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2020 (3) TMI 1103 - SC - FEMAOrganisation of a political nature as barred from receiving foreign contributions - 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 as violative of Articles 14, 19 (1) (a), 19 (1) (c) and 21 of the Constitution of India - Guidelines for declaration of an organisation to be an organisation of a political nature not being a political party are found in Rule 3 of the Rules - principal challenge of the Appellant-organisation to Section 5 (1) of the Act is on the ground that the terms activity, ideology and programme are vague and have not been defined in the Act which result in conferring unbridled and unfettered power on the executive. Therefore, the Appellant-organisation contended that Section 5 (1) is violative of Article 14 of the Constitution. Section 5 (4) is also challenged on the ground that the authority to whom a representation should be made has not been specified and it is not clear whether the authority would be an independent authority or the Central Government itself HELD THAT - Where the provisions of a statute are vague and ambiguous and it is possible to gather the intention of the legislature from the object of the statute, the context in which the provisions occur and purpose for which it is made, the doctrine of reading down can be applied - DTC v. Mazdoor Congress 1990 (9) TMI 334 - SUPREME COURT . To save Rule 3(v) from being declared as unconstitutional, the Court can apply the doctrine of reading down . A balance has to be drawn between the object that is sought to be achieved by the legislation and the rights of the voluntary organisations to have access to foreign funds. The purpose for which the statute prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds. Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected. On the other hand, such of those voluntary organisations which have absolutely no connection with either party politics or active politics cannot be denied access to foreign contributions. Therefore, such of those organisations which are working for the social and economic welfare of the society cannot be brought within the purview of the Act or the Rules by enlarging the scope of the term political interests . We are of the opinion that the expression political interests in Rule 3 (v) has to be construed to be in connection with active politics or party politics. Any organisation which habitually engages itself in or employs common methods of political action like 'bandh' or 'hartal', 'rasta roko', 'rail roko' or 'jail bharo' in support of public causes can also be declared as an organisation of political nature, according to the guideline prescribed in Rule 3 (vi). Support to public causes by resorting to legitimate means of dissent like bandh, hartal etc. cannot deprive an organisation of its legitimate right of receiving foreign contribution. It is clear from the provision itself that bandh, hartal, rasta roko etc., are treated as common methods of political action. Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared as an organisation of a political nature. To save this provision from being declared as unconstitutional, we hold that it is only those organisations which have connection with active politics or take part in party politics, that are covered by Rule 3 (vi). To make it clear, such of those organisations which are not involved in active politics or party politics do not fall within the purview of Rule 3 (vi). We make it clear that organisations used for channeling foreign funds by political parties cannot escape the rigour of the Act provided there is concrete material. In that event, the Central Government shall follow the procedure prescribed in the Act and Rules strictly before depriving such organisation the right to receive foreign contributions.
Issues Involved:
1. Constitutionality of Sections 5(1) and 5(4) of the Foreign Contribution (Regulation) Act, 2010. 2. Constitutionality of Rules 3(i), 3(v), and 3(vi) of the Foreign Contribution (Regulation) Rules, 2011. 3. Violation of Articles 14, 19(1)(a), 19(1)(c), and 21 of the Constitution of India. 4. Definition and scope of "political nature" for organizations under the Act and Rules. 5. Applicability of Article 19 rights to organizations. Detailed Analysis: 1. Constitutionality of Sections 5(1) and 5(4) of the Foreign Contribution (Regulation) Act, 2010: The Appellant challenged Section 5(1) of the Act on the grounds that it confers "unguided and uncanalised power" on the Central Government to declare an organization as one of a political nature. The Appellant argued that terms like "activity, ideology, and programme" are vague and undefined, leading to arbitrary power. The High Court dismissed this claim, stating that these terms are expansive but not vague, providing sufficient guidance. The Supreme Court agreed, holding that Section 5(1) does not suffer from vagueness and does not violate Article 14. Section 5(4) was also challenged for not specifying the authority to which representations should be made. The Court found no merit in this challenge, noting that the lack of specification does not render the provision unconstitutional. 2. Constitutionality of Rules 3(i), 3(v), and 3(vi) of the Foreign Contribution (Regulation) Rules, 2011: The Appellant argued that these Rules are vague and overbroad, leading to potential misuse and abuse of power. Rule 3(i) pertains to organizations with political objectives in their Memorandum of Association or bylaws. The Court found no ambiguity in this Rule, stating that organizations with avowed political objectives cannot access foreign funds, aligning with the legislative intent to prohibit foreign funds in active politics. Rule 3(v) deals with organizations of farmers, workers, students, etc., whose objectives include advancing "political interests." The Court acknowledged that the term "political interests" is vague and susceptible to misuse. However, the Court applied the doctrine of "reading down" to interpret "political interests" as connected to active or party politics, thereby saving the provision from being declared unconstitutional. Rule 3(vi) pertains to organizations employing common methods of political action like bandh, hartal, rasta roko, etc. The Court held that supporting public causes through legitimate dissent cannot deprive an organization of its right to receive foreign contributions. The provision was interpreted to apply only to organizations involved in active or party politics. 3. Violation of Articles 14, 19(1)(a), 19(1)(c), and 21 of the Constitution of India: The Appellant claimed that the Act and Rules violate Articles 14, 19(1)(a), and 19(1)(c) by being vague and unreasonable. The Court found that the Appellant, being an organization, cannot invoke Article 19 rights, which are guaranteed only to citizens. No individual members of the organization were parties to the petition. Thus, the Appellant could not enforce rights under Article 19. 4. Definition and scope of "political nature" for organizations under the Act and Rules: The Court interpreted "political nature" to align with the legislative intent of preventing foreign influence in active politics. Organizations with political objectives or those involved in political actions connected to active or party politics fall within this scope. The Court emphasized that organizations working for social and economic welfare without political connections should not be deprived of foreign contributions. 5. Applicability of Article 19 rights to organizations: The Court reiterated that Article 19 rights are guaranteed to citizens, and organizations cannot claim these rights. The Appellant, being an organization, could not invoke Article 19 in the absence of individual members as petitioners. Conclusion: The Supreme Court upheld the constitutionality of Sections 5(1) and 5(4) of the Act and Rules 3(i), 3(v), and 3(vi) of the Rules, with the latter two being "read down" to apply only to organizations involved in active or party politics. The appeal was disposed of accordingly.
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