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 NOEL HARPER & ORS.                                                 …PETITIONERS 

Case Comment, Publications

VERSUS

UNION OF INDIA & ANR.                                                   …RESPONDENTS 

WITH

WRIT PETITION (CIVIL) NO. 634 OF 2021

AND

WRIT PETITION (CIVIL) NO. 751 OF 2021

Bench: 

  1. Justice. A.M. Khanwilkar
  2. Justice. Dinesh Maheshwari
  3. Justice. C. T. Ravikumar

FACTS:

  1. “The Care and Share Charitable Trust” (Registration No.242/1997) was established in 1997 and registered with the Ministry of Home Affairs, Government of India, and the Income Tax authorities in order to receive funds. The trust assisted juveniles detained in observation homes, physically challenged children, children of sex workers, street children, and children below the poverty index Vijayawada, Andhra Pradesh. It also has a history of rescuing over Thousand street children, 165 infants, and orphans who were HIV positive or AIDS-related. Additionally, the trust provided dairy milk to 500 kindergarten students since 2000, in recognition of its extraordinary service.

“National Worker Welfare Trust” (NWWT) in Secunderabad, Telengana which is registered under the India Trusts Act, 1882 in the year 2016, this trust has also registered with Ministry of Home Affairs, Government of India under the Foreign Contribution (Regulation) Act 2010 for receipt of foreign funds (FRCA Registration No. 0102230883), it performs the function such as The International Labour Organization (ILO) is involved in the rehabilitation of migrant workers and addresses issues pertaining to women workers from marginalized communities and potential migrant workers (both interstate and overseas). Families of migrants, communities, leaders of communities, returnees, women organizations, trade unions, local panchayats, Mandal, district, and State departments concerned with labor, administration, and governance related to these workers have filed Writ Petition (Civil) No. 556 of 2021 against the Foreign Contribution (Regulation) amendment act, 2020, claiming the amended provisions are arbitrary. 

  1. A group of 4 non-profit organizations or trusts and an individual from all over the country registered under the 2010 act, these are the voluntary organizations involved in providing charitable, social, and educational endeavors for people from many areas. They have jointly filed a Writ Petition (Civil) No. 751 of 2021 stating the amendment act 2020 is a violation of Articles 14, 19(1)(c), 19(1)(g), and 21 of the Indian Constitution. Their activities range from providing food, clothing, and medicine for the needy and helpless peoples. They have also participated in AIDS awareness camps and widow care initiatives and children in homes and played a pivotal role in COVID-19 relief.
  2. A Public Interest Litigation filed under Writ Petition (Civil) No. 634 of 2021 is filed for the reason stating to extend the timeline of registration to make compliance with it, to maintain the register of all NGOs receiving funds from the foreign countries as per the amendment act 2020.

The above said facts proves there is existence of 3 Writ petitions in common subject matter and so the Honorable Supreme court of India has clubbed this petition to hear the case.

ISSUES: 

  1. Whether the amended provisions of the 2010 Act violate the rights guaranteed under Articles 19(1)(c) and 19(a) of the Constitution of India?
  2. Whether the provisions amended are arbitrary and overbroad restrictions concerning  right to receive foreign funding, thus violating Article 14 of the Constitution?
  3. Whether the requirement to open a FCRA account at a requisite branch of SBI in New Delhi is absurd, irrational, and serves no legitimate purpose?

CONTENTION:

PETITIONER:

  1. Articles 14, 19,(1)(c), 19(1)(g), and 21 of the Constitution are violated by Section 17 of the FRCA insofar as it stipulates that the principal FRCA must be opened in an SBI, New Delhi branch. 
  2. To squash the MHA Notification No. S.O. 3479(E) dated 7 October 2020 issued which is violative of Articles 14,19(1)(c), 19(1)(g) and 21 of the constitution.
  3. To revoke the public notice dated October 13, 2020, with F.No. II/21022/23/(35)/2019-FCRA-III, on the grounds that it violates Articles 14, 19(1)(c), 19(1)(g), and 21 of the Constitution in violation.
  4. To quash public notice with the number II/21022/36/(58)/2021-FCRA-III, dated May 18, 2021, as being in violation of the Constitution’s Articles 14, 19(1)(c), 19(1)(g), and 21.
  5. To maintain and declare that the disputed sections of the Foreign Contribution (Regulation) Amendment Act, 2020—namely, Sections 7, 12A, 12(1A), and 17—are unconstitutional because they go beyond the provisions of Articles 14, 19, and 21 of the Indian Constitution.
  6. The respondents agree to refrain from interfering with the petitioners’ and its legitimate members’ ability to operate, accept and use contributions from overseas sources, and maintain their current bank accounts in the designated banks.

