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‘Permitting inflow of foreign donations is a state policy’: SC affirms the constitutional validity of the FCRA Act, 2020

The court further noted that there is no "paucity of donors" in India and asked charitable organisations and NGOs to seek donations from within the country, obviating the influence of foreign countries owing to foreign contributions.

The Supreme Court on Friday upheld the constitutional validity of the Foreign Contribution(Regulation) Amendment Act, 2020, which regulates how NGOs, associations, companies and individuals receive and utilise contributions made from abroad.

Hearing on the constitutional validity of the Foreign Contribution (Regulation) Amendment Act (FCRA), 2020, which imposes several new conditions on the receipt and use of funds by the NGOs, besides making it mandatory for them to receive foreign funds only in an SBI account, the court opined that citizens do not have any right to receive foreign contributions and allowing the same is a matter of State policy.

“It is open to the State to have a regime which may completely prohibit receipt of foreign donation, as no right inheres in the citizen to receive foreign contribution (donation),” a bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar observed.

The court further noted that there is no “paucity of donors” in India and asked charitable organisations and NGOs to seek donations from within the country, obviating the influence of foreign countries owing to foreign contributions.

The court stated that foreign donations have the ability to influence the policies of the country and hence should be reduced and avoided. The court said receiving foreign donations is not absolute or even a vested right.

“Foreign contribution is qualitatively different from foreign investment. Receiving foreign donations cannot be an absolute or even a vested right. By its very expression, it is a reflection on the constitutional morality of the nation as a whole being incapable of looking after its own needs and problems,” the judgment states.

The verdict came on a batch of petitions challenging provisions of the FCRA Act that prohibited the transfer of foreign funds by the recipient NGOs to other NGOs; requiring Aadhaar as identification for prior approval, registration etc (Section 12A) and mandating the opening of an FCRA primary account exclusively in a branch of State Bank of India in New Delhi notified by the Centre (Section 17).

Earlier, an NGO or an individual could utilise more than 50 per cent of the contribution for meeting administrative expenses. The Bill brought the limit down to 20 per cent.

The Ministry of Home Affairs(MHA) had filed an affidavit in the apex court, stating that the Foreign Contribution (Regulation) Act passed by the Parliament lays down a clear legislative policy of strict controls over foreign contributions for certain activities in the country and the manner in which they are utilised by the beneficiaries.

The MHA said the “legislation has also prohibited 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”.

Under the FCRA Act, 2020, the designated accounts for transfers to a single NGO are specifically mentioned as ‘FCRA account’ in the State Bank of India, parliament street branch in Delhi. The account cannot receive any other funds except the foreign contribution. An individual may open another FCRA account in any scheduled bank of their choice for keeping or utilising the received contribution.

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OpIndia Staff
OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

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