolled Power:
The court held that the Notification dated 27th October 2011, as well as the consistent practice followed by the Central Government, lay down a principle and/or policy in the matter of appointment/selection of an investigative agency under Section 43 of FCRA. Therefore, the court found no arbitrary, vague, and uncontrolled power conferred by Section 43 of FCRA.

6. Allegation of Second FIR Amounting to Reinvestigation:
The court found that RC 9/2013 and RC 36/2017 relate to different offences and are entirely different in scope and ambit. The primary allegation in RC 9/2013 and ECIR 10/2017 is related to undue pecuniary advantage given to Airbus Industry, whereas RC 36/2017 pertains to violation of FCRA provisions and offences under IPC. Therefore, the court held that the two FIRs cannot be termed as FIRs in the course of the 'same transaction.'

7. Delegation of Investigation Authority:
The court found that the matter had been referred to the CBI by the Central Government itself and not by the officer authorized by the Central Government to carry out inspection under Section 23 of FCRA. Therefore, the court held that a delegatee had not sub-delegated the investigation to CBI in the present cases.

8. Nature of Offences Under FCRA:
The court held that all the offences mentioned in RC 36/2017 are not non-cognizable by virtue of Part-II of the First Schedule of Cr.P.C. The court noted that Section 35 of FCRA provides for imprisonment up to five years or fine or both, making it a cognizable offence. The court also noted that the case relates to two or more offences of which at least one is cognizable, making the case cognizable under Section 155(4) Cr.P.C.

9. Applicability of IPC Provisions:
The court held that offences mentioned in FCRA relate to mis-utilization of foreign contribution and giving false information, whereas offences in IPC like Section 468 relate to forging documents for the purpose of cheating. Therefore, IPC offences are not subsumed in offences under FCRA. The court concluded that the registration of the impugned FIR was legal.

Conclusion:
The court dismissed the writ petitions along with all pending applications, finding no merit in the arguments presented by the petitioners. All interim orders were vacated.