NOEL HARPER & ORS. versus UNION OF INDIA & ANR.

[2022] 19 S.C.R. 879

NOEL HARPER & ORS.

UNION OF INDIA & ANR.

(Writ Petition (Civil) No. 566 of 2021)

APRIL 08, 2022

[A. M. KHANWILKAR, DINESH MAHESHWARI ANDC. T. RAVIKUMAR, JJ.]

Foreign Contribution (Regulation) Act, 2010, as amended byForeign Contribution (Regulation) Amendment Act, 2020 – ss. 7,12(1A), 12A and 17(1) – Constitutional validity of amendmentsconcerning ss.7, 12(1A), 17 (1) and s.12A – Amended s.7 prohibitedtransfer of foreign contribution to other persons while theunamended s.7 restricted the transfer of foreign contribution, butdid not completely prohibit the same unlike the amended s.7 –s.12(1A) envisaged that every person making an application undersub-Section (1) of s.12 was obliged /required to open FCRA accountin the manner specified in s.17 and mention details of such accountin his application – s.17, in particular sub-Section (1) as amended,mandated that every person granted certificate or prior permissionu/s.12 shall receive foreign contribution only in an accountdesignated as FCRA account in the specified bank – The unamendedss.12 and 17 did not impose such restrictions – s.12A inserted videthe 2020 Act empowered the Central Government to require Aadhaarnumber etc., as identification document – Held: The amendedprovisions vide the 2020 Act, namely, ss.7, 12(1A), 12A and 17 ofthe 2010 Act are intra vires the Constitution and the ForeignContribution (Regulation) Act, 2010 – The amended s.7 completelyrules out transfer of foreign contribution by the person who hasreceived/accepted the same in the first place – That however doesnot prevent the recipient from utilising the foreign contribution“itself” for the purposes for which he has been granted certificateof registration or obtained prior permission under the Act – Therestriction inevitably fixes the accountability of the recipientorganisation and mandates maximum utilisation by itself for permittedpurposes – This is the procedure established by law – It can neitherbe said to be arbitrary nor discriminatory much less manifestlyarbitrary - within the meaning of Art.14 or impinging upon Art.21

Aof the Constitution – The pre-amendment dispensation (unamendeds.7) was not sufficient to effectively regulate the acceptance andutilisation of foreign contribution as predicated by the ForeignContribution (Regulation), 2010 – To overcome the mischief and toenhance transparency and accountability regarding acceptance andalso utilisation of foreign contribution which is quite substantialBevery financial year having proliferating effect on the economy ofthe nation, it became necessary to enact amended s.7 – The factthat unamended s.7 was less restrictive, cannot be the basis to testthe constitutional validity of the amended provision on thetouchstone of Art.19(1)(c) or 19(1)(g) or Arts.14 and 21 of theCConstitution – s.12(1A) and s.17(1), is holistic approach adoptedby the Parliament to provide for strict regulatory measure and forensuring transparency and accountability in the matter of foreigncontribution – Being matter of security of the State, public orderand in the interests of the general public, it is not open to questionthe validity of such law on the touchstone of Art.19(1)(c) orD19(1)(g) of the Constitution – It is not provision to completelyprohibit forming of the associations or engaging in business ofcharity as such – It is provision for regulating the manner ofdoing business more importantly, concerning foreign contribution– The provision became necessary for efficient regulation of foreignEcontribution on real-time basis, hence, it can neither be said to bemanifestly arbitrary nor irrational much less without legitimateobjective of the State – Accordingly, the challenge to these provisionsas being violative of Arts. 14, 19 and 21 of the Constitution is negated– Insofar as insertion of s.12A is concerned, this amendment hadbeen necessitated to safeguard the sovereignty and integrity of theFcountry, and public order, including in the interests of the securityof the State and of the general public – It is not open to argue thatassociations desirous of obtaining certificate of registration underthis Act need not furnish official identification document pertainingto its key functionaries – s.12A is to be read down and construed asGpermitting the key functionaries/office bearers of the applicant(associations/NGOs) who are Indian nationals, to produce IndianPassport for the purpose of their identification – That shall beregarded as substantial compliance of the mandate in s.12Aconcerning identification – Constitution of India – Arts. 14, 19(1)(c),19(1)(g) and 21.H

Foreign Contribution (Regulation) Act, 2010 – ForeignContribution (Regulation) Amendment Act, 2020 – Legislativehistory culminating with the 2010 Act, as amended in 2020 –Adoption of strict regime for prohibiting “transfer” of foreigncontribution and insistence of “utilisation” thereof by the recipienthimself/itself – Discussed.

Policy – Judicial Review – Scope – Held: It is not for theCourt to consider relative merits of the different political theoriesor economic policies including that an economic legislation may betroubled with crudities, inequities, uncertainties or the possibilityof abuse cannot be the basis for striking it down.

Policy – Just law made by the Parliament – On mere plea ofindividual hardships, Court cannot interfere with policy matters.

Legislation – Amended provisions – Role of the Parliament –Democratic accountability – Judicial review – Held: There ispresumption that the Parliament understands and reacts to the needsof its own people as per the exigencies and experience gained inthe implementation of the law – The Parliament is supreme and hasa final say in matters of legislation when it reflects on alternativesand choices with inputs from different quarters, with check in theform of democratic accountability and further check by the Courtswhich exercise the power of judicial review – The Courts howeverought not to adopt doctrinaire approach in construing theamended provisions and undermine the legislative intent.Words and Phrases – Expression “foreign contribution” –Meaning of – Distinction between foreign contribution and foreigninvestment – Held: By its very nature, foreign contribution is adonation accepted from foreign source purportedly for definitecultural, economic, educational, religious or social programme andto serve the cause of humanity – The expression “foreigncontribution” has been defined in s.2(1)(h) of the 2010 Act to meandonation, which can be in the form of delivery or transfer made byany foreign source of any article, currency, security, etc. – ForeignContribution (Regulation) Act, 2010 – s.2(1)(h).

Words and Phrases – Transfer and utilization of foreigncontribution – Expressions “transfer” and “utilisation” – Meaningof – Discussed – Foreign Contribution (Regulation) Act, 2010.

ADisposing of the writ petitions, the CourtHELD:

Validity of Section 7 of the Foreign Contribution(Regulation), 2010, as amended vide the 2020 Act

B1. The amended provision completely rules out transfer offoreign contribution by the person who has received/acceptedthe same in the first place. That does not prevent the recipientfrom utilising the foreign contribution “itself” for the purposesfor which he has been granted certificate of registration orobtained prior permission under the Act. [Para 44][958-D-E]C

2. There is no restriction regarding utilisation of foreigncontribution, leave alone complete prohibition. The rationale ofSection 7 as amended, inter alia, is that the donor (foreign source)is made fully aware of the definite purposes already declared bythe recipient and permitted by the competent authority andDcorresponding obligation upon the recipient regarding utilisationof the funds itself for stated purposes and none else. [Para 46][959-

3. The legislative intent for which the amendment has beeneffected is to introduce strict dispensation qua the recipient ofEforeign contribution to utilise the same “itself” for the purposesfor which it has been permitted as per the certificate of registrationor permission granted under the Act by the Central Government.In addition, by the same Amendment Act, utilisation of foreigncontribution for administrative purpose by the recipient has beenFlowered to twenty per cent only with view to ensure maximumspending on the purposes for which the foreign contribution hasbeen accepted by the recipient having certificate of registration.Absent such stringent provision, some of the recipientorganisations were reportedly indulging in successive chain oftransfers to other organisations, thereby creating layered trailGof money and also utilisation of funds towards administrative costsof successive transfers upto fifty per cent leaving very little fundsfor spending on the purposes for which it was permitted. Hence,providing complete restriction on transfer simplicitor, was thejust option to fix accountability of the recipient organisation and

maximise utilisation for the permitted purposes. Such being theavowed objective and purpose of the amendment, the challengeto the amended Section 7 must fail. [Paras 50 and 51][961-H;962-A-D]

4. The fact that earlier transfer of foreign contribution waspermitted as per the unamended provision, that by itself cannotbe the basis to challenge the validity of the amended provision.For, it is open to the Parliament to change the benchmark ofrestriction from higher standard to lower standard or vice versaon the basis of the exigencies and experience gained during theimplementation of the applicable provision at the relevant time.[Para 52][962-D-E]

5. Indubitably, foreign contribution is qualitatively differentfrom foreign investment. Receiving foreign donation cannot bean absolute or even vested right. No one can be heard to claima vested right to accept foreign donation, much less an absoluteright. This is so because the theory of possibility of national politybeing influenced by foreign contribution is globally recognised.For, foreign contribution can have material impact in the matterof socioeconomic structure and polity of the country. The foreignaid can create presence of foreign contributor and influencethe policies of the country. It may tend to influence or imposepolitical ideology. Such being the expanse of the effect of foreigncontribution coupled with the tenet of constitutional morality ofthe nation, the presence/inflow of foreign contribution in thecountry ought to be at the minimum level, if not completelyeschewed. The influence may manifest in different ways, includingin destabilising the social order within the country. [Paras 53 and54][962-E-F, H; 963-A-C]

6. One fails to understand as to how such provision(amended Section 7) can be regarded as discriminatory or so tosay vague or irrational much less manifestly arbitrary. Therestriction therein applies to class of persons who are permittedto accept foreign donation for being utilised by themselves forthe definite purposes, without any discrimination and it is so doneto uphold the objective of the Foreign Contribution (Regulation)Act, 2010. Thus, there is clear intelligible differentia with directnexus sought to be achieved with the intent of the Foreign

AContribution (Regulation) Act, 2010. Such strict regime hadbecome inevitable because of the experience gained by theconcerned authorities over period of time, including about theabuse of the earlier dispensation under the unamended provision.[Para 57][963-H; 964-A-B]

B7. The restriction inevitably fixes the accountability of therecipient organisation and mandating maximum utilisation by itselffor permitted purposes. This is the procedure established by law.It can neither be said to be arbitrary nor discriminatory muchless manifestly arbitrary — within the meaning of Article 14 orimpinging upon Article 21 of the Constitution. As matter of law,Csince the subject Act deals with distinct class of persons(accepting/receiving foreign contribution) and it is founded on anintelligible differentia having object sought to be achieved by theForeign Contribution (Regulation) Act, 2010, it fulfils the testpredicated in Shayara Bano. For the same reason, the amendedDprovision under challenge is neither capricious, irrational orlacking determining principle, nor suffers from the vice ofexcessiveness and being disproportionate. [Para 58][964-D-F]8.1. There is presumption that the Parliament understandsand reacts to the needs of its own people as per the exigenciesEand experience gained in the implementation of the law. Mereplea of inconvenience is not enough to attract the constitutionalinhibition. The Courts ought not to adopt doctrinaire approachin construing the amended provisions and undermine thelegislative intent of strengthening the regulatory mechanismconcerning foreign contribution. The legislature enjoysFconsiderable latitude while exercising its wisdom on the basis ofinputs collated from different quarters. There is intrinsic evidenceto indicate that the change effected by the amendments is to servethe legitimate Government purpose and has rational nexus tothe object of the Foreign Contribution (Regulation), 2010 andGthe amendments, and that the pre-amendment dispensation(unamended Section 7) was not sufficient to effectively regulatethe acceptance and utilisation of foreign contribution as predicatedby the Foreign Contribution (Regulation), 2010. [Para 59][964-F-G; 965-A-B]

8.2. While examining the issue as to whether the amendedprovision is reasonable restriction, the Court cannot be obliviousto the concern of the Parliament/Legislature backed by the pastexperiences including cancellation of registration of substantialnumber of registration certificates after due inquiry and fortangible reasons owing to abuse and misutilisation of foreigncontribution (donation); and especially when receipt or acceptanceof foreign exchange or be it foreign contribution, is otherwiseunderstood to be ordinarily prohibited. The subject enactment isessentially conceived in the interests of public order and alsogeneral public as the intent is to prevent misuse and misutilisationof foreign contribution coming from foreign sources to safeguardthe values of sovereign democratic republic. [Para 63][966-D-E; 967-G-H]

8.3. The restriction or complete prohibition on transfer tothird party, by no standards deprive acceptance of foreigncontribution and utilisation thereof in the manner permitted fordefinite purposes, such as cultural, economic, educational or socialprogramme. Such provision must be understood as beingprocedure established by law in the interests of the general publicand in the interests of sovereignty and integrity of the country,including public order. Resultantly, there is no infraction even ofArticle 19(1)(c) or 19(1)(g) of the Constitution as urged by thewrit petitioners, including Articles 14 and 21 of the Constitution.Consistent with this view, the challenge to the amended Section7 must be rejected on all counts. [Para 65][967-B-D]

8.4. For the same reason, the argument of the writpetitioners about lack of rational nexus with the object sought tobe achieved by the Principal Act much less the Amendment Act,must also fail. The rationale is of larger public interests and moreparticularly to obviate adverse impact on the economy, publicorder, sovereignty and integrity of the country. Such amendmenthas been necessitated because of the past experience consequentto implementation of the unamended Section 7 of the 2010 Act.It is so highlighted in the objects and reasons and the introductionof the Amendment Act. It can also be culled out from the debatesin the Parliament whilst considering the Amendment Bill in the

Arespective Houses. To overcome the mischief and to enhancetransparency and accountability regarding acceptance and alsoutilisation of foreign contribution which is quite substantial everyfinancial year having proliferating effect on the economy of thenation, it had become necessary to enact amended Section 7. Inother words, there is clear rationale behind the amendmentBwhich is consistent with the purpose of the Principal Act and theobject sought to be achieved under the enactments. The fact thatunamended provision was less restrictive, cannot be the basis totest the constitutional validity of the provision on the touchstoneof Article 19(1)(c) or 19(1)(g) or Articles 14 and 21 of theCConstitution. The amended Section 7, being plain and clear andhaving nexus with the object sought to be achieved and isnecessitated because of sovereignty and integrity of India orsecurity of the State, public order and in the interests of thegeneral public. It is unfathomable as to how the amended provision

can be regarded as unconstitutional on any parameter. [ParaD66][967-D-H; 968-A-B]Validity of Section 12(1A) and Section 17(1) of the ForeignContribution (Regulation), 2010, as amended vide the 2020 Act

9. Section 12(1A) has been inserted by Act 33 of 2020, whichEenvisages that every person who makes an application under sub-Section (1) of Section 12 is obliged/required to open FCRA accountin the manner specified in Section 17 and mention details of suchaccount in his application. Section 17, in particular sub-Section(1) as amended, mandates that every person who had been grantedcertificate or prior permission under Section 12 shall receiveFforeign contribution only in an account designated as FCRAaccount in the specified bank. The unamended Sections 12 and17 did not impose such restriction. Notably, as per the new regimeforeign remittances are being received through SWIFT platformby international banking wherein certain mandatory fields areGrequired to be captured apart from other details transaction wise.Further, foreign remittances do not have structured framework,including disclosures regarding purposes. All these deficiencieswill stand resolved thereby enhancing the monitoring mechanismin real-time basis, remittance wise by adopting the newdispensation predicated in the amended provisions. Once again,H

the need to strictly regulate the inflow of foreign funds and tooversee utilisation thereof for the purposes for which it has beenreceived having been recognised and being the rationale behindthe Amendment Act, including owing to the experience regardingabuse of the regime under the unamended provision, thechallenge to such amendment cannot be taken forward. [Paras68 and 69][968-D-H; 969-A]

10. Section 17 came to be amended in the aftermath ofrealisation of clear and discernible lacunae having cropped in dueto the presence of FCRA accounts of scores of registeredorganisations, in different scheduled banks across the country.The challenge became more pronounced due to doubling of foreigncontribution inflow in the last decade which had impacted theefficiency of monitoring and achieving the object of the PrincipalAct. The amended provision now mandates that FCRA accountsof all the registered persons/organisations are required to beopened in one particular branch in the country providing foressential information and fields, thereby ensuring complete andtransparent check on the inflow and utilisation of foreigncontribution towards single point source on real-time basis.[Para 70][969-B-C]

11. The fact that earlier FCRA account could be opened inany scheduled bank, cannot preclude the Parliament fromlegislating law which requires inflow of foreign contribution insome other manner specified by law. Merely because theframework of acceptance of foreign contribution had been changedcannot be the basis to question the validity of the amendedprovisions. Introducing change for the betterment of governanceis the prerogative and wisdom of the Parliament. The FCRAaccount operators cannot claim right of continuity of deficientand flawed framework. Ordinarily, convenience of business andpersons engaged in doing business must be uppermost in themind of the Parliament/Legislature — to effectuate the goal ofease of doing business. However, the strict regime had becomeessential because of the past experience of abuse andmisutilisation of the “foreign contribution” and cancellation ofcertificates of as many as 19,000 registered organisations on theground of being grossly noncompliant. fortiori, it would certainly

Ajustify the need to have holistic approach to ensure that theobjective of the Principal Act is fulfilled, namely, of strictregulation of the inflow and utilisation of foreign contribution forthe purposes for which it is so permitted, such as only cultural,economic, educational or social programme. [Para 71][969-D-H;970-A-B]B

12. In fact, the Parliament must be credited with for havingtaken recourse to corrective dispensation for eradicating themischief, which any sovereign country can ill-afford. TheParliament is supreme and has final say in matters of legislationwhen it reflects on alternatives and choices with inputs fromCdifferent quarters, with check in the form of democraticaccountability and further check by the Courts which exercisethe power of judicial review. It had become necessary for theParliament to step in and provide stringent regime for effectivelyregulating the inflow and utilisation of foreign contribution. Hence,Dthere had been legitimate goal for amending the subjectprovisions of acceptance of funds through one channel.Concededly, despite the requirement of opening FCRA accountin the designated bank, it is open to the organisation to utilisethe amount so received in the FCRA account through multipleaccounts in the scheduled branches. In that sense, it is balanced

Eapproach. [Para 72][970-B-D]

13. priori, opening of main FCRA account in thedesignated bank as per the law made by the Parliament in thatregard, cannot be brushed aside on the specious argument ofsome inconvenience being caused to the registered associations.FAssuming that some inconvenience is likely to be caused to fewapplicants, but the constitutionality of statute cannot be assailedon the basis of fortuitous circumstances and more so when itbeing only one-time exercise to ensure inflow of foreigncontribution through one channel only, being precondition forGgrant of permission. [Para 73][970-E-G]

14. As matter of law, the validity of the amendments mustbe tested on the touchstone of tenets underlying Articles 14, 19and 21 of the Constitution. The permission is precondition foracceptance and utilisation of foreign contribution. Such persons

are separate class and engage in specified activity. It cannot bea usual or ordinary business for everyone and anyone wanting toaccept foreign contribution. Permitting inflow of foreigncontribution, which is donation, is matter of policy of the Statebacked by law. In this case, it is governed by the 2010 Act asamended. It is open to the State to have regime which maycompletely prohibit receipt of foreign donation, as no right inheresin the citizen to receive foreign contribution (donation). [Para74][971-A-C]15. The provision such as Section 12(1A) and Section 17(1)introduced by the Amendment Act, is holistic approach adoptedby the Parliament to provide for strict regulatory measure andfor ensuring transparency and accountability in the matter offoreign contribution. Notably, there was unanimity amongst themembers of both the Houses cutting across party lines to havesuch strict regime as indiscriminate receipt/inflow and more soutilisation of foreign contribution had been threatening thesovereignty and integrity of the country itself. Being matter ofsecurity of the State, public order and in the interests of thegeneral public, it is not open to question the validity of such lawon the touchstone of Article 19(1)(c) or 19(1)(g) of theConstitution. It is not provision to completely prohibit formingof the associations or engaging in business of charity as such. Itis provision for regulating the manner of doing business moreimportantly, concerning foreign contribution. The provisionbecame necessary for efficient regulation of foreign contributionon real-time basis, hence, it can neither be said to be manifestlyarbitrary nor irrational much less without legitimate objective ofthe State. Accordingly, the challenge to these provisions as beingviolative of Articles 14, 19 and 21 of the Constitution is negated.[Paras 75 and 80][971-C-F; 973-E-F]

16. The fact that the registered associations were alreadycomplying with the statutory formalities of furnishing of accounts,intimation, audit and disposal of assets to the satisfaction of theconcerned Authorities, it would not follow that the Parliament/Legislature is denuded of its power of changing the regulatorymechanism or framework to make it more effective and to makeit real-time regarding the inflow or receipt of foreign contribution

Aand utilisation thereof for the purposes for which it has been sopermitted. [Para 81][973-F-H]

Validity of Section 12A of the Foreign Contribution(Regulation), 2010, as amended vide the 2020 Act

17. Section 12A, which was inserted vide the AmendmentBAct of 2020, mandates that the person concerned who seeks priorpermission or prior approval under Section 11, or makes anapplication for grant of certificate under Section 12, including forrenewal of certificate under Section 16, to provide as identificationdocument, the Aadhaar number of all its office bearers or DirectorsCor other key functionaries. The Statement of Objects and Reasonsof the Amendment Act are testimony about the past experienceof abuse of foreign contribution receipts and spending on activitiesnot connected with the purposes for which it was so permitted. Ithad been noticed that the inflow of foreign contribution had almostdoubled between the years 2010 and 2019 and many of theDregistered associations had failed to comply with basic statutoryformalities necessitating cancellation of certificates of registrationof more than 19,000 registered organisations. This is staggering(substantial) number indicative of gross violations by large numberof registered associations. More so, this amendment had beenEnecessitated to safeguard the sovereignty and integrity of thecountry, and public order, including in the interests of the securityof the State and of the general public. It is law made by theParliament which is competent to make such law concerningthe activities related to foreign donations and more particularlyabout its acceptance in prescribed manner and utilisation for theFpurposes defined in the certificate/permission granted by thecompetent authority. It has legitimate purpose and nexus soughtto be achieved with the objective underlying the Principal Actand the subject amendment. It is not open to argue thatassociations desirous of obtaining certificate of registration underGthis Act need not furnish official identification document pertainingto its key functionaries. [Para 83][974-C-H; 975-A]18. Regardless of the above, the provision (Section 12A)envisages that copy of the Passport can also be provided asidentification document of all its office bearers or Directors or

other key functionaries or Overseas Citizen of India Card, incase of foreigner. The underlying purpose of this provision ismerely to identify the key functionaries of the registeredassociation so that they can be made accountable for violations,if any. As the Passport in case of foreigner is accepted assufficient identification document, there is no reason why suchPassport of Indian national cannot be relied upon for the samepurpose. Thus understood, the challenge to this provision isunreasonable. Whereas, the provision needs to be construed aspermitting furnishing of the Indian Passport of the keyfunctionaries of the applicant who are Indian nationals, for thepurpose of their identification. [Para 84][975-B-D]

Conclusion

19. The amended provisions vide the 2020 Act, namely,Sections 7, 12(1A), 12A and 17 of the 2010 Act are intra vires theConstitution and the Principal Act. As regards Section 12A, thesaid provision is to be read down and construed as permittingthe key functionaries/office bearers of the applicant (associations/NGOs) who are Indian nationals, to produce Indian Passport forthe purpose of their identification. That shall be regarded assubstantial compliance of the mandate in Section 12A concerningidentification. [Para 87][975-F-H]

Rustom Cavasjee Cooper v. Union of India (1970) 1SCC 248 : [1970] 3 SCR 530; R.K. Garg v. Union ofIndia & Ors. (1981) 4 SCC 675 : [1982] 1 SCR 947;Ombalika Das v. Hulisa Shaw (2002) 4 SCC 539 :[2002] 2 SCR 902; Shayara Bano v. Union of India &Ors. (2017) 9 SCC 1 : [2017] 9 SCR 797; Dr. AshwaniKumar v. Union of India & Anr. (2020) 13 SCC 585 :[2019] 12 SCR 30; Laxmi Khandsari & Ors. v. State ofU.P. & Ors. (1981) 2 SCC 600 : [1981] 3 SCR 92 andAll India Council for Technical Education v. SurinderKumar Dhawan & Ors. (2009) 11 SCC 726 : [2009] 3SCR 859 – relied on.

