[FCRA amendment] You are discouraging NGO activities meanwhile: Supreme Court to Centre

During the hearing of the petitions challenging the 2020 amendment to the Foreign Contribution (Regulation) Act, 2010, the Supreme Court today observed that the activities of NGOs were being stalled by virtue of these amendments..The Bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar was hearing a batch of petitions challenging provisions of the Foreign Contribution (Regulation) Amendment Act, 2020 prohibiting transfer of foreign funds (Section 7); requiring Aadhaar as identification for prior approval, registration etc (Section 12A) and mandating opening of FCRA primary account exclusively in a branch of State Bank of India in New Delhi notified by the Centre (Section 17)..Senior Advocate Gopal Sankaranarayanan today said that the Central government cannot get a free pass by raising the national security issue..Citing the apex court's recent judgment in the Pegasus case, Sankaranarayanan, appearing for the petitioners, argued,"...if national security is applied then the clear restriction is on me. Supreme Court makes it very clear [in the Pegasus judgment] that Centre cannot get a free pass every time it is raised. They have to satisfy, and not me. They have to show that since double donation has come, those funds are being used for terror activities.".During the hearing, the Court observed,"The funds coming in was double and that was a cause of concern...It's only good when invested properly and not otherwise and that's why rules are important."To this, Sankaranarayanan replied,"But asking a remote person in India to open an account in Delhi is not working."The Court responded,"Now in the age of internet, such access can be digitally...""Not everyone is technological savvy. I visit banks for transfer of funds," the Senior Counsel said..Challenging the bar on transfer of foreign funds from an organisation that is registered and granted a certificate under the Act, Sankaranarayanan said,"Earlier it was that funding by larger organisations can be sent to the smaller ones who are doing the ground work like Bachpan Bachao Andolan etc. Now, it's a complete and outright ban. No person who is registered can transfer such foreign contribution. As soon as such prohibition comes into force, it becomes an absolute prohibition. Now goods and services are stuck with me even if the other person is registered.".The Senior Counsel also pointed out the good work that is facilitated through foreign funding, including relief for droughts, floods etc, sending migrants to their homes (during COVID-19). "A lot of this money has come from foreign countries. Whenever it's foreign we look at it from coloured lenses," he argued.The Bench then said,"Nobody is opposed to foreign contribution and this Act recognises it. The question is if the regulation under the Act for receiving such funds is extreme or not.".Sankaranaryanan went on to argue,"Now it is said about 26,000 institutions are registered under the old Act and hundreds of FCRA accounts were opened. Many of them don't have online support...Banks are going to the Centre and giving details (of FCRA accounts) in 48 hours. Then where is the question of saying that we are suppressing data? Balance which is sought to be achieved has been disturbed here."He added that there has been no specific denial by the Centre in this case, by means of an affidavit.In response, the Court said,"Can an affidavit explain the wisdom of the Parliament? We have to judge the statute as it is, whether on basis of doctrine of necessity...affidavit will not discredit the law made by Parliament.".Additional Solicitor General (ASG) Sanjay Jain defended the amendments, saying,"These are not legislative provisions which have been brought into force by haste. These have been brought into force 10 years after primary law. This is based on ground situation."On the bar on transfer of foreign funds, the Court asked,"The object of NGOs is to also fund the subsidiary NGOs, that is prohibited?""Yes it is prohibited now and can only be used for their own utilisation," was the ASG's reply.The Court then queried,"But one of the activities could be to finance the other smaller NGOs.""It will be subject to public policy and it will not be permitted," ASG said..The ASG also justified the provision mandating those receiving foreign funds to open an SBI account in Delhi, saying,"SBI account opening as a basic umbrella account is only one requirement and after that any number of accounts can be opened."He went on to explain the larger rationale behind the amendment."We have to see the broader objective as to what is the need for NGO like this...in a large country like this, the government often encourages NGOs to come forward and thus foreign funding had to be regulated......the transfer of one organisation to another will lead to a perverted situation. Money is passed to another NGO over whom they have no control. Only ideological or work similarity is not good for regulation purposes..."Making it clear that domestic funding of NGOs is not prohibited, the ASG said,"People of this country have donated largely and liberally. It is no more an era where average income of people was low. This dynamics have to be taken note of. Now domestic contribution is also large.".The Court then queried,"Disputes are looked at from the ground level. How will the donor look at it?""After doing a daan, the donor has no interest in it and done will take care of it. We just don't want intermediaries," the ASG replied.The Court then said,"You are discouraging NGO activities meanwhile. The result is this.".The Bench then adjourned the matter to November 9.