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Live Updates SC Bench hearing plea challenging the MHA notification of specific provisions of Foreign Contribution Regulation (Amendment) Act, 2020. [LIVE UPDATES]

Supreme Court MHA Foreign Contribution Regulation Act

Nov 09, 2021

Bench - You know what is the sphere of cultural, religious, social, but what is economic activity. It can be for distribution with similar organizations. All these activities are one activity or separate activity.

Mehta - Skill development activity...

Bench - It is social or educational. You tell us after lunch what is economic activities. In context of the original S.7 it would mean distribution to other NGOs. Now section 8 takes away that.

Elaborate on that also.S7 will come for economic activity. You explain that with little elaboration. Or all together as one activity, cannot be separated.  Please explain.

Mehta - Why Section 12 A was introduced. This was because there was a Benami transaction. Please See Section 1 and 4. [Reads the provision along with S. 3]

Those who run NGO should be identifiable persons. This is also a reason why MHA is the nodal agency. To ensure such benami things are stopped, the provision of Aadhar is introduced by statute which is permissible.

Bench has risen. Mr. Mehta would take another 15 min. He has a matter fixed at 2 in another court.

Nov 09, 2021

SG: The purpose of showing 11 is ...that any NGO cannot get registration under FCA. Reads Section 11...To get a foreign grant it has to be registered which is not challenged.

SG: Once you get 100 crore you have to show that you are using it for these purposes. Section 18 is under challenge. Kindly see… Earlier FC was accepted in any city, town, taluka. Fc from USA, China, in some village.

SG: The Govt would not come to know what amount has come so no one would not whether received for the activities and used for it. Every NGO will have a designated bank for the purpose of receipt.

SG:They do not have to travel. If I am in Vadodara, I can go to my ID and they will open it and money would come to SBI main branch… Opening of SBI account is a one-time Act. Open the account from wherever he is. Services charges would not be required

Bench - The branch of SBI acts as the backup office of the main office.

Mehta - Only for opening. Thereafter once that is over have an account in any bank of your choice, whichever no. of account you want to. Then the Central Govt can know.

Mehta - His account can be any scheduled bank.

Bench - Can be other than SBI?
Mehta - Yes. It is only for the purpose of receipt and transmission. Money from a foreign country will come to SBI main branch

Bench  - Without any liability?

Mehta - Yes, without any financial or other liability. This is the regulation.

Bench - Practicability and traveling - all these questions won’t arise.

Mehat - Unless they provide us with details there is no mechanism to know. Reads Section 17.

Bench - Can these restrictions be imposed on banks while issuing licenses? This is not on the customer, it would be applicable to the bank itself. Banking Regulation.

Mehta - Something similar is done. That would be more effective.

Bench: Underlying Purpose is to Regulate.

Mehta states it is difficult to regulate because innumerable NGOs are present.

Bench - 19000 you cancelled

Mehta- 1900 already opened accounts. There is no difficulty. Reads Section 17. …If I am regularly receiving then 11 otherwise special permission is required. …[Reads proviso]

Can have as many accounts where money would travel from SBI Main Branch. Complete freedom other than having an account in SBI Main Branch.

Bench - Proviso 2 would mean we may open multiple accounts, then these accounts will be only for Foreign exchange. So that it is not mixed up with other accounts and is affection regulation. It must maintain 2 accounts. One for general funds.

SG: Foreign funds can be transferred to the general fund account . The answer should be no in terms of this proviso. It cannot be mingled with other purposes of the trust.

Mehta - Suppose you want for religious purposes then it is not possible. This provision was there in the previous regime

Bench - The same trust is registered for 4 activities. Money taken for social purposes, can it be used for religious activities.

Mehta - I don’t think so.

Bench - then your argument gets weak. The amount received can only be used for that purpose.

Mehta - It can be used for any object for which registration is granted.

Bench - That it is not strict regulation. Be clear on that, it would have some bearing. Then the argument gets weakened. That amount cannot be transferred to a general account.

