Case Note & Summary
The judgment concerns the constitutional validity of amendments to the Foreign Contribution (Regulation) Act, 2010 (FCRA) introduced by the Foreign Contribution (Regulation) Amendment Act, 2020. The petitioners, including trusts and non-profit organizations engaged in social welfare activities, challenged Sections 7, 12(1A), 12A, and 17(1) of the amended Act as being manifestly arbitrary, unreasonable, and violative of fundamental rights under Articles 14, 19, and 21 of the Constitution. The petitioners argued that the amendments, which prohibit transfer of foreign contributions, mandate opening of FCRA accounts only at the New Delhi Main Branch of State Bank of India, and require Aadhaar details for registration, impose unreasonable restrictions on their activities and infringe upon their rights to freedom of association, speech, and privacy. The Union of India defended the amendments as necessary for effective monitoring and prevention of misuse of foreign funds, emphasizing national security and public order. The Supreme Court, after examining the legislative intent and the scheme of the Act, held that the amendments are reasonable and not manifestly arbitrary. The Court noted that there is no fundamental right to receive foreign contribution and that the restrictions are proportionate to the legitimate aim of ensuring transparency and accountability. The requirement to open an FCRA account in SBI New Delhi was justified for centralized monitoring, and the Aadhaar requirement was upheld as a reasonable identification measure. The prohibition on transfer of foreign contributions was seen as a measure to prevent routing of funds through multiple entities. Consequently, the Court dismissed all the writ petitions, upholding the constitutional validity of the impugned provisions.
Headnote
A) Constitutional Law - Manifest Arbitrariness - Test for Unconstitutionality - The court applied the test of manifest arbitrariness as laid down in previous decisions, holding that a provision is manifestly arbitrary if it is capricious, irrational, or without adequate determining principle. The impugned amendments were found to be reasonable and not manifestly arbitrary. (Paras 1-100) B) Foreign Contribution Regulation - Right to Receive Foreign Contribution - Not a Fundamental Right - The court held that there is no fundamental right to receive foreign contribution under Article 19(1)(g) or any other provision. The regulation of foreign contribution is a reasonable restriction in the interest of public order and national security. (Paras 50-60) C) Foreign Contribution Regulation - Prohibition on Transfer of Foreign Contribution - Section 7 - The amendment prohibiting transfer of foreign contribution to other persons was held to be a reasonable measure to prevent misuse and ensure accountability. The provision does not violate Article 14 or 19. (Paras 70-80) D) Foreign Contribution Regulation - Mandatory FCRA Account in SBI New Delhi - Section 17(1) - The requirement to open the primary FCRA account only at the New Delhi Main Branch of State Bank of India was held to be reasonable for effective monitoring and not discriminatory. It does not violate Article 14 or 19(1)(g). (Paras 81-90) E) Foreign Contribution Regulation - Aadhaar Requirement for Registration - Section 12A - The requirement to provide Aadhaar details of office bearers for registration was held to be a reasonable identification measure and not violative of the right to privacy as per K.S. Puttaswamy. (Paras 91-100)
Issue of Consideration
Whether Sections 7, 12(1A), 12A, and 17(1) of the Foreign Contribution (Regulation) Act, 2010 as amended by the Foreign Contribution (Regulation) Amendment Act, 2020 are unconstitutional for being manifestly arbitrary, unreasonable, and violative of Articles 14, 19, and 21 of the Constitution of India.
Final Decision
The Supreme Court dismissed all the writ petitions, upholding the constitutional validity of Sections 7, 12(1A), 12A, and 17(1) of the Foreign Contribution (Regulation) Act, 2010 as amended by the Foreign Contribution (Regulation) Amendment Act, 2020. The Court held that the amendments are not manifestly arbitrary and do not violate Articles 14, 19, or 21 of the Constitution.
Law Points
- Constitutional validity of amendments to FCRA
- 2010
- Manifest arbitrariness test
- Proportionality of restrictions on foreign contribution
- Right to receive foreign contribution not a fundamental right
- Aadhaar requirement for registration reasonable
- Mandatory FCRA account in SBI New Delhi not discriminatory
- Prohibition on transfer of foreign contribution valid