Shreya Singhal v. Union of India (2015) 5 SCC 1 :[2015] 5 SCR 963; K.S. Puttaswamy (Retired) & Anr.

ABC

(AADHAAR) v. Union of India & Anr. (2019) 1 SCC 1:[2018] 8 SCR 1 and Anuradha Bhasin v. Union of India& Ors. (2020) 3 SCC 637 : [2020] 1 SCR 812 –distinguished.

Indian Social Action Forum (INSAF) v. Union of IndiaAIR 2020 SC 1363 – clarified.

Public Union for Civil Liberties v. State of T.N. & Ors.(2004) 12 SCC 381 : [2004] 2 Suppl. SCR 64; K.C.Gajapati Narayan Deo & Ors. v. State of Orissa AIR1953 SC 375 : [1954] SCR 1; Maneka Gandhi v. Unionof India & Anr. (1978) 1 SCC 248 : [1978] 2 SCR;Ajay Hasia & Ors. v. Khalid Mujib Sehravardi & Ors.(1981) 1 SCC 722 : [1981] 2 SCR 79; Indra Sawhney& Ors. v. Union of India & Ors. (1992) 3 Supp SCC217; T.M.A. Pai Foundation & Ors. v. State ofKarnataka & Ors. (2002) 8 SCC 481; NaturalResources Allocation, In Re, Special Reference No.1 of2012, (2012) 10 SCC 1 : [1992] 2 Suppl. SCR 454;Modern Dental College and Research Centre & Ors. v.State of Madhya Pradesh & Ors. (2016) 7 SCC 353 :[2016] 3 SCR 579; Navtej Singh Johar & Ors. v. Unionof India (2018) 10 SCC 1 : [2018] 7 SCR 379;Distribution of Essential Supplies Services DuringPandemic 2021 SCC OnLine SC 339; Teesta AtulSetalvad v. State of Gujarat (2018) 2 SCC 372 : [2017]12 SCR 774; Rev. Stainislaus v. State of MadhyaPradesh & Ors. (1977) 1 SCC 677 : [1977] 2 SCR 611;Rajeev Suri v. Delhi Development Authority & Ors. 2021SCC Online 7; State of Himachal Pradesh & Ors. v.Himachal Pradesh Nizi Vyavsayik Prishikshan KendraSangh (2011) 6 SCC 597 : [2011] 5 SCR 533; RavindraRamachandra Waghmare v. Indore MunicipalCorporation & Ors. (2017) 1 SCC 667 : [2016] 9SCR 373; State of Himachal Pradesh & Ors. v. SatpalSaini (2017) 11 SCC 42 : [2017] 1 SCR 658; Union ofIndia v. Indian Radiological & Imaging Association &Ors. (2018) 5 SCC 773 : [2018] 3 SCR 649; PeerlessGeneral Finance and Investment Co. Limited & Anr. v.Reserve Bank of India (1992) 2 SCC 343 : [1992] 1SCR 406; Premium Granites & Anr. v. State of T.N. &Ors. (1994) 2 SCC 691 : [1994] 1 SCR 579; DelhiScience Forum & Ors. v. Union of India & Anr. (1996)2 SCC 405 : [1996] 2 SCR 767; BALCO Employees’Union (Regd.) v. Union of India & Ors. (2002) 2 SCC333 : [2001] 5 Suppl. SCR 511; State of MadhyaPradesh v. Narmada Bachao Andolan & Anr. (2011) 7SCC 639 : [2011] 6 SCR 443; Charanjit Lal Chowdhuryv. The Union of India & Ors. AIR 1951 SC 41 : [1950]SCR 869; The State of Bombay & Anr. v. F. N. BalsaraAIR 1951 SC 318 : [1951] SCR 682; Kathi RaningRawat v. State of Saurashtra AIR 1952 SC 123 : [1952]SCR 435; Gurbachan Singh v. State of Bombay & Anr.AIR 1952 SC 221 : [1952] SCR 737; The State ofPunjab v. Ajaib Singh & Anr. AIR 1953 SC 10 : [1953]SCR 254; Habeeb Mohamed v. The State of HyderabadAIR 1953 SC 287 : [1953] SCR 661; Kedar NathBajoria v. The State of West Bengal AIR 1953 SC 404: [1954] SCR 30; Baburao Shantaram More v. BombayHousing Board & Anr. AIR 1954 SC 153 : [1954]SCR 572; Harman Singh & Ors. v. Regional TransportAuthority, Calcutta Region & Ors. AIR 1954 SC 190 :[1954] SCR 371; Sakhawant Ali v. State of Orissa AIR1955 SC 166 : [1955] 1 SCR 1004; Budhan Choudhry& Ors. v. State of Bihar AIR 1955 SC 191 : [1955] 1SCR 1045; D.P. Joshi v. State of Madhya Bharat & Anr.AIR 1955 SC 334 : [1955] 1 SCR 1215; Hans Mullerof Nurenburg v. Superintendent, Presidency Jail,Calcutta & Ors. AIR 1955 SC 367 : [1955] 1SCR 1284; Kishan Singh & Ors. v. State of Rajasthan& Ors. AIR 1955 SC 795 : [1955] 2 SCR 531;P. Balakotaiah v. Union of India & Ors. AIR 1958 SC232 : [1958] SCR 1052; Shri Ram Krishna Dalmia v.Shri Justice S.R. Tendolkar & Ors. AIR 1958 SC 538 :[1959] SCR 279; Express Newspaper (Private) Ltd., &Anr. v. Union of India & Ors. AIR 1958 SC 578 : [1959]SCR 12; Khandige Sham Bhat v. Agricultural Income-tax Officer, Kasaragod & Anr. AIR 1963 SC 591 :

[1963] 3 SCR 809; Raja Bira Kishore Deb, HereditarySuperintendent, Jagannath Temple v. The State of OrissaAIR 1964 SC 1501 : [1964] 7 SCR 32; Ganga Ram &Ors. v. Union of India & Ors. (1970) 1 SCC 377 :[1970] 3 SCR 481; Anant Mills Co. Ltd. v. State ofGujarat & Ors. (1975) 2 SCC 175 : [1975] 3 SCR 220;Mohan Kumar Singhania & Ors. v. Union of India &Ors. (1992) 1 Supp SCC 594 : [1991] 1 Suppl. SCR46; Venkateshwara Theatre v. State of Andhra Pradesh& Ors. (1993) 3 SCC 677 : [1993] 3 SCR 616; DharamDutt & Ors. v. Union of India & Ors. (2004) 1 SCC712 : [2003] 6 Suppl. SCR 151; Basheer @ N.P.Basheer v. State of Kerala (2004) 3 SCC 609 : [2004]2 SCR 224; O. K. Ghosh & Anr. v. E. X. Joseph AIR1963 SC 812 : [1963] Suppl. SCR 789; Saghir Ahmad& Anr. v. State of U.P. & Ors. AIR 1954 SC 728 : [1955]1 SCR 707; Babulal Parate v. The State of Maharashtra& Ors. AIR 1961 SC 884 : [1961] 3 SCR 423; Daya v.Joint Chief Controller of Imports & Exports & Anr. AIR1962 SC 1796 : [1963] 2 SCR 73; Akadasi Padhan v.State of Orissa & Ors. AIR 1963 SC 1047 : [1963] 2Suppl. SCR 691; Municipal Committee, Amritsar & Ors.v. State of Punjab & Ors. (1969) 1 SCC 475 : [1969] 3SCR 447; Madhu Limaye v. Sub-Divisional Magistrate,Monghyr & Ors. (1970) 3 SCC 746 : [1971] 2SCR 711; Daruka & Co v. Union of India & Ors. (1973)2 SCC 617 : [1974] 1 SCR 570; Md. Serajuddin &Ors. v. State of Orissa (1975) 2 SCC 47 : [1975] Suppl.SCR 169; Municipal Corporation of the City ofAhmedabad & Ors. v. Jan Mohammed Usmanbhai andAnr. (1986) 3 SCC 20 : [1986] 2 SCR 700; Sushila SawMil v. State of Orissa and Ors. (1995) 5 SCC 615 :[1995] 2 Suppl. SCR 426; Krishnan Kakkanth v.Government of Kerala & Ors. (1997) 9 SCC 495 :[1996] 7 Suppl. SCR 487; Laxmikant v. Union of India& Ors. (1997) 4 SCC 739 : [1997] 3 SCR 861; IndianHandicrafts Emporium & Ors. v. Union of India & Ors.(2003) 7 SCC 589 : [2003] 3 Suppl. SCR 43; OmPrakash & Ors. v. State of U.P. & Ors. (2004) 3 SCC402 : [2004] 2 SCR 900; People’s Union for CivilLiberties & Anr. v. Union of India (2004) 9 SCC 580 :[2003] 6 Suppl. SCR 860; State of Gujarat v. MirzapurMoti Kureshi Kassab Jamat & Ors. (2005) 8 SCC 534: [2005] 4 Suppl. SCR 582; Kerala Bar HotelsAssociation & Anr. vs. State of Kerala & Ors. (2015)16 SCC 421; K.S. Puttaswamy & Anr. v. Union of India& Ors. (2017) 10 SCC 1 : [2017] 10 SCR 569; Gobindvs. State of Madhya Pradesh & Anr. (1975) 2 SCC 148: [1975] 3 SCR 946; Chintamanrao & Anr. v. The Stateof Madhya Pradesh AIR 1951 SC 118 : [1950] SCR759; The State of Madras v. V.G. Row AIR 1952 SC196 : [1952] SCR 597; Teri Oat Estates (P) Ltd. v. U.T.,Chandigarh & Ors. (2004) 2 SCC 130 : [2003] 6 Suppl.SCR 1235; Ramlila Maidan Incident, In re (2012) 5SCC 1 : [2012] 4 SCR 971; Sahara India Real EstateCorporation Limited & Ors. v. Securities and ExchangeBoard of India & Anr. (2012) 10 SCC 603 : [2012] 12SCR 256; Excel Crop Care Limited v. CompetitionCommission of India & Anr. (2017) 8 SCC 47 : [2017]5 SCR 901; A.K. Gopalan v. State of Madras AIR 1950SC 27 : [1950] SCR 88; and Manohar Lal Sharma v.Union of India & Ors. [2021] 6 SCR 1006 – referredto.

Joseph Lochner v. People of the State of New York 198U.S. 45 (1905); New State Ice Company v. Ernest A.Liebmann 285 U.S. 262 (1932); West Coast HotelCompany v. Ernest Parrish 300 U.S. 379 (1937); UnitedStates of America v. Carolene Products Company 304U.S. 144 (1938); American Federation of Labor,Arizona State Federation of Labor et al. v. AmericanSash & Door Company et al. 335 U.S. 538 (1949) andFerguson v. Skrupa 372 U.S. 726 (1963) – referredto.

Case Law Reference

referred to referred to

Para 3 (b)Para 3 (b)

referred toPara 3 (b)referred toPara 3 (b)referred toPara 3 (b)referred toPara 3 (b)relied onPara 3 (b)referred toPara 3 (b)distinguishedPara 3 (b)clarifiedPara 3 (b)referred toPara 4 (a)referred toPara 4 (a)relied onPara 5 (l)relied onPara 5 (l)referred toPara 5 (p)referred toPara 5 (p)referred toPara 5 (p)referred toPara 5 (p)relied onPara 5 (p)relied onPara 5 (q)relied onPara 5 (q)referred toPara 5 (q)referred toPara 5 (q)referred toPara 5 (q)referred toPara 5 (q)referred toPara 5 (q)referred toPara 5 (r)

[2022] 19 S.C.R.

referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5 (v)referred toPara 5(y)referred toPara 5(y)referred toPara 5(y)referred toPara 5(y)referred toPara 5(y)referred toPara 5(y)referred toPara 5(y)referred toPara 5(y)referred toPara 8 (a)distinguishedPara 8 (d)referred toPara 8 (e)

CIVIL ORIGINAL JURISDICTION: Writ Petition (C) No. 566of 2021.

Under Article 32 of The Constitution of India

With

Writ Petition (Civil) Nos. 634 and 751 of 2021.

Gopal Sankaranarayanan, Sr. Adv., Abishek Jebaraj, Ms. SrishtiAgnihotri, Ms. Nupur Raut, Ms. Ishita Chaudhary, Gautam Jha, PankajKumar, Ms. Sweta Jha, Subhash Chandra, Subhash Chhabra, BijendraSingh, Shishit Kumar Saxena, Mosim Ahmed, Ms. Neha Duhoon, Ms.Himanshi Bhowal, Udit Thakran, Jagdamba Prasad, Praveen Swarup,Advs. for the Petitioners.

Tushar Mehta, SG, Sanjay Jain, ASG, Udai Khanna, Kanu Agrawal,Balaji Srinivasan, Rajat Nair, Mrs. Deepabali Dutta, B. V. Balaram Das,Sanjay Kapur, Arjun Bhatia, Ms. Megha Karnwal, Mrs. Subhra Kapur,Mrs. Swarupama Chaturvedi, Ms. Saumya Kapoor, Advs. for theRespondents.

The Judgment of the Court was delivered by

A. M. KHANWILKAR, J.

1. These petitions under Article 32 of the Constitution of Indiaprimarily assail the constitutional validity of the amendments to theprovisions of the Foreign Contribution (Regulation) Act, 2010[1] vide theForeign Contribution (Regulation) Amendment Act, 2020[2], which hascome into effect on 29.9.2020, in particular, Sections 7, 12(1A), 12A and17(1), being manifestly arbitrary, unreasonable and impinging upon thefundamental rights guaranteed to the petitioners under Articles 14, 19and 21 of the Constitution.

2.Re: Writ Petition (Civil) No. 566 of 2021

(a) Petitioner No. 1 in this petition along with Carol Faison foundeda trust in the name of “The Care and Share Charitable Trust” inVijayawada, India (bearing Registration No. 242/1997), in the year 1997.It is the case of the petitioners that the Trust is also registered with theIncome Tax authorities and Ministry of Home Affairs, Government of

1 for short, “the 2010 Act” or “the Principal Act”, as the case may be

2 for short, “the 2020 Act” or “the Amendment Act”, as the case may be

AIndia including under the Foreign Contribution (Regulation) Act, 1976[3]for receipt of foreign funds (FCRA No. 010260151 dated 8.12.1998 andrenewed on 10.8.2016 under the 2010 Act). Petitioner No. 1 is servingas one of the trustees of the said Trust and petitioner No. 2 (Nigel Mills)is social worker and one of the trustees of the stated Trust. The Trustis engaged in the social upliftment activity such as helping children belowBthe poverty line in Vijayawada (Andhra Pradesh, India), street children,children of sex workers, physically challenged kids, shelter orphans,abandoned babies and assisting juveniles detained in the observation home(local reformatory). The Trust has built and is running nine schools indifferent slums. It has rescued over 1000 street children, 165 infants,HIV positive and AIDS orphans of Vijayawada. The Trust also engagesCin daily milk program for 500 kindergarten children since year 2000. TheTrust has been awarded National Award for Child Welfare by theGovernment of India, Ministry of Women and Child Development in theyear 2007, for its exceptional work and contribution in the field of childwelfare.

D(b) The petitioner Nos. 3 and 4 are also trustees of National WorkerWelfare Trust (NWWT), which is registered under the Indian TrustsAct, 1882[4] in Secunderabad, Telangana on 17.5.2016. Even this trust isregistered with Ministry of Home Affairs, Government of India underthe 2010 Act for receipt of foreign funds (FCRA Registration No.010230883). It is engaged in rehabilitation of migrant workers, withEInternational Labour Organisation (ILO) and addresses the concerns ofwomen workers from the marginalised communities and prospectivemigrant workers (interstate and oversees), families of migrants,communities, leaders of communities, returnees, women organisations,trade unions, local panchayats, Mandal, district and State departmentFconnected with labour and administration and governance related to theseworkers. Both these trusts, it is urged, are dependent upon foreigncontributions to meet their day-to-day expenses. However, with theamendments effected in year 2020 to the provisions of the 2010 Act, anew dispensation has been set forth, which in their opinion, is manifestlyarbitrary. For, it entails in cancellation of certificate[5] of the trust permittingG3 for short, “the 1976 Act”

4 for short, “the 1882 Act”

5 The expression “certificate” as defined in Section 2(1)(e) of the 2010 Act as amended,reads thus:

“2. Definitions.—(1) In this Act, unless the context otherwise requires,—

(a) to (e) xxxxxx xxx (e) “certificate” means certificate of registration granted under sub-section (3) ofHsection 12;”

receipt of foreign contributions for being utilised towards the activitiesof the concerned trust. Similarly, the operational “FCRA account” willbe barred from receiving foreign contribution. The petitioner-Trusts andsimilarly placed persons[6] (individuals/non-profit organisations) shallmandatorily have to shift to new regime and open FCRA account(s) inthe specified branch on or before the designated date. There is no tangiblejustification forthcoming for introducing such change in the dispensation.

(c) The petitioners have referred to the Circular issued by theReserve Bank of India (RBI) dated 6.2.2012 in exercise of its powerunder Section 36(1)(a) of the Banking Regulation Act, 1949, containingdetailed guidelines for implementation of the provisions of the 2010 Actincluding the opening of FCRA accounts in all scheduled commercialbanks (excluding Regional Rural Banks/RRBs) throughout India. Publicnotice dated 3.10.2020 issued by the respondent No. 2 after advent ofthe changed dispensation owing to the amendment of the provisions ofthe 2010 Act in the year 2020 is, therefore, excessive and withoutjurisdiction and, thus, unenforceable in law. Further, the amendment ofSection 7 of the 2010 Act prohibits the registered person from transferringany foreign contribution irrespective of whether such person is dulyregistered or not, which was otherwise permitted under the unamendedprovision. This change is also arbitrary and directly affects theimplementation of the social upliftment schemes of the Trusts throughforeign contribution. It is blanket ban on transfer of foreign contributions,thus affecting the collaborations in developing eco-system(s), especiallyfor smaller and less visible grassroot organisations that may not meetthe criteria or be able to submit detailed proposals to get access to grantsfrom foreign countries. The grassroot organisations, in some cases, maynot have the track record or meet the eligibility criteria to obtain registrationunder the Act and are entirely dependent on the funding/transfer byfoundations, such as the petitioner-Trusts. The intermediary organisations,

6 The expression “person” as defined in Section 2(1)(m) of the 2010 Act as amended,reads thus:

“2. Definitions.—(1) In this Act, unless the context otherwise requires,—

(a) to (l) xxxxxx xxx

(m) “person” includes—

(i) an individual;

(ii) Hindu undivided family;

(iii) an association;

(iv) company registered under section 25 of the Companies Act, 1956 (1of 1956);”

Awhich provide the necessary identification, monitoring and capabilitybuilding of the smaller non-profit organisations, which would be completelyjeopardised because of the changed dispensation. Resultantly, Section 7read with Section 17(1), as amended, is violative of the rights guaranteedunder Articles 19(1)(c) and 19(1)(a) of the Constitution of India. Theseprovisions also suffer from the vice of ambiguity and overbreadth orBover-governance, thereby violating Article 14 as well.

(d) The petitioners have also assailed the validity of Section 12A,whereby it is made mandatory to produce Aadhaar card details of theoffice bearers/functionaries/directors of the societies/trusts asidentification document for the purpose of seeking registration, evenCthough they are expected to file application for grant of certificate underSection 12 or get their certificate renewed under Section 16. To buttressthis assail, petitioners have relied upon the dictum of Constitution Benchof this Court in K.S. Puttaswamy (Retired) & Anr. (AADHAAR) vs.Union of India & Anr.[7].

(e) The petitioners have also challenged the validity of Sections17(1) and 12(1A) on the ground that the same suffer from the vice ofmanifest unreasonableness, ambiguity, overbreadth and imposeunreasonable restrictions. Section 17(1) is also discriminatory, as itmandates opening of “FCRA account” and receiving of foreignEcontribution only at one bank at New Delhi, i.e., New Delhi Main Branch[8]of the State Bank of India[9], 11, Sansad Marg, New Delhi-110001 onspecious ground of logistical issues for verification of accounts at differentlocations. Broadly on these assertions, the petitioners have prayed forthe following reliefs: -

F“a. To hold and declare that the impugned Sections 7, 12A, 12(1A)and 17 as inserted in the FCRA, 2010 by the ForeignContribution (Regulation) Amendment Act, 2020 are ultra viresArticles 14, 19 & 21 of the Constitution of India and the samebe struck down as unconstitutional.

Gb.A writ in the nature of certiorari and/or any other writ, orderor direction of like nature setting aside and quashing theimpugned public notice dated 13[th] October, 2020 issued by theRespondent No. 2 as illegal and unconstitutional.

7 (2019) 1 SCC 1 (paras 490 and 494)

8 for short, “NDMB”H9 for short, “SBI”

c. To direct the Respondents not to interfere with the acceptanceand utilisation of foreign contribution, operation of the existingbank accounts in the scheduled banks and function of thepetitioners and its bonafide members, and

d. Pass such other order/orders as Your Lordships may deem fitand proper in the facts and circumstances of the case.”

3. Re: Writ Petition (Civil) No. 751 of 2021

(a) Petitioner Nos. 1 to 4 in this petition claim to be non-profitorganisations/Trusts from all over the country having registration underthe 2010 Act and petitioner No. 5 is an individual. The petitioner-Trustsare voluntary organisations, duly registered under the unamended 2010Act. They are engaged in carrying out social, educational and/or religiouscharitable activities for persons across communities. Their activities rangefrom providing educational and vocational training and food, clothingand medicine for the destitute, to support the disabled and the aged,conducting AIDS awareness camps and taking care of the needs ofwidows and orphaned children. They claim to have played pivotal role inCOVID-19 relief efforts. Reliance is placed on the dictum of this Courtin Public Union for Civil Liberties vs. State of T.N. & Ors.[10], as to therecognition by this Court regarding indispensable role played by non-profit organisations.

(b) Even these petitioners have assailed amended provisions ofthe 2010 Act, in particular, Section 17 of the Act being violative of Articles14, 19(1)(c), 19(1)(g) and 21 of the Constitution of India insofar as itrequires opening of primary FCRA account in SBI, NDMB only. It istheir case that non-profit organisations and voluntary organisations suchas the petitioner organisations contribute enormously to India’s GDPand provide livelihood to millions of people through direct employmentand social welfare activities undertaken by them. Their role ranges fromservice delivery and welfare activities and welfare works for communitydevelopment, promoting democracy, human rights, equitable governanceand citizens’ participation. They focus their activities particularly in lowsocial sector spending in India by tapping into global philanthropy. It isstated that foreign contributions have increased from Rs.10,282 crore in2009-2010 to Rs.16,343 crore in 2018-2019, which is significantcontribution through foreign funds. The amended provisions of the 2010

AAct, however, have altered the compliance procedure including theregistration of the Trusts receiving foreign contributions. That change,however, is manifestly arbitrary, irrational and unreasonable. The purposeof provisions such as Section 17 (unamended) and the relevant Rulesframed under the Act served the cause of effective monitoring of foreigncontribution received, in order to prevent misutilisation of such funds.BHowever, the amended provision is excessive, irrational, arbitrary andfalls foul of test of proportionality. It suffers from the vice ofdisproportionate restrictions and failure to provide fair procedure. Tobuttress the grounds of challenge, reliance is placed on K.C. GajapatiNarayan Deo & Ors. vs. State of Orissa[11]; Maneka Gandhi vs. UnionCof India & Anr.[12]; Ajay Hasia & Ors. vs. Khalid Mujib Sehravardi& Ors.[13]; Indra Sawhney & Ors. vs. Union of India & Ors.[14]; T.M.A.Pai Foundation & Ors. vs. State of Karnataka & Ors.[15]; NaturalResources Allocation, In Re, Special Reference No.1 of 2012[16];Modern Dental College and Research Centre & Ors. vs. State ofMadhya Pradesh & Ors.[17]; Shayara Bano vs. Union of India &DOrs.[18]; Navtej Singh Johar & Ors. vs. Union of India[19]; K.S.Puttaswamy[20]; Anuradha Bhasin vs. Union of India & Ors.[21]; andIndian Social Action Forum (INSAF) vs. Union of India[22].

