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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
The above judgements have been provided by AccountAid India for
general information on a best-effort basis. There is no warranty that the
text is correct, complete or authentic. For any important decisions or usage,
please obtain the authorised text from court records. For a proper
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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