NGOs Backing Public Cause Can’t Be Barred from Foreign Funds: SC

NGO submitted that organisations agitating for their legitimate claims cannot be prevented access to foreign funds.

4 min read
File photo of Supreme Court of India

The Supreme Court on Friday, 6 March, said an organisation which supports citizens' cause without a political goal, via legitimate means of dissent like agitations, cannot be prevented from receiving foreign funds by declaring it as an outfit of political nature.

The apex court made it clear however that organisations used for channelling foreign funds by political parties cannot escape the rigour of the Foreign Contribution (Regulation) Act (FCRA) when there is concrete material in this regard.

The Centre shall strictly follow the procedure in the Act and Rules before depriving an organisation of the right to receive foreign contributions, the top court said in its verdict.

A bench of justices L Nageswara Rao and Deepak Gupta said an organisation supporting public causes by resorting to legitimate means of dissent like 'bandh' and 'hartal' cannot be deprived of its legitimate right of receiving foreign funds.


"It is clear from the provision itself that bandh, hartal, rasta roko etc., are treated as common methods of political action. Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalised by being declared as an organisation of a political nature," it said.

It said the organisations which are not involved in active politics or party politics do not fall within the purview of Rule 3 (vi) of FCRA.

It noted that as per the guideline in Rule 3 (vi) of FCRA, any organisation 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 can also be declared as an organisation of political nature.

The court delivered the judgement on an appeal by NGO India Social Action Forum (INSAF) which has challenged the constitutional validity of Section 5 (1) and 5 (4) of the FCRA (relating to procedure to notify an organisation of a political nature) and other rules.

The NGO claimed that the provision conferred unguided and uncanalised power on the Centre to specify an organisation as that of a political nature not being a political party and deny foreign contribution. It had challenged the order of Delhi High Court dismissing its plea.

The apex court said according to Rule 3 (i), an organisation having avowed political objectives in its memorandum of association or bye laws is an organisation of a political nature.

"As the intention of the legislature is to prohibit foreign funds in active politics, an association with avowed political objectives (that is, to play a role in active politics or party politics) cannot be permitted access to foreign funds.

"There is no ambiguity in the provision and hence, cannot be termed as vague. Therefore, we find no substance in the contention of the appellant (NGO) that Rule 3 (i) is ultra vires the Act," it said.

It added that the object of the Act is to ensure that Parliamentary institutions, political associations and other voluntary organisations and individuals working in the important areas of national life should function in a manner consistent with the values of a sovereign democratic republic without being influenced by foreign contributions.

The court said the title of the Act makes it clear that the regulation of acceptance and utilisation of foreign contribution is for the purpose of protecting national interest.

Election candidates, political parties or their office bearers are barred from accepting any foreign contribution and the legislative intent is to prohibit organisations of a political nature from receiving foreign contributions, it said.

The apex court said the Centre is required to take into account the activities and ideology of the organisation including its association with activities of any political party before declaring it as an organisation of "political nature not being a political party".

Regarding Rule 3 (v), the bench said it deals with organisations of farmers, workers and students, which are not directly aligned to any political party but their objectives include steps towards advancement of 'political interests' of such groups.

The NGO submitted that such organisations agitating for their legitimate claims cannot be prevented access to foreign funds by resorting to the vague term ‘political interests’.

The bench agreed that the words 'political interests' are vague and susceptible to misuse but held that "possible abuse of power is not a ground to declare a provision unconstitutional".

It said that a balance has to be drawn between the object sought to be achieved by the legislation and the rights of voluntary organisations to have access to foreign funds.

"The purpose for which the statute prevents organisations of a political nature from receiving foreign funds is to ensure that the administration is not influenced by foreign funds.”

"Prohibition from receiving foreign aid, either directly or indirectly, by those who are involved in active politics is to ensure that the values of a sovereign democratic republic are protected," the bench said.

It said the organisations which have no connection with either party politics or active politics cannot be denied access to foreign funds.

The organisations working for social and economic welfare of the society cannot be brought within the purview of the Act or Rules by enlarging scope of term 'political interests', it said.

(This story was auto-published from a syndicated feed. No part of the story has been edited by The Quint.)

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