(c) On such assertion, the petitioners have prayed for the followingreliefs: -E

“a.A writ of mandamus or any other writ/order declaring thatSection 17 of the FCRA is violative of Articles 14, 19(1)(c),19(1)(g) and 21 of the Constitution, in so far as it requiresthat the primary FCRA account is to be opened exclusivelyin branch of the State Bank of India, New Delhi, as notifiedFby the Respondent No. 1;

11 AIR 1953 SC 375

12 (1978) 1 SCC 248

13 (1981) 1 SCC 722 (para 16)

14 1992 Supp (3) SCC 217

15 (2002) 8 SCC 481 (para 25)G16 (2012) 10 SCC 1 (para 107)

16 (2012) 10 SCC 1 (para 107)

17 (2016) 7 SCC 353 (paras 60)

18 (2017) 9 SCC 1 (para 101)

19 (2018) 10 SCC 1

20 supra at Footnote No.7 (para 157)

21 (2020) 3 SCC 637 (paras 78 to 80)

H22 AIR 2020 SC 1363 (for short, “INSAF”) (para 15)

b.A writ of certiorari or any other writ/order quashing theMHA Notification No. S.O. 3479(E) dated 7 October 2020issued by Respondent No. 1 as being violative of Articles14, 19(1)(c), 19(1)(g) and 21 of the Constitution;

c.A writ of certiorari or any other writ/order quashing thepublic notice bearing F.No. II/21022/23/(35)/2019-FCRA-III dated 13 October 2020 as being violative of Articles 14,19(1)(c), 19(1)(g) and 21 of the Constitution;

d.A writ of certiorari or any other writ/order quashing thepublic notice bearing II/21022/36/(58)/2021-FCRA-III dated18 May 2021 as being violative of Articles 14, 19(1)(c),19(1)(g) and 21 of the Constitution.

e.Any other orders as deemed fit in the interests of justice.”

4. Re: Writ Petition (Civil) No. 634 of 2021

(a) This petition is filed as public interest litigation under Article32 of the Constitution, challenging the decision of the competent authorityin extending the timeline for registration and compliance as per theamended provisions of the 2010 Act being unnecessary and in excess ofthe authority. It is counter action filed by an individual for issuingdirection and peremptory writ of mandamus against the respondent No.1 (Union of India) to desist from granting further extension to Non-Governmental Organisations[23] for complying with the provisions of the2020 Act; and to maintain register of all NGOs receiving funds from theforeign countries strictly as per the provisions of amended 2010 Act.This petitioner is also relying upon the dictum in INSAF[24]; adverting tothe objective of the 2010 Act. Reliance is also placed on the elucidationof this Court in In Re: Distribution of Essential Supplies and ServicesDuring Pandemic[25], for issuing peremptory writ. Also, reliance isplaced on the decision in Teesta Atul Setalvad vs. State of Gujarat[26],to urge that in the past instances have come to the fore regardingmisappropriation of funds by NGOs. Lastly, reliance is placed on Rev.Stainislaus vs. State of Madhya Pradesh & Ors.[27].

23 for short, “NGOs”

24 supra at Footnote No.22 (para 18)

25 2021 SCC OnLine SC 339 (Suo Moto Writ Petition (C) No.3 of 2021)

26 (2018) 2 SCC 372

27 (1977) 1 SCC 677

A(b) The principal relief claimed in this petition, however, does notsurvive for consideration. For, the date of last extension granted by thecompetent authority has expired; and no further extension had beengranted thereafter during the pendency of this writ petition. Nevertheless,we reproduce the reliefs claimed in this writ petition, which read thus: -

B“A. Issue Peremptory Writ of Mandamus directing RespondentNo. 1 not to grant any further extension to the NGOs fromcomplying with the mandate of the FCRA (Amendment) Act,2020.

B.Direct Respondent No. 1 and Respondent No. 2 to maintainCa register of all NGOs who are involved in the receiving offunds received under FCRA, particularly during Covid times.

C.Direct the Respondent No. 3 to place on record all informationabout the steps taken by it with regard to the FCRA violationby NGOs, in the context of Child Rights?

DD. Pass such other Order or directions as this Hon’ble Courtmay deem fit in the facts and circumstances of the case fordoing complete justice in the matter.”

5. Common reply of Respondent-Union of India

(a) Respondents have filed common affidavit in response to theEaverments made in the three writ petitions. The thrust of their plea isthat the amendment does not bar any person to transact in foreigncontribution provided it is compliant with the parameters predicated inthe 2010 Act including concerning FCRA registration or prior permission.The amendments were necessitated owing to past experience of theFexecutive and is matter of legislative wisdom. The amendments areintended to ensure effective regulatory measures regarding inflow andutilisation of foreign funds. These are uniformly applicable and do notdiscriminate any NGO receiving foreign contribution from foreign donorsand its utilisation. It is stated that the amendments, in no manner, impactthe fundamental rights, much less under Articles 14, 19(1)(c), 19(1)(g)Gand 21 of the Constitution, as contended.

(b) The 2010 Act lays down clear legislative policy of strictcontrol in respect of foreign contributions and its utilisation for specifiedactivities in the country. This is so because the inputs from concernedstakeholders and duty-holders made it evident that the foreign contributionH

owing to its nature and vast expanse was being abused by some registeredorganisations. Indisputably, no absolute right inheres in any one, muchless to receive foreign contribution outside the framework delineated bythe Parliament and implemented by the executive. Every person receivingforeign contribution is obliged to comply with the regulatory and proceduralpreconditions. The regulatory and procedural preconditions have beenspecified by law in the form of the 2010 Act and amendments madethereto vide the 2020 Act. The same being quintessence are required tobe fulfilled for acceptance of foreign contribution and its utilisation.

(c) Notably, in these petitions, no challenge is set forth in respectof amended provisions, as obtained prior to coming into force of the2020 Act. The same were complied with by all concerned without anydemur.

(d) The purpose behind the amendment of 2020, is to makemeaningful and effective regulatory arrangement and real-time reportingof utilisation of the foreign contribution for the activity for which it hasbeen earmarked and permitted to be so used in terms of the registrationcertificate or prior permission of the competent authority.

(e) The permission to receive foreign contribution is granted topersons for definite cultural, economic, educational or social programmemeant for the benefit of the society, as mandated in Sections 11 and 12of the 2010 Act. The dispensation envisaged in the Act is to seekregistration or prior permission of the competent authority to receiveand utilise foreign contribution. The person having obtained suchcertificate of registration or prior permission, cannot complain about theregulatory provisions regarding utilisation thereof for the prescribedactivities. For, the legislative intent behind enactment of the 2010 Act isthat foreign contribution cannot be allowed unless it is tightly regulatedand controlled.

(f) The implementation of the 2010 Act increasingly revealed thatcertain NGOs were involved primarily in routing of foreign contributionsonly. They received and utilised foreign contribution by transferring it toother NGOs, thereby establishing principal-client relationship. Toovercome this mischief, it became necessary to amend the provisionsfor effective regulatory and control measures in respect of receipt andutilisation of foreign contribution. These amendments were necessitatedbecause of large-scale transfers of foreign contribution and sudden risein the inflow thereof in the recent past creating several operational

Adifficulties and malpractices, that threatened to defeat the very purposeof the 2010 Act. The regulatory agencies were finding it difficult tomonitor the ultimate utilisation of foreign contribution by the transferee.To stop such violations and malpractices and to fix accountability, it wasconsidered necessary to stop the transfer of foreign contribution andthus ensure that the recipient of the foreign contribution itself utilises theBsame.

(g) The need to mandate the utilisation of foreign contribution bythe recipient NGO itself, is also on account of the purport of Sections 11and 12 of the Act. The same predicate that FCRA registration be offeredto an association[28]having definite programme to spend the foreignCcontribution on purposes useful to society. The NGOs merely indulgingin transfer of foreign contribution to other NGOs albeit registered orpersons having prior permission, is not the scheme of the 2010 Act. Inorder to ensure that the purported legitimate activities of NGOs do notresult in foreign contribution being diverted from one area of activity toDother area leading to its misuse including threatening the sovereigntyand integrity of the country, the Parliament opted the strict dispensationof restricted utilisation of foreign contribution by the recipient NGOsitself for the permitted activities. The amended provisions are intendedto remedy the mischief of endless chain of transfers of foreign contributionfrom the recipient NGOs to other registered NGOs creating layeredEtrail of money making it difficult to trace the flow and legitimate utilisationthereof.

(h) The successive multiple chain of transfers not only create alayered trail of money, but also lead to substantive portion of foreigncontribution being utilised as administrative expenditure by the concernedFentity by claiming it as its own allowance for administrative expenditureto the extent of 50 per cent of the receipt. The aggregate of suchadministrative expenditure, if reckoned with the aggregate quantum ofinflow of funds by the original recipient, would, in given situation, farexceed the statutory bar of 50 per cent of total contribution received byG28 The expression “association” as defined in Section 2(1)(a) of the 2010 Act as amended,reads thus:

“2. Definitions.—(1) In this Act, unless the context otherwise requires,— (a) “association” means an association of individuals, whether incorporated or not,having an office in India and includes society, whether registered under the SocietiesRegistration Act, 1860 (21 of 1860), or not, and any other organisation, by whateverHname called;”

the NGO from abroad. Further, the wisdom of the Parliament was alsoin favour of reducing the permissibility of administrative expenditure bylimiting it to 20 per cent, so that maximum benefit is reaped by the societyat large due to its utilisation for permissible activities of the NGO.

(i) The subject amendment became necessary also to obliteratethe mischief of foreign powers and foreign State and non-State actorsindulging in activities resulting in interference in the internal polity of thecountry with ulterior designs. Resultantly, sub-Section (1A) has beeninserted in Section 12 of the 2010 Act, making it essential to furnishdetails of FCRA account. This is in consonance with the manner specifiedin Section 17 of the Act. In other words, insertion of sub-Section (1A)was to infuse compatibility with other provisions of the 2010 Act. To thatend, new section – Section 12A has also been inserted requiringfurnishing of Aadhaar card details in lieu of identification document. It isurged that the petitioners have misapplied the exposition of theConstitution Bench in K.S. Puttaswamy[29]. The said decision does notcompletely rule out the possibility of intrusion into the privacy of person,which is backed by just law.(j) The core intent behind the provisions such as Section 12A is tofacilitate proper identification of person and associations with which thepersons are connected and also purposeful real-time monitoring ofactivities for ensuring that the same are not detrimental to the nationalinterest. As matter of fact, the 2010 Act (unamended) itself mandatesthat benami and fictitious activities are prohibited under the Act. Thus,proper identification of person at the time of registration would ensureproper identification of functionaries of FCRA/NGOs. Such provisionought to stand the test of legitimate aim and also proportionality test.

(k) The amended Section 17(1) specifies receipt of foreigncontribution in designated FCRA account in the SBI, NDMB. An NGOis required to open such account for the purpose of remittances of foreigncontribution. The proviso to Section 17(1) envisages that the FCRAaccount holder is free to add any FCRA account in any of the scheduledbank of his choice for the purpose of receipt and utilisation of foreignfunds received in his FCRA account with the specified branch of theSBI at New Delhi i.e., SBI, NDMB. The operation of the FCRA accountwould be controlled by the account holder itself. The stipulation onlyrequires the inflow of foreign contribution through designated channel

29 supra at Footnote No.7

Awhich is to ensure effective implementation of proper regulatory andcontrolled measures. Sufficient time was given to the FCRA accountholder to comply with the formalities as per the new dispensation.

(l) Initially, public notice was issued on 13.10.2020 providing forprocedure and operation of the designated FCRA account, giving timeBtill 31.3.2021, which came to be extended from time to time untilDecember, 2021. It is stated that the respondent No. 1 also informed allthe FCRA registered associations/organisations through SMS and e-mailon their registered mobile number and e-mail address about the publicnotice dated 13.10.2020. The competent authority also amended theForeign Contribution (Regulation) Rules, 2011[30]. It is urged that someCindividual hardship may be caused to the registered associations onaccount of the change, but that cannot be the basis to declare the lawmade by the Parliament, vide the 2020 Act, invalid. Reliance is placedon M/s. Laxmi Khandsari & Ors. vs. State of U.P. & Ors.[31] and AllIndia Council for Technical Education vs. Surinder Kumar DhawanD& Ors.[32], wherein this Court held that the Court must refrain frominterfering with policy matters on the specious ground of individualhardship to some persons.

(m) It is further stated that the 2010 Act mandates Ministry ofHome Affairs[33] to regulate the receipt and utilisation of foreignEcontributions in the country. That process involves multiple steps includingaudit, inspection and filing of annual return and monitoring of fund flow.Accordingly, systematic monitoring of FCRA bank account is imperativepart of the regulatory measures provided in the Act and the rules madethereunder. It is elaborated that presently there are about 22,600 NGOsholding registration or prior permission for specific project/programme.FThese NGOs used to receive foreign contribution in an exclusive bankaccount of their choice in any bank in India. That resulted in opening ofmultiple accounts in hundreds of branches spread across the country.This inevitably caused enormous difficulty in monitoring of inflow oroutflow of amount from the respective accounts and also during auditGprocess. Even though the mandate of law obliges the NGOs to fileperiodical annual return, however, the inflow and outflow details at

30 for short, “the 2011 Rules”31 (1981) 2 SCC 60032 (2009) 11 SCC 726H33 for short, “the MHA”

particular point of time or on real-time basis, association-wise, as wellas, cumulatively, for all such organisations was not forthcoming andmonitoring thereof due to scattered distribution of the FCRA accountsacross the country seriously affected the monitoring process. Notably,keeping in mind the convenience of the registered associations, theyhave been given choice to open another FCRA account in any scheduledbank/branch of their choice after opening of FCRA account in SBI,NDMB, for receiving foreign contribution from any foreign source. It isurged that the legislative intent behind the 2010 Act and the object soughtto be achieved is to curb misuse of foreign contribution threatening thesovereignty and integrity of the nation including impacting the polity. Asaforesaid, the amendments were necessitated on account of pastexperience and to curb the mischief which was prevalent despite thetight regulatory measures under the 2010 Act.

(n) The legislative history has also been highlighted in the commonreply filed by respondents. To address the scourge of foreign contributionimpacting the national interest was taken note of by way of the 1976Act. Certain changes were brought about to that Act in the year 1985,making it more effective. The 2010 Act had been the outcome of billdrafted in 2006. The Statement of Objects and Reasons, as mentionedin the said Bill titled as “Foreign Contribution (Regulation) Bill, 2006”recognised that significant developments had taken place since 1984,such as change in internal security scenario, an increased influence ofvoluntary organisations, spread of use of communication and informationtechnology, quantum jump in the amount of foreign contribution beingreceived and large-scale growth in the number of registered organisations,necessitating comprehensive legislative approach. The Bill was referredto the Department–related Parliamentary Standing Committee on HomeAffairs. Eventually, the 2010 Act was perceived. This legislative historyhas been taken note of in the case of INSAF[34]. The amendments effectedin the year 2020 had become necessary to ensure that the object of theAct is achieved efficiently.

(o) It is urged that the 2010 Act cannot be equated with any othergeneral legislation. The object behind this Act is to insulate the democraticpolity and public institutions and individuals working in the nationaldemocratic space from being unduly influenced with the aid of foreigncontribution or foreign hospitality received from foreign source. The object

34 supra at Footnote No.22

Abehind the Act is to secure the sovereignty and integrity of India includingpublic order and public interests. This wisdom of the Parliament cannotbe lightly brushed aside being legislative policy. Reliance is placed onRajeev Suri vs. Delhi Development Authority & Ors.[35] to buttressthis argument. Reliance is also placed on Joseph Lochner vs. Peopleof the State of New York[36]; New State Ice Company vs. Ernest A.BLiebmann[37];West Coast Hotel Company vs. Ernest Parrish[38]; UnitedStates of America vs. Carolene Products Company[39]; AmericanFederation of Labor, Arizona State Federation of Labor et al. vs.American Sash & Door Company et al.[40]; and Ferguson vs. Skrupa[41].It is urged that the doctrine that prevailed in Joseph Lochner[42] that dueCprocess authorises Courts to hold laws unconstitutional whenever theybelieve the legislature has acted unwisely - has long since been discarded.(p) After having said so, reliance is also placed on the decision ofthis Court in State of Himachal Pradesh & Ors. vs. Himachal PradeshNizi Vyavsayik Prishikshan Kendra Sangh[43]; RavindraDRamachandra Waghmare vs. Indore Municipal Corporation &Ors.[44]; State of Himachal Pradesh & Ors. vs. Satpal Saini[45]; andUnion of India vs. Indian Radiological & Imaging Association &Ors.[46], in support of the argument that Court should be loath in interferingwith the wisdom of the legislature adopting particular policy. Further,the Court cannot substitute such wisdom in the guise of exercise of theEpower of judicial review. Reliance is also placed on the enunciation inDr. Ashwani Kumar vs. Union of India & Anr.[47] to contend that theConstitution predicates that legislature is supreme and has final say inmatters of legislation when it reflects on alternatives and choices withinputs from different quarters, with check in the form of democraticFaccountability and further check by the Courts which exercise the35 2021 SCC Online 7 (paras 570 and 571)36 198 U.S. 45 (1905)37 285 U.S. 262 (1932)38 300 U.S. 379 (1937)39 304 U.S. 144 (1938)40 335 U.S. 538 (1949)G41 372 U.S. 726 (1963)42 supra at Footnote No.36

43 (2011) 6 SCC 597 (para 21)

44 (2017) 1 SCC 667 (para 46)

45 (2017) 11 SCC 42 (para 6)

46 (2018) 5 SCC 773 (para 16)H47 (2020) 13 SCC 585 (paras 25-27)

power of judicial review. It is further held in this decision that it is not forthe Judges to seek to develop new all-embracing principles of law in away that reflects the stance and opinion of the individual judges whenthe society/legislature as whole are unclear and substantially dividedon the relevant issues.

(q) Reliance is also placed on Rustom Cavasjee Cooper vs. Unionof India[48], restating the above principle and observing that the Courtwill not sit in appeal over the policy of Parliament in enacting law.Reliance is also placed on R.K. Garg vs. Union of India & Ors.[49],wherein it has been observed that the Courts have only the power ofdestroying and not to reconstruct. Further, in respect of economicregulation being replete with complexity, self-limitation needs to beexercised by the Courts, thereby following the path of judicial wisdom.Reliance is also placed on Peerless General Finance and InvestmentCo. Limited & Anr. vs. Reserve Bank of India[50]; Premium Granites& Anr. vs. State of T.N. & Ors.[51];Delhi Science Forum & Ors. vs.Union of India & Anr.[52]; BALCO Employees’ Union (Regd.) vs.Union of India & Ors.[53]; and State of Madhya Pradesh vs. NarmadaBachao Andolan & Anr.[54]. Relying on said decisions, it is urged thatthe gravamen of grievance of the writ petitioners is essentially about theoperational inconvenience being caused to them. That cannot be thebasis to declare the amended provisions being violative of fundamentalrights and more so, because the same are necessitated to overcome themisuse of foreign contribution from foreign sources threatening thesovereignty of the nation.

(r) Dealing with the plea regarding amended provisions beingviolative of Article 14 of the Constitution, it is urged that the Constitutiondoes not predicate that all laws must be general in character and universalin application. On the other hand, it is open to the legislature to distinguishand classify persons or things for the purposes of legislation. Indeed,such discrimination and classification should not be arbitrary and oughtto be in conformity with the intelligible differentia having reasonable

48 (1970) 1 SCC 248 (para 63, 70)49 (1981) 4 SCC 675 (para 8)50 (1992) 2 SCC 343 (para 31)51 (1994) 2 SCC 691 (para 54)52 (1996) 2 SCC 405 (para 7)53 (2002) 2 SCC 333 (para 38)54 (2011) 7 SCC 639 (para 36)

Arelation to the object sought to be achieved by the law in question. Theimpugned amendments of 2020 are fully compliant. The amendmentsfulfil the “twin test of classification” founded on the factum ofclassification between Indian citizens and foreigners, so much so, Indiancontribution and foreign contribution. The amendments fulfil thepermissible classification principle and are founded on intelligibleBdifferentia and distinguish contributions to be received by the NGO. Inother words, if an NGO intends to receive foreign contribution, it mustfulfil the necessary conditions and comply with the formalities specifiedtherefor. Thus understood, the exposition in Shayara Bano[55], pressedinto service by the writ petitioners, will be of no avail. Whereas,Cclassification by law is not forbidden. It is not open to belittle the legislativeintent behind the amendments by giving it the colour of manifestarbitrariness. The argument that the law suffers from the vice of manifestarbitrariness, must be examined on the touchstone of the enunciation bythis Court in series of judgments. Reliance is placed on Charanjit LalChowdhury vs. The Union of India & Ors.[56]; The State of BombayD& Anr. vs. F.N. Balsara[57]; Kathi Raning Rawat vs. State ofSaurashtra[58]; Gurbachan Singh vs. State of Bombay & Anr.[59]; TheState of Punjab vs. Ajaib Singh & Anr.[60]; Habeeb Mohamed vs. TheState of Hyderabad[61]; Kedar Nath Bajoria vs. The State of WestBengal[62]; Baburao Shantaram More vs. Bombay Housing Board &EAnr.[63]; Harman Singh & Ors. vs. Regional Transport Authority,Calcutta Region & Ors.[64]; Sakhawant Ali vs. State of Orissa[65];Budhan Choudhry & Ors. vs. State of Bihar[66]; D.P. Joshi vs. Stateof Madhya Bharat & Anr.[67]; Hans Muller of Nurenburg vs.Superintendent, Presidency Jail, Calcutta & Ors.[68]; Kishan Singh

F55 supra at Footnote No.1856 AIR 1951 SC 41 (paras 8-10, 18, 27-29, 61-65)57 AIR 1951 SC 318 (paras 37-42, 47, 62)58 AIR 1952 SC 123 (paras 7, 19, 32-36, 45-48)59 AIR 1952 SC 221 (paras 3-6, 8)60 AIR 1953 SC 10 (para 22)G61 AIR 1953 SC 287 (paras 4-6)62 AIR 1953 SC 404 (paras 6-16)63 AIR 1954 SC 153 (para 6)64 AIR 1954 SC 190 (para 7)65 AIR 1955 SC 166 (paras 9-10)66 AIR 1955 SC 191 (paras 5, 7, 9)67 AIR 1955 SC 334 (paras 14-16)H68 AIR 1955 SC 367 (paras 14, 24-25)

& Ors. vs. State of Rajasthan & Ors.[69]; P. Balakotaiah vs. Union ofIndia & Ors.[70]; Shri Ram Krishna Dalmia vs. Shri Justice S.R.Tendolkar & Ors.[71]; Express Newspaper (Private) Ltd., & Anr. vs.Union of India & Ors.[72]; Khandige Sham Bhat vs. AgriculturalIncome-tax Officer, Kasaragod & Anr.[73]; Raja Bira Kishore Deb,hereditary Superintendent, Jagannath Temple vs. The State ofOrissa[74]; Ganga Ram & Ors. vs. Union of India & Ors.[75]; AnantMills Co. Ltd. vs. State of Gujarat & Ors.[76]; Mohan KumarSinghania & Ors. vs. Union of India & Ors.[77]; VenkateshwaraTheatre vs. State of Andhra Pradesh & Ors.[78]; Ombalika Das vs.Hulisa Shaw[79]; Dharam Dutt & Ors. vs. Union of India & Ors.[80];and Basheer @ N.P. Basheer vs. State of Kerala[81].(s) In substance, it is the case of the respondents that duringimplementation of the 2010 Act, it was experienced that there was needto streamline the provisions, so as to achieve the desired objective of theAct by improving the compliance mechanism, enhancing transparencyand accountability in the receipt and utilisation of foreign contributionthrough effective monitoring and facilitating genuine NGOs or associationsworking for the welfare of the society in ensuring maximum benefit tothe intended population. Indisputably, all the registered associations havebeen treated equally in respect of receipt of foreign contribution and itsutilisation for the purpose for which it is so received. The law permitsutilisation of foreign contribution by the recipient NGO itself and ensuresthat the spending of administrative expenses should not exceed 20 percent of such receipts, so that substantial portion of the foreign contributionis spent on the activities for which it has been so received and benefitsthe targeted population. The amendment mandating receipt of foreigncontribution only in designated FCRA account with the SBI, NDMB is

69 AIR 1955 SC 795 (paras 3-5)

70 AIR 1958 SC 232 (para 13(IIa), 14-16)

71 AIR 1958 SC 538 (paras 11-17)

72 AIR 1958 SC 578 (paras 210-218)

73 AIR 1963 SC 591 (paras 7-9)

74 AIR 1964 SC 1501 (para 5)

75 (1970) 1 SCC 377 (para 2)

76 (1975) 2 SCC 175 (paras 24-25)

77 1992 Supp. (1) SCC 594 (paras 127, 130)

78 (1993) 3 SCC 677 (paras 20-23, 29)

79 (2002) 4 SCC 539 (para 11)

80 (2004) 1 SCC 712 (para 56)

81 (2004) 3 SCC 609 (paras 20, 23)

Ato facilitate access of data of foreign contribution from one source foreffective monitoring of fund flow received through foreign contribution.This legislative intent, by no means, can be said to be in conflict with theobject of the Principal Act and in any case, cannot be labelled as manifestlyarbitrary as well. This is also because Section 17(1) of the 2010 Actwould permit the registered NGOs to open and operate another FCRABaccount in any scheduled bank/branch of their choice in the country.Accordingly, it is urged that the argument regarding amended provisionsbeing violative of Article 14, is devoid of merits.

