Summary
NGOs challenged the 2020 FCRA amendments restricting onward transfers, requiring a designated SBI receipt account and prescribing identification of key functionaries. The Court upheld the challenged provisions as regulatory measures promoting accountability and monitoring of foreign contributions. It distinguished prohibited onward grants from payment for services in the recipient’s own permitted activities. Section 12A was read down to permit Indian passports as identification for Indian key functionaries. The petitions were disposed of on those terms.
Issues
- Whether the amended transfer prohibition and designated-account requirements violated Articles 14, 19 or 21.
- How prohibited transfer differed from utilisation of foreign contributions for the recipient’s permitted activities.
- Whether Section 12A required Indian key functionaries invariably to provide Aadhaar rather than an Indian passport.
Provisions considered
- Sections 7 and 8, Foreign Contribution (Regulation) Act, 2010, as amended in 2020The prohibition on onward transfer was upheld while preserving expenditure and service payments constituting the recipient’s own permitted utilisation. Section 8’s validity was not challenged. (¶¶ 20, 38-67)
- Sections 12(1A) and 17, Foreign Contribution (Regulation) Act, 2010, as amended in 2020The designated primary SBI account requirement was upheld; other scheduled-bank accounts remained available for keeping and utilising funds received through it. (¶¶ 20, 68-82)
- Section 12A, Foreign Contribution (Regulation) Act, 2010, as amended in 2020Read down to accept Indian passports for identification of Indian office bearers, directors and key functionaries as substantial compliance. (¶¶ 20, 83-87)
- Articles 14, 19 and 21, Constitution of IndiaThe challenged foreign-contribution regulatory measures survived the asserted constitutional objections, subject to the reading down of Section 12A. (¶¶ 21-31, 57-66, 74-85)
Held
- There was no fundamental or vested right to receive foreign contributions outside the statutory regulatory framework. The measures regulated foreign funding without prohibiting formation of associations or charitable activity, and treated the relevant class of foreign-contribution recipients uniformly. (¶¶ 21-31, 53-59, 63-66)
- Section 7 prohibited onward transfer even to another registered recipient. The legislative choice sought to prevent layered chains of grants, fix responsibility on the original recipient and maximise spending on its permitted purposes. The earlier, less restrictive regime created no right to its continuation. (¶¶ 38-44, 49-52, 57-67)
- Transfer in this context meant passing contributions to another person without retaining control and without services in return. Engaging services or outsourcing particular work while the recipient itself undertook its permitted activities constituted utilisation. Permitted programme expenditure, including authorised administrative expenses, was not barred merely because payment changed hands. (¶ 45-49)
- Requiring initial receipts through the notified SBI New Delhi branch supported centralised, real-time monitoring. Recipients could retain or use funds through other scheduled-bank accounts under the statutory provisos. The Court accepted arrangements enabling account opening and operation without physical travel to Delhi; operational inconvenience did not invalidate the provisions. (¶ 68-82)
- Section 12A pursued identification and accountability of key functionaries. Since a passport sufficed for a foreigner, an Indian passport could likewise identify an Indian functionary. The provision was read down accordingly, making further determination of the privacy objections unnecessary. (¶¶ 83-85, 87)
- The separate petition seeking to prevent further compliance extensions no longer presented its principal grievance because the last extension had expired and none had subsequently been granted during the proceedings. (¶¶ 4, 88)
Result
Sections 7, 12(1A), 12A and 17 as amended in 2020 declared constitutionally valid, with Section 12A read down to permit Indian passports for identification of Indian key functionaries as substantial compliance. All three writ petitions and pending applications disposed of without costs.