Indian Social Action Forum (Insaf) vs Union of India

Foreign Contribution (Regulation) Rules, 2011: rr.3(i), 3(v) and 3(vi) – Constitutional validity of – According to the Appellant, the guidelines provided in r.3 of the Rules are impermissibly wide, giving arbitrary discretion to the authorities which would result in abuse of the power – It was alleged in the Writ Petition that the Rules suffer from unreasonableness and arbitrariness – Appellant prayed for declaring rr.3(i), 3(v) and 3(vi) as violative of the fundamental rights enshrined in Arts.14, 19(1)(a), 19(1)(c) and 21 of the Constitution – Held: According to r.3(i), an organisation having avowed political objectives in its memorandum of association or bye laws is an organisation of a political nature – As the intention of the legislature is to prohibit foreign funds in active politics, an Association with avowed political objectives (i.e. to play a role in active politics or party politics) cannot be permitted access to foreign funds – There is no ambiguity in the provision and hence, cannot be termed as vague – r.3 (i) is not ultra vires the Act – r.3 (v) deals with organisations of farmers, workers, students etc. which are not directly aligned to any political party but objectives of which include steps towards advancement of ‘political interests’ of such groups – Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected – On the other hand, such of those voluntary organisations which have absolutely no connection with either party politics or active politics cannot be denied access to foreign contributions – Therefore, such of those organisations which are working for the social and economic welfare of the society cannot be brought within the purview of the Act or the Rules by enlarging the scope of the term ‘political interests’ – The expression ‘political interests’ in r.3 (v) has to be construed to be in connection with active politics or party politics – 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 the guideline prescribed in r.3 (vi) – Support to public causes by resorting to legitimate means of dissent like bandh, hartal etc. cannot deprive an organisation of its legitimate right of receiving foreign contribution – It is clear from the provision itself that bandh, hartal, rasta roko etc., are treated as common methods of political action – Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared as an organisation of a political nature – To save this provision from being declared as unconstitutional, it is held that it is only those organisations which have connection with active politics or take part in party politics, that are covered by r.3 (vi). Interpretation of Statutes: Two interpretations – Held: In case of ambiguity in the language used in the provision of a statute, the Courts can take aid from the historical background, the Parliamentary debates and the aims and objects of the Act – Foreign Contribution (Regulation) Rules, 2011.

Disposing of the appeal, the Court

HELD: 1. The Foreign Contribution (Regulation) Act, 1976 was enacted to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain persons or associations with a view to ensure that parliamentary institutions, political associations, academic and other voluntary organisations as well as other individuals working in important areas of national life may function in a manner consistent with the values of a sovereign democratic republic and the matters connected therewith and incidental thereto. In view of several deficiencies in the 1976 Act, a fresh law in the shape of the Foreign Contribution (Regulation) Act, 2010 was made by repealing the 1976 Act. The long title of the 2010 Act indicates that it is made to consolidate the law 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. [Paras 5-7] [912-G; 913-A-D-G; 914-A]

Association for Democratic Reforms v. Union of India (2014) 209 DLT 609 – referred to.

2. Section 5 of 2010 Act stipulates that the Central Government shall specify an organisation as an organisation of a political nature not being a political party as referred to in Section 3 (1)(f) having regard to the activities of the organisation or the ideology propagated by the organisation or association of the organisation with the activities of any political party. It is further provided in Section 5(1) that the Central Government may by Rules frame guidelines specifying the ground(s) on which an organisation shall be specified as an organisation of a political nature. Section 48(2)(d) empowers the Central Government to frame guidelines, specif ying the ground(s) on which an organisation may be specified as an organisation of a political nature under Section 5(1). In exercise of power conferred under Section 48, the Central Government framed the Foreign Contribution (Regulation) Rules, 2011. [Paras 8, 9] [914-F-H; 915-A]

3. A plain reading of Section 3 of the Act shows that foreign contributions should not be accepted by a candidate in an election or by a political party or office bearer thereof and member of any legislature apart from Judges and Government servants and those belonging to the press, print and electronic media. Section 3(1)(f) of the Act provides that an organisation of a political nature is also barred from receiving foreign contributions. Such an organisation of a political nature may be specified under Section 5(1) by the Central Government. [Para 10] [915-G-H]

4. Section 5 of the 1976 Act provided that any organisation of a political nature not being a political party shall not accept any foreign contribution except with the prior permission of the Central Government. However, according to the 2010 Act, an organisation of a political nature, as specified, is barred from accepting foreign contributions. The procedure to notify an organisation of a political nature is prescribed under Section 5 of the 2010 Act. Before declaring an organisation to be an organisation of a political nature not being a political party, the Central Government shall take into account the activities of the organisation or the ideology propagated by the organisation or the programme of the organisation or the association of the organisation with the activities of any political party. Section 5(1) does not suffer from the vice of vagueness inviting the wrath of Article 14. Section 5(4) cannot be declared as unconstitutional only on the ground that the authority to whom representation should be made is not specified. No serious attempt has been made by the Appellant-organisation to assail Section 5 (4) of the Act. [Paras 11-13] [916-A-C-H; 917-A]

