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FCRA Court Cases |
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State vs. CROSS, Hyderabad
(26-March-01) |
State vs. CROSS, Hyderabad (26-March-01)SUPREME
COURT OF INDIA Before: - G.B. Pattanaik and U.C. Banerjee, JJ. Criminal Appeal Nos. 377-379 of 2001 (Arising out
of SLP (Criminal) Nos. 84-86 of 2001). D/d. Versus For the Appellants: - Mr. Altaf Ahmed, Additional
Solicitor General, Mr. Syed Naqvi and Mr. P. Parmeswaran, Advocates. For the Respondent: - Mr. M.P. Raju and Mr. S.P.
Sharma, Advocates. G.B.
Pattanaik, J. - Delay
condoned. Leave granted. 2. These
appeals by the Central Bureau of Investigation are directed against the
judgment dated 27th September, 1999 of a learned Single Judge of Delhi High
Court. By the impugned judgment, the High Court in exercise of power under
Section 482 of the Code of Criminal Procedure, has come to hold that a breach
of the undertaking given by an Association under Section 6(1)(b) of the
Foreign Contribution (Regulation) Act, 1976 [hereinafter referred to as `the
Act'] would not amount to contravention of the provisions of the Act within
the meaning of Section 23 of the said Act and as such the criminal
prosecution that had been launched, would not lie. The High Court having
quashed the criminal proceedings, arising out of the two F.I.Rs., the Central
Bureau of Investigation is in appeal. 3. The
respondent-society, submitted an application in the prescribed form for
registration under Section 6 of the Act for receiving foreign contribution.
It was indicated therein that the foreign contribution will be received only
through the main branch of the State Bank of India, Hyderabad and a separate
bank account was opened for the purpose. The society was allotted a
registration number by the Central Government in accordance with Section
6(1)(a) of the Act. The said society entered into an agreement with M/s.
HEKS, Switzerland and the latter agreed to finance the project of
"teaching aid non-formal education". The said M/s. HEKS issued
instructions to the Canara Bank, Cantonment Branch, Bangalore, pursuant to
which two Bank Drafts were issued amounting to Rs. 2 lacs and Rs. 1.65 lacs,
in favor of the respondent-society by the Canara Bank, Bangalore. The
respondent society instead of depositing the same in the main branch of the
State Bank of India, Hyderabad, in accordance with the terms of the
agreement, deposited the same into the account of Canara Bank, M.G. Road,
Secunderabad. It was further alleged that the respondent society even failed
to intimate the Central Government about the receipt of the contribution from
M/s. HEKS, as required under Section 6(1)(b) of the Act. The Central
Government in exercise of its power under Section 10(b) of the Act, issued a
notification, requiring the society to have prior permission of the
Government before accepting any contribution. But that notification was
quashed by the High Court on a writ petition being filed. The Central
Government, thereafter got the accounts of the respondent society inspected
by the Assistant Director, appointed under Foreign Contribution (Regulation)
Act, in the Ministry of Home Affairs and on the basis of reports submitted by
the said Assistant Director, two First Information Reports were lodged
against the society. The investigating agency, after inspecting into the
allegations, submitted a charge-sheet under Section 6 read with Section 20(3)
and it is at that stage, the respondent filed the petition under Section 482
of the Code of Criminal Procedure for quashing of the criminal proceedings.
As stated earlier, the High Court having allowed the petitions and having
quashed the criminal proceedings, the Central Bureau of Investigation is in
appeal before this Court. 4. Mr.
Altaf Ahmed, the learned Additional Solicitor General, appearing for the
appellants contends that a conjoint reading of Section 6(1)(b) and Section 23
of the Act read with Section 3(a) and the prescribed form FC-1, required to
be filed, seeking permission of the Central Government for accepting foreign
contribution would unequivocally indicate that the contravention and/or
violation of any terms and conditions contained in the very application form,
would constitute the contravention of the provisions of the Rules made under
the Act and as such would be punishable under Section 23 of the Act and the
High Court committed an error in holding that there has been no contravention
of the provisions of the Act. Learned Additional Solicitor General further
contended that the Act in question having been enacted to regulate the
acceptance and utilization of foreign contribution or foreign hospitality by
persons or associations with a view to ensure that parliamentary
institutions, political associations and other voluntary organizations may
function in a manner consistent with the values of sovereign democratic
republic, any contravention of the provisions of the Act or the Rules made
thereunder should be strictly construed, and on being so construed, if an
applicant indicates the mode or channel of foreign contribution in his
application and in violation of the same receives through a different mode or
channel, that would constitute an infraction of the relevant provisions of
the Rules, on the information given by the persons concerned and such
infraction must be held to be punishable under Section 23 of the Act and the
same cannot be lightly brushed aside. 5. Dr.
M.P. Raju, appearing for the respondent, on the other than contended that
Section 23 of the Act makes only the contravention of any provisions of the
Act or any Rule made thereunder punishable, and the information provided in
form FC-1 and violation thereof, would not constitute a contravention of the
provisions of the Act or Rules made thereunder and as such, the High Court
rightly quashed the criminal proceedings. The learned counsel contends that
the penal statutes which create offences, must be construed strictly and
there is no rhyme or reason for construing the same liberally and thus
construed, violation of any particulars given in the form for receipt of the
contribution in a particular bank would not constitute a violation of either
the provisions of the Act or Rules made thereunder and as such, it would not
be an offence within the ambit of Section 23 of the Act. 6. In
order to appreciate the correctness of the rival stand, it would be necessary
to examine some of the provisions of the Act and the Rules made thereunder.