(t) While countering the challenge on the ground of Article 19(1)(c)and 19(1)(g), it is stated that there exists no right to seek foreignCcontribution without regulation. Further, the 2010 Act does not prohibitthe foreign contributions or the right to form the associations itself or theright to practice any profession. Rather, it merely seeks to provideefficacious regulatory regime regarding foreign contributions to bereceived by such associations. The rights under Article 19(1)(c) andD19(1)(g), therefore, remain unaffected. It is urged that right to form anassociation and right to freedom of trade and profession do not includeright to receive unbridled and unregulated foreign contributions and moreso its utilisation for activities other than permissible activities. In otherwords, the law in question is squarely covered by the exceptions providedfor within the meaning of Article 19(4) and 19(6) of the Constitution.E

(u) The challenge to the amendments made on the touchstone ofArticle 19(1)(c), needs to be considered in light of the object of thePrincipal Act. It is an Act to protect umbrella terms of “sovereignty andintegrity of India” and “public order”. Reliance is placed on O.K. Ghosh& Anr. vs. E.X. Joseph[82], wherein it has been noted that clause (4) ofFArticle 19 refers to the restriction imposed in the interests of publicorder. The restriction, proximate and direct, must have causal connectionwith public order.

(v) Reliance is also placed on exposition in following decisions: -

GSaghir Ahmad & Anr. vs. State of U.P. & Ors.[83]; BabulalParate vs. The State of Maharashtra & Ors.[84]; Daya vs. Joint ChiefController of Imports & Exports & Anr.[85]; Akadasi Padhan vs. State

82 AIR 1963 SC 812 (paras 9-10)83 AIR 1954 SC 728 (para 23)84 AIR 1961 SC 884 (paras 26, 28-32)H85 AIR 1962 SC 1796 (paras 14-19)

of Orissa & Ors.[86]; Municipal Committee, Amritsar & Ors. vs. Stateof Punjab & Ors.[87]; Madhu Limaye vs. Sub-Divisional Magistrate,Monghyr & Ors.[88]; Daruka & Co vs. Union of India & Ors.[89]; Md.Serajuddin & Ors. vs. State of Orissa[90]; Municipal Corporation ofthe City of Ahmedabad & Ors. vs. Jan Mohammed Usmanbhai andAnr.[91]; Sushila Saw Mil vs. State of Orissa and Ors.[92]; Laxmikantvs. Union of India & Ors.[93]; Krishnan Kakkanth vs. Government ofKerala & Ors.[94]; Indian Handicrafts Emporium & Ors. vs. Unionof India & Ors.[95]; Om Prakash & Ors. vs. State of U.P. & Ors.[96];People’s Union for Civil Liberties & Anr. vs. Union of India[97]; Stateof Gujarat vs. Mirzapur Moti Kureshi Kassab Jamat & Ors.[98]; KeralaBar Hotels Association & Anr. vs. State of Kerala & Ors.[99];andAnuradha Bhasin[100].

(w) It is urged that the impugned amendments are directly relatedto the object sought to be achieved by the 2010 Act. The object behindthe Principal Act is to secure the interests of sovereignty and integrity ofthe country, public order and interests of general public. That objectivebeing consistent part of the legislative policy of the country for the pastfive decades, is beyond judicial review. As the impugned amendmentshave direct and proximate relationship with the stated object of thePrincipal Act, they are fully protected within the meaning of Article 19(4)and 19(6).

(x) It is further contended that right to life and liberty within themeaning of Article 21 of the Constitution, cannot and does not includethe right to receive unregulated funds and contributions; misuse of whichinevitably threatens the polity and sovereignty and integrity of the country.

86 AIR 1963 SC 1047 (paras 1, 14-15)87 (1969) 1 SCC 475 (paras 10, 14)88 (1970) 3 SCC 746 (paras 12-16, 24, 26-28, 46)89 (1973) 2 SCC 617 (paras 16-20, 24-25)90 (1975) 2 SCC 47 (para 28)91 (1986) 3 SCC 20 (paras 15-24)92 (1995) 5 SCC 615 (para 4)93 (1997) 4 SCC 739 (para 10)94 (1997) 9 SCC 495 (paras 27-29)95 (2003) 7 SCC 589 (paras 31-41)96 (2004) 3 SCC 402 (paras 31-40)97 (2004) 9 SCC 580 (paras 40-45)98 (2005) 8 SCC 534 (paras 73-79, 135-137)99 (2015) 16 SCC 421 (paras 30-38)100 supra at Footnote No.21 (paras 154-159)

AThe amended provisions, by no stretch of imagination, prohibit the inflowof foreign contributions or the right to form associations itself or the rightto practice any profession. The same merely provide for tight regulatorymechanism to ensure that the foreign contribution received from foreignsource is utilised only for the purpose by the recipient itself for which ithas been so permitted, and that restriction is only to secure the sovereigntyBand integrity of the nation and public order. In any case, it (regulatorymechanism) being procedural matter, would come within the purview ofprocedure established by law. Being reasonable restriction foraccomplishing the objectives of the Principal Act and founded on intelligibledifferentia, it must be regarded as rational and proportionate, and asCfurthering the State interests.(y) The respondents have also placed reliance on K.S. Puttaswamy& Anr. vs. Union of India & Ors.[101] in support of the argument thatthe amended provisions are in furtherance of the legitimate State interestsencompassed in the regulatory measures provided for in the PrincipalDAct. Reliance is also placed on Gobind vs. State of Madhya Pradesh& Anr.[102], wherein this Court had observed that even though privacyand dignity claims must receive scrutiny with due care, but that claimswill necessarily have to go through process of case-by-casedevelopments. Reliance is also placed on Chintamanrao & Anr. vs.The State of Madhya Pradesh[103]; The State of Madras vs. V.G. Row[104];ETeri Oat Estates (P) Ltd. vs. U.T., Chandigarh & Ors.[105]; RamlilaMaidan Incident, In re[106]; Sahara India Real Estate CorporationLimited & Ors. vs. Securities and Exchange Board of India &Anr.[107]; and Excel Crop Care Limited vs. Competition Commissionof India & Anr.[108] to contend that Article 21 is extremely wide. Whereas,Fthe prohibition on transfer of foreign contribution and receipt of foreigncontribution in the manner specified in the amended provisions areintended to improve compliance mechanism, enhance transparency andaccountability in the receipt and utilisation thereof. In that sense, it doesnot impinge upon the fundamental rights of the petitioners, much less

101 (2017) 10 SCC 1 (paras 310-311, 377, 380, 526, 558, 582 and 639)G102 (1975) 2 SCC 148 (paras 22-23, 28)103 AIR 1951 SC 118 (para 7)104 AIR 1952 SC 196 (para 15)105 (2004) 2 SCC 130 (paras 40, 44-46, 49)106 (2012) 5 SCC 1107 (2012) 10 SCC 603H108 (2017) 8 SCC 47 (paras 29, 92, 94-95)

Article 21 of the Constitution. The regulation and control are directlyrelatable to activities/programmes detrimental to the sovereignty andintegrity of India, public order and interests of general public and formatters connected therewith or incidental thereto. It being reasonableand proportionate restriction having clear nexus with the object of thePrincipal Act without impacting the right of the registered associationsto continue to receive foreign contribution from foreign donors and alsoutilise the same by opening accounts in different scheduled banks/branches of their choice in the country, by no stretch of imagination, canbe said to impinge upon the fundamental rights of the registeredassociations or persons having prior permission of the competent authority.

(z) As regards the grievance of the writ petitioners being forcedto open and operate account in the designated bank and branch i.e., SBI,NDMB, it is stated in the reply affidavit that for outstation FCRAorganisations located in remote areas and for operational ease of anyFCRA organisation, MHA and SBI have put in place system to enablethe associations/FCRA organisations/NGOs to open main bank accountin SBI, NDMB without any need to physically come to Delhi. It certainlydispels and redresses the principal grievance of the writ petitioners aboutthey being forced to visit Delhi to open account in the designated branchcoupled with the enabling provision allowing the registered associationsto utilise and transact from any scheduled bank/branch of their choice inthe country. The fundamental basis of assail to the amended provisions,therefore, falls to the ground.(aa) The respondents have relied on the Standard OperatingProcedure (SOP) issued by the appropriate authority in regard to theopening of FCRA account in the designated branch (SBI, NDMB) toreceive the inflow of foreign contribution including to permit the registeredassociations to open FCRA account in other scheduled banks/branchesof their choice across the country. Further, it is asserted that until thefiling of the common response in October, 2021, around 19,000 accountswere already opened in the designated branch at New Delhi. That waspossible even without physical visit of the authorised persons of theconcerned associations to New Delhi. This facility of opening accountin the designated bank and branch is provided on free/gratis basis withoutany bank charge on real-time basis by the SBI on the instructions of therecipient organisations through digital or internet banking. As aforesaid,these arrangements are necessitated for the purposes of effective

Aenforcement and operational angle and to monitor the flow of foreigncontributions and information concerning the same on real-time basisfrom one centralised location. This has reasonable nexus and proximaterelationship with the object sought to be achieved by the Act and toensure transparency and accountability of all concerned. The registeredassociations/NGOs are not put to any undue hardship or extra financialBcosts/compliance burden. The challenge to the amended provisions,therefore, is based on tenuous assertions.

(bb) It is also asserted that application for effecting any changeof details furnished while opening the main account in the designatedbranch (i.e., SBI, NDMB) is to be submitted only through online modeCon the FCRA web portal i.e., [REDACTED]. It is highlighted that theassertion made by the writ petitioners that there are close to 50,000persons registered under FCRA, is false and misleading. In fact, theFCRA website itself would reveal that out of close to 50,000 personsregistered under FCRA, registration certificates of less than 23,000 areDactive. Further, registration of 20,600 non-compliant persons has alreadybeen cancelled. Furthermore, following the changed dispensation as perthe amended provisions (of 2020 Act), over 19,000 accounts have alreadybeen opened in the designated branch (i.e., SBI, NDMB) until October,2021. It is, thus, urged that the amended provisions are intended to furtherthe object of the Principal Act and are regulatory in nature concerningEthe receipt and utilisation of foreign contribution or foreign hospitality bycertain individuals or associations or companies and incidental matters;and are consistent with the underlying principles expounded in the PrincipalAct.

(cc) After having said as above, the affidavit goes on to highlightFthat none of the amended provisions even remotely permit or attempt tooversee the banking functions. The amended provisions of the Act, aswell as, the Regulations, are intended to only bring out clarity on crucialrole assigned to the banks in respect of the implementation of the PrincipalAct of 2010. Similarly, the stated circular is only an administrative guidanceGfor better implementation of the provisions of the 2010 Act.

(dd) The respondents have, thus, prayed for dismissal of the writpetitions[109] filed by the registered associations, consequently leavingnothing for consideration in the writ petition filed by Vinay VinayakJoshi[110].109 W.P. (C) No.566 of 2021 and W.P. (C) No.751 of 2021H110 W.P. (C) No.634 of 2021

6. Counter affidavit filed by respondent No. 3-SBI111

(a) SBI has also filed counter affidavit dated 20.10.2021 in WritPetition (C) No.751 of 2021 sworn by one Anjana Tandon, Dy. GeneralManager, SBI, New Delhi Main Branch. This affidavit essentially dealswith the issues concerning SBI. It is stated that SBI is the largest publicsector bank in India with network of 22,219 branches in India and spreadacross the length and breadth of the country, including rural and urbanareas/branches. SBI also has 223 foreign offices and about 230 overseasbranches in around 40 countries.

(b) It is stated that FCRA account is not normal current/savingsaccount. The transactions effected in this account ought to be strictlyregulated, as predicated in the 2010 Act. SBI works in tandem with theinstructions issued by the Government of India in that regard. TheGovernment of India has issued Standard Operating Procedure (SOP)with regard to opening and operation of FCRA account. The informationin that regard has been disseminated to account holders and is in publicdomain, including by conducting Webinars from time to time. The mainBranch of SBI has created dedicated cell having over forty officials todeal with all the FCRA accounts at SBI, NDMB. They exclusively dealwith FCRA accounts and have been provided with requisiteinfrastructure. SBI has made internal arrangements regarding sharingof details of 23,000 entities with branches of SBI all over India; liaisingwith foreign offices of SBI for credential verification of the overseasstakeholders; and have designated Nodal Officer up to the rank ofAssistant General Manager in 17 local Head Offices, spread all overIndia for operating FCRA accounts. By this affidavit, SBI has refutedthe grievance of the writ petitioners/registered associations aboutoperational and other difficulties being faced by them in transacting/opening account in the designated Branch at New Delhi.

(c) It is emphatically stated that the entities, desirous of openingFCRA account or for accessing funds, are not required to visit Delhi ashas been clearly indicated in the communication dated 9.6.2021. This isalso duly notified on the official website of the MHA. SBI has streamlinedthe entire process for the convenience of the organizations to open/operationalize FCRA accounts. It is stated that the entities can do bankingactivities including internet banking activity anywhere and anytime, aidedwith the power and convenience of the internet. The entities can avail

111 in W.P. (C) No.751 of 2021

ACINB and may customize their authority matrix for making any financialtransactions. It is also open to the entities to open and operate FCRAaccount (utilization account) at one or more branches of scheduled banksof their choice. Alternatively, they are free to use their previous accountsas utilization accounts, to which funds can be transferred from thedesignated FCRA account at SBI, NDMB.B

(d) It is also asserted that the entities are not required to maintainminimum balance in FCRA accounts. Further, they are free to operatetheir account without physically approaching SBI Branch on regular basisas in the case of any other normal account holder, if they intend to accessinternet banking facility. It is denied that the registered associations/Cconcerned entities are required to appoint designated person in NewDelhi and make frequent trips for offline KYC verification as alleged.Instead, they can approach the nearest SBI Branch and get the offlineverification of document done at the said Branch itself. In other words,the argument of inconvenience put forth by the writ petitioners andDsimilarly placed persons have not only been refuted, but informationregarding sufficient logistical arrangements made by the respondent-Bank (SBI) to facilitate opening as well as operating of FCRA accountby authorised persons has been delineated in the response filed beforethis Court. The same is indicative of the fact that the services are offeredto the concerned entities at the local level itself without requiring theEFCRA account holders to visit the main Branch at New Delhi.

(e) This affidavit also reveals that SBI has more than two lakhemployees working in branches in different parts of the country withnetwork all over the country as well as abroad. It is stated that for thepurposes of operating 23,000 FCRA accounts, there is no need to incurFhigh administrative expenses. Instead, the Bank has augmented additionalinfrastructure required for that purpose in the designated Branch at NewDelhi.

(f) It is further stated that by the time the affidavit was filed,about 20,000 FCRA accounts have already been opened, out ofGapproximately 23,000 active organizations, and that the remainingregistered associations were in the process of getting their accountsopened by approaching the main Branch at New Delhi. It is urged thatthe respondent-Bank (SBI) is offering all banking facilities as requested/demanded by the concerned account holder. SBI has denied that thereHis any delay in the process of opening of account and receiving of foreign

remittances due to the volume of transactions or that it does not havenecessary infrastructural capacity to handle queries from thousands oforganizations, as alleged by the writ petitioners. At the same time, it hasbeen fairly accepted that during the second phase of COVID-19, due toextraordinary situation, there may have been delay in some cases, but allthe accounts have been made operational and are being accessed by theconcerned FCRA account holders. The affidavit also mentions aboutthe steps taken to streamline the operational issues in respect of FCRAaccounts. The substance of this affidavit is to demonstrate that noinconvenience is being caused to the FCRA account holders, in anymanner; and the Bank is fully equipped to handle the logistical issuesconcerning FCRA accounts in the main Branch as well as other branchesacross the country.

7. Rejoinder affidavit filed by the writ petitioners

(a) The writ petitioners have filed rejoinder affidavit wherebyassertions made in the writ petitions are reiterated. The emphasis isessentially in respect of grounds to assail the validity of the amendedprovisions of the 2010 Act, in particular Sections 7, 12(1A), 12A and17(1). The rejoinder affidavit also points out the reason for rejection ofapplication for registration and opening of bank account. Those matters,however, cannot be the basis to test the validity of the provisions. Hence,it is not necessary to elaborate the same. They are more in the nature ofinconvenience caused in respect of process of registration and of operatingthe FCRA accounts.

8. Submissions of the writ petitioners112

(a) The registered associations/writ petitioners would urge thatthe argument of legislative policy being inviolable cannot be countenanced.For, this Court in A.K. Gopalan vs. State of Madras[113], noted that theCourt is obliged to consider the effect of the law on the citizens andwhether the same impacts the fundamental rights guaranteed under PartIII of the Constitution.

(b) It is urged that this Court in INSAF[114] has already recognisedthe right to receive foreign contribution. Thus, it is not open to contendthat no fundamental right exists to receive foreign contribution. The

112 in Writ Petition (C) Nos.566 and 751 of 2021113 AIR 1950 SC 27114 supra at Footnote No.22 (paras 18 to 22)

Aamended provisions are arbitrary and overbroad restrictions on the rightto receive foreign funding, thus, it is violative of Article 14 of theConstitution. Further, this Court in the case of INSAF[115] did not examinethe effect of the impugned provisions on the fundamental rights underArticle 19 of the Constitution as there was no petitioner in individualcapacity before the Court. The amendments effected vide the 2020 ActBare not only hit by the vice of Article 14 of the Constitution, but alsoArticle 19(1)(a), 19(1)(c) and 19(1)(g) as well as Article 21 of theConstitution.

(c) As regards Section 7 of the Act, it is submitted that pre-amendment, transfer of foreign contribution to other person dulyCregistered and had been granted the certificate or obtained the priorpermission under the 2010 Act was permissible. The proviso permittedthe transfer of foreign contribution by the recipient registered association.This has been completely prohibited by the amended provision, which isoverbroad restriction. For, this prohibition would inevitably impact theDfunding of the entities who were otherwise allowed to receive foreigncontribution. Having so permitted, the regulatory measures at best canbe to ensure that the foreign contribution is eventually utilised for thepurpose for which it has been so permitted. The total prohibition in termsof the amended Section 7 is manifestly arbitrary and has no causalconnection with the object sought to be achieved by the Principal Act orEthe Amendment Act. In support of this contention, reliance is placed onK.S. Puttaswamy[116]. In that, being case of total prohibition, it impactsthe very utilisation of foreign contribution by any organisation. Theexpression “person” in Section 2(1)(m) of the Act posits an expansivemeaning. Thus, post amendment transfer of foreign contribution toFindividual or organisation will be affected. Significantly, the word “transfer”has not been defined. In other words, there is no clarity about the mannerof utilisation of foreign contribution by the registered entities who hadbeen allowed to receive the same for utilisation for specified purposes.The ordinary meaning of expression “utilisation” would include transfer

of foreign contribution to another entity; and, thus, there is apparentGconflict between Section 7 and Section 8 of the Act. As result, amendedSection 7 is not only absurd, but defeat the very object of the PrincipalAct, which allows regulated use of foreign contribution. In absence ofany definition of expressions “transfer” and “utilisation”, use of foreign

115 supra at Footnote No.22H116 supra at Footnote No.7 (paras 105 and 106)

contribution by the entity would be risking violation of the provisions ofthe Act.

(d) It is urged that Section 7 is overbroad and vague. There isambiguity as to what constitutes various social or educational or culturalor economic or religious purpose under Section 11(1) of the Act and atthe same time, Section 35 of the Act invites punishment for contraventionof any provision of the Act. For that reason, Section 7 suffers from thevice of manifest arbitrariness and hit by Article 14 of the Constitution.To buttress this argument, reliance is placed on the enunciation of thisCourt in Shreya Singhal vs. Union of India[117]. Further, the amendedSection 7 would not permit collaboration between registered non-profitorganisations to serve larger social needs across the country with anyother entity or person. That is bound to hamper work of grassrootorganisations which receive sub-grants in India from consortium leadpartner in international development projects. Those projects will beaffected at the grassroot level where the registered organisations maynot be able to cater on its own.

(e) It is then urged that even if the purpose of Section 7 is toprevent misutilisation of funds, it violates the fundamental rightsguaranteed in Article 19(1)(a), 19(1)(c) and 19(1)(g) under Part III ofthe Constitution, being an unreasonable restriction. Such restriction servesno legitimate Government purpose. It has no rational nexus with theobject of the enactment, including the Principal Act. The unamendedprovision was less restrictive and was working very well, serving theobjective of the Principal Act. Furthermore, being case of completeprohibition, the registered organisations would not be able to continuecollaboration with other entities at the grassroot level, even if those entitiesare also duly registered under the Act. This is bound to denude the recipient(registered organisation) of foreign contribution from reaching out andundertaking specified activities at the grassroot level through such entity.Such onerous restriction does not stand the test of proportionality orbeing reasonable restriction as held in the case of K.S. Puttaswamy[118].Reliance is also placed upon recent decision of this Court in ManoharLal Sharma vs. Union of India & Ors.[119], to contend that the Statehad failed to specifically establish national security issues to justify theamendments to the 2010 Act. In absence thereof, no omnibus prohibition

117 (2015) 5 SCC 1

118 supra at Footnote No.7 (paras 157 and 158)

119 W.P. (Crl.) No.314 of 2021 etc., decided on 27.10.2021 (paras 49 and 50)

Acan be validated by the Court. It is urged that Section 7, being manifestlyarbitrary and lacking any determining principle, is wholly unreasonableand, therefore, violative of Article 21 of the Constitution.

