2022 (4) TMI 471 - SUPREME COURT

Constitutional validity of the amendments to the provisions of the Foreign Contribution (Regulation) Act, 2010 - Infringement of fundamental rights guaranteed to the petitioners under Articles 14, 19 and 21 of the Constitution - HELD THAT:- 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 matter of security of the State, public order and in the interests of the general public, it is not open to question the validity of such a law on the touchstone of Article 19(1)(c) or 19(1)(g) of the Constitution. It is not a provision to completely prohibit forming of the associations or 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 with for availing the permission accorded by the Central Government under the Act to be a certified association or person given permission to receive foreign contribution as a precondition.

The need to have only one entry point for the inflow of foreign contribution had been viewed by the Parliament as the best option for regulating the inflow of foreign contribution. This 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.

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.

Having noted that the provision became necessary for efficient regulation of foreign contribution on real-time basis, it can neither be said to be manifestly arbitrary nor irrational much less without legitimate objective of the State. Accordingly, there are no hesitation in negating the challenge to these provisions as being violative of Articles 14, 19 and 21 of the Constitution - The fact that the registered associations were already complying with the statutory formalities of furnishing of accounts, intimation, audit and disposal of assets to the satisfaction of the concerned Authorities, it would not follow that the Parliament/Legislature is denuded of its power of changing the regulatory mechanism or framework to make it more effective and to make it real-time regarding the inflow or receipt of foreign contribution and utilisation thereof for the purposes for which it has been so permitted. Accepting the argument of the registered associations would not only be undermining the legislative intent, but also disregarding the object sought to be achieved by the Principal Act.

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 - 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 and spending on activities not connected with the purposes for which it was so permitted - It is a law made by the Parliament which is competent to make such a law concerning the activities related to foreign donations and more particularly about its acceptance in prescribed manner and utilisation for the purposes defined in the certificate/permission granted by the competent authority. It has a legitimate purpose and nexus sought to be achieved with the objective underlying the Principal Act and the subject amendment. It is not open to argue that associations desirous of obtaining certificate of registration under this Act need not furnish official identification document pertaining to its key functionaries.

The provision (Section 12A) envisages that a copy of the Passport can also be provided as identification document of all its office bearers or Directors or other key functionaries or Overseas Citizen of India Card, in case of a foreigner. The underlying purpose of this provision is merely to identify the key functionaries of the registered association so that they can be made accountable for violations, if any - the Passport in case of a foreigner is accepted as sufficient identification document, there is no reason why such Passport of Indian national cannot be relied upon for the same purpose. Thus understood, the challenge to this provision being unreasonable need not detain us nor is required to be taken any further. Whereas, it is held that the provision needs to be construed as permitting furnishing of the Indian Passport of the key functionaries of the applicant who are Indian nationals, for the purpose of their identification.

It is declared 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, the said provision are read 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.

Petition disposed off.