5. The Appellant-organisation is not entitled to invoke Article 19. No member of the Appellant-organisation is arrayed as a party. Article 19 guarantees certain rights to ‘all citizens’. The Appellant, being an organisation, cannot be a citizen for the purpose of Article 19 of the Constitution. In the absence of any member of the association as a petitioner in the Writ Petition, the Appellant-organisation cannot enforce the rights guaranteed under Article 19 of the Constitution. [Para 15] [917-E-F]

State Trading Corporation of India Ltd. v. The Commercial Tax Officer, Visakhapatnam [1964] 4 SCR

99 ; Bennett Coleman & Co. v. Union of India (1972)

2 SCC 788 : [1973] 2 SCR 757 ; Tata Engineering and Locomotive Ltd. v. State of Uttar Pradesh (2011)

3 SCC 193 : [2011] 3 SCR 134 – relied on.

6. It is settled principle of interpretation that the provisions of the statute have to be interpreted to give the words a plain and natural meaning. But, if there is scope for two interpretations, the Courts have preferred purposive construction, which is now the predominant doctrine of interpretation. In case of ambiguity in the language used in the provision of a statute, the Courts can take aid from the historical background, the Parliamentary debates, the aims and objects of the Act including the long title, and the endeavour of the Court should be to interpret the provisions of a statute to promote the purpose of the Act. [Para 17] [918-E-F]

K. A. Abbas v. Union of India (1970) 2 SCC 780: [1971] 2 SCR 446 ; Chiranjit Lal Chowduri v. Union of India [1950] SCR 869 ; Union of India v.

Elphinstone Spinning and Weaving Co. Ltd. (2001) 4 SCC 139 : [2001] 1 SCR 221 – relied on.

7. The object sought to be achieved by the Act is to ensure that Parliamentary institutions, political associations and academic and other voluntary organisations as well as individuals working in the important areas of national life should function in a manner consistent with the values of a sovereign democratic republic without being influenced by foreign contributions or foreign hospitality. The long title of the Act makes it clear that the regulation of acceptance and utilisation of foreign contribution is for the purpose of protecting national interest. Candidates for election and political parties or office bearers of political parties are barred from accepting any foreign contribution. The legislative intent is also to prohibit organisations of a political nature from receiving foreign contributions. It is clear that preventing foreign contribution into the political arena is the object sought to be achieved by the Act. Prevention of foreign contributions routed through voluntary organisations which are not connected to party politics is the reason behind introduction of Section 3(1)(f) and Section

5 of the Act. The Central Government is required to take into account the activities, ideology or the programme of the organisation including the association of the organisation with activities of any political party before declaring an organisation as an organisation of political nature not being a political party. Guidelines that are prescribed by the Rules indicate that only those organisations which are actively involved in politics or associated with political parties can be declared as organisations of a political nature. According to Rule 3(I), an organisation having avowed political objectives in its memorandum of association or bye laws is an organisation of a political nature. As the intention of the legislature is to prohibit foreign funds in active politics, an Association with avowed political objectives (i.e. to play a role in active politics or party politics) cannot be permitted access to foreign funds. There is no ambiguity in the provision and hence, cannot be termed as vague. Therefore, there is no substance in the contention of the Appellant that Rule 3(i) is ultra vires the Act. [Para 18] [918-G; 919-A-F]

8. Rule 3(v) deals with organisations of farmers, workers, students etc. which are not directly aligned to any political party but objectives of which include steps towards advancement of ‘political interests’ of such groups. The submission made on behalf of the Appellant is that such organisations agitating for their legitimate claims cannot be prevented access to foreign funds by resorting to the vague term ‘political interests’. It is correct to state that the words ‘political interests’ are vague and are susceptible to misuse. However, possible abuse of power is not a ground to declare a provision unconstitutional. [Para 19] [919-G-H; 920-A]

9. Where the provisions of a statute are vague and ambiguous and it is possible to gather the intention of the legislature from the object of the statute, the context in which the provisions occur and purpose for which it is made, the doctrine of “reading down” can be applied. To save Rule 3(v) from being declared as unconstitutional, the Court can apply the doctrine of “reading down”. A balance has to be drawn between the object that is sought to be achieved by the legislation and the rights of the voluntary organisations to have access to foreign funds. The purpose for which the statute prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds. Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected. On the other hand, such of those voluntary organisations which have absolutely no connection with either party politics or active politics cannot be denied access to foreign contributions. Therefore, such of those organisations which are working for the social and economic welfare of the society cannot be brought within the purview of the Act or the Rules by enlarging the scope of the term ‘political interests’. The expression ‘political interests’ in Rule 3(v) has to be construed to be in connection with active politics or party politics. [Paras 20, 21] [920-A-E]

10. 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 the guideline prescribed in Rule 3(vi). Support to public causes by resorting to legitimate means of dissent like bandh, hartal etc. cannot deprive an organisation of its legitimate right of receiving foreign contribution. It is clear from the provision itself that bandh, hartal, rasta roko etc., are treated as common methods of political action. Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared as an organisation of a political nature. To save this provision from being declared as unconstitutional, it is held that it is only those organisations which have connection with active politics or take part in party politics, that are covered by Rule 3(vi). [Para 22] [920-F-G; 921-A]