Writ Petition SummaryFCRA Amendment
Background & Issue
On September 28th, 2020, The Union Government enacted the Foreign Contribution (Regulation) Amendment Act, 2020 (the Amendment). The Amendment introduced specific provisions in the Foreign Contribution (Regulation) Act, 2010 (FCRA) which further restricted the manner in which Non-Governmental Organisations (NGO) could receive and utilise foreign funds. Many NGOs argue that the restrictions will hamper their functioning, especially for small-scale, grassroots organisations. The Union argues that the Amendment will ensure greater transparency and secure the nation against foreign interference.
On October 13th, 2021 the Ministry of Home Affairs released a notification, stating that organisations can only receive foreign funds by opening an account in State Bank of India’s main branch in New Delhi. Foreign funding can then only be received in this account.
The lead petitioner, Noel Harper, is the co-founder of the ‘Care and Share Charitable Trust’, based out of Vijayawada, Andhra Pradesh. He filed his petition at the Supreme Court on April 19th, 2021, and argued that Sections 7, 12A, and 17 of the amended Act were unconstitutional. He argued that the sections are unreasonable, arbitrary and must be struck down.
What does the Petitioner Seek?
- Section 7, 12A, and 17 of the FCRA to be struck down as they violate Articles 14, 19, and 21 of the Constitution of India, 1950.
The Amendment Hampers the Operations of Grassroots NGOs
Section 7 of the amended FCRA bans an organisation from transferring any funds it receives through a foreign contribution to another person or organisation. Mr. Harper argues that smaller grassroots organisations are usually unable to obtain registration under the FCRA, and do not possess the means to directly receive foreign contributions. These grassroots organisations rely on larger ‘intermediary’ organisations to help them through funding or other means. Banning this practice of ‘sub-granting’ funds will have a drastically negative effect on the operations of smaller organisations, according to Mr. Harper.
Section 17(1) of the amended FCRA requires all registered organisations to receive foreign contributions in a bank account at a specific State Bank of India (SBI) branch in New Delhi. Mr. Harper submitted that small organisations do not have the funds, knowledge, or transport facilities to maintain such an account.
These restrictions, Mr. Harper states, would ‘paralyse’ organisations from performing crucial functions, during a time when COVID-19 is still prevalent and marginalised groups require the aid of NGOs.
The Amendment is Redundant and the Original Act Achieves the Union’s Objectives
Mr. Harper argued that in an era of digital banking, there is no logical reason to impose the physical restriction of opening a bank account specifically in SBI’s main branch in New Delhi. Further, the FCRA framework already required that every transaction using foreign funds be intimated to the Union—an added restriction was excessive.
He further argues that this requirement has no connection with the objectives of the FCRA—which is to control the inflow and utilisation of foreign funds. According to him, the FCRA achieved this even before the Amendment was enacted, through the original Act. Additional restrictions are excessive and ‘autocratic’.
The Amendment is Arbitrary and Violates the Right to Equality
Mr. Harper argues that Section 7 of the amended FCRA imposes an arbitrary and unreasonable restriction on NGOs, violating the Right to Equality. Further, he argues that the section does not provide any reasonable exceptions to the ban on sub-granting foreign funds which further violates the Right to Equality.
He argues that the text of the sections is vague and gives undue discretion to the Union government, opening the door to abuses of power as well.
He states Section 17 requires those working in remote areas to open an account in Delhi without considering the practical difficulties these organisations would face, such as lack of transport and funds, as well as operational delays.
The Amendment Violates the Right to Practice any Profession
The requirement to open a designated FCRA Account in a specific SBI branch under Section 17(1) imposes an arbitrary and unreasonable restriction on NGOs, and violates the Right to Practice any Profession under Article 19, Mr. Harper argues. He calls the provision a ‘legislative misadventure in the guide of public interest’.
The Amendment Contradicts the SC’s Judgment in Puttuswamy
Section 12A of the amended FCRA requires all office-bearers, directors, and key functionaries to submit their Aadhaar numbers in order to register under the FCRA or to renew their registration. Contesting this requirement, Mr. Harper refers to the SCs decision in Justice K.S. Puttuswamy v Union of India (2018) where the Court held that the requirement to produce an Aadhaar card to open a new bank account is unconstitutional as it violates the Right to Privacy.