(f) On similar lines, Section 12(1A) read with Section 17(1) hasbeen assailed, being manifestly arbitrary and unreasonable. The challengeBis limited to the stipulation of opening bank account only at one specificbranch of SBI at New Delhi for all organisations across the countryreceiving foreign contribution. Such requirement is absurd, irrationaland serves no legitimate purpose under the 2010 Act or any other law. Itis urged that the challenge is not to the amended sub-Section (2) ofSection 17 requiring reporting to the authority. That being Bank’sCobligation can be taken forward by the Bank. No tangible logic isforthcoming to justify the need for Section 12(1A) read with Section17(1), as to how national interest would be jeopardised by not adheringto that regime especially when all the scheduled banks are regulated bythe Reserve Bank of India, including other Government owned publicDsector banks or even local branches of SBI. Each one of them is obligedto report all such transactions within 48 hours to the MHA. Such aprovision, therefore, is simply absurd and irrational.

(g) It is argued that the impact of amended provisions is to denudethe registered associations to have physical access to their primaryEaccount at Delhi along with host of other restrictions. It is furtherurged that the amended provision does not stand the test of legitimategoal for which such dispensation is necessary nor spells out the causalconnection for compelling the persons seeking foreign contribution toopen bank accounts only in specified branch at New Delhi and how itwould further the cause of the State interests. Even, the principle ofFnecessity has not been substantiated by the State, especially when thereare already existing restrictions and proper mechanism to achieve theobject of the Principal Act whereunder each organisation is mandated toopen FCRA account in scheduled bank of its choice, which accountdetails were required to be reported to the MHA and linked to the FCRAGregistration number of the organisations. All the registered organisationswere already complying with that requirement and have been registeredon an electronic portal known as ‘DARPAN’ having unique ID providedto them. Further, the registered organisations were also obliged to submitregular returns as specified in Section 18 read with Rule 17 of the 2011

Rules. The said dispensation requires furnishing of necessary detailsand reporting within 48 hours to the appropriate authority. The speciousplea of national security cannot be countenanced. The same has notbeen substantiated and there can be no presumption in that regard infavour of the legislation.

(h) Further, respondent No.3-SBI has admitted that only 40personnel are assigned with the work of operating FCRA accounts atthe main Branch. It is unfathomable as to how such low number ofpersonnel would be able to handle the workload of transaction of thousandsof persons for 23,000 registered organisations. Relying on the expositionsin Anuradha Bhasin[120] and Maneka Gandhi[121], it is urged that Section12(1A) read with Section 17(1) is unconstitutional, being manifestlyarbitrary and irrational.

(i) Even, the provision in the form of Section 12A is violative offundamental rights guaranteed to the office bearers of the registeredorganisations as it requires mandatory disclosure of Aadhaar number asan identity document for grant of FCRA certificate under Section 12, orrenewal under Section 16 or to open bank account under Section 17.Such provision clearly falls foul of the test of proportionality as held inK.S. Puttaswamy[122]. Inasmuch as, overseas citizens of India or foreignnationals serving as office bearers can provide an identity alternate tothe Aadhaar card for the same purposes. There is no legitimate goal setforth for inserting Section 12A in the Principal Act. It is urged that eventhis provision has no nexus with the object sought to be achieved underthe Principal Act and suffers from the vice of violation of Article 19 ofthe Constitution.

9. We have heard Mr. Gopal Sankaranarayanan, learned seniorcounsel and Mr. Gautam Jha, learned counsel for the petitioners and Mr.Tushar Mehta, learned Solicitor General and Mr. Sanjay Jain, learnedAdditional Solicitor General for the respondents.

Legislative History

10. In the first place, we must advert to the legislative historyculminating with the 2010 Act, as amended in 2020. Bill was introducedin the Rajya Sabha in the year 1973 titled as “the Foreign Contribution

120 supra at Footnote No.21

121 supra at Footnote No.12

122 supra at Footnote No.7

A(Regulation) Bill, 1973”. The Statement of Objects and Reasonsappended to the said Bill read thus: -

“STATEMENT OF OBJECTS AND REASONS

There has been widespread concern about the unregulatedreceipt of funds from foreign agencies by individuals andBorganisations in the country. The Bill seeks to regulate theacceptance and utilisation of foreign contribution or hospitalitywith view to ensuring that our parliamentary institutions, politicalassociations, academic and other voluntary organisations as wellas individuals working in important areas of national life mayCfunction in manner consistent with the values of sovereigndemocratic republic.”

(emphasis supplied)

On 19.2.1974, the House referred the Bill to Joint Committee ofthe Houses consisting of 60 members, of whom 20 were to be nominatedDfrom Rajya Sabha. While introducing the Bill, the Minister outlined thecontours of the regulatory measures felt essential in respect of the foreigncontributions. He adverted to three options. The first of outrightprohibition; the second being acceptance subject to prior permission ofGovernment; and the third of acceptance subject to intimation beingEgiven to Government. He expressed that the Government felt that it wasan important measure and believed that the deliberations in the JointCommittee of both the Houses would enable formulation of well-conceived Bill, on the basis of informed representative public opiniondesirous of securing the objectives, as stated in the Bill. There was broadunanimity between the members that the issue needed in-depthFexamination.

11. The then Minister of Home Affairs presented therecommendation of the Rajya Sabha before the Lok Sabha on 25.3.1974.The motion was duly adopted by the Lok Sabha and 40 members of thesaid House were nominated to the Joint Committee of the Houses.G

12. The report of the Joint Committee on the Bill to regulate theacceptance and utilisation of foreign contribution or hospitality by certainpersons or associations and for matters connected therewith or incidentalthereto, was presented before the Lok Sabha on 6.1.1976. Similarly, thereport of the Joint Committee of the Houses on the Bill was presented inHthe Rajya Sabha on 6.1.1976.

13. The deliberations regarding the proposed Bill and the reportof the Joint Committee took place in the Lok Sabha on 29.3.1976. Duringthe discussion, there was unanimity amongst all members cutting acrossparty lines that the penetration of foreign money into country is seriousthreat and danger to the sovereignty of the country. The membersvariously expressed concern about the unregulated inflow of foreigncontribution. It was noted that its penetration was so widespread thatgenerally, anyone interested in the sovereignty of our country and indemocracy was bound to feel concerned about the same. The experienceof other countries was also discussed by the members. The membersmentioned about the inflow of foreign contribution from many countriesand noted that some times it was being received directly and some timesindirectly, through other countries. It was coming in many forms includingreceipt by religious organisations. It was agreed that the foreigncontribution can be permitted in regulated manner without completelyprohibiting the inflow thereof. Eventually, to address the mischief ofgrowing foreign influence owing to influx of foreign donations in ourcountry, the Bill was passed which took the form of the Act i.e., theForeign Contribution (Regulation) Act, 1976. This Act came into forceon 5.8.1976[123] as shield in our legislative armoury. The preamble ofthe 1976 Act reads as under:

“An Act to regulate the acceptance and utilization of foreigncontribution or foreign hospitality by certain persons orassociations, with view to ensuring that parliamentaryinstitutions, political associations and academic and othervoluntary organisations as well as individuals working inthe important areas of national life may function in mannerconsistent with the values of sovereign democraticrepublic, and for matters connected therewith or incidentalthereto.”

(emphasis supplied)

Over the course of time, this Act came to be amended. One suchamendment was in 1985. The Statement of Objects and Reasons of thestated amendment read thus:

123 Vide notification No. GSR 755(E), dated 5.8.1976 published in the Gazette of India,Extraordinary, Part-II, section 3(i)

“STATEMENT OF OBJECTS AND REASONS

The Foreign Contribution (Regulation) Act, 1976, seeks to regulatethe acceptance and utilisation of foreign contribution or foreignhospitality by certain categories of persons or associations. Toremove certain inadequacies and practical difficulties in theadministration of the Act, Bill to amend the Act was introducedin the Rajya Sabha in May, 1984. The Bill was passed by theRajya Sabha with certain amendments. But it could not be passedby the Lok Sabha before it adjourned at the end of its MonsoonSession and the Bill has now lapsed. As it was considerednecessary to give effect to the provisions of the Bill as passed bythe Rajya Sabha urgently, the Foreign Contribution (Regulation)Amendment Ordinance, 1984, was promulgated by the Presidenton the 20th October, 1984. The said Ordinance, inter alia, madethe following amendments in the Act, namely:—(i) The definition of “foreign contribution”, ascontained in the Act, included only the donation, deliveryor transfer made by any foreign source. It did not includedonation or contribution received by an organisation fromanother organisation from out of foreign contributionreceived by the latter organisation. The definition wasenlarged to include such contributions also for the purposeof tracing the utilisation of foreign contribution down theline.

(ii)The definition of “political party”, as contained inthe Act, did not include political parties in the State of Jammuand Kashmir and political parties which are not covered bythe Election Symbols (Reservation and Allotment) Order,1968. The Ordinance amended this definition to includesuch political parties also.

(iii)Section 6(1) of the Act provided that everyassociation having definite cultural, economic, educational,religious or social programmes, may receive foreigncontribution, but was required to send intimation regardingsuch receipt to the Central Government within such timeand such manner to be prescribed by the rules made underthe Act. It had been observed that number of associationshad not sent such intimation. In order to effectively monitor

the receipt of foreign contribution, this sub-section wasamended to provide that associations referred to thereinshall accept foreign contribution only after they areregistered with the Central Government specifically for thepurpose and accept such contributions only through aspecified branch of bank. They would, however, berequired to give, within such time and in such manner asmay be prescribed, intimation to the Central Governmentas to the amount of foreign contribution received by them,the source from which and the manner in which such foreigncontribution was received by them, etc. Where anyregistered association does not accept foreign contributionthrough the specified branch of specified bank or doesnot submit intimations, etc., in time, the CentralGovernment has been empowered to direct that suchassociation shall not accept foreign contribution without theprior permission of the Central Government. new sub-section (1A) had also been included in this section toprovide that an association not so registered with theCentral Government shall obtain prior permission of theCentral Government before accepting any foreigncontribution and also give intimation to the CentralGovernment as to the amount of contribution received byit.

(iv)The Act only enabled the Central Government toinspect the accounts of certain persons or associations. Itdid not provide for any power to audit the accounts of anyorganisation if it is considered necessary to do so. TheOrdinance amended the Act by inserting new section 15A,to take specific power to audit the accounts of certainpersons, organisations or associations, if the prescribedreturns are not furnished in time by such persons,organisations or associations or the returns so furnishedby them are not in accordance with law or their scrutinygives room for suspicion that the provisions of the Act havebeen contravened.

(v) new section 25A had also been inserted in the Act toprovide that where any person is convicted of an offence relating

Ato the acceptance or utilisation of foreign contribution for secondtime, he shall be prohibited from accepting any foreign contributionfor period of three years from the date of the second conviction.

2. The Bill seeks to replace the aforesaid Ordinance.”

(emphasis supplied)

14. After the coming into force of the 1976 Act including thesubsequent amendments thereto, the experience gained and the significantdevelopments having taken place since 1984 such as change in internalsecurity scenario, an increased influence of voluntary organisations, spreadof use of communication and information technology, quantum jump inCthe amount of foreign contribution being received and large-scale growthin the number of registered organisations, Bill known as “the ForeignContribution (Regulation) Bill, 2006” came to be introduced. The proposalin the Bill was to repeal the 1976 Act and replace it with the provisionsof the proposed Bill. The Statement of Objects and Reasons for the Billare as under:D

“STATEMENT OF OBJECTS AND REASONS

The Foreign Contribution (Regulation) Act, 1976 wasenacted to regulate the acceptance and utilisation of foreigncontribution or hospitality with view to ensuring that ourEparliamentary institutions, political associations, academicand other voluntary organisations as well as individualsworking in important areas of national life may function in amanner consistent with the values of sovereign democraticrepublic. The Act was amended in 1984 to extend theFprovisions of the Act to cover second and subsequentrecipients of foreign contribution and to the members ofhigher judiciary, besides introducing the system of grant ofregistration to the associations receiving foreigncontribution.

2. Significant developments have taken place since 1984Gsuch as change in internal security scenario, an increasedinfluence of voluntary organisations, spread of use ofcommunication and information technology, quantum jumpin the amount of foreign contribution being received, andlarge scale growth in the number of registeredHorganisations. This has necessitated large scale changes

in the existing Act. Therefore, it has been thoughtappropriate to replace the present Act by new legislationto regulate the acceptance, utilisation and accounting offoreign contribution and acceptance of foreign hospitalityby person or an association.

3. The Foreign Contribution (Regulation) Bill, 2006 provides, interalia, to —

(i) consolidate the law to regulate, acceptance and utilisation offoreign contribution or foreign hospitality and prohibit the samefor any activities detrimental to the national interests;

(ii) prohibit organisations of political nature, not being political partiesfrom receiving foreign contribution;

(iii) bring associations engaged in production or broadcast of audionews or audio visual news or current affairs through any electronicmode under the purview of the Bill;

(iv) prohibit the use of foreign contribution for any speculativebusiness;

(v) cap administrative expenses at fifty per cent. of the receipt offoreign contribution;

(vi) exclude foreign funds received from relatives living abroad;

(vii) make provision for intimating grounds for refusal of registrationor prior permission under the Bill;

(viii) provide arrangement for sharing of information on receipt offoreign remittances by the concerned agencies to strengthenmonitoring;

(ix) make registration to be valid for five years with provisionfor renewal thereof, and also to provide for cancellation orsuspension of registration;

(x) make provision for compounding of certain offences.

4. The Bill seeks to achieve the above objects.”

(emphasis supplied)

Finally, the Bill after being scrutinised by the Committee appointedby the House, presented it in the Lok Sabha on 27.8.2010, titled as

A“Foreign Contribution (Regulation) Act, 2010”. The members expressedthat India is an emerging economic power and the Bill, as propounded,was welcome step towards prohibiting organisations with politicalagenda from destabilising the country through foreign funding. Themembers shared their experience and finally accepted the Bill whichbecame the 2010 Act. This Act repealed the 1976 Act. The introductionBfor the 2010 Act recognised that some of the foreign countries werefunding individuals, associations, political parties, candidates for elections,correspondents, columnists, editors, owners, printers or publishers ofnewspapers. They were also extending hospitality. The introduction ofthe Act reads thus: -C“It had been noticed that some of the foreign countries werefunding individuals, associations, political parties,candidates for elections, correspondents, columnists,editors, owners, printers or publishers of newspapers. Theywere also extending hospitality. The effects of such fundingDand hospitality were quite noticeable and to have somecontrol over such funding and hospitality and to regulatethe acceptance and utilisation of foreign contribution orforeign hospitality by certain persons or associations, witha view to ensuring that Parliamentary institutions, politicalassociations and academic and other voluntaryEorganisations as well as individuals working in the importantareas of national life may function in manner consistentwith the values of sovereign democratic republic theForeign Contribution (Regulation) Act, 1976 (49 of 1976)was enacted. Since its enactment in 1976 several deficienciesFhad been found and it was proposed to enact fresh law on thesubject by repealing the Act 49 of 1976. Accordingly the ForeignContribution (Regulation) Bill was introduced in the Parliament.”

(emphasis supplied)

It will be useful to advert to the preamble of the 2010 Act. TheGsame reads thus: -

“An Act to consolidate the law to regulate the acceptance andutilisation of foreign contribution or foreign hospitality by certainindividuals or associations or companies and to prohibit acceptanceand utilisation of foreign contribution or foreign hospitality for any

activities detrimental to the national interest and for mattersconnected therewith or incidental thereto.”

The underlying reason discernible from the Statement of Objectsand Reasons and the concerns expressed by the members during thedebate in the concerned Houses, make it amply clear that there wasneed to strictly regulate the inflow of foreign contribution in the mannerspecified by the Act. Intrinsic in the regulatory provisions of the 2010Act is to permit inflow of foreign contribution only in the manner specifiedin the Act including its utilisation; and any activity inconsistent with the2010 Act was to visit with penal consequences. The preamble of the2010 Act restates the need to strictly regulate the inflow of foreigncontribution, as lack of it would inevitably affect the national interestsincluding the sovereignty and integrity of the country.

15. The 2010 Act came to be amended on two occasions untilrecently, vide Finance Act, 2016 (28 of 2016) and Finance Act, 2018(13 of 2018).

16. The Central Government in exercise of powers conferred bySection 48 of the 2010 Act framed the 2011 Rules, which came intoforce on 1.5.2011. Further, the Central Government also framed rulesknown as “The Foreign Contribution (Acceptance or Retention of Giftsor Presentations) Rules, 2012”, which came into force on 17.6.2012.The 2011 Rules were amended by (Amendment) Rules, 2020. We shalladvert to these Rules including the amended provisions at the appropriateplace.

17. In the present cases, we are concerned with the challenge tothe latest amendment effected vide the Foreign Contribution (Regulation)Amendment Act, 2020, which has come into effect from 29.9.2020.Vide the 2020 Act, clause (c) in Section 3(1) came to be amended. Theamendment has been effected also to Sections 7, 8, 11, 12, 13, 15, 16 and17 of the 2010 Act. The assail is limited to the amended provisions (videAmendment Act of 2020) on the ground of abridgement of fundamentalrights of the petitioners guaranteed under Articles 14, 19(1)(a), 19(1)(c),19(1)(g) and 21 of the Constitution of India.

18. Notably, we are called upon to deal with the validity only ofamendment concerning Sections 7, 12(1A), 17 and insertion of Section12A in the Act. The unamended Sections 7, 12 and 17 read thus: -

“7. Prohibition to transfer foreign contribution to otherperson.- No person who — (a) is registered and granted acertificate or has obtained prior permission under this Act; and

(b) receives any foreign contribution,

shall transfer such foreign contribution to any other person unlesssuch other person is also registered and had been granted thecertificate or obtained the prior permission under this Act:

Provided that such person may transfer, with the priorapproval of the Central Government, part of such foreigncontribution to any other person who has not been granted acertificate or obtained permission under this Act in accordancewith the rules made by the Central Government.

12. Grant of certificate of registration.- (1) An application bya person, referred to in section 11 for grant of certificate or givingprior permission, shall be made to the Central Government in suchform and manner and along with such fee, as may be prescribed.

(2) On receipt of an application under sub-section (1), theCentral Government shall, by an order, if the application is not inthe prescribed form or does not contain any of the particularsspecified in that form, reject the application.

(3) If on receipt of an application for grant of certificate orgiving prior permission and after making such inquiry as the CentralGovernment deems fit, it is of the opinion that the conditionsspecified in sub-section (4) are satisfied, it may, ordinarily withinninety days from the date of receipt of application under sub-section (1), register such person and grant him certificate orgive him prior permission, as the case may be, subject to suchterms and conditions as may be prescribed:

Provided that in case the Central Government does not grant,within the said period of ninety days, certificate or give priorpermission, it shall communicate the reasons therefor to theapplicant:

Provided further that person shall not be eligible for grantof certificate or giving prior permission, if his certificate has been

suspended and such suspension of certificate continues on thedate of making application.

(4) The following shall be the conditions for the purposesof sub-section (3), namely: —

(a) the person making an application for registration or grantof prior permission under sub-section (1),—

(i) is not fictitious or benami;

(ii) has not been prosecuted or convicted for indulging inactivities aimed at conversion through inducement or force,either directly or indirectly, from one religious faith to another;

(iii) has not been prosecuted or convicted for creating communaltension or disharmony in any specified district or any otherpart of the country;

(iv) has not been found guilty or diversion or mis-utilisation ofits funds;

(v) is not engaged or likely to engage in propagation of seditionor advocate violent methods to achieve its ends;

(vi) is not likely to use the foreign contribution for personalgains or divert it for undesirable purposes;

(vii) has not contravened any of the provisions of this Act;

(viii) has not been prohibited from accepting foreign contribution;

(b) the person making an application for registration under sub-section (1) has undertaken reasonable activity in its chosen filedfor the benefit of the society for which the foreign contribution isproposed to be utilised;

(c) the person making an application for giving prior permissionunder sub-section (1) has prepared reasonable project for thebenefit of the society for which the foreign contribution is proposedto be utilised;

(d) in case the person being an individual, such individual has neitherbeen convicted under any law for the time being in force nor anyprosecution for any offence pending against him;

(e) in case the person being other than an individual, any of itsdirectors or office bearers has neither been convicted under anylaw for the time being in force nor any prosecution for any offenceis pending against him;

(f) the acceptance of foreign contribution by the person referredto in sub-section (1) is not likely to affect prejudicially—

(i) the sovereignty and integrity of India; or

(ii) the security, strategic, scientific or economic interest of theState; or

(iii) the public interest; or

(iv) freedom or fairness of election to any Legislature; or

(v) friendly relation with any foreign State; or

(vi) harmony between religious, racial, social, linguistic, regionalgroups, castes or communities;

(g) the acceptance of foreign contribution referred to in sub-section(1),—

(i) shall not lead to incitement of an offence;

(ii) shall not endanger the life or physical safety of any person.

(5) Where the Central Government refuses the grant ofcertificate or does not give prior permission, it shall record in itsorder the reasons therefor and furnish copy thereof to theapplicant:

Provided that the Central Government may not communicatethe reasons for refusal for grant of certificate or for not givingprior permission to the applicant under this section in cases whereis no obligation to give any information or documents or recordsor papers under the Right to Information Act, 2005.

(6) The certificate granted under sub-section (3) shall bevalid for period of five years and the prior permission shall bevalid for the specific purpose or specific amount of foreigncontribution proposed to be received, as the case may be.

17. Foreign contribution through scheduled bank.- (1) Everyperson who has been granted certificate or given prior permissionunder section 12 shall receive foreign contribution in singleaccount only through such one of the branches of bank as hemay specify in his application for grant of certificate:

Provided that such person may open one or more accountsin one or more banks for utilising the foreign contribution receivedby him:

Provided further that no funds other than foreign contributionshall be received or deposited in such account or accounts.

(2) Every bank or authorised person in foreign exchangeshall report to such authority as may be specified—

(a) prescribed amount of foreign remittance;

(b) the source and manner in which the foreign remittancewas received; and

(c) other particulars,

in such form and manner as may be prescribed.”

19. As aforementioned, the need to amend certain provisions ofthe 2010 Act was felt necessary, as is discernible from the Statement ofObjects and Reasons appended to Bill No. 123/2020, which finallyculminated in the Amendment Act of 2020. The same reads thus: -

“STATEMENT OF OBJECTS AND REASONS

The Foreign Contribution (Regulation) Act, 2010 was enacted toregulate the acceptance and utilisation of foreign contribution orforeign hospitality by certain individuals or associations orcompanies and to prohibit acceptance and utilisation of foreigncontribution or foreign hospitality for any activities detrimental tothe national interest and for matters connected therewith orincidental thereto.

2. The said Act has come into force on the 1st day of May,2011 and has been amended twice. The first amendment wasmade by section 236 of the Finance Act, 2016 and the secondamendment was made by section 220 of the Finance Act, 2018.

