Delhi HC Upholds The Vires Of Foreign Contributions (Regulation) Act 2010; CBI Empowered To Investigate [Read Judgment]

Dismissing a batch of seven writ petitions, the Delhi High Court on Friday said that the Central Bureau of Investigation was empowered to investigate in matters of foreign contribution and upheld the constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 (FCRA). The validity of the corresponding Rule 22 of the Foreign Contribution (Regulation) Rules, 2011 (FCRR) was also upheld.

Background

The Petitioner, M/s Advantage India, was accused of obtaining foreign contributions worth Rs. 90 crore for the personal use of its office bearers, under the garb of undertaking social/educational activities. In this regard, an authorized officer had inspected the organization's records under Section 23 of FCRA. Later, the Monitoring Unit of Foreigners Division of the Ministry of Home Affairs directed a CBI probe in the matter and an FIR was registered. The Petitioner moved against the said investigation order of the central government and the FIR so filed by challenging the constitutional validity of Section 43 of FCRA in the case captioned "M/s Advantage India & Anr. v. Union of India & Ors.".

Section 43 of the FCRA empowers the Central Government to appoint an authority to investigate the offences committed under FCRA. This authority is vested with all the powers which an officer-in-charge of a police station has while making an investigation into a cognizable offence.

Petitioner's Contentions against S. 43

1. The main contention raised by the Petitioner was that only the officer, who had conducted the inquiry and investigation into commission of alleged offences under Sections 23 to 26 and 42 of FCRA, was authorized to investigate and file a criminal complaint under Section 40 of FCRA. A separate direction under Section 43 of FCRA, requesting the CBI to investigate the matter would amount to multiple, parallel and re-investigation and prosecution in regard to same offences. With reliance placed on Directorate of Enforcement v. Deepak Mahajan & Anr., (1994) 3 SCC 440, it was submitted that the investigation could be done by the CBI or Crime Branch officials, only when the authorization in this behalf was issued in their favour at the very inception/first instance.
2. Section 43 of FCRA and Rule 22 of FCRR confer uncontrolled and unguided power upon the respondents, to choose whether the investigation should be carried out by the officer authorized by the Central Government or the CBI. This renders Section 43 manifestly arbitrary, unreasonable, ambiguous, unconstitutional and ultra vires on the vice of Articles 14 and 21 of the Constitution of India. Reliance was placed on State of Punjab v. Khan Chand, (1974) 1 SCC 549.

Petitioner's Contentions against FIR

1. Sections 33, 35 and 37 imbibe the substance and spirit of penal provisions pertaining to cheating, forgery of documents, falsification and fabrication of records, criminal misappropriation and hence, external penal provisions under Sections 199, 468, 471 and 511, IPC cannot be invoked qua FCRA. Thus, registration of the FIR by CBI is non-est, unsustainable in the eyes of law and is thus liable to be quashed including all the proceedings emanating from registration of the said FIR.
2. It is trite law that there cannot be multiple FIRs when the offences pertain to the 'same transaction'. Reliance was placed on Amitbhai Anilchandra Shah v. The Central Bureau of Investigation &Ors., (2013) 6 SCC 348. Thus, the FIR lodged by CBI was not sustainable in as much as it was filed on same grounds as the previous FIRs.
3. Offences under FCRA were non-cognizable in as much as they were punishable with imprisonment or with fine or both and Section 43 of FCRA could not be allowed to make offences under FCRA "cognizable offences" or give CBI "through the back door" the authority to arrest.

Respondent's Contentions

1. With regards the first contentions, the Respondent submitted that the scope of inspection by the officer empowered under Section 23 of FCRA and the investigation under Section 43 of FCRA was entirely different since both lead to different conclusions. While an enquiry under Section 23 leads to cancellation of registration under Section 14 of FCRA, Section 43 leads to criminal action under Section Chapter VIII of the FCRA.
2. For the second contention, the Respondent submitted that they did not enjoy unbridled discretion and they referred only such cases for investigation under Section 43 of FCRA wherein serious offences like forgery, mis-appropriation or mis-utilisation of foreign contribution were alleged to be committed.
3. On the third and fourth contention, the Respondent clarified that it was not a case of multiple FIRs since the earlier report pertained to undue pecuniary advantage being given to Airbus Industry by public servants in abuse of their official position and the corresponding loss caused to Government of India. While on the other hand, the impugned FIR pertained to violation of FCRA provisions
4. Lastly, with regards the fifth contention it was submitted that some of the offences specified in Chapter VIII of FCRA are cognizable offences and thus an FIR can be registered for the purpose of investigation.

Findings

1. The court firstly held that there was a set principle and/or policy for guidance of exercise of discretion by the Government in the matter of selection of an investigative agency and there was no parallel investigation or arbitrary, vague and uncontrolled power with the Government to claim violation of fundamental rights.
2. Secondly, it was held that though there was no statutory prohibition that inquiry and investigation cannot be carried out by the same authority, yet it is known to law that inquiry and investigation can be carried out by different authorities.
3. The court further held that Sections 33, 35 and 37 of FCRA essentially relate to mis-utilisation of the Foreign Contribution and giving false information whereas external penal provisions like Sections 199, 468, 471 and 511 IPC relate to forging of the documents for purpose of cheating. Hence, they relate to different offences and can be proceeded with.
4. The court dismissed the Petitioner's last contention and held that not all offences punishable with imprisonment or with fine or both were non-cognizable offences. Reliance was placed on Section 2(c) of CrPC.

The bench comprised by Justice Manmohan and Justice Sangita Dhingra Sehgal lastly stated that "courts should exercise judicial restraint while judging the constitutional validity of the statute and it is only when there is clear violation beyond reasonable doubt that the court should declare a provision to be unconstitutional". Reliance was placed on Maganlal Chhagganlal (P) Ltd. v. Municipal Corporation of Greater Bombay & Ors., (1975) 1 SCR 1.

It was further held in the light of Namit Sharma v. Union of India, (2013) 1 SCC 745, that "there is always a presumption in favour of constitutionality of an enactment and the burden to show that there has been a clear transgression of constitutional principles is upon the person who attacks such an enactment."

In view of the aforementioned findings and trite position of law, the high court upheld the constitutional validity of Section 43 FCRA and the corresponding Rule 22 of FCRR and refrained from interfering in the central government's order of directing CBI probe 

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