Mehta - Money does not come for general purposes

Bench - you are indicating that the heads should be mentioned. Kindly take instructions.

Gopal - 11(1) requires you to utilize for the activities that you are registered for; But for 11(2) as Your Lordship pointed out not registered but take permission from Govt. Then it ought to be for the specific purpose for which it was received. 
Mehta - will respond after lunch

Bench - Section 18 - is required to give specific intimation

Mehta - Let me read Section 18. Your Lordships are right. Otherwise, it would come for cultural and education is imparted, that is possible. It is a mischief.

Bench - Supposed some cheque - hardcopy is received from foreign country can it be deposited in a local bank or main office.

Mehta - Cheques can be deposited to local banks.

Bench - it means...Receipt of cheque can be in a local bank. Make it clear.

Mehta - I shall do that.

Bench - There could be e-transfer also. Initial credit has to be in main branch and then it can go to the local branch.

Mehta - It should land there (Main Branch)

Bench - Whether cheque, draft, or e-transfer it has to be. Please make sure.

Bench - Section doesn't say that it is to be received only through digital Media. There should be some regulations and rules.  
SG:  - I bow down...There is a provision that the bank has to inform us of. 
Out of 23000 accounts, 19000 have already operated without coming to Delhi.

Kindly See para 105. I need not reiterate…[Reads from pg 97 and pg 98]

Bench - Can you explain why this activity is under Home Affairs, not the finance department.

Mehta - There are two reasons. There is an element of internal security. Sovereignty. Not only an accounting act. Why would someone pay me to sit in another country? Falls within HM’s purview.

SG: Several factors, have an effect on law and order. Money for Naxalite activities which are not under the purview of FCRA

SG: I have IB inputs. I have notes. I have not placed it on record. Material is not required for the legislature to legislate, but for the administrative branch.

Mehta states Page 97 - Oblique notice, more clarity on pg 100.

Mehta - This is the purpose and object. Please see S. 8. I cannot have registration if my sole purpose is to receive funds and distribute them amongst other NGOs.

Bench - My activities referred to.

Mehta - The purpose is very rational. Please See Section 8. Just visualize a citation. I received a  50 lakhs contribution. I can provide that I as MT would get 30 lakh and staff would get 10 lakh and 10 for other purposes. That was happening.

Bench - If it is multi activity trust. It is received for one activity and  . Read Section 8. Is that the understanding of the department

Mehta- I’ll put it on Affidavit.

Bench - otherwise 8 would have read for any permissible purpose of the trust.

Mehta - Kindly underline b. (defray such sum… to meet administrative expenses) the purpose is defined under Section 11, not for my enrichment.

I will receive one crore and 20 lakhs kept for me and distribute the rest to other NGOs. Therefore Section 7 is amended. Please see unamended Section 7.

Bench - this is not under challenge

Mehta - Section 8 is not under challenge. The amount has been redacted to 20 %

Mehta - We have made it 10% under Rules. [Reads Unamended Section 7]….10% could be given to the unregistered. Registered to registered was permissible. [Reads Amended Section 7] Now you cannot distribute. Cannot act as a middleman.

SG:  If you are so benevolent then ask the contributor that there are other NGOs. You can outsource their help. If you receive blankets you cannot transfer it, but help from somebody to see that the real beneficiary gets the benefit.

Another Section is Section 12A. This is to have Aadhar No. Even the Aadhar Judgment says it can be used for legitimate state interest. And this is a legitimate state interest. Kindly have a look at 12A.

Nov 09, 2021

AG: Distance of feeder roads from border roads is there in the application.

AG: Char Dham roads connecting 4 religious places for Hindus. Petition sought to broaden the road and the buses to could cross each other. petitioner wanted 5.5 m but army wanted 10 m. There are seven projects lead to international borders which are needed for army movements

AG: There is a need for armed forces vehicles, rocket launchers etc to travel on these roads and all this was not taken into account. Army was ignored in this matter and army's needs to be presented here before the court

SC: AG, Which part of the 2018 circular will be replaced by the 2020 circular?

