Delhi High Court
Indian Social Action Forum(Insaf) vs The Union Of India on 16 September, 2011
Author: Dipak Misra
Bench: Chief Justice, Sanjiv Khanna
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 11th August, 2011
% Judgment pronounced on: 16th September, 2011
+ WP(C) No.5793/2011
Indian Social Action Forum(INSAF) ..... Petitioner
Through: Mr.Sanjay Parikh, Mr. Aagney Sail,
Ms. Mamta Saxena and Mr.Pranav
Raina, Advocates.
versus
The Union of India ..... Respondent
Through: Mr.Himanshu Bajaj, Advocate.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SANJIV KHANNA
1. Whether reporters of the local papers be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
DIPAK MISRA, CJ
The petitioner, Indian Social Action Forum (INSAF), has preferred
this writ petition for declaring Sections 5(1) & 5(4) of the Foreign
Contribution (Regulation) Act, 2010 (for brevity, „the Act‟) and Rules 3(i),
3(v) & 3(vi) of the Foreign Contribution (Regulation) Rules, 2011 (for
WP(C) No.5793/2011 Page 1 of 20
short, „the 2011 Rules‟) as ultra vires the Articles 14, 19(1)(a), 19(1)(c) and
21 of the Constitution of India.
2. At the very outset, we may note that the petitioner has stated about its
status and the social activity it carries out and how the Act came into force.
They need not be adverted to, for we are only concerned with the
constitutional validity of the aforesaid provisions of the Act.
3. To appreciate the controversy, it is appropriate to refer to Section 3 of
the Act, which reads as follows:
"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;
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(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
WP(C) No.5793/2011 Page 3 of 20
(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."
[Emphasis supplied]
4. Section 5 of the Act is as follows:
"5. Procedure to notify an organisation of a
political nature. - (1) The Central Government may,
having regard to the activities of the organisation or the
ideology propagated by the organisation or the
programme of the organisation or the association of the
organizations with the activities of any political party, by
an order published in the Official Gazette, specify such
organisation as an organisation of a political nature not
being a political party, referred to in clause (f) of sub-
section (1) of section 3:
Provided that the Central Government may, by
rules made by it, frame the guidelines specifying the
ground or grounds on which an organisation shall be
specified as an organisation of a political nature.
WP(C) No.5793/2011 Page 4 of 20
(2) Before making an order under sub-section (1), the
Central Government shall give the organisation in respect
of whom the order is proposed to be made, a notice in
writing informing if of the ground or grounds, on which
it is proposed to be specified as an organisation of
political nature under that sub-section.
(3) The oranisation to whom a notice has been served
under sub-section (2), may within a period of thirty days
from the date of the notice, make a representation to the
Central Government giving reasons for not specifying
such organisation as an organisation under sub-section
(1):
Provided that the Central Government may
entertain the representation after the expiry of the said
period of thirty days, if it is satisfied that the organisation
was prevented by sufficient cause from making the
representation within thirty days.
(4) The Central Government may, if it considers it
appropriate, forward the representation referred to in sub-
section (3) to any authority to report on such
representation.
(5) The Central Government may, after considering
the representation and the report of the authority referred
to in sub-section (4), specify such organisation as an
organisation of a political nature not being a political
party and make an order under sub-section (1)
accordingly.
(6) Every order under sub-section (1) shall be made
within a period of one hundred and twenty days from the
date of issue of notice under sub-section (2):
Provided that in case no order is made within the
said period of one hundred and twenty days, the Central
WP(C) No.5793/2011 Page 5 of 20
Government shall, after recording the reasons therefor,
make an order under sub-section (1) within a period of
sixty days from the expiry of the said period of one
hundred and twenty days."
5. In this context, we may refer to Rule 3 of the 2011 Rules. It is as
follows:
"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;
WP(C) No.5793/2011 Page 6 of 20
(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."