3. The annual inflow of foreign contribution has almostdoubled between the years 2010 and 2019, but manyrecipients of foreign contribution have not utilised the samefor the purpose for which they were registered or grantedprior permission under the said Act. Many of them werealso found wanting in ensuring basic statutory compliancessuch as submission of annual returns and maintenance ofproper accounts. This has led to situation where theCentral Government had to cancel certificates ofregistration of more than 19,000 recipient organisations,including non-Governmental organisations, during theperiod between 2011 and 2019. The criminal investigationsalso had to be initiated against dozens of such non-Governmental organisations which indulged in outrightmisappropriation or mis-utilisation of foreign contribution.

4. Therefore, there is need to streamline theprovisions of the said Act by strengthening the compliancemechanism, enhancing transparency and accountability inthe receipt and utilisation of foreign contribution worththousands of crores of rupees every year and facilitatinggenuine non-Governmental organisations or associationswho are working for the welfare of the society.

5. The Foreign Contribution (Regulation) Amendment Bill,2020, inter alia, seeks to provide for—

(a) amendment of clause (c) of sub-section (1) of section 3to include “public servant” also within its ambit, to providethat no foreign contribution shall be accepted by any publicservant;

(b) amendment of section 7 to prohibit any transfer of foreigncontribution to any association/person;

(c) amendment of sub-section (1) of section 8 to reducethe limit for defraying administrative expenses from existing“fifty per cent.” to “twenty per cent.”;

(d) insertion of new section 12A empowering the CentralGovernment to require Aadhaar number, etc., asidentification document;

[A. M. KHANWILKAR, J.]

(e) insertion of new section 14A enabling the CentralGovernment to permit any person to surrender the certificategranted under the Act;

(f) amendment of section 17 to provide that every personwho has been granted certificate or prior permission undersection 12 shall receive foreign contribution only in anaccount designated as ‘‘FCRA Account’’ which shall beopened by him in such branch of the State Bank of India atNew Delhi, as the Central Government may, by notification,specify and for other consequential matters relating thereto.

6. The Bill seeks to achieve the above objects.”

(emphasis supplied)

When the Bill proposed for amendment to the said provisions wasbeing considered, the members expressed their concern about the volumeof inflow of foreign contribution. It was noted that NGOs have beenformed, who in turn receive foreign contribution and spend the funds asper their own desire and the same is being misused, threatening thesecurity apparatus and sovereignty of the country.

20. Consequent to the 2020 Act, the relevant provisions includingthe newly inserted clauses read thus: -

“7. Prohibition to transfer foreign contribution to otherperson.- No person who —

(a) is registered and granted certificate or has obtained priorpermission under this Act; and

(b) receives any foreign contribution,

shall transfer such foreign contribution to any other person.

12. Grant of certificate of registration.- (1) An application bya person, referred to in section 11 for grant of certificate or givingprior permission, shall be made to the Central Government in suchform and manner and along with such fee, as may be prescribed.

(1A) Every person who makes an application under sub-section (1) shall be required to open “FCRA Account” in the

manner specified in section 17 and mention details of such accountin his application.

(2) On receipt of an application under sub-section (1), theCentral Government shall, by an order, if the application is not inthe prescribed form or does not contain any of the particularsspecified in that form, reject the application.

(3) If on receipt of an application for grant of certificate orgiving prior permission and after making such inquiry as the CentralGovernment deems fit, it is of the opinion that the conditionsspecified in sub-section (4) are satisfied, it may, ordinarily withinninety days from the date of receipt of application under sub-section (1), register such person and grant him certificate orgive him prior permission, as the case may be, subject to suchterms and conditions as may be prescribed:

Provided that in case the Central Government does not grant,within the said period of ninety days, certificate or give priorpermission, it shall communicate the reasons therefor to theapplicant:

Provided further that person shall not be eligible for grantof certificate or giving prior permission, if his certificate has beensuspended and such suspension of certificate continues on thedate of making application.

(4) The following shall be the conditions for the purposesof sub-section (3), namely: —

(a) the person making an application for registration or grantof prior permission under sub-section (1),—

(i) is not fictitious or benami;

(ii) has not been prosecuted or convicted for indulging inactivities aimed at conversion through inducement or force,either directly or indirectly, from one religious faith to another;

(iii) has not been prosecuted or convicted for creatingcommunal tension or disharmony in any specified districtor any other part of the country;

(iv) has not been found guilty or diversion or mis-utilisationof its funds;

(v) is not engaged or likely to engage in propagation of seditionor advocate violent methods to achieve its ends;

(vi) is not likely to use the foreign contribution for personalgains or divert it for undesirable purposes;

(vii) has not contravened any of the provisions of this Act;

(viii) has not been prohibited from accepting foreigncontribution;

(b) the person making an application for registration under sub-section (1) has undertaken reasonable activity in its chosen filedfor the benefit of the society for which the foreign contribution isproposed to be utilised;

(c) the person making an application for giving prior permissionunder sub-section (1) has prepared reasonable project for thebenefit of the society for which the foreign contribution is proposedto be utilised;

(d) in case the person being an individual, such individual has neitherbeen convicted under any law for the time being in force nor anyprosecution for any offence pending against him;

(e) in case the person being other than an individual, any of itsdirectors or office bearers has neither been convicted under anylaw for the time being in force nor any prosecution for any offenceis pending against him;

(f) the acceptance of foreign contribution by the person referredto in sub-section (1) is not likely to affect prejudicially—

(i) the sovereignty and integrity of India; or

(ii) the security, strategic, scientific or economic interest of theState; or

(iii) the public interest; or

(iv) freedom or fairness of election to any Legislature; or

(v) friendly relation with any foreign State; or

(vi) harmony between religious, racial, social, linguistic, regionalgroups, castes or communities;

(g) the acceptance of foreign contribution referred to in sub-section(1),—

(i) shall not lead to incitement of an offence;

(ii) shall not endanger the life or physical safety of any person.

(5) Where the Central Government refuses the grant ofcertificate or does not give prior permission, it shall record in itsorder the reasons therefor and furnish copy thereof to theapplicant:

Provided that the Central Government may not communicatethe reasons for refusal for grant of certificate or for not givingprior permission to the applicant under this section in cases whereis no obligation to give any information or documents or recordsor papers under the Right to Information Act, 2005.

(6) The certificate granted under sub-section (3) shall bevalid for period of five years and the prior permission shall bevalid for the specific purpose or specific amount of foreigncontribution proposed to be received, as the case may be.

12A. Power of Central Government to require Aadhaarnumber, etc., as identification document.- Notwithstandinganything contained in this Act, the Central Government may requirethat any person who seeks prior permission or prior approval undersection 11, or makes an application for grant of certificate undersection 12, or, as the case may be, for renewal of certificate undersection 16, shall provide as identification document, the Aadhaarnumber of all its office bearers or Directors or other keyfunctionaries, by whatever name called, issued under the Aadhaar(Targeted Delivery of Financial and Other Subsidies, Benefits andServices) Act, 2016 (18 of 2016), or copy of the Passport orOverseas Citizen of India Card, in case of foreigner.

17. Foreign contribution through scheduled bank.- (1) Everyperson who has been granted certificate or prior permission undersection 12 shall receive foreign contribution only in an accountdesignated as “FCRA Account” by the bank, which shall be opened

by him for the purpose of remittances of foreign contribution insuch branch of the State Bank of India at New Delhi, as theCentral Government may, by notification, specify in this behalf:

Provided that such person may also open another “FCRAAccount” in any of the scheduled bank of his choice for thepurpose of keeping or utilising the foreign contribution which hasbeen received from his “FCRA Account” in the specified branchof State Bank of India at New Delhi:

Provided further that such person may also open one ormore accounts in one or more scheduled banks of his choice towhich he may transfer for utilising any foreign contribution receivedby him in his “FCRA Account” in the specified branch of theState Bank of India at New Delhi or kept by him in another “FCRAAccount” in scheduled bank of his choice:

Provided also that no funds other than foreign contributionshall be received or deposited in any such account.

(2) The specified branch of the State Bank of India at NewDelhi or the branch of the scheduled bank where the personreferred to in sub-section (1) has opened his foreign contributionaccount or the authorised person in foreign exchange, shall reportto such authority as may be specified,—

(a) the prescribed amount of foreign remittance;

(b) the source and manner in which the foreign remittancewas received; and

(c) other particulars,

in such form and manner as may be prescribed.”

21. It is well-established that rights guaranteed under Part III ofthe Constitution and Article 19 in particular, are not absolute rights. Thesame are subject to reasonable restrictions, as predicated in clauses (2)and (6) of Article 19. For, it is open to the State to make law, so as toimpose reasonable restrictions on the exercise of such right [under Article19(1)(a)] in the interests of the sovereignty and integrity of India, thesecurity of the State, friendly relations with Foreign States, public order,decency or morality or in relation to contempt of Court, defamation orincitement to an offence; in case of Article 19(1)(c) - in the interests of

Athe sovereignty and integrity of India, public order or morality; and incase of Article 19(1)(g) - in the interests of the general public. It isrightly urged by the respondents that whenever the challenge is to theamended provisions, the scope of enquiry, inter alia, ought to be as towhether the same is in consonance with the Principal Act, achieve theobject and purpose of the Principal Act and are otherwise just, rationalBand reasonable. Further, there is no fundamental right vested in anyoneto receive foreign contribution (donation) or foreign exchange; and thatthe purport of the Principal Act and the impugned amendments are onlyto provide regulatory framework and not one of complete prohibition.22. Indisputably, serious concern about the impact of widespreadCinflow of foreign contribution on the values of sovereign democraticrepublic had been repeatedly expressed at different levels including inthe Parliament. To that end, the Bill was introduced in the Parliament in1973. The legislative intent behind the enactment of the 1976 Act hasremained unchanged even to this day — nay it has become more relevantDnow. In that, the experience gained aftermath implementation of the1976 Act revealed that more stringent dispensation was needed tominimise the negative impact owing to the surge in the inflow of foreigndonation and for upholding the values of sovereign democratic republic,for which the 2010 Act came to be enacted. In that, even the amendmenteffected in 1985 to the 1976 Act was found to be insufficient to dealEwith the shortcomings in the law in force, for regulating the inflow andsustained moderate utilisation of foreign contribution. For that reason,the Parliament eventually decided to replace the regulatory dispensationby enacting new law (the 2010 Act) to address the mischief.

23. In due course of time, however, it was realised that theFdispensation enunciated in the 2010 Act was also not yielding the desiredresult. This impelled the Parliament to amend the 2010 Act (vide 2020Act) to make it more stringent and effective to subserve the cause andintent of the Principal Act — not only in regard to the modality ofacceptance of foreign contribution in the prescribed manner but alsoGmaking it imperative for the recipient of foreign contribution to utilise thesame “itself” for the designated or specified purposes for which it wasso permitted.

24. Philosophically, foreign contribution (donation) is akin togratifying intoxicant replete with medicinal properties and may work likeHa nectar. However, it serves as medicine so long as it is consumed

(utilised) moderately and discreetly, for serving the larger cause ofhumanity. Otherwise, this artifice has the capability of inflicting pain,suffering and turmoil as being caused by the toxic substance (potenttool) — across the nation. In that, free and uncontrolled flow of foreigncontribution has the potentials of impacting the sovereignty and integrityof the nation, its public order and also working against the interests ofthe general public.

25. To eradicate misuse and abuse of foreign contribution in thepast, despite the firm regime in place in terms of the 2010 Act, theParliament in its wisdom has now (vide Amendment Act of 2020) adoptedthe path of moderation by making it mandatory for all to accept foreigncontribution only through one channel and to utilise the same “itself” forthe purposes for which permission has been accorded. Undeniably, thesovereignty and integrity of India ought to prevail and the rights enshrinedin Part III of the Constitution must give way to the interests of generalpublic much less public order and the sovereignty and integrity of thenation. It must be borne in mind that the legislation under considerationmust be understood in the context of the underlying intent of insulatingthe democratic polity from the adverse influence of foreign contributionremitted by foreign sources.26. The Statement of Objects and Reasons for the AmendmentAct of 2020 makes it amply clear that the annual inflow of foreigncontribution had almost doubled between the years 2010 and 2019 andmany recipients of foreign contribution had not utilised the same for thepurposes for which they were registered or granted prior permissionunder the Act. Further, many recipients had also failed to adhere to andfulfil the statutory compliances — which resulted in cancellation of asmany as 19,000 certificates of concerned persons/organisations duringthe stated period, including initiation of criminal investigation concerningoutright misappropriation or misutilisation of foreign contribution. It wasincreasingly reported that some of the NGOs were primarily involved inrouting of foreign contribution accepted by them and not utilising thesame itself for the purposes for which certificate of registration wasissued. Such transfer created several operational issues bordering onmalpractices impacting the very intent of the Principal Act. For, routingof foreign contribution entails in diverting it to another area of activityincluding misuse thereof. There had been cases of successive transfersand creation of layered trail of money making it difficult to trace the

Aflow and final utilisation. In this backdrop, to strengthen the compliancemechanism and enhancing transparency and accountability in the matterof acceptance and utilisation of foreign contribution, the Parliament hadto once again step in to restructure the dispensation, making it moremeaningful and effective, so as to deal with the increasing impact offoreign contribution.B

27. It is unnecessary to underscore the distinction between foreigncontribution and foreign investment. By its very nature, foreigncontribution is donation accepted from foreign source purportedlyfor definite cultural, economic, educational, religious or social programmeand to serve the cause of humanity. The expression “foreign contribution”Chas been defined in Section 2(1)(h) of the 2010 Act to mean donation,which can be in the form of delivery or transfer made by any foreignsource of any article, currency, security, etc.

28.It is open to sovereign democratic nation to completely prohibitacceptance of foreign donation on the ground that it undermines theDconstitutional morality of the nation, as it is indicative of the nation beingincapable of looking after its own affairs and needs of its citizens. Thethird world countries may welcome foreign donation, but it is open to anation, which is committed and enduring to be self-reliant and variouslycapable of shouldering its own needs, to opt for policy of completeEprohibition of inflow/acceptance of foreign contribution (donation) fromforeign source. This was the first option noted by the Parliament whileconsidering the Bill concerning the 1976 Act.

29. When the 1976 Act was enacted, the Parliament had discussedabout three options. The first was of outright prohibition; the secondFbeing acceptance subject to prior permission of Government; and thethird — acceptance subject to intimation being given to Government.The Parliament opted for the second option and that continues to thisday in the form of 2010 Act, as amended in 2020. At the same time,from the experience gained aftermath implementation of the dispensationpredicated for regulating the inflow of foreign contribution from foreignGsource and its utilisation, the need to make it more stringent was felt.The amendments vide the 2020 Act, are the product of that experienceand the Parliament, for accomplishing the objectives of the Principal Actand to uphold the sovereignty and integrity of the nation as well as publicorder and in the interests of the general public, introduced the regimeHrequiring acceptance of foreign contribution from foreign source onlythrough one channel and utilising the same by the recipient itself for theactivities for which prior permission has been granted to him in thatregard.The permission to be granted by the Central Government can bea general permission for definite cultural, economic, educational, religiousor social programme or special permission in respect of particularactivity in that regard. In either case, it has to be prior permission inthe form of obtaining certificate of registration from the CentralGovernment or obtaining prior permission of the Central Governmentfor the specific purpose by person not so registered.

30. Suffice it to observe that considering the legislative historyand the need for the Parliament to periodically intervene to arrest theincreasing influence on the polity of the nation due to the high volume ofinflow of foreign contribution and large-scale improper utilisation andmisappropriation thereof, as noticed by the authorities and keeping inmind the objective of the principal enactment being to uphold the valuesof sovereign democratic republic, the dispensation as altered to make itmore strict compliance mechanism for ensuring that the foreign fundsare accepted in the prescribed manner and utilised by the recipient itselfand more so, for the purposes for which it was allowed to be receivedby that person, the amended provisions ought to pass the musterofreasonable restriction. Certainly, such change cannot be labelled asirrational much less manifestly arbitrary, especially when it appliesuniformly to class of persons without any discrimination. We need toremind ourselves the dictum of this Court in Rustom CavasjeeCooper[124]and also R.K. Garg[125] – that it is not for the Court to consider relativemerits of the different political theories or economic policies includingthat an economic legislation may be troubled with crudities, inequities,uncertainties or the possibility of abuse cannot be the basis for striking itdown.

31. It must follow that acceptance of foreign contribution isotherwise prohibited by law and violation of such restriction has beenmade an offence under Chapter VIII of the 2010 Act. Nothing preventsthe organisations interested in doing charitable work in raising contributionwithin the country. In that sense, the 2010 Act deals with class ofpersons accepting foreign contribution from foreign source. All suchpersons are treated equally and without any discrimination.

124 supra at Footnote No.48

125 supra at Footnote No.49

ARelevant provisions of the 2010 Act as amended

32. We may now broadly delineate the contours of the provisionsof the 2010 Act before we proceed to examine the challenge specific tothe amended provisions vide the 2020 Act. Chapter I of the 2010 Actdeals with short title, extent, application and commencement of the ActBas well as definitions of certain expressions referred to therein.

33. Chapter II is about regulation of foreign contribution and foreignhospitality. Section 3[126] deals with prohibition to accept foreign

126 3. Prohibition to accept foreign contribution.—(1) No foreign contribution shallbe accepted by any—

(a) candidate for election;

(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher ofa registered newspaper;

(c) public servant, Judge, Government servant or employee of any corporationor any other body controlled or owned by the Government;

(d) member of any Legislature;

(e) political party or office-bearer thereof;

D(f) organisation of political nature as may be specified under sub-section (1)of section 5 by the Central Government;

(g) association or company engaged in the production or broadcast of audionews or audio visual news or current affairs programmes through any electronicmode, or any other electronic form as defined in clause (r) of sub-section (1) ofsection 2 of the Information Technology Act, 2000 (21 of 2000) or any othermode of mass communication;E(h) correspondent or columnist, cartoonist, editor, owner of the association orcompany referred to in clause (g).

Explanation.1—For the purpose of clause (c), “public servant” means public servantas defined in section 21 of the Indian Penal Code (45 of 1860).

Explanation 2.—In clause (c) and section 6, the expression “corporation” means acorporation owned or controlled by the Government and includes Governmentcompany as defined in clause (45) of section 2 of the Companies Act, 2013 (18 ofF2013).

(2) (a) No person, resident in India, and no citizen of India resident outside India, shallaccept any foreign contribution, or acquire or agree to acquire any currency from aforeign source, on behalf of any political party, or any person referred to in sub-section(1), or both.

(b) No person, resident in India, shall deliver any currency, whether Indian or foreign,which has been accepted from any foreign source, to any person if he knows or hasGreasonable cause to believe that such other person intends, or is likely, to deliver suchcurrency to any political party or any person referred to in sub-section (1), or both.(c) No citizen of India resident outside India shall deliver any currency, whether Indianor foreign, which has been accepted from any foreign source, to—

(i) any political party or any person referred to in sub-section (1), or both; or(ii) any other person, if he knows or has reasonable cause to believe that suchother person intends, or is likely, to deliver such currency to political party orHto any person referred to in sub-section (1), or both.

contribution by specified persons. Section 4[127] is to declare that nothingin Section 3 shall apply to the acceptance, by any person specified inthat section, of any foreign contribution where such contribution isaccepted by him, subject to the provisions of Section 10 in respect ofmatters provided therein. Section 5 is about the procedure to notify anorganisation of political nature. Section 6 deals with restriction onacceptance of foreign hospitality. Section 7 is about prohibition on transferof foreign contribution to other persons. Section 8[128 ]is about restriction

(3) No person receiving any currency, whether Indian or foreign, from foreign sourceon behalf of any person or class of persons, referred to in section 9, shall deliver suchcurrency—

(a) to any person other than person for which it was received, or

(b) to any other person, if he knows or has reasonable cause to believe thatsuch other person intends, or is likely, to deliver such currency to person other thanthe person for which such currency was received.

127 4. Persons to whom section 3 shall not apply.—Nothing contained in section 3shall apply to the acceptance, by any person specified in that section, of any foreigncontribution where such contribution is accepted by him, subject to the provisions ofsection 10,—

(a) by way of salary, wages or other remuneration due to him or to any groupof persons working under him, from any foreign source or by way of paymentin the ordinary course of business transacted in India by such foreign source; or(b) by way of payment, in the course of international trade or commerce, or inthe ordinary course of business transacted by him outside India; or

(c) as an agent of foreign source in relation to any transaction made by suchforeign source with the Central Government or State Government; or

(d) by way of gift or presentation made to him as member of any Indiandelegation, provided that such gift or present was accepted in accordance withthe rules made by the Central Government with regard to the acceptance orretention of such gift or presentation; or

(e) from his relative; or

(f) by way of remittance received, in the ordinary course of business throughany official channel, post-office, or any authorised person in foreign exchangeunder the Foreign Exchange Management Act, 1999 (42 of 1999); or

(g) by way of any scholarship, stipend or any payment of like nature:

Provided that in case any foreign contribution received by any personspecified under section 3, for any of the purposes other than those specifiedunder this section, such contribution shall be deemed to have been accepted incontravention of the provisions of section 3.

128 8. Restriction to utilise foreign contribution for administrative purpose.—(1)Every person, who is registered and granted certificate or given prior permissionunder this Act and receives any foreign contribution,—

(a) shall utilise such contribution for the purposes for which thecontribution has been received:

Provided that any foreign contribution or any income arising out of itshall not be used for speculative business:

Ato utilise foreign contribution for administrative purpose. Section 9[129]speaks about power of Central Government to prohibit receipt of foreigncontribution and matters connected therewith. Section 10[130] is about the

Provided further that the Central Government shall, by rules, specifythe activities or business which shall be construed as speculative business forthe purpose of this section;

(b) shall not defray as far as possible such sum, not exceeding twenty per cent.of such contribution, received in financial year, to meet administrative expenses:Provided that administrative expenses exceeding twenty per cent. ofsuch contribution may be defrayed with prior approval of the CentralGovernment.

(2) The Central Government may prescribe the elements which shall be includedCin the administrative expenses and the manner in which the administrativeexpenses referred to in sub-section (1) shall be calculated.

129 9. Power of Central Government to prohibit receipt of foreign contribution,

etc., in certain cases.—The Central Government may—

(a) prohibit any person or organisation, not specified in section 3, fromaccepting any foreign contribution;

(b) require any person or class of persons, not specified in section 6, to

Dobtain prior permission of the Central Government before accepting any foreignhospitality;

(c) require any person or class of persons not specified in section 11, tofurnish intimation within such time and in such manner as may be prescribed as to theamount of any foreign contribution received by such person or class of persons as thecase may be, and the source from which and the manner in which such contribution wasreceived and the purpose for which and the manner in which such foreign contributionEwas utilised;

(d) without prejudice to the provisions of sub-section (1) of section 11,require any person or class of persons specified in that sub-section to obtain priorpermission of the Central Government before accepting any foreign contribution;(e) require any person or class of persons, not specified in section 6, tofurnish intimation, within such time and in such manner as may be prescribed, as to theFreceipt of any foreign hospitality, the source from which and the manner in which suchhospitality was received:

Provided that no such prohibition or requirement shall be made unless theCentral Government is satisfied that the acceptance of foreign contribution by suchperson or class of persons, as the case may be, or the acceptance of foreign hospitalityby such person, is likely to affect prejudicially—

(i) the sovereignty and integrity of India; or

(ii) public interest; or

(iii) freedom or fairness of election to any Legislature; or

(iv) friendly relations with any foreign State; or

(v) harmony between religious, racial, social, linguistic or regional groups,castes or communities.

