The Ministry of Home Affairs (MHA) has filed a Preliminary Affidavit in Writ Petitions pending before the Supreme Court challenging the Foreign Contribution (Regulation) Amendment Act, 2020 and in one Writ Petition seeking stricter enforcement of the amended provisions.

The MHA has raised a preliminary objection to the Writ Petitions that there is no fundamental right to receive unbridled foreign contributions without any regulation. The Affidavit states, "It is submitted that in fact, there exists no fundamental right under which any right, legal or otherwise, can be said to include the purported right to receive foreign contributions."

In its detailed Affidavit, the MHA states that during the implementation of the FCRA, 2010 was noted that certain NGOs were involved only in routing of foreign contributions to other NGOs instead of utilising it. As per MHA, this was done taking advantage of the erstwhile provision of 'transfer', thereby adopting 'transfer' of foreign contribution as the principal activity by some NGOs and establishing a principal-client relationship between the NGOs.

The Affidavit states that the purpose of the FCRA Act "is to ensure that foreign money does not dominate public life as well as political and social discourse in India. This becomes even more imperative in view of the fact that some foreign powers and foreign state and non-state actors continue to take up activities that amount to interference in the internal polity of the country with ulterior designs".

Interestingly, the MHA quotes extensively from case laws from the US Supreme Court to make its point about separation of powers and contours of judicial review. MHA refers to the Lochner era and the 'Four Horsemen' of the SCOTUS. The Affidavit states as follows:-

"It is submitted that it may be relevant to note the dictum from the American Supreme Court, during what is now termed as the Lochner era, wherein the said constitutional court regularly held state and federal statutes regulating economic activity unconstitutionally impaired the substantive due process rights of citizens by interfering with their liberty of contract, citing Lochner v. New York, 198 U.S. 45, 56–58, 25 S.Ct. 539, 49 L.Ed. 937. The judges who championed this are also known as the "Four Horsemen" consisting of Justices Pierce Butler, James Clark McReynolds, George Sutherland, and Willis Van Devanter. As per a "standard estimate" it is said that the Court invalidated 197 state and federal statutes pursuant to the Due Process Clause between 1899 and 1937."

After referring to judgments passed in the Lochner era, the MHA states that, "Therefore, the doctrine that prevailed in Lochner that due process authorizes courts to hold laws unconstitutional when they believe the legislature has acted unwisely—has long since been discarded. The American Supreme Court has returned to the original constitutional proposition that courts do not substitute their social and economic beliefs for the judgment of legislative bodies, who are elected to pass laws".

The MHA also refutes arguments about the amendments violating Article 14 of the Constitution of India by relying extensively upon judgments about the permissibility of reasonable classification and non-requirement of 'mathematical nicety' or 'perfect equality' under Article 14.

With respect to the claim of violation of rights under Article 19, it is stated that "the right to form associations and the right to freedom of trade and profession cannot include the right to receive unbridled, unregulated foreign contributions".

One of the much discussed changes in the FCRA regime is the new requirement that the receipt of foreign contribution should only be in a designated "FCRA Account" in the State Bank of India, New Delhi Main Branch, to facilitate access of data of the foreign contribution from one source for effective monitoring of fund flow. This new requirement was challenged by the Petitioners citing hardship.

The MHA clarifies in its Affidavit that it has put in place a system to enable the NGOs to open the main designated FCRA Account in SBI, New Delhi Main Branch without any need to physically come to Delhi. It is also stated in the Affidavit that the petitioners in the Writ Petition and other NGOs have absolute freedom about opening and operating any additional FCRA Bank Accounts in bank branches of their choice.

MHA has disclosed that based on the existing procedure, over 19000 accounts have already been opened at SBI, New Delhi Main Branch.

The allegation of the Petitioners regarding the requirement of a visit to Delhi during change of details of office bearers, key functionaries and other members for KYC etc. are denied by the MHA by stating that the State Bank of India, New Delhi Main Branch has ensured KYC verification through their branches across the country and based on remote processing.

It is also stated that applications for change of details such as change in name, address, aims, objectives, or key members of the association under Rule 17-A of the Foreign Contribution Regulation Rules, 2011 are processed only online through the FCRA web portal and that there is no physical application since December, 2015.

The Affidavit discloses that close to 22,600 associations are registered under FCRA as on date of the Affidavit.

Click here to read/ download the Affidavit