But before focusing attention on the same, it may be noticed that when
political associations and voluntary organizations as well as individuals
working in important areas of national life were found to be in receipt of
foreign contribution and foreign hospitality, the Parliament came forward to
enact the Act. The main object was to regulate and keep a control over the
acceptance and utilization of foreign contribution. The entire purpose behind
the Act was that the recipients of such foreign contribution may not act in a
manner inconsistent with the values of the sovereign republic, which our founding
fathers have given to us. Without prohibiting the receipt of such foreign
contribution, the Act intends to regulate the same and it is for that
purpose, it is required that recipient of such contribution must intimate the
Central Government within the time and in the manner to be prescribed by the
Rules. Since several recipients did not send the intimations, for effectively
monitoring the receipt of foreign contribution, Section 6(1) of 1976 Act was
amended by Act 1 of 1985, making it obligatory for the associations to get
themselves registered with the Central Government and then they could accept
the contribution only through a specified branch of a bank. The act enables
the Central Government even to inspect the accounts of persons or
associations by insertion of Section 15-A. The Act also has inserted Section
25-A even prohibiting acceptance of foreign contribution under certain
circumstances. This indicates the legislative intent and purpose behind the
Act and, therefore, the provisions of the Act are required to be construed
accordingly. Section 6 of the Act prohibits receipt of foreign contribution
by an association unless the association gets itself registered with the
Central Government, and agrees to receive contribution only through such one
of the branches of a bank, as it may specify in its application for such
registration. Section 6(1) of the Act is extracted herein below in extenso: "Section
6(1): No
association [other than an organization referred to in sub-section (1) of
Section 5] having a definite cultural, economic, educational, religious, or
social program shall accept foreign contribution unless such association, - (a)
registers itself with the Central Government in accordance with the rules
made under this Act; and (b)
agrees to receive such foreign contributions only through such one of the
branches of a bank as it may specify in its application for such
registration, and
every association so registered shall give, within such time and in such
manner as may be prescribed, an intimation to the Central Government as to
the amount of each foreign contribution received by it, the source from which
and the manner in which such foreign contribution was utilized by it: Provided
that where such association obtains any foreign contribution through any
branch other than the branch of the bank through which it has agreed to
receive foreign contribution or fails to give such intimation within the
prescribed time or in the prescribed manner, or gives any intimation which is
false, the Central Government may, by notification in the official Gazette,
direct that such association shall not, after the date of issue of such
notification, accept any foreign contribution without the prior permission of
the Central Government." Section
23 which is the penal provisions, provides thus: "Section
23. Punishment for the contravention of any provision of the Act. - (1) Whoever accepts, or assists any person,
political party or organization in accepting, any foreign contribution or any
currency from a foreign source, in contravention of any provision of this Act
or any rule made thereunder, shall be punished with imprisonment for a term
which may extend to five years or with fine or with both. (2)
Whoever accepts any foreign hospitality in contravention of any provision of
this Act or any rule made thereunder shall be punished with imprisonment for
a term which may extend to three years, or with fine, or with both." A plain
reading of Section 23 would make it clear that any receipt of foreign
contribution in contravention of the provisions of the Act or Rules
thereunder becomes punishable. Section 30 confers power on the Central
Government to make Rules for carrying out the provisions of the Act. In
exercise of such powers, the Central Government has framed the Rules called
the Foreign Contribution (Regulation) Rules, 1976 [hereinafter referred to as
`the Rules']. The expression `Form' has been defined in Rule 2(b) to mean a
form appended to the rules. Rule 3 provides that an application for obtaining
prior permission of the Central Government to receive foreign contribution
under sub-section (1) of Section 5, or clause (a) of sub-section (2) of that
Section, shall be made in Form FC-1. The aforesaid Form FC-1 at serial No. 5,
stipulates that the applicant should intimate the mode/channel of receipt.
The form also provides the declaration, which the applicant must declare to
the effect that the particulars furnished by the applicant are true and
correct. This form must be held to be a statutory form being appended to the
Rules and being the form prescribed under Rule 3 for obtaining permission to
receive foreign contribution. Reading the aforesaid provisions together and
giving a literal meaning to the expressions contained in the aforesaid
provisions, the conclusion is irresistible that receipt of contribution and
depositing the same in a bank other than the bank indicated in the
application form FC-1, would be a violation of the provisions of Section
6(1)(b) itself inasmuch as no association is entitled to accept foreign
contribution, unless the association agrees to receive the foreign
contribution only through such one of the branches of the bank, as it may
specify in is application for registration. The violation being a
violation of the provisions of Section 6(1)(b), it would constitute an
offence under Section 23 and, therefore, the High Court, in our opinion,
committed serious error in quashing the criminal proceedings on a finding
that it does not tantamount to violation of any provisions of the Act. Needless
to mention that if associations and political parties would be allowed to
receive foreign contribution and would deposit the same in any bank they like
notwithstanding their declaration with the Central Government at the time of
registration, then the very purpose of conferring power on the Central
Government to regulate, would be frustrated and all other provisions for
inspections and auditing conferring power on the Central Government would be
futile. In the aforesaid premises, we have no hesitation to come to the
conclusion that the High Court committed serious error by quashing the
criminal proceedings in the impugned judgment on an erroneous interpretation
of the provisions of the Act and the Rules made thereunder, as stated above
and we, accordingly set aside the same. These appeals are allowed. The
Magistrate is directed to proceed with the matter expeditiously. Appeals
allowed. The Fine Print
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[1] CROSS–
Comprehensive Rural Operations Service Society
1-69,
Snehapuri, Nacharam,
Hyderabad
– 500, Andhra Pradesh
Mr M
Kurian, Executive Director
Phone :
040 – 7170596
Fax : 040
– 7170596