RESPONDENT:

  1. The respondents contended that the amendment is necessary and it is intended to ensure effective regulatory measures on inflow and utilization of foreign funds, it is applicable to all registered trusts and it doesn’t involve in discrimination from one over the other and not violative of fundamental rights such as Articles 14, 19(1)(c), 19(1)(g) and 21 of the constitution.
  2. This amendment has imposed a clear legislative policy of strict control over foreign contributions and its utilization for specific activities in the country, this is to control the abuse or illegal activity committed by some registered organizations.
  3. The amendment act 2020 has required prior or permission or Registration certificate competent authority to make meaningful and effective regulatory arrangement and real-time reporting of utilization of the foreign funds prescribed in section 11 and 12 of the 2010 act, the person has such registration certificate or prior permission cannot complain about the regulatory provision regarding utilization.
  4. The 2010 act show causes that certain NGOs were committing malpractices using their trust and utilizing the funds other than that it is intended, to stop such violations and improve the accountability this amendment act 2020 is necessary.
  5. The received foreign funds are transferring into layered form of transaction from one over the other and not for the reason it has received creating mischief to avoid this it is essential to mention the registration certificate and require prior permission and the funds received is also used for the administrative expenses by claiming its own expense up to 50 percent of the amount received which also used for their personal purposes. Further, the wisdom of the parliament was also in favor of reducing the permissibility of administrative expenditure by limiting it to 20 per cent, so that maximum benefit can be used for the needy.
  6. The amendment is also necessary to control the foreign state and foreign powers and non-state actors which tend to interference in internal politics and section 12A has introduced requiring the Aadhaar card to facilitate proper identification of the person it would ensure proper identification of functionaries of FCRA/NGOs it stand as the test of legitimate aim and also proportionality test.
  7. The receipt of foreign contributions in the specified FCRA account in the SBI, NDMB is outlined in the modified Section 17(1). In order to remit international contributions, an NGO must open an account of this type. According to the proviso to Section 17(1), the holder of an FCRA account may open an additional FCRA account with any scheduled bank of his choosing in order to accept and use foreign monies received in his FCRA account at the designated SBI branch in New Delhi, or SBI, NDMB. The account holder would be in charge of how the FCRA account operated. The only need of the condition is the entry of foreign contributions through a defined channel in order to guarantee the successful application of appropriate controls and regulations. The FCRA account holder was given enough time to complete the necessary paperwork in accordance with the new dispensation. 
  8. A public notice detailing the process and functioning of the chosen FRCA account was released on October 13, 2020, with a deadline of March 3, 2021 and further extended till December 2021 stating the non-registration the law cannot be declared void.
  9. The amendment act doesn’t prohibit the fundamental rights such as Article 19(1)(c) and 19(1)(g) rather it provides an effective regulatory framework regarding foreign contributions that these associations may accept. The FCRA Act, 2010 was enacted primarily to safeguard the nation’s sovereignty and integrity, public order, and the interests of the general public. Additionally, article 21 of the constitution excludes the right to accept unrestricted funds and contributions, the misuse of which inevitably jeopardizes the nation’s polity and sovereignty.
  10. The opening of account in SBI, NDMB doesn’t require the organizations for their physical appearance, they can open their account online itself and till October 2021, around 19,000 accounts were already opened and they are working it with designated standard operating procedure (SOP) to carry the process.

RATIONALE:

Validity of section 7:

It was required to pass revised section 7 in order to address the issue and improve accountability and transparency surrounding the receipt and use of foreign contributions, which are significant each fiscal year and have a multiplicative effect on the country’s economy.

Validity of section 12(1A) and section 17(1):

The mandate to open account in SBI, NMDB is a one-time process and it only to regulate and monitor the amount received in the form of foreign countries they can further transfer such amount and however it doesn’t prohibit the association to open multiple accounts. The parliament believed that the only way to regulate the inflow of foreign contributions was to have a single point of entry. This would help the relevant authorities monitor the inflow of contributions more effectively in real time and allow them to take prompt corrective action in order to deal with any impending threats that may arise due to the volume of contributions, including those from unwanted sources of remittances. The court is not permitted to take a second-guessing stance in that regard.

Validity of section 12A: 

The provision 12A had required Aadhaar card has mandate for the identification document to get prior permission whereas the court held they can require passport for such identification, The purpose is just to ascertain the principal officers of the registered association in order to hold them responsible for any infractions that may have happened.

DEFECTS OF LAW:

  1. The legislative should consider the practical difficulty and must provide the sufficient time as the institutions require to comply with the newly amended provisions of law, rejecting the unregistered trusts and organizations without giving sufficient time would not be valid.
  2. The court itself agreed that the right to privacy is enshrined in the Part III of the constitution of India requiring Aadhaar card would be not reasonable and it alternatively requires passport, whereas requiring the document for identification is not necessary, the trust itself is an independent body.
  3. Creating a mandatory account opening of account in SBI, NMDB is not valid, as the banking system has carrying core banking systems to manage and control all other system of branches under single control and has advanced technologies, requiring the account in common single branch for receiving of funds is unnecessary.

INFERENCE:

  1. The Honorable Supreme Court of India has declared that the amendment provisions, 2020 to Foreign Contribution (Regulation) Act, 2010 such as sections 7, 12(1A), 12A, is intra vires in nature and not violative of Fundamental Rights under Articles 14, 19(1)(a), 19(1)(c) and 21 or Constitution of India and not violative of principal act.

Regarding the section 12A authority of the Central Government to request an Aadhaar number, among other things, the bench has ordered Indian nationals who hold important positions in the applicant organizations (NGOs/associations) to present their Indian passports as proof of identity. This would be the identification-related substantial compliance with section 12A. Writ petitions (civil) Nos. 566 and 751 of 2021 are therefore dismissed.

  1. Writ Petition (Civil) No.634 of 2021 also stands disposed of. No order as to costs.

Judgement dated 08 April, 2022.

Krishna Kanth R S

Intern – (June 2024)

Government Law College Vellore.