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SC Judgement on Foreign Funding and FCRA

Table of contents

  • Overview of judgement
  • Background
  • FCRA explained
  • Section 5 of FCRA
  • Highlights of verdict
  • Remarks given by the SC

 Brief Overview

Bench          –   Justices L Nageshwar Rao & Deepak Gupta

Date            –   March 6th

Petitioner     –   INSAF vs Union of India

Verdict:

  • The government cannot prevent NGOs and other social outfits from getting foreign funds- just under the reason that they used political means to mobilise people.
  • The bar under the Foreign Currency Regulation Act (FCRA) applied only to political parties.

Background

The ruling came in response to a plea by an NGO—India Social Action Forum (INSAF)

—challenging the constitutional validity of Section 5 (1) and 5 (4) of the FCRA and that the grounds provided in section 5 for declaring an organisation as a political organisation were vague.

What is FCRA

  • The Foreign Contribution (regulation) Act, 2010 is an act of the Parliament of India, by the 42nd Act of 2010.
  • It is a consolidating act whose scope is to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies
  • And to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto

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Section 5 in The Foreign Contribution (Regulation) Act, 2010

Procedure to notify an organisation of a political nature.

(1) The Central Government may, having regard to the activities of the organisation or the ideology propagated by the organisation or the programme of the organisation or the association of the organisations with the activities of any political party, by an order published in the Official Gazette, specify such organisation as an organisation of a political nature not being a political party: frame the guidelines specifying the ground or grounds on which an organisation shall be specified as an organisation of a political nature.

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Highlights of the Verdict

  • Any organisation which habitually engages itself in or employs common methods of political action like ‘bandh’ or ‘hartal’, ‘rasta roko’, ‘rail roko’ or ‘jail bharo’ in support of public causes can also be declared as an organisation of political nature, according to rules under the FCRA.
  • organisations which were not involved in active politics or party politics would not come under these rules.
  • The statute that prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds.
  • Voluntary organisations which have absolutely no connection with either party politics or active politics cannot be denied access to foreign contributions by enlarging the scope of the term ‘political interests’

Suggestions and Remarks by the SC bench

Support to public causes by resorting to legitimate means of dissent such as bandh and hartal cannot deprive an organisation of its legitimate right of receiving foreign contribution.

The rule would, however, apply to organisations used by political parties for channelling foreign funds provided there was concrete material to prove that.

In that event, the central government shall follow the procedure strictly in depriving an organisation of the right to receive foreign contributions.