Its goal of ‘ease of doing business’ did not stop the government from bringing a “strict” regime of the Foreign Contribution Regulation Act (FCRA) in 2020 to stop the abuse and misutlisation of foreign funds, the Supreme Court said in a judgment on Friday.
“Ordinarily, convenience of business and persons engaged in doing business must be uppermost in the mind of the Parliament/Legislature to effectuate the goal of ease of doing business... the strict regime became essential because of the past experience of abuse and misutilisation of the ‘foreign contribution’ and cancellation of certificates of as many as 19,000 registered organisations on the ground of being grossly non-compliant,” a three-judge Bench led by Justice A.M. Khanwilkar supported the restrictions in 2020 FCRA amendments.
Permitting inflow of foreign contribution, which is a donation, is a matter of policy of the State backed by law, the apex court held. It was open for the State to even have a regime which may completely prohibit receipt of foreign donation, as no right inheres in the citizen to receive foreign donations.
Besides, the court said, anyone wanting foreign contributions cannot be said to be engaged in “usual or ordinary business”.
Particular bank branch
One of the amendments criticised by NGOs involved a bar on operating existing FCRA accounts in scheduled banks of their convenience and the opening of a new bank account at the State Bank of India branch at Sansad Marg in New Delhi. Foreign donations can be remitted from abroad only through this “primary” account in this particular branch and no other.
But the court said FCRA account operators could not claim the right of continuity of a “deficient and flawed framework”. Opening an account at the Sansad Marg branch was only a one-time exercise to ensure inflow of foreign contribution through one channel only.
“There is no restriction regarding utilisation of the funds only through that (primary) FCRA account. For, it is open to the recipient to operate multiple accounts in other scheduled banks for its utilisation,” Justice Khanwilkar, accompanied by Justices Dinesh Maheshwari and C.T. Ravikumar on the Bench, reasoned.
The court said 22,762 FCRA organisations have complied with the new regime as on December 2021. As many as 12,989 organisations have applied for the renewal of the FCRA licence between September 30, 2020 and December 31, 2021 while 5,789 organisations have not applied.
“The Parliament must be credited with having taken recourse to corrective dispensation for eradicating the mischief, which any sovereign country can ill-afford... The Parliament is supreme and has a final say in matters of legislation,” the court said.
