Indian Social Action … vs Union Of India on 6 March, 2020


Supreme Court of India

Indian Social Action … vs Union Of India on 6 March, 2020

Author: L. Nageswara Rao

Bench: L. Nageswara Rao, Hemant Gupta

                                                          Reportable

         IN THE SUPREME COURT OF INDIA
            CIVIL APPELLATE JURISDICTION

                 Civil Appeal No.1510 of 2020
            (Arising out of SLP (C) No.33928 of 2011)

Indian Social Action Forum (INSAF)
                                             .... Appellant(s)
                              Versus


Union of India

                                          …. Respondent (s)

                       JUDGMENT

L. NAGESWARA RAO, J.

1. The Appellant filed a Writ Petition in the High Court of

Delhi for a declaration that Sections 5 (1) and 5 (4) of the

Foreign Contribution (Regulation) Act, 2010 (hereinafter

referred to as ‘the Act’) and Rules 3 (i), 3 (v) and 3 (vi) of

the Foreign Contribution (Regulation) Rules, 2011

(hereinafter referred to as ‘the Rules’), are violative of

Articles 14, 19 (1) (a), 19 (1) (c) and 21 of the Constitution

of India. The High Court dismissed the Writ Petition,

aggrieved by which this appeal has been filed. The

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Appellant is a registered society involved in resisting

globalization, combating communalism and defending

democracy. In the Writ Petition filed before the High Court,

the Appellant-organisation stated that it firmly believes in

a secular and peaceful social order and opposes

communalism and the targeted attacks on the lives and

rights of people including religious minorities. Several

activities of the Appellant-organisation in the interest of

the society have been referred to in the Writ Petition. The

power conferred by the Act on the Central Government to

declare an organisation to be an organisation of a political

nature under Section 5 (1) of the Act was challenged by

the Appellant on the ground that no guidelines are

provided for the exercise of such power. Section 5 (4) of

the Act was assailed on the ground that the authority to

which a representation made by the aggrieved party is to

be forwarded, has not been specified. According to the

Appellant, the guidelines provided in Rule 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

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unreasonableness and arbitrariness. Hence, the Appellant

prayed for declaring Rules 3 (i), 3 (v) and 3 (vi) as violative

of the fundamental rights enshrined in Articles 14, 19 (1)

(a), 19 (1) (c) and 21 of the Constitution.

2. After considering the relevant provisions of the Act

and the submissions made on behalf of the Appellant, the

High Court of Delhi dismissed the Writ Petition as being

bereft of merit.

3. Mr. Sanjay Parikh, learned Senior Counsel appearing

for the Appellant submitted that Section 5 (1) of the Act

confers unguided and uncanalised power on the Central

Government to specify an organisation as an organisation

of a political nature not being a political party. He

submitted that Rule 3 (i), 3 (v) and 3 (vi) which contain the

guidelines and grounds, suffer from the vice of vagueness.

According to Mr. Parikh, Rules 3 (i), 3 (v) and 3 (vi) require

to be declared as unconstitutional as they are vague,

overbroad and unreasonable. He urged that the

vagueness in the said provisions leads to arbitrary exercise

of power in violation of Article 14 of the Constitution. He

further submitted that an organisation, the activity of

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which is to educate and promote civil, political, social,

economic and cultural rights cannot be prevented from

having access to funding, whether domestic or foreign.

Curtailing the right of the Appellant-organisation in having

access to foreign funds would result in the violation of the

fundamental rights guaranteed under Articles 19 (1) (a)

and 19 (1) (c) of the Constitution. He relied upon the

International Covenant on Civil and Political Rights and

International Covenant on Economic, Social and Cultural

Rights which have been accepted as sources of human

rights by the Protection of Human Rights Act, 1993.

Mr.Parikh submitted that political rights are an integral part

of human rights and any restriction in exercise of political

rights would be unconstitutional.

4. Mr.K.M.Nataraj, learned Additional Solicitor General

appearing for the Respondent defended the judgment of

the High Court by arguing that all the relevant points have

been rightly adjudicated by the High Court. He argued

that the constitutional validity of a statute can be

challenged only on two grounds which are legislative

competence and violation of any of the fundamental rights

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guaranteed under Part III of the Constitution. Additionally,

he submitted that a subordinate legislation can be

challenged successfully only on the ground of the

subordinate legislation being ultra vires the Act. The

learned Additional Solicitor General contended that the

Appellant organisation is not entitled to invoke Article 19 of

the Constitution of India. According to him, Article 19

provides for fundamental rights which are guaranteed only

to citizens. The Appellant organisation cannot be

considered as a citizen. Moreover, no individual member

of the organisation has been made a party to the Writ

Petition or in this Appeal. In support of this submission, he

relied upon judgments of this Court reported in Tata

Engineering and Locomotive Co. Ltd. v. State of

Bihar1 and Shree Sidhbali Steels Ltd. vs. State of

Uttar Pradesh2. According to the learned Additional

Solicitor General, right to receive foreign contribution is not

a fundamental right guaranteed under Article 19 of the

Constitution. We were taken through the provisions of the

Act and the Rules by the learned Additional Solicitor

1 (1964) 6 SCR 885
2 (2011) 3 SCC 193

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General who submitted that sufficient safeguards against

possible abuse of power are incorporated in the Act and

the Rules. That apart, it was contended that possibility of

abuse of power cannot be a ground to challenge

legislation. It was submitted that the object and purpose

of the Act has to be taken into consideration by this Court

while interpreting the provisions of the Act. The further

submission on behalf of the Respondent was that the

principle of ‘reading down’ has to be adopted in case this

Court is of the opinion that there is ambiguity in Rule 3 of

the Rules.

