SC INTERPRETS CONSTITUTIONALITY OF 2010 FOREIGN CONTRIBUTION ACT

Asmita Kuvalekar | Government Law College, Mumbai | 8^th March 2020

INDIAN SOCIAL ACTION FORUM (INSAF) VS. UNION OF INDIA (CIVIL APPEAL NO. 1510 OF 2020 ARISING OUT OF SLP. (C) NO. 33928 OF 2011)

FACTS OF THE CASE: 

Aggrieved by the rejection of declaratory relief in the High Court of Delhi, the Appellant, being a registered society, filed the abovementioned appeal in the Supreme Court. This case assumes importance by way of precedence as the Apex Court interprets specific provisions of the Foreign Contribution (Regulation) Act, 2010 (hereinafter referred to as ‘the Act’) and the Foreign Contribution (Regulation) Rules, 2011 (hereinafter referred to as ‘the Rules’). Together, they seek to regulate persons or institutions accepting foreign funds, to ensure transparency in the country’s political affairs. To that end, the Central Government has the authority to declare certain organizations as political in nature, thereby barring them from receiving any foreign aid. The Appellant assailed said provisions, praying for a declaration that the same was unconstitutional. The principal contention was that unbridled, unlimited powers to the Executive is a prelude to misuse and that legislative provisions should be void if they are vague. Additionally, the Appellant argued against the declaration of an organization as political in nature simply because of its participation in protests for welfare demands. 

The Supreme Court’s interpretation in this case lays down a succinct and clear analysis of key provisions of the Act and the Rules for all to follow in future potential scenarios. 

ISSUE: 

1. Whether Sections 5(1), 5 (4) of the Act and Rules 3 (i), 3(v), 3(vi) are unconstitutional on grounds of violating Articles 14, 19 (1) (a), 19 (1) (c) and 21 of the Indian Constitution? 
2. Whether Section 5 (1) confers unlimited, unbridled power on the Central Government?
3. Whether Section 5 (4) is void as it fails to specify an authority to hear representation?
4. Should rules 3 (i), 3 (v) and 3(vi) be struck down on account of vagueness? 

JUDGEMENT:

The Court took into consideration the core object of the Act and the circumstances in which it was passed. Thereby, the Act’s long title and its preceding (now, repealed) 1976 version jointly offer substance to glean the Parliament’s intention; upholding national interest and sovereign political functions against any extenuating disturbances from foreign sources. Section 5 and 5 (1) of the Act allow the Central Government to declare an organization to be of a political nature in accordance with the guidelines set out in the Rules. The wording “activity, ideology and programme” under 5 (1) being specifically targeted by the Appellant as vague, the Supreme Court clarified that the terms are more appropriately described as expansive and therefore not violative of Article 14. Simply put, a broad provision is not necessarily hit by vagueness. 

Furthermore, the fact that no Authority has been specified to hear an organization’s submissions under 5 (4) is no ground to challenge the constitutionality of the provision and the Appellant’s claim was without basis. It was reiterated that legislation can be declared unconstitutional only on two specific grounds: incompetent legislature and violation of fundamental rights guaranteed by the Constitution in Part III. Mere possibility of misuse is not sufficient to nullify law. Interestingly, the Court also noted that the Appellant’s lack lustre criticism of Section 5 (4) was relevant to its decision. 

The interpretation of the Rules in this case was a nod to the Appellant’s claims as the Apex Court read down Rule 3 (v) and 3(vi) to save them from being unconstitutional. It was held that “political interests” in 3 (v) shall mean active politics or party politics so as to exclude social and economic welfare demands of bodies. Similarly, Rule 3(vi) cannot be imposed upon organizations simply because they use common methods of dissent like hartal, jail bharo, bandh, rasta/rail roko. A mere legal way of protest cannot preclude an organization from receiving foreign aid. But to save 3(vi) from nullity, methods of dissent as above used in relation to active politics or party politics would bring the organization under the purview of the Act. Rule 3 (i) was held to not be vague and the Appellant’s claims were dismissed on that count. It was also highlighted that the Appellant society cannot claim relief under Article 19 or any of its sub-provisions since the freedom visualized therein is for citizens. The society failed to join its member as a petitioner and cannot be considered to be a citizen for that purpose. Article 19 was effectively put out of contention in this case. Lastly, the Supreme Court thought best to clarify that any organization “channelling foreign funds by political parties” would be subject to the regulations of this Act and the Rules, and the same shall be strictly construed by the Central Government.