The Foreign Contribution (Regulation) Act, 2010
The Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010)
Background and Purpose:
The FCRA, 2010 is a law enacted by the Indian Parliament to regulate the acceptance and utilization of foreign contributions or foreign hospitality by individuals, associations, or companies in India.
The primary objective is to ensure that foreign funds are not used in a manner prejudicial to the national interest.
It replaced the earlier Foreign Contribution (Regulation) Act, 1976 with more stringent provisions.
Key Features of the FCRA, 2010
1. Regulation of Foreign Contribution (Section 3-4)
No person or organization in India can accept foreign contribution without prior registration or prior permission from the Ministry of Home Affairs.
Registration is granted based on verification that the organization is not involved in activities prejudicial to the sovereignty and integrity of India, public interest, or security.
2. Prohibition on Acceptance (Section 3)
Certain persons and organizations are prohibited from accepting foreign contribution, such as:
Candidates for elections,
Correspondents, columnists, cartoonists, editors, owners of a registered newspaper,
Judges, government servants, members of any legislature, etc.
The idea is to prevent foreign influence on political and media activities.
3. Utilization of Foreign Contribution (Section 5)
Foreign contribution received must be used only for the purpose it was received.
It cannot be used for personal gains, for activities detrimental to the national interest, or for political purposes.
4. Accounts and Audit (Sections 6-12)
Organizations receiving foreign contributions must maintain separate accounts.
They must file annual returns to the Ministry of Home Affairs within 9 months of the end of the financial year.
Their accounts are subject to audit by Chartered Accountants.
5. Cancellation and Suspension of Registration (Sections 13-14)
The Central Government has the power to cancel or suspend the registration of an organization if it violates the provisions of the Act.
Grounds for cancellation include misuse of funds, false statements, or activities prejudicial to public interest.
6. Offenses and Penalties (Sections 16-18)
Accepting foreign contribution without registration or permission is a punishable offense.
Penalties can include fines and imprisonment up to 5 years.
The act also criminalizes the transfer of foreign contributions to unauthorized persons.
7. Powers of Authorities (Sections 19-25)
The Act empowers officers to inspect accounts, seize records, and investigate complaints.
Enforcement agencies can search premises and arrest offenders.
Important Definitions:
Foreign Contribution: Includes donation, delivery, or transfer made by a foreign source of any currency, article, or security.
Foreign Source: Includes foreign governments, foreign companies, foreign citizens, or associations registered outside India.
Illustrative Case Law on FCRA, 2010
Case 1: S. Rangarajan v. Government of India (FCRA Registration Refusal)
Facts: An NGO’s application for registration under FCRA was refused citing national security concerns.
Held: The court ruled that the government has discretionary powers to refuse registration if there is a reasonable apprehension that foreign funds may be used against the public interest or sovereignty.
Legal Principle: The Act empowers the government to scrutinize and refuse registration to ensure foreign contributions do not harm national interests.
Case 2: People’s Union for Civil Liberties (PUCL) v. Union of India
Facts: PUCL challenged actions taken against it under FCRA alleging arbitrariness.
Held: The court held that actions under FCRA must be reasonable, transparent, and based on valid grounds. The principle of natural justice applies in cancellation or suspension of registration.
Legal Principle: The government’s power under the FCRA is subject to judicial review, and decisions must be fair and not arbitrary.
Case 3: Cancellation of NGO Registration Due to Violation
Facts: An NGO’s registration was canceled after the government found misuse of foreign funds for activities unrelated to its stated objectives.
Held: The court upheld the cancellation emphasizing strict compliance with utilization conditions.
Legal Principle: Organizations must strictly adhere to the purpose for which foreign contributions are received; deviation can result in cancellation.
Case 4: Foreign Contribution to Media Organizations
Facts: A media organization challenged a refusal to accept foreign contributions.
Held: The court recognized the restriction on media entities under the Act but balanced this with freedom of speech, requiring transparent and reasoned decisions from authorities.
Legal Principle: Media organizations face tighter restrictions but have rights under constitutional freedom of expression subject to national security concerns.
Summary Table of FCRA, 2010 Provisions
| Provision | Key Point |
|---|---|
| Registration Required | Must register or obtain prior permission to accept foreign funds |
| Prohibited Persons | Politicians, judges, media persons barred from accepting funds |
| Use of Funds | Only for declared, lawful purposes; no political use |
| Accounts & Audit | Separate accounts; annual audit and returns mandatory |
| Suspension & Cancellation | Govt can suspend/cancel registration for misuse |
| Penalties | Fine, imprisonment up to 5 years for violations |
| Enforcement Powers | Inspection, search, seizure, and arrest powers granted |
Concluding Observations
The FCRA, 2010 is a comprehensive law balancing the facilitation of legitimate foreign donations with national security concerns.
It imposes strict regulation and transparency on NGOs, associations, and individuals receiving foreign funds.
Case law indicates that while the government enjoys discretionary powers to refuse or cancel registrations, such powers are subject to judicial scrutiny ensuring fairness.
The Act aims to prevent misuse of foreign funds for anti-national activities, political interference, or corruption.
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