5. It is imperative to refer to the statutory regime. The

Foreign Contribution (Regulation) Act, 1976 (hereinafter

referred to as ‘the 1976 Act’) 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

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connected therewith and incidental thereto. The

background in which the 1976 Act was made has been

succinctly stated by the High Court of Delhi in

Association for Democratic Reforms v. Union of

India3 as follows:

“It can be safely gathered that amidst a spate of
subversive activities sponsored by the Foreign Powers
to destabilize our nation, the Foreign Contribution
(Regulation) Act
, 1976 was enacted by the Parliament
to serve as a shield in our legislative armoury, in
conjunction with other laws like the Foreign Exchange
Regulation Act
, 1973, and insulate the sensitive areas of
national life like – journalism, judiciary and politics from
extraneous influences stemming from beyond our
borders.”

6. 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

introduction of the Act is as under:

“It had been noticed that some of the foreign countries
were funding individuals, associations, political parties,
candidates for elections, correspondents, columnists,
editors, owners, printers or publishers of newspapers.

They were also extending hospitality. The effects of
such funding and hospitality were quite noticeable and

3 (2014) 209 DLT609

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to have some control over such funding and hospitality
and to regulate the acceptance and utilisation of foreign
contribution or foreign hospitality by certain persons or
associations, with a view to ensuring that Parliamentary
institutions, political associations and academic and
other voluntary organisations as well as individuals
working in the important areas of national life may
function in a manner consistent with the values of a
sovereign democratic republic the Foreign Contribution
(Regulation) Act
, 1976 (49 of 1976) was enacted.”

7. 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. Section 3 of the Act prohibits

acceptance of foreign contribution by the following:

(a) candidate for election;

(b) correspondent, columnist, cartoonist, editor, owner,
printer or publisher of a registered newspaper;

(c) Judge, Government servant or employee of any
corporation or any other body controlled or owned by
the Government;

(d) member of any Legislature;

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(e) political party or office-bearer thereof;

(f) organisation of a political nature as may be specified
under sub-section (1) of section 5 by the Central
Government;

(g) association or company engaged in the production
or broadcast of audio news or audio visual news or
current affairs programmes through any electronic
mode, or any other electronic form as defined in clause

(r) of sub-section (1) of section 2 of the Information
Technology Act, 2000 (21 of 2000) or any other mode of
mass communication;

(h) correspondent or columnist, cartoonist, editor,
owner of the association or company referred to in
clause (g).

8. Section 5 thereof 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.

9. 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)

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empowers the Central Government to frame guidelines,

specifying 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. Rule 3 of the Rules,

which is relevant for this case, is as follows:

“3. Guidelines for declaration of an organisation to be of
a political nature, not being a political party. – The
Central Government may specify any organisation as
organisation of political nature on one or more of the
following grounds:

(i) organisation having avowed political objectives in its
Memorandum of Association or bylaws;

(ii) any Trade Union whose objectives include activities
for promoting political goals;

(iii) any voluntary action group with objectives of a
political nature or which participates in political
activities;

(iv) front or mass organisations like Students Unions,
Workers’ Unions, Youth Forums and Women’s wing of a
political party;

(v) organisation of farmers, workers, students, youth
based on caste, community, religion, language or
otherwise, which is not directly aligned to any political
party, but whose objectives, as stated in the
Memorandum of Association, or activities gathered

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through other material evidence, include steps towards
advancement of Political interests of such groups;

(vi) any organisation, by whatever name called, 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.”

10. 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. As the dispute in

this case revolves around the organisations which are not

actively involved in politics, it is necessary to focus on the

provisions of the Act and the Rules governing such

organisations. 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.

11. Section 5 of the 1976 Act provides that any

organisation of a political nature not being a political party

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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. The Central Government is obligated in

terms of Section 5 (2) of the Act, to issue notice in writing

informing the organisation in respect of which the order is

proposed to be made of the ground(s) on which an order

under Section 5 (1) is proposed. As per Section 5 (3), the

organisation is to be given an opportunity to submit its

representation which shall be considered within the time

prescribed in Section 5 and an order is required to be

passed recording the reasons therefor.

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12. Guidelines for declaration of an organisation to be an

organisation of a political nature not being a political party

are found in Rule 3 of the Rules. We are concerned with

Rules 3 (i), 3 (v) and 3 (vi) of the Rules, which are the

subject matter of challenge in this appeal.

