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Supreme Court upholds constitutional validity of 2020 amendment to FCRA provisions

The bench said foreign contribution can have a material impact on the matter of socio-economic structure and polity of the country.

Published: 08th April 2022 07:15 PM  |   Last Updated: 08th April 2022 07:15 PM   |  A+A-

Supreme Court

Supreme Court (Photo| Shekhar Yadav, EPS)

By PTI

NEW DELHI: The Supreme Court Friday upheld the validity of certain amendments to the provisions of the Foreign Contribution (Regulation) Act, 2010, which came into effect in September 2020, saying "the strict regime had become essential because of the past experience of abuse and misutilisation of foreign contribution."

Observing that receiving foreign donations cannot be an “absolute or even a vested right”, the apex court said no one can be heard to claim a vested right to accept the foreign donation because the theory of the possibility of the national polity being influenced by foreign contribution is globally recognised.

Upholding the amendments meant to strictly regulate the foreign funding of the NGOs, the top court noted many recipients of foreign contributions had not utilised the same for the purposes for which they were registered or granted prior permission under the Act and that many recipients had also failed to adhere to and fulfil the statutory compliances.

"...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," the apex court said.

A bench headed by Justice A M Khanwilkar 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," said the bench, also comprising Justices Dinesh Maheshwari and C T Ravikumar.

The 132-page verdict was delivered 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.

The top court, which adverted to the legislative history culminating with the 2010 Act, noted that serious concern about the impact of widespread inflow of foreign contributions on the values of a sovereign democratic Republic had been repeatedly expressed at different levels including in Parliament.

"To eradicate misuse and abuse of foreign contribution in the past, despite the firm regime in place in terms of the 2010 Act, the Parliament in its wisdom has now (vide Amendment Act of 2020) adopted the path of moderation by making it mandatory for all to accept foreign contribution only through one channel and to utilise the same ‘itself' for the purposes for which permission has been accorded," it said.

It noted that the sovereignty and integrity of India ought to prevail and the rights enshrined in Part III of the Constitution must give way to the interests of the general public much less public order and the sovereignty and integrity of the nation.

"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," the bench said.

It noted that many recipients had also failed to adhere to and fulfil the statutory compliances, which resulted in the cancellation of as many as 19,000 certificates of concerned persons/organisations during the stated period, including initiation of the criminal investigation concerning outright misappropriation or misutilisation of foreign contribution.

It noted it is open to a sovereign democratic nation to completely prohibit acceptance of foreign donation on the ground that it undermines the constitutional morality of the nation, as it is indicative of the nation being incapable of looking after its affairs and the needs of its citizens.

The bench said amended section 7 postulates complete prohibition on the transfer of foreign contribution to other person, not even to a person having the certificate of registration under the Act.

"Absent such stringent provision, some of the recipient organisations were reportedly indulging in the successive chain of transfers to other organisations, thereby creating a layered trail of money and also utilisation of funds towards administrative costs of successive transfers up to fifty per cent leaving very little funds for spending on the purposes for which it was permitted," it said.

The bench said foreign contribution can have a material impact on the matter of socio-economic structure and polity of the country.

"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," it said.



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