NEW DELHI: The Supreme Court Friday said the Statement of Objects and Reasons for the Foreign Contribution (Regulation) Amendment Act, 2020, makes it clear that the annual inflow of foreign contributions had almost doubled between 2010 and 2019 and many recipients had not utilised the same for the purposes for which they were registered.
The apex court said many recipients had failed to adhere to and fulfil the statutory compliances, which resulted in the cancellation of as many as 19,000 certificates of concerned persons or organisations during the stated period.
A bench headed by Justice A M Khanwilkar noted that until December last year, there were reportedly 22,762 FCRA registered organisations presumably compliant with the new dispensation.
The bench, also comprising Justices Dinesh Maheshwari and C T Ravikumar, also noted that 12,989 organisations have applied for renewal of FCRA licence between September 30, 2020, and December 31 last year.
The top court upheld the validity of certain amendments to the provisions of the Foreign Contribution (Regulation) Act, 2010, which came into effect in September 2020.
The bench delivered the 132-page judgement on pleas, including those assailing the constitutional validity of the amendments to provisions of FCRA 2010, vide the Foreign Contribution (Regulation) Amendment Act, 2020 which came into effect on September 29, 2020.
It said that ordinarily, the 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," it said.
In fact, the Parliament must be credited for having taken recourse to corrective dispensation for eradicating the mischief, which any sovereign country can ill-afford, the apex court said and observed that introducing change for the betterment of governance is the prerogative and wisdom of Parliament.
"The Statement of Objects and Reasons for the Amendment Act of 2020 makes it amply clear that the annual inflow of foreign contribution had almost doubled between the years 2010 and 2019 and many recipients of foreign contribution had not utilised the same for the purposes for which they were registered or granted prior permission under the Act," it said.
It said many recipients had also failed to adhere to and fulfil the statutory compliances, which resulted in the cancellation of 19,000 certificates of concerned persons/organisations during the period, including initiation of the criminal investigation concerning outright misappropriation or misutilisation of foreign contribution.
The apex court observed that a holistic approach is needed to ensure that the objective of the Principal Act is fulfilled, namely, strict regulation of the inflow and utilisation of foreign contribution for the purposes for which it is so permitted, such as only cultural, economic, educational or social programme.
It also dealt with the submissions regarding section 17 (1) of the Act which mandates that every person who has been granted a certificate or prior permission under section 12 shall receive foreign contribution only in an account designated as an FCRA account in a specified branch of a bank at New Delhi.
The top court said it was urged before it that there was a lack of infrastructure at the designated bank and the branch is manned only by 40 odd personnel.
"This argument does not commend us at all. In digital banking operations, it is not the headcount dispensing physical services that would matter, but the effectiveness of the software is important," it said.
The bench declared that the amended provisions namely, sections 7, 12(1A), 12A, and 17 of the 2010 Act, are intra vires the Constitution and the principal Act.
However, it read down section 12A and construed it as permitting the key functionaries or office bearers of the associations/NGOs, who are Indian nationals, to produce Indian passports for the purpose of their identification.
Section 12A mandates a person, who seeks prior permission or prior approval under section 11 or makes an application for grant of certificate under section 12 of the Act, including for renewal of a certificate under section 16, to provide the Aadhaar number of all its office bearers or directors or other key functionaries as an identification document.
"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," the bench said.