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  • DAILY CURRENT AFFAIRS:SC upholds constitutional validity of Foreign Contribution (Regulation) Amendment Act, 2020

SC upholds constitutional validity of Foreign Contribution (Regulation) Amendment Act, 2020

Tags: National

A three judge bench of the Supreme Court  led by Justice A.M. Khanwilkar has upheld the constitutional validity of the Foreign Contribution (Regulation) Amendment Act, 2020 and said that receiving foreign donations cannot be an absolute right.

The court delivered its judgement on the Neol Harpers and others Vs Union of India 2021 case on 8 April 2022. 

The petitioner Neol Harper of NGO Care and Share Charitable Trust has challenged certain provisions of the Foreign Contribution (Regulation) Amendment (FCRA) Act, 2020. 

Changes made by FCRA act  2020

  • The new FCRA law introduced stringent provisions for compliance by NGOs receiving foreign donations and imposed restrictions on the way such contributions are handled.

  • The changes made it mandatory for all NGOs to have their primary account to receive foreign donations in Delhi.

  • It reduced the percentage of funds that can be spent as administrative expenses from 50 per cent to 20 per cent.

Challenge  to Law and Supreme Court judgement

The petitioner challenged certain sections of the FCRA act 2000. These sections were :

  • Section 7 (prohibiting transfer of foreign funds to a third-party account),

  • Section 17 (mandating opening of FCRA primary account exclusively in a State Bank of India branch notified in Delhi) and 

  • Section 12A (requiring Aadhaar as identification for prior approval, registration etc) of the amended law.

Supreme Court Judgement

  • The Supreme court upheld the FCRA act 2020 and held that Parliament has the final say in the matter of legislation.

  • The court upheld the Government of India contention that foreign money can be used to influence a country’s polity and socio-economic structure of the country and hence it needs to be regulated  in the “larger public interest, more particularly to safeguard the sovereignty and integrity of the country”.

  • The court upheld the validity of Section 17, which makes it mandatory for the recipient to receive foreign donations in an account designated as FCRA in a specific bank. It helps in better monitoring of the funds,source of funds  and prevent its possible misuse.

  • On section 12 A which made Aadhaaar mandatory for  identification purposes the court allowed the use of Passport for identification purposes for key functionaries of NGOs who are Indian.

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