SC clears FCRA changes: Receiving foreign donations not absolute right

Underlining that foreign contributions “may tend to influence or impose political ideology”, the Supreme Court on Friday cleared the Centre’s amendments in 2020 to the Foreign Contribution (Regulation) Act-2010, saying they were “essentially conceived in the interest of public order as the intent is to prevent misuse of donations coming from foreign sources, to safeguard the values of a sovereign democratic republic”.

The judgment came on a batch of three writ petitions, two of which challenged the 2020 amendments, while the third one prayed for stricter enforcement of the amended and other provisions of the Act.

The bench of Justices A M Khanwilkar, Dinesh Maheswari and C T Ravikumar said “receiving foreign donations cannot be an absolute or even a vested right”, adding, “we say so because the theory of possibility of national polity being influenced by foreign contribution is globally recognised”.

“For, foreign contribution can have material impact on the socio-economic structure and polity of the country. The foreign aid can create presence of a foreign contributor and influence the policies of the country. It may tend to influence or impose political ideology,” said the court.

Such being the expanse of the effect of foreign contribution coupled with the tenet of constitutional morality of the nation, the presence/inflow of foreign contribution in the country ought to be at the minimum level, if not completely eschewed. The influence may manifest in different ways, including in destabilising the social order within the country,” it added.

The bench further said: “We find force in the argument that it had become necessary for Parliament to step in and provide a stringent regime for effectively regulating the inflow and utilisation of foreign contribution”.

The petitions challenged the constitutional validity of the amendments made to the 2010 Act, in particular, sections 7, 12(1A), 12A and 17(1), contending that they were manifestly arbitrary, unreasonable and impinging upon the fundamental rights.

Section 7 prohibits transfer of any foreign contribution; Section 12A made it mandatory to produce Aadhaar card details of the office-bearers/functionaries/directors of the societies/trusts as identification document for the purpose of seeking registration, and Section 12(1A) and Section 17 made it mandatory for recipients to open “FCRA Account” and receive foreign contribution only at the New Delhi main branch of the State Bank of India.

Declaring the provisions as “intra vires the Constitution”, the bench, which went into the legislative history of the law that was first enacted in 1976, said the experience since then “revealed that more stringent dispensation was needed to minimise the negative impact owing to the surge in the inflow of foreign donation and for upholding the values of a sovereign democratic republic, for which the 2010 Act was enacted”.

Writing for the bench, Justice Khanwilkar said “philosophically, foreign contribution (donation) is akin to gratifying intoxicant replete with medicinal properties and may work like a nectar. However, it serves as a medicine so long as it is consumed (utilised) moderately and discreetly…free and uncontrolled flow of foreign contribution has the potential of impacting the sovereignty and integrity of the nation”. It held that “considering the legislative history and the need for Parliament to periodically intervene to arrest the increasing influence on the polity of the nation due to the high volume of inflow of foreign contribution and large-scale improper utilisation and misappropriation thereof, such a change cannot be labelled as irrational… especially when it applies uniformly to a class of persons without any discrimination”.

The bench also noted that nothing prevents the organisations interested in doing charitable work in raising contribution within the country.

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