13. The principal challenge of the Appellant-organisation

to Section 5 (1) of the Act is on the ground that the terms

‘activity, ideology and programme’ are vague and have not

been defined in the Act which result in conferring unbridled

and unfettered power on the executive. Therefore, the

Appellant-organisation contended that Section 5 (1) is

violative of Article 14 of the Constitution. Section 5 (4) is

also challenged on the ground that the authority to whom

a representation should be made has not been specified

and it is not clear whether the authority would be an

independent authority or the Central Government itself.

The High Court held that the words ‘activities of the

organisation, the ideology propagated by the organisation

and the programme of the organisation’ having nexus with

the activities of a political nature are expansive but cannot

be termed as vague or uncertain. Sufficient guidance is

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provided by the Parliament in Section 5 and it is for the

rule making authority to lay down the specific grounds.

We are in agreement with the High Court that 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. It is

relevant to note that no serious attempt has been made by

the Appellant-organisation to assail Section 5 (4) of the

Act.

14. The contention of the Appellant is that the guidelines

in Rule 3 of the Rules are vague giving scope for misuse

and abuse of power by roping in voluntary organisations

within the sphere of the Act. Thereby, an organisation

which has no interest in active politics can be deprived of

the right to receive foreign contribution at the whims and

fancies of the executive by resorting to the vague

guidelines in Rule 3. It was further submitted on behalf of

the Appellant that the words ‘political objectives’, ‘political

activities’, ‘political interests’ and ‘political action’ used in

Rule 3 have no clarity and any activity though not

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connected with party politics can be brought into the fold

of Rule 3. Therefore, according to the Appellant-

organisation, Rules 3 (i), 3 (v) and 3 (vi) suffer from the

vice of over-breadth and are liable to be declared as

unconstitutional being violative of Article 14. According to

the Appellant-organisation, there is an infraction of Article

19 of the Constitution as the Rules are also unreasonable

and violate the freedom of speech and expression and the

right to form associations protected under Article 19 (1) (a)

and 19 (1) (c) of the Constitution.

15. We find force in the objection taken on behalf of the

Union of India that 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. (See: 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 and Tata

Engineering and Locomotive Ltd. v. State of Uttar

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Pradesh, (2011) 3 SCC 193). 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.

16. The principal contention of the Appellant-organisation

is that the guidelines provided in Rule 3 are vague and

confer naked and untrammeled power on the executive

thereby giving the scope for arbitrary exercise of power. In

K. A. Abbas v. Union of India 4 this Court was of the

opinion that:

“46. The real rule is that if a law is vague or appears to
be so, the court must try to construe it, as far as may
be, and language permitting, the construction sought to
be placed on it, must be in accordance with the
intention of the legislature. Thus, if the law is open
to diverse construction, that construction which accords
best with the intention of the legislature and advances
the purpose of legislation, is to be preferred. Where
however the law admits of no such construction and the
persons applying it are in a boundless sea of
uncertainty and the law prima facie takes away a
guaranteed freedom, the law must be held to offend the
Constitution, this is not application of the doctrine of
due process. The invalidity arises from the probability of
the misuse of the law to the detriment of the individual.

If possible, the Court instead of striking down the law
4 (1970) 2 SCC 780

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may itself draw the line of demarcation where possible
but this effort should be sparingly made and only in
the clearest of cases”.

17. 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 interpretation5. 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. (See: Chiranjit Lal Chowduri v. Union of India,

(1950) SCR 869; Union of India v. Elphinstone

Spinning and Weaving Co. Ltd., (2001) 4 SCC 139).

18. The object sought to be achieved by the Act is to

ensure that Parliamentary institutions, political

associations and academic and other voluntary

5 Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619

17 | P a g e
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

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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. The question that falls

for our consideration is whether the guidelines in Rule 3

suffer from vagueness and ambiguity and whether they

can be stated to be conferring uncanalised power on the

executive. 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, we find no substance in

the contention of the Appellant that Rule 3 (i) is ultra vires

the Act.

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19. 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’. We are in

agreement 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

unconstitutional6.

20. 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 7. To

save Rule 3(v) from being declared as unconstitutional, the

Court can apply the doctrine of “reading down”.

6 Collector of Customs v. Nathella Sampathu Shetty, (1962) 3 SCR 786.
7 DTC v. Mazdoor Congress, 1991 Supp (1) SCC 600

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21. 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’. We are

of the opinion that the expression ‘political interests’ in

Rule 3 (v) has to be construed to be in connection with

active politics or party politics.

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22. 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, we hold 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).

To make it clear, such of those organisations which are not

involved in active politics or party politics do not fall within

the purview of Rule 3 (vi). We make it clear that

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organisations used for channeling foreign funds by political

parties cannot escape the rigour of the Act provided there

is concrete material. In that event, the Central

Government shall follow the procedure prescribed in the

Act and Rules strictly before depriving such organisation

the right to receive foreign contributions.

23. The appeal is disposed of accordingly.

……………………………..J.
[L. NAGESWARA RAO]

…………………………….J.
DEEPAK GUPTA]

New Delhi,
March 06, 2020.

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