Delhi HC upholds validity of Section 43 of Foreign Contribution (Regulation) Act

The Delhi High Court has upheld the constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 (Rules)..As per Section 43, notwithstanding anything contained in the Code of Criminal Procedure, 1973, Central Government has the power to notify an authority to investigate an offence punishable under the Foreign Contribution (Regulation) Act..The Court has stated that the discretion exercised by the Government in the matter of selection of an investigative agency under FCRA was guided by policy and thus there was no arbitrary, vague and uncontrolled power with the Government..The judgment was passed by a Division Bench of Justices Manmohan and Sangita Dhingra Sehgal in a batch of petitions challenging the validity of the provision..The petitioners, who were aviation lobbyist Deepak Talwar’s NGO, Advantages India and other related parties, had also prayed for quashing of the investigation against them by the CBI and Enforcement Directorate for violation of FCRA..The petitioners submitted that in terms of Section 23 read with Section 43 of the FCRA, the Central Government could authorize the same Officer to inspect a case under FCRA and then investigate it for the purpose of filing a criminal complaint in terms of Section 40 of FCRA..In view of the facts at hand, the Petitioners thus objected to the Central Government’s request to the CBI to investigate the petitioners after completion of the inspection by an Authorized Officer..It was contended that allowing the CBI investigation to proceed would lead to absurdity as it would amount to multiple, parallel and re-investigation and prosecution with respect to same offences..The petitioners submitted that CBI could investigate an FCRA matter when an authorization is issued in their favour at the very inception/first instance and the Central Government could not “pick and choose” the investigative agency according to their whims and fancies..Challenging the validity of Section 43 and Rule 22, the petitioner contended that the implementation of the provisions conferred “uncontrolled or unguided power” upon the Central Government which was “manifestly arbitrary, unreasonable, ambiguous, unconstitutional and ultra vires” Articles 14 and 21 of the Constitution of India..After taking the Court through the scheme and object behind FCRA, the Central Government submitted that in accordance with Section 43, the investigation was to be conducted by an authority specified by the Central Government with respect to cognizable offences. It was also pointed out that some of the offences specified in Chapter VIII of FCRA were cognizable offences and an FIR for them is registered by the stipulated agency for the purpose of investigation..The Central Government thus emphasised that it had vide Notification dated October 27, 2011 already notified the CBI for the purpose of such investigation where the amount of foreign contribution exceeds Rs. 1 crore, and the State Crime Branch if the amount is less than Rs. 1 crore..It was further clarified that the scope of inspection by the officer empowered under Section 23 of FCRA and the investigation under Section 43 of FCRA were entirely different since both led to different conclusions..While an enquiry under Section 23 leads to cancellation of registration under Section 14 of FCRA, Section 43 leads to criminal action under Section Chapter VIII of the FCRA, it was stated..After hearing the parties, the Court, at the outset, stated that an Act could be declared as unconstitutional only if a clear case was made out that the legislature did not have the legislative competence to pass the Act or that the Act violated the fundamental rights guaranteed by Part-III of the Constitution..It further added that there was always a presumption in favour of the constitutionality of an enactment and the burden to show a clear transgression of constitutional principles was upon the person who has assailed the enactment..“..laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power. In fact, it must be presumed, unless the contrary is proved, that administration and application of a particular law would be done ―”not with an evil eye and unequal hand”. “.In the instant case, the Court opined that there was no possibility of any “pick and choose” of the investigative agency or parallel investigation or re-investigation. “By virtue of established practice” and the Notification, investigation of offences was carried out either by CBI or crime branch officials exclusively depending upon the pecuniary value of alleged violation and not by an officer authorised by the Central Government under Section 23 of FCRA..It further stated that there was a principle and/or policy which guided the exercise of discretion by the Government in the matter of selection of an investigative agency. Thus, there was no arbitrary, vague and uncontrolled power with the Government..The Court remarked that the authorisation letter issued under Section 23 of FCRA appointed an Officer to only exercise power under Sections 23 to 26 and 42 of FCRA. No power to investigate offences under Section 43 had been conferred upon the Officer..To contend that whosoever is authorized to inspect is vested with complete power to investigate under Chapter VIII of FCRA is not correct., the Court held..“Though there is no statutory prohibition that inquiry and investigation cannot be carried out by the same authority, yet it is known to law that inquiry and investigation can be carried out by different authorities. At times inquiry report giving prima facie findings leads to subsequent criminal investigation by police or specialised agencies.”.The Court also held that the fact that some of the IPC offences overlapped with the offences under FCRA would neither render the registration of an FIR under such sections illegal nor could it be a ground to challenge the Constitutional validity of the provisions of FCRA..In view of the above, the petitions were dismissed..The petitioners were represented by Senior Advocates N Hariharan, Sudhir Nandrajog along with advocates Tanveer Ahmed Mir, Arjun Singh Bhati, Dhruv Gupta, Pranav Ralli, Vaibhav Suri, Nikhil Rohatgi, Narayani Bhattacharya, Vaibhav Sharma, Rekha Anjara, Siddharth Yadav, C Govind Venugopal, Sharang Dhulia, Pratheek Bhalla, Shaishav Manu, Shivek Trehan, Avishkar Singhvi, Kshitij Kuma..Union of India was represented by Advocates Amit Mahajan, Ripu Daman Bhardwaj, Vinod Diwakar with Dhruv Pande and Mallika Hiramath..SPP Anil Grover and Advocates Shivesh P Singh, Noopur Singhal and Mishal Vij appeared for CBI..[Read Judgement]