Sakunjay Vyas
Published on: April 9, 2022 at 20:02 IST
The Three-Judge Bench of Justice A.M. Khanwilkar, Justice Dinesh Maheshwari and Justice C.T. Ravikumar of the Supreme Court was hearing 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 vide the Foreign Contribution (Regulation) Amendment Act, 2020, 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 guaranteed to the petitioners under Articles 14, 19 and 21 of the Constitution.
The Apex Court while considering the present writ petitions had to challenge was primarily the following amendments:
· Amendment to Section 7, which forbids a recipient of foreign contribution from transferring the same to any other entity.
· Amendment to the proviso to Section 11(2), which states that the Centre can direct an organization to not utilize foreign contributions pending an inquiry on suspected violations.
· Newly added Section 12 & 17 which state that the foreign contributions must be deposited in the FCRA account created in the specified branch of the scheduled bank, which was later notified as to the New Delhi Branch of the State Bank of India.
· Newly added Section 12A which empowers the Centre to obtain Aaadhaar numbers of the key functionaries of the organization for approval.
The apex court stated that according to the Act it would be a case of utilization if the recipient of foreign contributions engages the services of a third party or outsources certain activities to a third party, whilst also undertaking certain activities itself and paying for them.
Accordingly, Section 7 implies that the transfer is a case of per se (simplicitor) transfer by the recipient of a foreign contribution to a third party without the need to engage in specific activities of the recipient’s cultural, economic, educational, or social program, for which the recipient has obtained a certificate of registration from the Central Government.
This provision is in the favor of the general public and sovereignty and at the same time the integrity of the country.
Therefore, the Court concluded that payments made to third-party agencies in furtherance of the purposes of the recipient constituted a “utilization” and not a “transfer”. As a result, the Court deemed Section 7 intra-vires.
“The transfer within the meaning of Section 7, therefore, would be a case of per se (simplicitor) transfer by the recipient of foreign contribution to the third party without requiring to engage in the definite activities of the cultural, economic, educational or social program of the recipient of foreign contribution, for which the recipient had obtained a certificate of registration from the Central Government.” the Court said.
The Apex Court stated that The Court observed that inconvenience to a party is not a ground to challenge constitutionality.
The Apex Court stated that the inflow of the annual inflow of foreign contributions has doubled between the years 2010 and 2019, at the same time many of these contributions didn’t stick to the statutory provisions and also did not follow the purposes for which they were registered.
Over the stated period, several thousand certificates were canceled for concerned individuals and organizations, including criminal investigations involving outright misappropriation and misuse of foreign contributions.
The Apex Court further stated the state’s right to prohibit foreign contributions and stated that it is perfectly acceptable for a sovereign democratic nation to completely prohibit accepting foreign donations because it undermines the constitution’s morality and indicates incapability to take care of its affairs and needs.
Even though third-world countries may welcome foreign donations, a nation that is committed and enduring to be self-sufficient and diversely capable of fulfilling its own needs may opt for an absolute ban on receiving or accepting foreign contributions (donations) from other nations.
“The third world countries may welcome foreign donation, but it is open to a nation, which is committed and enduring to be self-reliant and variously capable of shouldering its own needs, to opt for a policy of complete prohibition of inflow/acceptance of foreign contribution (donation) from a foreign source.” The Court said.
As a result, the Apex court by stating that 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, upheld the Foreign Contribution (Regulation) Amendment Act 2020.
