9911796707
TMI Blog2022 (4) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... engaging in business of charity as such. It is a provision for regulating the manner of doing business more importantly, concerning foreign contribution. 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 - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 - HELD THAT:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 - Justice A.M. Khanwilkar, Justice Dinesh Maheshwari And Justice C. T. Ravikumar For the Petitioner : Mr. Gopal Sankaranarayanan, Sr. Adv. Mr. Ashishek Jabaraj, Adv. Ms. Srishti Agnihotri, AOR Ms Nupur Raut, Adv. Ms. Ishita Chowdhury, Adv. Ms. Sanjana Grace Thomas, Adv. Mr. Gautam Jha, AOR Mr. Piyush Chhabra, Adv. Mr. Bripendra Singh, Adv. Mr. Praveen Swarup, AOR For the Respondent : Mr. Tushar Mehta, Ld. S.G. Mr. Kanu Aggrawal, Adv. Mr. M.K. Maroria, AOR Mr. Sanjay Kapur, AOR Mrs. Swarupama Chaturvedi, AOR Ms. Sanmaya Kapoor, Adv. Ms. Himanshi Goel, Adv. JUDGMENT 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 for short, the 2010 Act or the Principal Act , as the case may be vide the Foreign Contribution (Regulation) Amendment Act, 2020 for short, the 2020 Act or the Amendment Act , as the case may be , which has come into effect on 29.9.2020, in particular, Sections 7, 12(1A), 12A and 17(1), being manifestly arbitrary, unreasonable and impinging upon the fundamental rights guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, 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 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; 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 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 otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 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 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. (2019) 1 SCC 1 (paras 490 and 494) . (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 receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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 global philanthropy. It is stated that foreign contributions have increased from ₹ 10,282 crore in 2009-2010 to ₹ 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/36/(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 for short, NGOs 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 supra at Footnote No.22 (para 18) ; adverting to the objective of the 2010 Act. Reliance is also placed on the elucidation of this Court in In Re: Distribution of Esse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sociation 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; having definite programme to spend the foreign contribution on purposes useful to society. The NGOs merely 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 endl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) specifies 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 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A accounts across the country seriously affected 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desh Nizi Vyavsayik Prishikshan Kendra Sangh (2011) 6 SCC 597 (para 21) ; Ravindra Ramachandra Waghmare vs. Indore Municipal Corporation Ors. (2017) 1 SCC 667 (para 46) ; State of Himachal Pradesh Ors. vs. Satpal Saini (2017) 11 SCC 42 (para 6) ; and Union of India vs. Indian Radiological Imaging Association Ors. (2018) 5 SCC 773 (para 16) , 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. (2020) 13 SCC 585 (paras 25-27) 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between Indian citizens and foreigners, so much so, Indian 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 supra at Footnote No.18 , 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. AIR 1951 SC 41 (paras 8-10, 18, 27-29, 61-65) ; The State of Bombay Anr. vs. F.N. Balsara AIR 1951 SC 318 (paras 37-42, 47, 62) ; Kathi Raning Rawat vs. State of Saurashtra AIR 1952 SC 123 (paras 7, 19, 32-36, 45-48) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions working for the welfare of 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 ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) 2 SCC 47 (para 28) ; Municipal Corporation of the City of Ahmedabad Ors. vs. Jan Mohammed Usmanbhai and Anr. (1986) 3 SCC 20 (paras 15-24) ; Sushila Saw Mil vs. State of Orissa and Ors. (1995) 5 SCC 615 (para 4) ; Laxmikant vs. Union of India Ors. (1997) 4 SCC 739 (para 10) ; Krishnan Kakkanth vs. Government of Kerala Ors. (1997) 9 SCC 495 (paras 27-29); Indian Handicrafts Emporium Ors. vs. Union of India Ors. (2003) 7 SCC 589 (paras 31-41) ; Om Prakash Ors. vs. State of U.P. Ors. (2004) 3 SCC 402 (paras 31-40) ; People s Union for Civil Liberties Anr. vs. Union of India (2004) 9 SCC 580 (paras 40-45) ; State of Gujarat vs. Mirzapur Moti Kureshi Kassab Jamat Ors. (2005) 8 SCC 534 (paras 73-79, 135-137) ; Kerala Bar Hotels Association Anr. vs. State of Kerala Ors. (2015) 16 SCC 421 (paras 30-38) ; and Anuradha Bhasin supra at Footnote No.21 (paras 154-159) (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 1 ; Sahara India Real Estate Corporation Limited Ors. vs. Securities and Exchange Board of India Anr. (2012) 10 SCC 603 ; and Excel Crop Care Limited vs. Competition Commission of India Anr. (2017) 8 SCC 47 (paras 29, 92, 94-95) 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansparency 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., [email protected]. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 supra at Footnote No.7 (paras 105 and 106) . 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution 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 supra at Footnote No.7 (paras 157 and 158) . Reliance is also placed upon a recent decision of this Court in Manohar Lal Sharma vs. Union of India Ors. W.P. (Crl.) No.314 of 2021 etc., decided on 27.10.2021 (paras 49 and 50) , 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 requirement is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted 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 thousands of persons for 23,000 registered organisations. Relying on the expositions in Anuradha Bhasin supra at Footnote No.21 and Maneka Gandhi supra at Footnote No.12 , 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 supra at Footnote No.7 . 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 insertin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e President on the 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 latter 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 programmes, may receive foreign contribution, but was required to send intimation regarding such receipt to the Central Government within such time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 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 wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 Sections 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 reasonable project for the benefit of the society for which the foreign contribution is proposed to be util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution 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 Government 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 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 necta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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, curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 supra at Footnote No.48 and also R.K. Garg supra at Footnote No.49 that it is not for the Court to consider relative merits of the different political theories or economic policies includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 3. is to declare that nothing 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 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 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. speaks about power of Central Government to prohibit receipt of foreign contribution and matters connected therewith. Section 10 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 (Preven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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. is about registration of certain persons 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate 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. 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 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 Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral 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, the new dispensation became necessary to introduce a stricter 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. 41. The expressions foreign contribution 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 perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 thereunder, 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction 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/shelters.; 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndubitably, 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 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 permitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra at Footnote No.21 (paras 154-159) 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 supra at Footnote No.22 , 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 depr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titutional 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 provided 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. 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 had been granted certificate or prior permission under Section 12 shall receive foreign con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 21 of the Constitution. The permission is a precondition for acceptance 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