AG: Here the 5.5 m was changed to 7.5 m to enable army to carry their supplies and their needs

Sr Adv Colin Gonsalves: the ministry of defence is not asking for this road... the defence ministry is asking for something which the minority judgment had stated.

Gonsalves: Why is this happening now.. this is happening now since in 2016 char dham yatra was envisaged so that SUVs can travel up and down the mountains. earlier pilgrims travelled on foot but that was not good enough and thus we need highways and helipads

Gonsalves: Himalayas has physical restrictions and you cannot do something that it crash. Expert study has suggested that such vehicles going up and down is impacting the glaciers and there is catastrophe after catastrophe.

AG: Nothing is there in affidavit

Gonsalves: be rest assured all in affidavit

SC: Can we deny the factual position that these are feeder roads to the border areas. I don't think there can be any doubt that these are feeder roads.

SC: thus the whole notion that border areas are only those proximate to borders is not the case here...

SC: If you have travelled to Ladakh and if you have moved from Leh to Kargil to Zanskar you will know when the army vehicle comes and the civilian vehicle comes both meet at one point and descending vehicle is at a greater danger of falling down..

SC: So we cannot say that this need can be ignored. We agree that Himalayas are young mountains... but can the need highlighted be disregarded?

Gonsalves: if himalayas are capable to take the developments envisioned then yes go ahead but if reports suggest that himalays are not able to take it then can we. we saw what happened as an aftermath recently

Supreme Court Bench headed by Justice Khanwilkar is hearing plea(s) challenging the Ministry of Home Affair’s notification that extends the date for compliance of specific provisions of the Foreign Contribution Regulation (Amendment) Act, 2020.

Solicitor General of India Tushar Mehta is arguing

Right to receive foreign contributions is not a Fundamental Right: SG Tushar Mehta

SG: Foreign contributions, if unregulated, can cause devastating consequences to the sovereignty of the nation…Please have my affidavit ...common preliminary affidavit for Petitioner No. 1 and 2… As a nation, we have been conscious of foreign contributions.

SG: The regulation is with an object and has been clear from the introduction of the legislation. [Referred to the Affidavit - predecessor Act referred to the statement of object]

Came to be amended in 1985, statement of objects of the ordinance pg 20. 
Earlier if China contributed to an NGO then it was regulated.

Experience showed that various govt. in other countries infusing funds in India, the definition was enlarged to trace the utilization of foreign contribution down the line. How it is being used has to be traced.

SG: In one line I can say they were made to strengthen the original object.

A bill came on 2006 pg 21.

Bench - you are referring to the ordinance?

Mehta: Kindly see page 21, Statement of object of the bill, my mistake. It matured into an amending act. Now para 33 [ Reads on]

SG: The country has responded. Right from 76 this has happened. Now see the existing Act. I am reading the existing Act of 2010 [para 35 pg 23]. This was 2010, the policy has remained the same de hors. This is not that something new has been introduced in 2020.

Bench: Expression used in sovereignty. Much wider than security.

SG: The provisions under challenge. Let me take you to the statement of object of amendment. They travel beyond the scope and object of the original Act.

Bench - In writ only some provisions are challenged. So you say that they have to be within the scope of the Act.

Mehta - Whether in furtherance of the scope of Act or totally alien. Refer to pg 25 - what amounted to the amended. [it is submitted that thereunder ….efficiently…]. We have no means to examine on our own until they produce it.

Bench - Cancel of recipient organization - year-wise breakup available.

Mehta - Reads on. Then these amendments came into force. See 1st section. We have some data. Shall place in proper format...I have given a comparative chart of the provision and how it is amended at pg 4 to 9. Please come to first Section 11 which is not challenged.


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