6. It is contended by Mr.Sanjay Parikh, learned counsel for the
petitioner, that the terms that have been used in Section 5(1) of the Act,
namely, activity, ideology and programme are extremely vague and they
have not been defined in the Act and the Rules. It is urged that because of
such vague expressions, it confers unbridled and unfettered power on the
executive and, hence, the provision invites the frown of Article 14 of the
Constitution. It is canvassed by him that by virtue of the proviso to Section
5(1) which stipulates that the Central Government may, by rules made by it,
frame the guidelines specifying the ground or grounds on which an
organisation shall be specified as an organisation of a political nature the
legislature in actuality has abandoned its basic legislative power. It is his
further submission that though the Rules have been framed, yet they really
do not cover the situation envisaged by the terms, namely, activities,
ideologies and programmes and, hence, the Rules travel beyond the
conferment of power under the main provision making the same ultra vires
WP(C) No.5793/2011 Page 7 of 20
of the Act. The learned counsel for the petitioner would contend that the
term authority which has been mentioned in sub-section (4) of Section 5 has
nowhere been defined and it is not clear whether the authority would be
independent of the Central Government and thereby a state of uncertainty
has crept in. It is further argued that the restriction imposed is unreasonable
and, therefore, it offends the right to freedom of expression.
7. Criticizing the validity of the Rules, it is contended that the guidelines
specified in the Rules are without any checks and balances and confer an
arbitrary and wide discretion on the authorities which can be misused and
abused. That apart, the Rules suffer from total unreasonableness,
arbitrariness and do not create a discernible specification between the
political activities and other social or public activities. It has been
highlighted that the Rule nowhere defines what it is meant by political
objective and that is why any action taken by a democratic institution in a
democratic manner is likely to be covered within it and such an act clearly
offends the right to protest and right to freedom of expression. Mr. Parikh
has also advanced a contention that certain activities are sometimes
undertaken for the advancement of the political interest of marginalized
WP(C) No.5793/2011 Page 8 of 20
sections and the same cannot be put under the category of political interest
and the organisation engaged in it cannot be said to be an organization of a
political nature. It is contended that an organisation engaged in political
actions which include „bandh‟, „hartal‟ or „jail bharo‟ cannot be regarded as
an organisation involved in political activities to be denied foreign
contribution. To bolster the said submission, reliance has been placed on
State of W.B. v. Anwar Ali Sarkar, AIR 1952 SC 75, Shri Ramakrishna
Dalmiya v. Justice Tendulkar, AIR 1958 SC 538, K.T. Moopil Nair v.
State of Kerala, AIR 1961 SC 552, Kameshwar Prasad and others v. State
of Bihar and another, AIR 1962 SC 1166, Smt. Damyanti Naranga v. The
Union of India & Ors., (1971) 1 SCC 678, Himmat Lal K Shah v.
Commissioner of Police Ahmedabad, (1973) 1 SCC 227, Rohtas
Industries Ltd. v. Rohtas Industrial Staff Union, (1976) 2 SCC 82,
Maneka Gandhi v. Union of India, (1978) 1 SCC 248, PUCL v. Union of
India and other, (1997) 3 SCC 433 and Kapila Hingorani v. State of
Bihar, (2003) 6 SCC 1.
8. Mr. Himanshu Bajaj, learned counsel for the respondent, has
submitted that the provisions under challenge do not violate any of the
WP(C) No.5793/2011 Page 9 of 20
provisions of the Constitution and the Rules do not transgress the postulates
engrafted under the Act. It is contended by him that a misuse or abuse of
power cannot be a ground to strike down a provision as that would come
within the illegal exercise of power. The learned counsel further submits
that the guidelines clearly provide guidance and therefore it cannot be said
that unbridled or unfettered power is conferred on any authority. It is urged
by him that the purpose of the Act is to regulate the foreign contribution in a
certain sphere and the purpose of the Act has a specific object and addresses
a concern and, therefore, it does not deserve to be declared ultra vires.
9. First, we shall advert to the issue whether Sections 5(1) and 5(4)
contravene Articles 14 and 19 of the Constitution of India. Section 3 of the
Act provides for prohibition to accept foreign contribution. Sub-section
(1)(f) of the said provision covers organisation of a political nature as may
be specified under sub-section (1) of Section 5 by the Central Government.
Section 5 lays down the procedure to notify an organisation of a political
nature. Thus, the power flows from Section 3(1)(f). Section 5 deals with
the procedure to notify. Section 5(1) provides that the Central Government
by rules shall frame guidelines specifying the ground or grounds on which
WP(C) No.5793/2011 Page 10 of 20
an organisation shall be specified as an organisation of a political nature.
