The Supreme Court on Friday upheld amendments introducing restrictions in the Foreign Contribution Regulation Act (FCRA) while holding that no one has a fundamental or absolute right to receive foreign contributions.
In a judgment that may hit non-governmental organisations (NGOs) working at the grass-root level with no direct link to foreign donors, the court reasoned that unbridled inflow of foreign funds may destabilise the sovereignty of the nation.
The restrictions involve a bar on using operational FCRA accounts to receive foreign contributions; mandatory production of the Aadhaar card for registration under the FCRA. They require NGOs and recipients to open a new FCRA account at a specified branch of the State Bank of India in New Delhi as a “one-point entry” for foreign donations.
The petitioners, including individuals and NGOs engaged in cultural, educational, religious activities, argued that the amendments suffered from the “vice of ambiguity, over-breadth or over-governance” and violated their fundamental rights. They said the new regime amounts to a blanket ban on the capacity of intermediary organisations in India to distribute foreign donations to smaller and less visible NGOs.
‘Strict regulatory framework’
But the court countered that the amendments only provide a strict regulatory framework to moderate the inflow of foreign funds into the country.
“No one can be heard to claim a vested right to accept foreign donations, much less an absolute right,” a three-judge Bench led by Justice A.M. Khanwilkar, who authored the verdict, said.
Free and uncontrolled inflow of foreign funds has the potential to impact the socio-economic structure and polity of the country.
“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, for serving the larger cause of humanity. Otherwise, this artifice has the capability of inflicting pain, suffering and turmoil as being caused by the toxic substance (potent tool) — across the nation,” Justice Khanwilkar wrote in a 132-page judgment.
‘Look within country’
The court said charity could be found at home. NGOs could look within the country for donors.
“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 noted.
Fundamental rights have to give way in larger public interest to the need to insulate the democratic polity from the “adverse influence of foreign contributions”.
“The third-world countries may welcome foreign donations, but it is open to a nation, which is committed and enduring to be self-reliant and variously capable of shouldering its own needs, to opt for a policy of complete prohibition of inflow/acceptance of foreign contribution (donation) from a foreign source,” the court said.
Unregulated inflow of foreign donations would only indicate that the government was incapable of looking after its own affairs and needs of its citizens, Justice Khanwilkar observed.
The court noted how 19,000 certificates of registration under the FCRA were cancelled for violating statutory compliances. The annual inflow of foreign contribution had almost doubled between the years 2010 and 2019. There was a spurt of criminal investigations. Donations had been re-routed. Successive transfers and creation of a layered trail of money had made it difficult to trace the flow and final utilisation of foreign donations despite the “firm regime” in place since 2010.
“The amendments do not prohibit inflow of foreign contributions, but are a regulatory measure to permit acceptance by registered persons or persons having prior permission to do so with condition that they must themselves utilise the entire contribution,” Justice Khanwilkar observed.
‘Continual Supervision’
The court held that the restrictions in the amendments were “reasonable” and “founded on intelligible criteria”. It fixed accountability on the recipients, increased the efficacy of “continual supervision” over foreign contributions, did not discriminate and served the purpose of the FCRA 2010.
“Mere plea of inconvenience is not enough to attract constitutional inhibition… There is intrinsic evidence to indicate that the change effected by the amendments is to serve the legitimate government purpose and has a rational nexus to the object of the principal Act of 2010,” Justice Khanwilkar observed.
However, the court read down one of the provisions — Section 12 (A) — of the 2020 Amendment Act, which mandated the production of Aadhaar card for registration. The Bench allowed the office-bearers of NGOs to use their Indian passports as an identification document.