130 10. Power to prohibit payment of currency received in contravention of theAct.—Where the Central Government is satisfied, after making such inquiry as it mayHdeem fit, that any person has in his custody or control any article or currency or

power of the Central Government to prohibit payment of currencyreceived in contravention of the Act.

34. The provisions of Chapter III deal with the subject ofregistration. Section 11[131 ]is about registration of certain persons withCentral Government. Section 12 is about grant of certificate of registration

security, whether Indian or foreign, which has been accepted by such person incontravention of any of the provisions of this Act, it may, by order in writing, prohibitsuch person from paying, delivering, transferring or otherwise dealing with, in anymanner whatsoever, such article or currency or security save in accordance with thewritten orders of the Central Government and copy of such order shall be servedupon the person so prohibited in the prescribed manner, and thereupon the provisionsof sub-sections (2), (3), (4) and (5) of section 7 of the Unlawful Activities (Prevention)Act, 1967 (37 of 1967) shall, so far as may be, apply to, or in relation to, such articleor currency or security and references in the said sub-sections to monies, securities orcredits shall be construed as references to such article or currency or security.

131 11. Registration of certain persons with Central Government.— (1) Save asotherwise provided in this Act, no person having definite cultural, economic,educational, religious or social programme shall accept foreign contribution unless suchperson obtains certificate of registration from the Central Government:

Provided that any association registered with the Central Government undersection 6 or granted prior permission under that section of the Foreign Contribution(Regulation) Act, 1976 (49 of 1976), as it stood immediately before the commencementof this Act, shall be deemed to have been registered or granted prior permission, as thecase may be, under this Act and such registration shall be valid for period of five yearsfrom the date on which this section comes into force.

(2) Every person referred to in sub-section (1) may, if it is not registered with theCentral Government under that sub-section, accept any foreign contribution only afterobtaining the prior permission of the Central Government and such prior permissionshall be valid for the specific purpose for which it is obtained and from the specificsource:

Provided that the Central Government, on the basis of any information orreport, and after holding summary inquiry, has reason to believe that person whohas been granted prior permission has contravened any of the provisions of this Act, itmay, pending any further inquiry, direct that such person shall not utilise the unutilisedforeign contribution or receive the remaining portion of foreign contribution which hasnot been received or, as the case may be, any additional foreign contribution, withoutprior approval of the Central Government:

Provided further that if the person referred to in sub-section (1) or in thissub-section has been found guilty of violation of any of the provisions of this Act orthe Foreign Contribution (Regulation) Act, 1976 (49 of 1976), the unutilised or unreceivedamount of foreign contribution shall not be utilised or received, as the case may be,without the prior approval of the Central Government.

(3) Notwithstanding anything contained in this Act, the Central Government may, bynotification in the Official Gazette, specify—

(i) the person or class of persons who shall obtain its prior permission beforeaccepting the foreign contribution; or

Aand the procedure therefor. Section 12A has been inserted vide the 2020Act providing for power of Central Government to require Aadhaarnumber etc., as identification document at the time of registration or forrenewal of certificate. Section 13 deals with situations where certificateof registration can be suspended and Section 14[132] is about cancellationof such certificate. Section 15 deals with issues of management of foreignBcontribution of person whose certificate has been cancelled and Section16[133 ]is about the process of renewal of certificate of registration.

(ii) the area or areas in which the foreign contribution shall be accepted andutilised with the prior permission of the Central Government; or

(iii) the purpose or purposes for which the foreign contribution shall be utilisedCwith the prior permission of the Central Government; or

(iv) the source or sources from which the foreign contribution shall be acceptedwith the prior permission of the Central Government.

132 14. Cancellation of certificate.—(1) The Central Government may, if it is satisfied

after making such inquiry as it may deem fit, by an order, cancel the certificate if—(a) the holder of the certificate has made statement in, or in relation to, theapplication for the grant of registration or renewal thereof, which is incorrect orDfalse; or(b) the holder of the certificate has violated any of the terms and conditions ofthe certificate or renewal thereof; or

(c) in the opinion of the Central Government, it is necessary in the publicinterest to cancel the certificate; or

(d) the holder of certificate has violated any of the provisions of this Act orrules or order made thereunder; orE(e) if the holder of the certificate has not been engaged in any reasonable activityin its chosen field for the benefit of the society for two consecutive years or hasbecome defunct.

(2) No order of cancellation of certificate under this section shall be madeunless the person concerned has been given reasonable opportunity of beingheard.(3) Any person whose certificate has been cancelled under this section shall notFbe eligible for registration or grant or prior permission for period of threeyears from the date of cancellation of such certificate.

133 16. Renewal of certificate.—(1) Every person who has been granted certificateunder section 12 shall have such certificate renewed within six months before theexpiry of the period of the certificate.

Provided that the Central Government may, before renewing the certificate,

Gmake such inquiry, as it deems fit, to satisfy itself that such person has fulfilled allconditions specified in sub-section (4) of section 12.

(2) The application for renewal of the certificate shall be made to the Central Governmentin such form and manner and accompanied by such fee as may be prescribed.

(3) The Central Government shall renew the certificate, ordinarily within ninety daysfrom the date of receipt of application for renewal of certificate subject to such termsand conditions as it may deem fit and grant certificate of renewal for period of fiveHyears:

35. We are not so much concerned with the other Chapters, namely,Chapters IV to IX of the 2010 Act, except Section 17 (in Chapter IV)which deals with foreign contribution through scheduled bank. The otherprovisions in Chapter IV are about accounts, intimation, audit and disposalof assets, etc.

36. As aforesaid, the 2010 Act is to regulate foreign contributionas defined in Section 2(1)(h). As the petitioners are desirous of engagingin definite cultural, economic, educational, religious or social programmeand for doing so accept foreign contribution, they had to seek certificateof registration from the Central Government in terms Section 11. Thecertificate of registration refers to definite activities which will beundertaken by the concerned organisation/trust for utilisation of foreigncontribution. Having shown interest in obtaining such certificate ofregistration or for renewal thereof, it is obligatory for the organisation tocomply with the formalities, including as specified in Sections 7, 12(1A)read with Section 17 or Section 12A. We shall deal with this aspect indetail little later.

37. Besides complying with the formalities for registration underSection 11, the persons interested in receipt/acceptance of foreigncontribution from foreign source after grant of such certificate ofregistration, are obliged to do so only through the FCRA account whichis required to be opened under Section 17 being precondition for grantof certificate of registration or renewal thereof, in terms of Section 12(1A)read with Section 17 of the 2010 Act. That apart, after grant of certificateof registration and acceptance of foreign contribution from foreign sourcethrough the specified account, the same is required to be utilised by therecipient itself only for the purposes for which such permission had beengranted, with prohibition to transfer such foreign contribution to any otherperson by virtue of Section 7 of the 2010 Act.

Validity of Section 7

38. Having said this, now we may revert to the grounds on whichSection 7, as amended vide the 2020 Act, has been challenged. It is

Provided that in case the Central Government does not renew the certificatewithin the said period of ninety days, it shall communicate the reasons therefor to theapplicant:

Provided further that the Central Government may refuse to renew thecertificate in case where person has violated any of the provisions of this Act or rulesmade thereunder.

Aurged that the unamended provision though restricted the transfer offoreign contribution, yet it did not completely prohibit the same unlike theamended Section 7. The amended Section 7 postulates completeprohibition on the transfer of foreign contribution to other person — noteven to person having certificate of registration under the Act. Inother words, person who is registered and granted certificate or hasBobtained prior permission under the Act to receive foreign contributionwill henceforth be required to utilise the amount “itself” and not throughany other person.39. Be it noted that the proviso to the unamended Section 7envisaged that if part of foreign contribution was to be transferred toCsome other person who had not been granted certificate or obtainedprior permission under the 2010 Act, that could be made possible byobtaining prior approval of the Central Government. Even that option isdone away with on account of the amended Section 7.

40. This plea has been countered by the respondents on theDargument that the Parliament in its wisdom has decided to introduce astrict regime in the backdrop of the experience gained from theimplementation of the unamended Section 7 of the 2010 Act; and toeradicate the mischief which had unfolded. Hence, the new dispensationbecame necessary to introduce stricter regime (amended Section 7).EIndisputably, the new regime does not completely prohibit the inflow offoreign contribution as such. Whereas, it is firm dispensation regardingutilisation of the funds so accepted/received from foreign source onlyfor the purposes for which the recipient is registered and granted acertificate or had been given prior permission under the Act in that regard.

F41. The expressions “foreign contribution”[134 ]and “foreign

134 2. Definitions.—(1) In this Act, unless the context otherwise requires,—(a) to (g) xxx xxx xxx

(h) “foreign contribution” means the donation, delivery or transfer made byany foreign source,—

(i) of any article, not being an article given to person as gift for his personalGuse, if the market value, in India, of such article, on the date of such gift, is notmore than such sum as may be specified from time-to-time, by the CentralGovernment by the rules made by it in this behalf;

(ii) of any currency, whether Indian or foreign;

(iii) of any security as defined in clause (h) of section 2 of the SecuritiesContracts (Regulation) Act, 1956 (42 of 1956) and includes any foreign securityas defined in clause (o) of section 2 of‘ the Foreign Exchange Management Act,H1999 (42 of 1999).

source”[135 ]have been defined in Sections 2(1)(h) and 2(1)(j) of the 2010Act as amended.

Explanation 1.—A donation, delivery or transfer of any article, currency orforeign security referred to in this clause by any person who has received itfrom any foreign source, either directly or through one or more persons, shallalso be deemed to be foreign contribution within the meaning of this clause.Explanation 2.—The interest accrued on the foreign contribution deposited inany bank referred to in sub-section (1) of section 17 or any other incomederived from the foreign contribution or interest thereon shall also be deemed tobe foreign contribution within the meaning of this clause.Explanation 3.—Any amount received, by any person from any foreign sourcein India, by way of fee (including fees charged by an educational institution inIndia from foreign student) or towards cost in lieu of goods or services renderedby such person in the ordinary course of his business, trade or commercewhether within India or outside India or any contribution received from anagent of foreign source towards such fee or cost shall be excluded from thedefinition of foreign contribution within the meaning of this clause;135 2. Definitions.—(1) In this Act, unless the context otherwise requires,—

(a) to (i) xxx xxx xxx

(j) “foreign source” includes,—

(i) the Government of any foreign country or territory and any agency ofsuch Government;

(ii) any international agency, not being the United Nations or any of itsspecialised agencies, the World Bank, International Monetary Fund or suchother agency as the Central Government may, by notification, specify inthis behalf;

(iii) foreign company;

(iv) corporation, not being foreign company, incorporated in foreigncountry or territory;

(v) multi-national corporation referred to in sub-clause (iv) of clause (g);(vi) company within the meaning of the Companies Act, 1956 (1 of 1956),and more than one-half of the nominal value of its share capital is held,

either singly or in the aggregate, by one or more of the following, namely:—

(A) the Government of foreign country or territory;

(B) the citizens of foreign country or territory;

(C) corporations incorporated in foreign country or territory;

(D) trusts, societies or other associations of individuals (whetherincorporated or not), formed or registered in foreign country orterritory;

(E) foreign company;

Provided that where the nominal value of share capital is within the limitsspecified for foreign investment under the Foreign Exchange Management Act,1999 (42 of 1999), or the rules or regulations made thereunder, then,notwithstanding the nominal value of share capital of company being morethan one-half of such value at the time of company being more than one-halfof such value at the time of making the contribution, such company shall not bea foreign source;

A42. Section 11 of the Act, as applicable vide the Amendment Actof 2020, is in one sense complete prohibition to receive foreign contributionunless have obtained certificate of registration or prior permission fromthe Central Government in that regard. Further, Section 11 allows receiptor acceptance of foreign contribution only for definite purposes such ascultural, economic, educational, religious or social programme.B

43. person desirous of receiving/accepting foreign contributionfor such definite purposes had to seek certificate of registration fromthe Central Government even under the unamended provision. Afterobtaining such certificate of registration, the recipient of foreigncontribution could transfer it to another person who is also registeredCand had been granted certificate or obtained prior permission underthe 2010 Act. However, that is not permissible under the new dispensation(amended Section 7). For, the legislative intent is now one of completeprohibition regarding transfer of foreign contribution to third party.

44. Significantly, as per the scheme of the 2010 Act, certificateDof registration is not granted for acting as an intermediary between thedonor (foreign source) and the grassroot level organisation. The amendedprovision, therefore, completely rules out such transfer of foreigncontribution by the person who has received/accepted the same in thefirst place. That does not prevent the recipient from utilising the foreignEcontribution “itself” for the purposes for which he has been granted acertificate of registration or obtained prior permission under the Act.

45. The expression “transfer” has not been defined in the Act.The meaning of expression “transfer” in the subject enactment wouldpresuppose giving away of the foreign contribution in whole or in part toFthird person without retaining any control thereon; and such change ofhands is obviously without offering any services in return, namely, freeof costs. The third person would then be free to deal with such transferredforeign contribution in the manner he chooses to do so, whilst adheringto the conditions specified in his certificate of registration or the conditionsspecified in the prior permission under the Act, as the case may be. InG

(vii) trade union in any foreign country or territory, whether or not registeredin such foreign country or territory;

(viii) foreign trust or foreign foundation, by whatever name called, or suchtrust or foundation mainly financed by foreign country or territory;

(ix) society, club or other association of individuals formed or registeredoutside India;

(x) citizen of foreign country;

this scenario, it had been possible that the transferor (who had acceptedthe foreign contribution) may have persuaded the foreign source to donatefor one permitted purpose, but without consulting the donor (foreignsource) could transfer the whole or part amount (foreign donation) tothird person (transferee) for being utilised for altogether another purpose,which in given case may not be acceptable to the donor. It, thus, pavedway for misutilisation of foreign contribution and the possibility of abusethereof.

46.There is no restriction regarding utilisation of foreign contribution,leave alone complete prohibition. The rationale of Section 7 as amended,inter alia, is that the donor (foreign source) is made fully aware of thedefinite purposes already declared by the recipient and permitted by thecompetent authority and corresponding obligation upon the recipientregarding utilisation of the funds itself for stated purposes and none else.

47. Indeed, even the expression “utilisation” has not been definedin the Act. The ordinary meaning of expression “utilisation” must beunderstood in the context of the purpose for which certificate ofregistration or prior permission under the Act has been granted by theCentral Government. If the foreign contribution is utilised for such definitepurposes[136], including administrative expenses permissible under Section

136 Illustrative list of activities permitted as mentioned in the Annual Report(2004-2005) prepared by Ministry of Home Affairs, Foreigners’ Division, FCRAWing read thus:

“1. Religious

• Celebrations of religious functions/festivals etc.; • Construction/repair/maintenanceof places of worship, religious schools.; • Education of priests and preachers(dissemination of the message of good will etc. from the holy books).; • Publication anddistribution of religious books/ literature.; · Maintenance of priests / preachers / otherreligious functionaries.; • Any other activities related to the above.

2. Educational

• Construction and maintenance of schools/colleges.; • Construction and running ofhostels for poor students.; • Grant of stipends/ scholarships/ assistances in cash orkind to poor/deserving children.; • Purchase and supply of educational material-books,notebooks etc.; • Conducting adult literacy programs.; • Conducting research.; • Non-formal education/schools for the mentally challenged.; • Non-formal education projects/coaching classes.; • Any other activities related to the above.

3. Economic·

• Following but not being commercial or profit making activities: • Micro-financeprojects, including setting up banking co-operatives and self-help groups.; • Self-sustaining income generation projects/schemes. • Agricultural activities.; • Ruraldevelopment programmes/schemes.; • Animal husbandry projects.; • Setting up andrunning handicraft centres/cottages and khadi industry/social forestry projects.; •

A8, even though it may theoretically entail in transfer of foreigncontribution, it would not be case attracting the rigors of Section 7. Inother words, Section 7 may be attracted if the utilisation is not for thedefinite or permitted purposes for which the certificate of registration orpermission under the Act has been granted by the competent authority.Indeed, if the recipient of foreign contribution engages services of someBthird party or outsources its certain activities to third person, whilstundertaking definite activities itself and had to pay therefor, it would bea case of utilisation. The transfer within the meaning of Section 7,therefore, would be case of per se (simplicitor) transfer by the recipientof foreign contribution to third party without requiring to engage in the

CVocational training, tailoring, motor repairs, computers etc.; • Projects for income generationactivities or any other developmental projects for urban slum development.; • Any otheractivities related to the above, not being commercial activities.4. Social

• Construction/running of hospitals/dispensaries/clinics.; • Construction of communityhalls etc.; • Construction and management of old age homes.; • Welfare of the old agedDpersons or widows.; • Construction and management of orphanage.; • Welfare of theorphans.; • Construction and management of dharamshalas/shelters.; • Holding of freemedical/health/family welfare/immunisation camps.; • Supply of free medicine, andmedical aids, including hearing aids, visual aids, family planning aids etc.; • Provision ofaids such as tricycles, callipers etc. to the handicapped.; • Treatment/rehabilitation ofdrug addicts.; • Welfare/empowerment projects/schemes for women.; • Welfare ofchildren.; • Provision of free clothing/food to the poor, needy and destitutes.; • Relief/Erehabilitation of victims of natural calamities.; • Help to the victims of riots/other socialdisturbances.; • Digging of bore wells.; • Sanitation including community toilets etc.; ·Awareness camps/ seminars/ workshops / meetings / conferences.; • Providing freelegal aids/running legal aid centres.; • Holding sports meet.; • Promoting awarenessabout Acquired Immune Deficiency Syndrome (AIDS)/treatment and rehabilitation ofpersons affected by AIDS.; • Welfare of the physically and mentally challenged.; ·Welfare of the Schedules Castes.; • Welfare of the Scheduled Tribes.; • Welfare of theFBackward Classes.; • Environmental programs.; • Survey for socio-economic and otherwelfare programs.; • Preservation and maintenance of wild life.; • Preservation of naturalresources.; • Awareness against social evils.; • Rehabilitation of victims of heinouscrimes.; • Rehabilitation of beggars, bootleggers, child labour etc.; • Creating awarenessof Government schemes & laws to general public.; • Any other activities related to theabove.

5. Cultural·GCelebration of national events (Independence/Republic day/festivals).; • Theatre/films/puppet show/road show etc.; • Maintenance of places of historical and culturalimportance.; • Preservation of ancient/tribal art forms.; • Preservation and promotion ofcultural heritage orliterature of India.; • Cultural shows.; • Any other activities relatedto the above.”

definite activities of cultural, economic, educational or social programmeof the recipient of foreign contribution, for which the recipient hadobtained certificate of registration from the Central Government. Onthis interpretation, it must follow that the argument regarding amendedSection 7, being ultra vires, must fail.

48. Concededly, Section 8 permits the recipient of foreigncontribution to utilise only specified portion thereof for administrativepurposes, to the extent permissible. As per Section 8, the administrativeexpenses qua foreign contribution received by the registered personought not to exceed twenty per cent (instead of fifty per cent under theunamended provision) of such contribution in the concerned financialyear. The proviso to Section 8(1), however, enables spending beyondtwenty per cent towards administrative expenses with prior approval ofthe Central Government. Be it noted, the validity of amended Section 8is not put in issue in these petitions.

49. On conjoint reading of Sections 7 and 8, as amended, thelegislative intent of mandating utilisation of foreign contribution by therecipient itself for the purposes for which it had been permitted getsreinforced. Additionally, Sections 12(4)(b) and 18 of the 2010 Act alsoreinforce such view — which predicates that the person who hasbeen granted certificate of registration or given prior approval under theAct, is obliged to give intimation to the Central Government and suchother authorities as may be specified by the Central Government as tothe amount of each foreign contribution received by it, the source fromwhich and the manner in which such foreign contribution was received,and the purposes for which, and the manner in which such foreigncontribution was utilised by him. This information may facilitate inquirymechanism and to reassure that the foreign contribution accepted by theperson has been utilised for definite purposes permitted by the competentauthority. Any breach of this stipulation may entail in penal action underthe Act.

50. It was vehemently urged before us that since the transfereewould also possess certificate of registration and bound by the provisionsof the 2010 Act, it would serve no legitimate purpose by prohibiting transferof foreign contribution to such person. Accepting this argument wouldbe completely glossing over the legislative intent for which the amendmenthas been effected. The legislative intent is to introduce strict dispensationqua the recipient of foreign contribution to utilise the same “itself” for

Athe purposes for which it has been permitted as per the certificate ofregistration or permission granted under the Act by the CentralGovernment. In addition, by the same Amendment Act, utilisation offoreign contribution for administrative purpose by the recipient has beenlowered to twenty per cent only with view to ensure maximum spendingon the purposes for which the foreign contribution has been accepted byBthe recipient having certificate of registration.

51. Absent such stringent provision, some of the recipientorganisations were reportedly indulging in successive chain of transfersto other organisations, thereby creating layered trail of money and alsoutilisation of funds towards administrative costs of successive transfersCupto fifty per cent leaving very little funds for spending on the purposesfor which it was permitted. Hence, providing complete restriction ontransfer simplicitor, was the just option to fix accountability of the recipientorganisation and maximise utilisation for the permitted purposes. Suchbeing the avowed objective and purpose of the amendment, the challenge

to the amended Section 7 must fail.D

52. Be that as it may, the fact that earlier transfer of foreigncontribution was permitted as per the unamended provision, that by itselfcannot be the basis to challenge the validity of the amended provision.For, it is open to the Parliament to change the benchmark of restrictionfrom higher standard to lower standard or vice versa on the basis of theEexigencies and experience gained during the implementation of theapplicable provision at the relevant time.

53. Indubitably, foreign contribution is qualitatively different fromforeign investment. Receiving foreign donation cannot be an absolute oreven vested right. By its very expression, it is reflection on theFconstitutional morality of the nation as whole being incapable of lookingafter its own needs and problems. The question to be asked is: “in normaltimes”, why developing or developed countries would need foreigncontribution to cater to their own needs and aspirations? Indisputably,the aspirations of any country cannot be fulfilled on the hope (basis) offoreign donation, but by firm and resolute approach of its own citizens toGachieve the goal by sheer dint of their hard work and industry. Indeed,charitable activity is business. Receiving contribution within India todo charitable activity can be and is being regulated differently. It is notpossible to have similar approach relating to foreign contribution fromforeign source. In short, no one can be heard to claim vested right to

Haccept foreign donation, much less an absolute right.

54. We say so because the theory of possibility of national politybeing influenced by foreign contribution is globally recognised. For, foreigncontribution can have material impact in the matter of socio-economicstructure and polity of the country. The foreign aid can create presenceof foreign contributor and influence the policies of the country. It maytend to influence or impose political ideology. Such being the expanse ofthe effect of foreign contribution coupled with the tenet of constitutionalmorality of the nation, the presence/inflow of foreign contribution in thecountry ought to be at the minimum level, if not completely eschewed.The influence may manifest in different ways, including in destabilisingthe social order within the country. The charitable associations may insteadfocus on donors within the country, to obviate influence of foreign countryowing to foreign contribution. There is no dearth of donors within ourcountry.

55. Pertinently, the 1976 Act came to be repealed by the 2010Act, as it had become necessary to do so because of the experiencegained that in the name of foreign contribution, attempts were made byunscrupulous entities to disturb the economy and sovereignty of ourcountry. That being the underlying reason, it must follow that the legislativeintent behind the Act and constant effort of the Government and of theParliament is to discourage foreign contribution generally, but allow itfor specific definite purposes mentioned in Section 11 of the Act; and forwhich, the person receiving or accepting foreign contribution is obligedto obtain certificate of registration under the Act or prior permission,as the case may be. Further, such person is obligated to comply all thestipulations attached to the certificate of registration or prior permission,without any exception.