The main section postulates that while publishing in the Official Gazette
specifying an organisation as an organisation of a political nature, due
regard shall be given to the activities of the organisation or the ideology
propagated by the organisation or the programme of the organisation or the
association of the organisation.
10. 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
WP(C) No.5793/2011 Page 11 of 20
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. In Bidi Supply Co. v. Union of India, AIR 1956
SC 479 it has been held that Article 14 is a way of life rendering precise rule
of law and in a given case that it falls this side of the line or that, and
because of that decisions on the same point will vary as conditions vary, one
conclusion in one part of the country and another somewhere else; one
decision today and another tomorrow when the basis of society has altered
and the structure of current social thinking is different. It is not the law that
alters but the changing conditions of the times and Article 14 narrows down
to a question of fact which must be determined by the highest Judges in the
land as each case arises. While scrutinizing the constitutional validity of a
provision on the anvil of Article 14, it is to be seen whether it confers
unbridled and unfettered power on an authority to act at his whim or caprice.
The learned counsel for the petitioner has submitted that the terms used in
the provision are vague. We have already opined that the said terms are in a
larger canvass, a greater expanse and a broader spectrum but not vague.
WP(C) No.5793/2011 Page 12 of 20
What is urged by Mr. Parikh basically relates to an abstract standard but 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.
11. The next plank of submission related to attack under Article 19(1)(a)
of the Constitution of India. It is submitted by Mr.Parikh that the right to
freedom of speech and expression and to voice the grievances of the people
has been curbed in an extremely unreasonable manner. 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
WP(C) No.5793/2011 Page 13 of 20
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, an
imposition of reasonable restriction is permissible. In this regard, we may
refer to the Constitution Bench judgment in Virendra v. The State of
Punjab and another, AIR 1957 SC 896 wherein after referring to the
decision in The State of Madras v. V.G. Row, AIR 1952 SC 196 it has been
held as follows:
"The surrounding circumstances which the impugned law
came to be enacted, the underlying purpose of the
enactment and the extent and the urgency of the evil
sought to be remedied have already been adverted to. It
cannot be overlooked that the Press is a mighty
institution wielding enormous powers which are excepted
to be exercised for the protection and the good of the
people but which may conceivably be abused and
exercised for anti-social purposes by exciting the passion
and prejudices of a section of the people against another
section and thereby disturbing the public order and
tranquility or in support of a policy which may be of a
subversive character."
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12. In Ajay Goswami v. Union of India and others, (2007) 1 SCC 143, it
has been held that the Constitution of India guarantees the right to freedom
of speech and expression to every citizens but the said right is not absolute.
It is subject to reasonable restriction. In the said decision, it has been opined
that there is need to balance various aspects and rights to protect the society.
In the case at hand, there is no prohibition of freedom of speech or
expression. What is prohibited is acceptance of foreign contribution by the
notified organisation for their activities and propagates of ideals and
ideologies which are political in nature which have been specified in the
Rules. We have referred to the aforesaid decision only to highlight even the
right to freedom of speech and expression is not an absolute right. On a
studied scrutiny of the factual matrix, it is quite vivid that a detailed
procedure has been prescribed before an organisation is notified and
prohibited from accepting the foreign contribution, so that the object and
reasons of the Act is in consonance with the preamble of the Constitution.
13. Tested on the anvil of the aforesaid pronouncement of law, it is
extremely difficult to accept the submission of Mr.Parikh that the
restrictions imposed are unreasonable as they affect the freedom of speech
WP(C) No.5793/2011 Page 15 of 20
and expression. 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. In this
context, we may profitably reproduce a passage from the locus classicus,
that is, Ram Krishna Dalmia and Ors. v. Shri Justice S.R. Tendolkar and
Ors., AIR 1958 SC 538, wherein the Apex Court had laid down many a
principle pertaining to class legislation and also the presumption as to the
constitutionality of a statutory provision. Looking at the role of a court
while dealing with the presumption of constitutionality, the two principles
which are relevant for the present purpose are reproduced below:
"(e) that in order to sustain the presumption of
constitutionality the Court may take into consideration
matters of common knowledge, matters of common
report, the history of times and may assume every state
of facts which can be conceived existing at the time of
legislation; and
(f) that while good faith and knowledge of the
existing conditions on the part of a Legislature are to be
resumed, if there is nothing on the face of the law or the
surrounding circumstances brought to the notice of the
Court on which the classification may reasonably be
regarded as based, the presumption of constitutionality
cannot be carried to the extent of always holding that
WP(C) No.5793/2011 Page 16 of 20
there must be some undisclosed and unknown reasons
for subjecting certain individuals or corporations to
hostile or discriminating legislation."
