Supreme Court: Foreign Donation not Absolute Right, Upheld the Constitutional Validity of Foreign Contribution (Regulation) Act, 2020

Supreme Court Law Insider

Shivani Thakur

Published on: April 9, 2022 at 19:43 IST

The Supreme Court said Foreign Donation cannot be an absolute Right, as it upheld the Constitution validity of the Foreign Contribution (Regulation) Amendment Act (FCRA), 2020.

A Three-Judge Bench, led by Justice A.M. Khanwilkar, however, described the new ‘Regulatory Measures’ as ‘Effective’ and in the ‘Larger Public Interest, more particularly to Safeguard the Sovereignty and Integrity of the Country’.

Foreign contributions, the Court noted, could have a ‘material impact’ on the ‘Socioeconomic Structure and Polity of the Country’, in essence, that Foreign Donors could exert undue influence in India.

The Bench also advised Charitable Organisations to seek Indian Donor’s rather than Foreign Donors for reason of National Interest.

The new Foreign Contribution (Regulation) Amendment Act impose stringent provision on compliance by Non-Governmental Organization’s receiving Foreign Donations.

The changes made it mandatory for all Non-Governmental Organizations to have their Primary Account to receive Foreign Donations in Delhi and further reduced the percentage of Funds that can be spent as Administrative Expenses from 50 to 20 percent.

The Petition was filed by Noel Harper of the Non-Governmental Organization Care and Share Charitable Trust, and specifically questioned Section 7, 17 and 12A of the Amended Law.

It is open to the Parliament to change the Benchmark of Restriction from higher standard to lower standard or vice versa on the basis of the exigencies and experience gained during the implementation of the applicable provision at the relevant time,” the Court held.

The Courts ought not to adopt a Doctrinaire approach in construing the Amended Provisions and undermine the Legislative intent of strengthening the Regulatory Mechanism concerning Foreign Contribution,” the Bench said.

The Court accepted the Centre’s contention that it was necessary to Amend the Foreign Contribution (Regulation) Amendment Act to stop ‘unscrupulous entities’ from ‘disturbing the Economy and Sovereignty of our Country’.

The influence may manifest in different ways, including in destabilising the Social Order within the Country. The Charitable Associations may instead focus on donors within the Country, to obviate influence of Foreign Country owing to Foreign Contribution,” the Court observed.

The Old Foreign Contribution (Regulation) Amendment Act law allowed the recipient of a Foreign contribution to transfer it to another person, were Registered and had been granted a Certificate by the Government. The new Law rules out such a transfer under Section 7.

The Court rejected the Charge that these new Regulations around the usage of Funds were Arbitrary and Violative of Article 19, Articles 14 and 21.

Also Read: Centre has validated the non-renewal of FCRA for NGO

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