In FCRA investigation, there is no possibility of “pick and choose” of investigative agency or parallel investigation or re-investigation: Delhi HC

A batch of writ petitions were filed in the High Court of New Delhi seeking to challenge the constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 (FCRR) on the ground that they are arbitrary, unreasonable, ultra vires and violative of Articles 14 and 21 of the Constitution of India. The petitioners sought to quash the investigation being carried out by the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED).

An association - M/s. Advantage India (Petitioner) received total foreign contribution amounting to Rs. 90.72 crores during FYs 2012-13 to 2015-16 and also received bank interest amounting to Rs. 6.69 crores on foreign contributions during the aforesaid period. The Government of India, Ministry of Home Affairs, Foreigners Division (FCRA Wing) Monitoring Unit requested the CBI vide letter dated 4th August 2017 to carry out investigation in accordance with Section 43 of FCRA.

On examination and scrutiny of the records of the Association, it was observed that the Association had not substantiated its various expenses that it claimed to have incurred during the said period. The Ministry’s inquiry prima-facie revealed that the said Association violated various provisions of FCRA.

The Association claimed to have purchased medicines worth Rs. 26.97 Crores for various health camps from two Pharma entities. However, on investigation it was found that no such purchases had been made and that the Association furnished fabricated and forged vouchers and bills. It was also mentioned in the letter that the Managing Director of M/s. Accordis Health Care Private Limited (also one of the petitioners) had confessed before the Income Tax Authorities that he had booked bogus expenses and had indulged in over pricing of mobile medical units.

The Association changed its registered office without intimating the Ministry.

Further, the Association received foreign contributions in more than one FCRA designated bank account which was found to be in violation of Section 17 under FCRA, 2010. Moreover, the Association had not intimated Government about opening of more than one account for the purpose of utilizing the foreign contribution. The Association admitted the facts stating that it was done due to ignorance of provisions of FCRA, 2010. Thus the Associations violated Section 17 under FCRA, 2010.

The Petitioners contended that the letter dated 4th August, 2017 requesting the CBI to investigate is unsustainable after completion of investigation by the authorized officer and that it would amount to multiple, parallel and re-investigation and prosecution in regard to same offences.

The learned counsel for Union of India and Enforcement Directorate (Respondents) noted that from the scheme of FCRA it is apparent that no part of it is vague and arbitrary and powers of different authorities are clearly defined. The Special Public Prosecutor for the CBI stated that the Central Government vide Notification dated 27th October, 2011 has authorised CBI to carry out investigation of offences committed under FCRA involving receipt of foreign contribution of an amount of Rs. 1 crore or equivalent or more. He emphasized that there was no duplicity of actions taken under Chapter V, VI and Section 43 of FCRA as offences punishable under the said Act as mentioned in Chapter VIII, could only be investigated by the authorities specified under Section 43 of FCRA.

The Delhi High Court ruled that the principles for adjudicating the constitutionality of an enactment are well settled. An Act can be declared as unconstitutional only if the petitioner makes out a case that the legislature did not have the legislative competence to pass such an Act or the provisions of the Act violated the fundamental rights guaranteed by Part-III of the Constitution or the impugned provision is in any manner arbitrary, unreasonable or vague.

The Court further noted 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. Also, whenever constitutionality of a provision is challenged on the ground that it infringes a fundamental right, the direct and inevitable consequence of the legislation has to be taken into account.

The High Court ruled that laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power. The Court opined that “As regards investigation of offences under FCRA is concerned, there is no possibility of any “pick and choose” of investigative agency or parallel investigation or re-investigation.” Moreover, investigation of offences under Chapter VIII of FCRA is carried out either by CBI or crime branch officials exclusively depending upon the pecuniary value of alleged violation and not by an officer authorised by the Central Government under Section 23 of FCRA.

The Court was of the opinion that there is a principle and policy for guidance of exercise of discretion by the Government in the matter of selection of an investigative agency and there is no arbitrary, vague and uncontrolled power with the Government which will enable it to discriminate between persons or things similarly situated.

Finally, the Court held that in the present case, the inspecting officer as well as investigating authority were both appointed by the Government of India and in this case a delegatee had not sub-delegated the investigation to CBI.

The Court dismissed the writ petitions.

A bench of Justice Manmohan and Justice Sangita Dhingra Sehgal presided over the case.

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