14. Thus, the submission on this score by Mr.Parikh leaves us
unimpressed and we repel the same.
15. The other challenge is to the Rule 3 of the 2011 Rules on the ground
that it transgresses the statutory provision and in a way supplants it. The
basic test is to determine whether a rule to have effect must have its source
of power which is relatable to the rule making authority. Similarly, a
notification must be in accord with the rules, as it cannot travel beyond it.
In this context, we may refer with profit to the decision in General Officer
Commanding-in-Chief v. Dr. Subhash Chandra Yadav, AIR 1988 SC 876
wherein it has been held that before a rule can have the effect of a statutory
provision, two conditions must be fulfilled, namely (1) it must conform to
the provisions of the statute under which it is framed; and (2) it must also
come within the scope and purview of the rule making power of the
authority framing the rule. If either of these two conditions is not fulfilled,
the rule so framed would be void.
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16. In Additional District Magistrate (Rev.), Delhi Administration v.
Shri Ram, AIR 2000 SC 2143, it has been held that it is a well recognized
principle that conferment of rule making power by an Act does not enable
the rule making authority to make a rule which travels beyond the scope of
the enabling Act or which is inconsistent therewith or repugnant thereto.
17. In B.K. Garad v. Nasik Merchants Co-op. Bank Ltd., AIR 1984 SC
192, it has been held that if there is any conflict between a statute and the
subordinate legislation, the statute shall prevail over the subordinate
legislation and if the subordinate legislation is not in conformity with the
statute, the same has to be ignored.
18. We have to test the Rule on the aforesaid parameters. We have
already scanned the statutory provision. Section 5(1) refers to the activities
of the organisation, ideology propagated by the organisation, the
programmes of the organisation or the association of the organisation with
the activities and having nexus with any political party. The language
employed in the Rule uses the words "about political objective", "activities
for promoting political goals", "participation in political activities", "front
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organisation of any political party", "organisation involved in advancement
of political interest" and "political actions like „bandh‟ or „hartal‟, „rasta
roko‟, „rail roko‟ or „jail bharo‟ in support of public causes.
19. Reading the Rule as a whole, we really fail to fathom, how it can be
urged that it travels beyond the statutory provision. What is urged before us
is that the right to raise the voice of the people to advance public causes is
curtailed. The provision under Section 5(1) carves out an exception when
an organisation can be notified and thereafter barred from accepting foreign
contribution Section 3(1)(f), Section 5(1) and Rule 3 have to be read
together in harmony. The Rule effectuates the two sections and
complements them. The Rule at every place refers to the political actions.
Therefore, the Rule, according to us, is within the rule making power of the
statutory authority. It confirms to the provisions of the statute and comes
within the scope of purview of the rule making power of the authority of
framing the Rule. Therefore, the Rules cannot be declared as ultra vires the
Act.
20. We will be failing in our duty if we do not take note of another
submission which has been urged with immense vehemence by Mr.Parikh to
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the effect that the manner in which the guidelines have been termed, it is
most likely to be abused by the executive. It is trite law that there is a
distinction between conferment of power and exercise of power. If the
power by an authority is not properly exercised, the same can always be
assailed in a court of law. It has nothing to do as regards the constitutional
validity of a Rule or a guideline. The apprehension in the mind of the
petitioner that there would be abuse of power and some organizations may
be unnecessarily harassed, we are disposed to think, is not to be taken note
of while dealing with the validity of a statutory provision or the Rule made
thereunder. The same shall be subject to judicial scrutiny when the order is
passed. Thus, the aforesaid submission, being bereft of merit, is rejected.
21. Ex-consequenti, the writ petition, being sans substratum, stands
dismissed without any order as to costs.
CHIEF JUSTICE
SANJIV KHANNA, J.
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