56. Apparently, receiving “foreign exchange” is itself completelyprohibited and made subject to exceptions provided for in terms of theForeign Exchange Management Act, 1999[137]. On conjoint reading ofthe provisions of the 1999 Act and the regulatory mechanism providedfor in the 2010 Act, it is clear pointer to the strict regime to be followedby all concerned for allowing inflow of “foreign contribution” (donation)in the manner prescribed and its utilisation only for definite purposespermitted by the competent authority.

57. We fail to understand as to how such provision (amendedSection 7) can be regarded as discriminatory or so to say vague or137 for short, “the 1999 Act”

Airrational much less manifestly arbitrary. The restriction therein appliesto class of persons who are permitted to accept foreign donation forbeing utilised by themselves for the definite purposes, without anydiscrimination and it is so done to uphold the objective of the PrincipalAct. Thus, there is clear intelligible differentia with direct nexus soughtto be achieved with the intent of the Principal Act. Such strict regimeBhad become inevitable because of the experience gained by theconcerned authorities over period of time, including about the abuse ofthe earlier dispensation under the unamended provision.

58. The change not only completely prohibits transfer, but alsoenhances the efficacy of the foreign contribution by mandating utilisationCthereof by the person granted certificate of registration itself, for thepurposes for which it had been accepted in terms of the certificate ofregistration or prior permission granted under the Act, as the case maybe, including upto prescribed administrative expenses. This restrictioninevitably fixes the accountability of the recipient organisation andDmandating maximum utilisation by itself for permitted purposes. This isthe procedure established by law. It can neither be said to be arbitrarynor discriminatory much less manifestly arbitrary — within the meaningof Article 14 or impinging upon Article 21 of the Constitution. As matterof law, since the subject Act deals with distinct class of persons(accepting/receiving foreign contribution) and it is founded on anEintelligible differentia having object sought to be achieved by the PrincipalAct, it fulfils the test predicated in Shayara Bano[138]. For the samereason, the amended provision under challenge is neither capricious,irrational or lacking determining principle, nor suffers from the vice ofexcessiveness and being disproportionate.F

59. We need to bear in mind that there is presumption that theParliament understands and reacts to the needs of its own people as perthe exigencies and experience gained in the implementation of the law.Mere plea of inconvenience is not enough to attract the constitutionalinhibition. The Courts ought not to adopt doctrinaire approach inGconstruing the amended provisions and undermine the legislative intentof strengthening the regulatory mechanism concerning foreigncontribution. The legislature enjoys considerable latitude while exercisingits wisdom on the basis of inputs collated from different quarters[139].

138supra at Footnote No.18

H139see Ombalika Das vs. Hulisa Shaw (supra at Footnote No.79)

There is intrinsic evidence to indicate that the change effected by theamendments is to serve the legitimate Government purpose and has arational nexus to the object of the Principal Act and the amendments,and that the pre-amendment dispensation (unamended Section 7) wasnot sufficient to effectively regulate the acceptance and utilisation offoreign contribution as predicated by the Principal Act.

60. Reliance placed by the petitioners on the dictum in ShreyaSinghal[140] and K.S. Puttaswamy[141] to urge that it is open to the Courtto test the amendment on the touchstone of manifestly arbitrary, neednot detain us in light of the conclusion noted hitherto, keeping in mind thelegislative history and the compelling necessity to adopt strict regime forprohibiting “transfer” of foreign contribution and insistence of “utilisation”thereof by the recipient himself/itself. For the same reasons, the dictumin Anuradha Bhasin[142 ]that the underlying consideration ofappropriateness, necessity and the least restrictive measure compliantlaw, will also be of no avail.61. The argument that this Court in the case of INSAF[143],whiledealing with the provisions of the 1976 Act had recognised the absoluteright to receive foreign contribution is misplaced and misreading of thatdecision. For, the said decision examined the arguments pursued beforethe Court in the context of challenge to the validity of Section 5(1) and5(4) of the 2010 Act and Rule 3(i), 3(v) and 3(vi) of the 2011 Rules asbeing violative of Articles 14, 19(1)(a), 19(1)(c) and 21 of the Constitution.The provisions in Rule 3(v) and 3(vi) were read down to mean that theexpression “political interests” occurring therein be construed to meanthat it would apply only to those organisations which have connectionwith active politics or take part in party politics. Strikingly, even in thisdecision the Court noted the object sought to be achieved by the 2010Act. To wit, to ensure that Parliamentary institutions, political associationsand academic and other voluntary organisations as well as individualsworking in the important areas of national life should function in mannerconsistent with the values of sovereign democratic republic withoutbeing influenced by foreign contributions or foreign hospitality. The Courtwent on to observe that long title of the Act makes it clear that the

140 supra at Footnote No.117

141 supra at Footnote No.7

142 supra at Footnote No.21 (paras 154-159)

143 supra at Footnote No.22

Aregulation of acceptance and utilisation of foreign contribution is for thepurpose of protecting “national interests” and to prohibit organisationsof political nature from receiving foreign contributions.

62. That being the underlying purpose for which the Act has beenenacted, whilst interpretating the amended provisions, we cannot beBoblivious to the concern expressed by the Parliament, about the state ofaffairs and the fallout of the implementation of the dispensation enunciatedunder the unamended Act. As the Parliament took well informed andconscious decision to alter that position — to make it strict regulatoryregime of not permitting the recipient of foreign contribution to transferthe funds to third party for the reasons weighed with it, it must followCthat the provision is in the interests of the sovereignty and integrity of thecountry, public order and in the interests of the general public.63. The question posed to us was: whether such restriction canbe said to be reasonable restriction or impinges upon the right of anyperson? While examining the issue as to whether the amended provisionDis reasonable restriction, the Court cannot be oblivious to the concernof the Parliament/Legislature backed by the past experiences includingcancellation of registration of substantial number of registration certificatesafter due inquiry and for tangible reasons owing to abuse and misutilisationof foreign contribution (donation); and especially when receipt orEacceptance of foreign exchange or be it foreign contribution, is otherwiseunderstood to be ordinarily prohibited. For, the “foreign exchange” andmore so “foreign contribution” can be received or brought within theterritory of India only as per the dispensation provided for in the municipallaw. There can be no absolute right in that regard. The fact that transferwas permitted under the unamended Section 7, it does not follow thatFthe Parliament is not competent to amend that dispensation to make itmore stringent, including to completely prohibit the inflow of foreigncontribution. The amended provision is not to completely prohibit inflowof foreign contribution, but is regulatory measure to permit acceptanceby registered persons or persons having prior permission to do so withGcondition that they must themselves utilise the entire contribution includingfor administrative expenses within the limits provided under Section 8 ofthe Act. The subject enactment is essentially conceived in the interestsof public order and also general public as the intent is to prevent misuseand misutilisation of foreign contribution coming from foreign sources tosafeguard the values of sovereign democratic republic.H

64. Thus understood, it is reasonable restriction as it does nothinder with the right of forming associations as well as to engage inbusiness of charity. Being regulatory measure necessitated becauseof past experience and to uphold the intent of the Principal Act, insistingfor utilisation, spending of foreign contribution by the recipient itself cannotbe said to be irrational, arbitrary, discriminatory, or unreasonable restrictionas such.

65. The restriction or complete prohibition on transfer to thirdparty, by no standards deprive acceptance of foreign contribution andutilisation thereof in the manner permitted for definite purposes, such ascultural, economic, educational or social programme. Such provisionmust be understood as being procedure established by law in the interestsof the general public and in the interests of sovereignty and integrity ofthe country, including public order. Resultantly, there is no infraction evenof Article 19(1)(c) or 19(1)(g) of the Constitution as urged by the writpetitioners before us, including Articles 14 and 21 of the Constitution.Consistent with this view, we must reject the challenge to the amendedSection 7 on all counts.66. For the same reason, the argument of the writ petitionersabout lack of rational nexus with the object sought to be achieved by thePrincipal Act much less the Amendment Act, must also fail. The rationaleis of larger public interests and more particularly to obviate adverseimpact on the economy, public order, sovereignty and integrity of thecountry. Such amendment has been necessitated because of the pastexperience consequent to implementation of the unamended Section 7of the 2010 Act. It is so highlighted in the objects and reasons and theintroduction of the Amendment Act. It can also be culled out from thedebates in the Parliament whilst considering the Amendment Bill in therespective Houses. To overcome the mischief and to enhancetransparency and accountability regarding acceptance and also utilisationof foreign contribution which is quite substantial every financial yearhaving proliferating effect on the economy of the nation, it had becomenecessary to enact amended Section 7. In other words, there is clearrationale behind the amendment which is consistent with the purpose ofthe Principal Act and the object sought to be achieved under theenactments. The fact that unamended provision was less restrictive,cannot be the basis to test the constitutional validity of the provision onthe touchstone of Article 19(1)(c) or 19(1)(g) or Articles 14 and 21 of

Athe Constitution. The amended Section 7, being plain and clear and havingnexus with the object sought to be achieved and is necessitated becauseof sovereignty and integrity of India or security of the State, public orderand in the interests of the general public. It is unfathomable as to howthe amended provision can be regarded as unconstitutional on anyparameter.B

67. It is urged that Rule 24 of the 2011 Rules came to be deletedwith effect from 10.11.2020. This rule enabled the registered organisationsto transfer foreign contribution to any unregistered person in the mannerprovided therein. However, in light of amendment to Section 7 prohibitingtransfer of foreign contribution to any person, the need for the dispensationCpredicated in Rule 24 had become non-existent. In other words, as peramended Section 7, there is no need to continue Rule 24 on the statutebook and its continuance for some time would also make no differencein the wake of express prohibition in amended Section 7 of the 2010 Act.

Validity of Section 12(1A) and Section 17(1)D

68. Section 12(1A) has been inserted by Act 33 of 2020, whichenvisages that every person who makes an application under sub-Section(1) of Section 12 is obliged/required to open FCRA account in the mannerspecified in Section 17 and mention details of such account in hisapplication. Section 17, in particular sub-Section (1) as amended,Emandates that every person who had been granted certificate or priorpermission under Section 12 shall receive foreign contribution only in anaccount designated as FCRA account in the specified bank. Theunamended Sections 12 and 17 did not impose such restriction. Notably,as per the new regime foreign remittances are being received throughFSWIFT platform by international banking wherein certain mandatoryfields are required to be captured apart from other details transactionwise. Further, foreign remittances do not have structured framework,including disclosures regarding purposes. All these deficiencies will standresolved thereby enhancing the monitoring mechanism in real-time basis,remittance wise by adopting the new dispensation predicated in theGamended provisions.

69. Once again, the need to strictly regulate the inflow of foreignfunds and to oversee utilisation thereof for the purposes for which it hasbeen received having been recognised and being the rationale behindthe Amendment Act, including owing to the experience regarding abuse

of the regime under the unamended provision, the challenge to suchamendment cannot be taken forward.

70. There is force in the argument of the respondents that Section17 came to be amended aftermath realisation of clear and discerniblelacunae had cropped in due to the presence of FCRA accounts of scoresof registered organisations, in different scheduled banks across thecountry. The challenge became more pronounced due to doubling offoreign contribution inflow in the last decade which had impacted theefficiency of monitoring and achieving the object of the Principal Act.The amended provision now mandates that FCRA accounts of all theregistered persons/organisations are required to be opened in oneparticular branch in the country providing for essential information andfields, thereby ensuring complete and transparent check on the inflowand utilisation of foreign contribution towards single point source onreal-time basis.

71. The fact that earlier FCRA account could be opened in anyscheduled bank, cannot preclude the Parliament from legislating lawwhich requires inflow of foreign contribution in some other mannerspecified by law. Merely because the framework of acceptance offoreign contribution had been changed cannot be the basis to questionthe validity of the amended provisions. Introducing change for thebetterment of governance is the prerogative and wisdom of theParliament. The FCRA account operators cannot claim right of continuityof deficient and flawed framework. Ordinarily, convenience of businessand persons engaged in doing business must be uppermost in the mind ofthe Parliament/Legislature — to effectuate the goal of ease of doingbusiness. However, the strict regime had become essential because ofthe past experience of abuse and misutilisation of the “foreigncontribution” and cancellation of certificates of as many as 19,000registered organisations on the ground of being grossly non-compliant.Despite such cancellation of large number of certificates of registration,until December 2021 there were reportedly 22,762 FCRA registeredorganisations presumably compliant with new dispensation. Further, asmany as 12,989 organisations have applied for the renewal of the FCRAlicence between 30.09.2020 and 31.12.2021. And as many as 5,789organisations had not applied for renewal of FCRA licence, whose FCRAlicence has ceased to be valid. fortiori, it would certainly justify theneed to have holistic approach to ensure that the objective of the

APrincipal Act is fulfilled, namely, of strict regulation of the inflow andutilisation of foreign contribution for the purposes for which it is sopermitted, such as only cultural, economic, educational or socialprogramme.

72. In fact, the Parliament must be credited with for having takenBrecourse to corrective dispensation for eradicating the mischief, whichany sovereign country can ill-afford. The Parliament is supreme and hasa final say in matters of legislation when it reflects on alternatives andchoices with inputs from different quarters, with check in the form ofdemocratic accountability and further check by the Courts whichCexercise the power of judicial review[144]. We find force in the argumentthat it had become necessary for the Parliament to step in and provide astringent regime for effectively regulating the inflow and utilisation offoreign contribution. Hence, there had been legitimate goal for amendingthe subject provisions of acceptance of funds through one channel.DConcededly, despite the requirement of opening FCRA account in thedesignated bank, it is open to the organisation to utilise the amount soreceived in the FCRA account through multiple accounts in the scheduledbranches. In that sense, it is balanced approach.73. priori, opening of main FCRA account in the designatedEbank as per the law made by the Parliament in that regard, cannot bebrushed aside on the specious argument of some inconvenience beingcaused to the registered associations[145]. Assuming that someinconvenience is likely to be caused to few applicants, but theconstitutionality of statute cannot be assailed on the basis of fortuitousFcircumstances and more so when it being only one-time exercise toensure inflow of foreign contribution through one channel only, being aprecondition for grant of permission. There is no restriction regardingutilisation of the funds only through that (primary) FCRA account. For, itis open to the recipient to operate multiple accounts in other scheduledGbanks for its utilisation.

144 Dr. Ashwani Kumar (supra at Footnote No.47)

145 In Laxmi Khandsari (supra at Footnote No.31) and All India Council forTechnical Education (supra at Footnote No.32), this Court had expounded that on theplea of individual hardships, Court cannot interfere with policy matters (and in presentcases just law made by Parliament).H

74. As matter of law, the validity of the amendments must betested on the touchstone of tenets underlying Articles 14, 19 and 21 ofthe Constitution. The permission is precondition for acceptance andutilisation of foreign contribution. Such persons are separate class andengage in specified activity. It cannot be usual or ordinary business foreveryone and anyone wanting to accept foreign contribution. Permittinginflow of foreign contribution, which is donation, is matter of policyof the State backed by law. In this case, it is governed by the 2010 Actas amended. It is open to the State to have regime which maycompletely prohibit receipt of foreign donation, as no right inheres in thecitizen to receive foreign contribution (donation).

75. The provision such as Section 12(1A) and Section 17(1)introduced by the Amendment Act, is holistic approach adopted by theParliament to provide for strict regulatory measure and for ensuringtransparency and accountability in the matter of foreign contribution.Notably, there was unanimity amongst the members of both the Housescutting across party lines to have such strict regime as indiscriminatereceipt/inflow and more so utilisation of foreign contribution had beenthreatening the sovereignty and integrity of the country itself. Being amatter of security of the State, public order and in the interests of thegeneral public, it is not open to question the validity of such law on thetouchstone of Article 19(1)(c) or 19(1)(g) of the Constitution. It is not aprovision to completely prohibit forming of the associations or engagingin business of charity as such. It is provision for regulating the mannerof doing business more importantly, concerning foreign contribution.

76. Opening of main FCRA account in the designated bank, ashas been rightly contended by the respondents, is only one-time exerciseand for which instructions and protocols have been issued by thecompetent authority, not to insist for physical presence for complyingwith the formalities. It can be organised even at the local branches ofthe designated bank in the manner specified in the instructions issued inthat regard. Moreover, the provision does not prohibit the person/registered association from opening multiple accounts in other scheduledbanks, wherein the amount received in (primary) FCRA account inNDMB can be transferred; and from where day-to-day activities canbe then carried on by them. In any case, the designated bank being

Aconscious of its banking obligations and to provide best services to theregistered associations, have issued instructions (Standard OperatingProcedure) for making it convenient to open FCRA account in NDMBas also to operate the foreign contribution received in such an account.If any further improvement in the operational convenience is required, itBis open to the petitioners and all other interested persons to request thedesignated bank to improve upon such facility. However, merely becausethe registered association has been compelled to open FCRA account inthe designated bank at the centralised location for receipt/inflow of foreigncontribution from foreign source, it does not follow that such arequirement would be manifestly arbitrary or unreasonable. It is only aCone-time exercise to be complied with for availing the permissionaccorded by the Central Government under the Act to be certifiedassociation or person given permission to receive foreign contribution asa precondition.

D77. The need to have only one entry point for the inflow of foreigncontribution had been viewed by the Parliament as the best option forregulating the inflow of foreign contribution. This process is expected toincrease the efficiency in continual supervision of the inflow of foreigncontribution on real-time basis by the concerned Authorities and to enableEthem to take immediate corrective measures to deal with and pre-emptthe impending threat perceived because of its volume including undesirablesource of remittance. It is not open to the Court to have second-guessapproach in that regard.

78. In the context of the law made by the Parliament in the interestsFof the sovereignty and integrity of the country and security of the State,public order, as also in the interests of the general public, such provisioncannot be lightly viewed much less on the specious plea of manifestlyarbitrary. The Parliament in its wisdom had deemed it essential to havesuch provision because of the prevalent discernible circumstancesGreferred to in the introduction of the Bill.

79. It was vehemently urged that there is lack of infrastructure atthe designated bank and that the bank branch is manned only by 40 oddpersonnel. To buttress this plea, reference is made to the observationmade by the Reserve Bank of India — that voluminous data on ForeignH

Remittances will put an extra financial burden on the Bank and increaseits costs including divert focus on monitoring of suspicious transactions.This argument does not commend to us at all. In digital banking operations,it is not the head count dispensing physical services that would matter,but the effectiveness of the software is important. We are also notimpressed by the plea that for organisations located in remote parts ofthe country, there would be impediments and for that reason, Section 7violates test of fairness and reasonableness. In any case, respondentNo.3 (SBI) has on affidavit explained as to the extent of measures takenfor ensuring efficient servicing of FCRA accounts of all the registeredassociations/account holders. Respondent No.3 has also assured that ifneed arises, suitable corrective measures including to upgrade thefacilities/services would be taken at its end. Suffice it to observe that theargument under consideration cannot be the basis to doubt theconstitutional validity of the provisions in the form of Section 12(1A) andSection 17(1), as amended vide the Amendment Act. Needless tounderscore that respondent No.3 has stated on affidavit before this Courtthat FCRA accounts opened in its designated branch can be operatedonline on real-time basis without the need for physical presence of theaccount holder or its officials.80. Having noted that the provision became necessary for efficientregulation of foreign contribution on real-time basis, it can neither besaid to be manifestly arbitrary nor irrational much less without legitimateobjective of the State. Accordingly, we have no hesitation in negatingthe challenge to these provisions as being violative of Articles 14, 19 and21 of the Constitution.

81. The fact that the registered associations were already complyingwith the statutory formalities of furnishing of accounts, intimation, auditand disposal of assets to the satisfaction of the concerned Authorities, itwould not follow that the Parliament/Legislature is denuded of its powerof changing the regulatory mechanism or framework to make it moreeffective and to make it real-time regarding the inflow or receipt offoreign contribution and utilisation thereof for the purposes for which ithas been so permitted. Accepting the argument of the registeredassociations would not only be undermining the legislative intent, butalso disregarding the object sought to be achieved by the Principal Act.

A82. The argument of compelling necessity may have arisen forour consideration only if we were to find that the dispensation providedin the amended provisions is in the nature of complete prohibition toform association or to engage in business. As mentioned earlier, theseprovisions are only for effective regulatory measures concerning andBlimited to foreign contribution, in the larger public interests, public order,and more particularly for safeguarding the sovereignty and integrity ofthe country. Taking any other view would entail in undermining thelegislative intent and cannot be countenanced.

Validity of Section 12AC

83. Reverting to the challenge to the insertion of Section 12A videthe Amendment Act of 2020, it mandates that the person concernedwho seeks prior permission or prior approval under Section 11, or makesan application for grant of certificate under Section 12, including forDrenewal of certificate under Section 16, to provide as identificationdocument, the Aadhaar number of all its office bearers or Directors orother key functionaries. The Statement of Objects and Reasons of theAmendment Act are testimony about the past experience of abuse offoreign contribution receipts and spending on activities not connectedEwith the purposes for which it was so permitted. It had been noticed thatthe inflow of foreign contribution had almost doubled between the years2010 and 2019 and many of the registered associations had failed tocomply with basic statutory formalities necessitating cancellation ofcertificates of registration of more than 19,000 registered organisations.FThis is staggering (substantial) number indicative of gross violations bylarge number of registered associations. More so, this amendment hadbeen necessitated to safeguard the sovereignty and integrity of thecountry, and public order, including in the interests of the security of theState and of the general public. It is law made by the Parliament whichGis competent to make such law concerning the activities related toforeign donations and more particularly about its acceptance in prescribedmanner and utilisation for the purposes defined in the certificate/permission granted by the competent authority. It has legitimate purposeand nexus sought to be achieved with the objective underlying the PrincipalHAct and the subject amendment. It is not open to argue that associations

desirous of obtaining certificate of registration under this Act need notfurnish official identification document pertaining to its key functionaries.

84. Regardless of the above, the provision (Section 12A) envisagesthat copy of the Passport can also be provided as identification documentof all its office bearers or Directors or other key functionaries or OverseasCitizen of India Card, in case of foreigner. The underlying purpose ofthis provision is merely to identify the key functionaries of the registeredassociation so that they can be made accountable for violations, if any.We are of the view that as the Passport in case of foreigner is acceptedas sufficient identification document, there is no reason why such Passportof Indian national cannot be relied upon for the same purpose. Thusunderstood, the challenge to this provision being unreasonable need notdetain us nor is required to be taken any further. Whereas, we hold thatthe provision needs to be construed as permitting furnishing of the IndianPassport of the key functionaries of the applicant who are Indian nationals,for the purpose of their identification.

85. Having said this, it is not necessary to dilate on other argumentspressed into service dealing with matters of privacy or the provisionsunder consideration being manifestly arbitrary.

86. For the view that we have taken, we do not wish to dilate onevery single authority cited across the Bar as the view taken by us is inno way different than the principle expounded therein.

Conclusion

87. To sum up, we declare that the amended provisions vide the2020 Act, namely, Sections 7, 12(1A), 12A and 17 of the 2010 Act areintra vires the Constitution and the Principal Act, for the reasons notedhitherto. As regards Section 12A, we have read down the said provisionand construed it as permitting the key functionaries/office bearers of theapplicant (associations/NGOs) who are Indian nationals, to produce IndianPassport for the purpose of their identification. That shall be regardedas substantial compliance of the mandate in Section 12A concerningidentification.

[2022] 19 S.C.R.

A88. Accordingly, Writ Petition (Civil) Nos. 566 and 751 of 2021are disposed of in the aforementioned terms. Writ Petition (Civil) No.634of 2021 also stands disposed of. No order as to costs.

Pending application(s), if any, are also disposed of.

Bibhuti Bhushan Bose

Writ Petitions disposed of.

(Assisted by : Preetam Bharti, LCRA)