Foreign contribution to persons and organisation in India: restrictions!

What is an ‘Organisation of Political Nature’?:

Foreign contribution to political parties and certain other groups and officials is regulated by Foreign Contribution (Regulation) Act, 2010 of India. The Government can restrict such contribution as well. The object is that politics in India remains free from foreign influence. This question arose about validity and interpretation of Section 3 of Foreign Contribution (Regulation) Act, 2010 (of India) and the Rules framed thereunder. This section 3 is as under:

“3. Prohibition to accept foreign contribution. – (1) No foreign contribution shall be accepted by any:
(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;
(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).

Explanation. – In clause (c) and section 6, the expression “corporation” means a corporation owned or controlled by the Government and includes a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956).

(2)(a) No person, resident in India, and no citizen of India resident outside India, shall accept any foreign contribution or acquire or agree to acquire any currency from a foreign source, on behalf of any political party, or any person referred to in sub-section (1), or both.
(b) No person, resident in India, shall deliver any currency, whether Indian or foreign, which has been accepted from any foreign source, to any person if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to any political party or any person referred to in sub- section (1), or both.
(c) No citizen of India resident outside India shall deliver any currency, whether Indian or foreign, which has been accepted from any foreign source, to:
(i) any political party or any person referred to in sub- section (1), or both; or
(ii) any other person, if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to a political party or to any person referred to in sub-section (1), or both. (3) No person receiving any currency, whether Indian or foreign, from a foreign source on behalf of any person or class of persons, referred to in section 9, shall deliver such currency:
(a) to any person other than a person for which it was received, or
(b) to any other person, if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to a person other than the person for which such currency was received.”

The Rule 3 framed under the Act had specified political organisation as:

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 organizations like Students Unions, Workers‟ Unions, Youth Forum 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 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.”

Restriction on foreign contribution if affects free speech:

It was contended before the court that above definition restricts free  speech but the court rejected the argument on the ground that mere possibility of abuse is no reason to strike down a valid law. It was also held that it was neither discriminatory under article 14 nor violative of free speech under article 19(1)(a) of the Constitution of India.:

“On an x-ray of the provision of Section 5 of the Act, it is evincible that there is ample guidance inherent in it inasmuch as it refers to “activities of the organisation”, or “the ideology propagated by the organisation” or the “programme of the organisation” having nexus with the activities of any political nature. The said terms are in large expanse but can never be regarded as vague or uncertain. That apart, the proviso clearly sets out that the Rules shall be framed specifying the grounds on which the organisation shall be classified and regarded as an organisation of a political nature. On a scrutiny of the language employed, it is quite vivid that the rule making authority has been empowered to specify the grounds. Thus, the legislature after stating and laying down the area has left the specific grounds to the rule making authority. It by no means, can be regarded or treated as an abdication of the essential legislative function. At this juncture, we may state that despite the widening spectrum of Article 14 of the Constitution, it is to be borne in mind that the challenge on lack of guidance cannot be thought of in a vacuum…….
A provision is not to be tested on the parameters of abstraction. As we find there is guidance and further grounds have been envisaged to be set out regard being had to the activities and other facets and, hence, it cannot be termed as arbitrary. Thus, the assail under the touchstone of Article 14, is without any substance……

The 2010 Act has been brought into existence to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith and incidental thereto. The law has been enacted by the Parliament to ensure that the parliamentary institutions, political association and academic and other voluntary organizations as well as individuals working in important areas of national life should function in a manner consistent with the values of Sovereign Democratic Republic of India. Article 19(1)(a) confers on all citizens the right of freedom of speech and expression. Article 19(2) enables the State to impose reasonable restrictions in the interest of sovereignty and integrity of India, security of the State, friendly relations with foreign States, public order, decency or morality, etc. Thus, imposition of reasonable restriction is permissible.
What is restricted is acceptance of foreign contribution.There is no prohibition or restriction on voicing the plight or grievances of the marginalized sections of people or to protest as permissible in a democratic body polity under the framework of the Constitution.”

(For whole judgement of Delhi High Court See Indian Social Action vs The Union Of India; Dated 16 September, 2011 through its Division Bench consisting of Chief Justice Dipak Misra and Sanjeev Khanna, J.)