The Delhi High Court (“Court”) in the case of M/s Advantages India v. Union of India held that the investigation carried by Central Bureau of Investigation (“CBI”) can investigate cases relating to the Foreign Contribution (Regulation) Act, 2010 (“FCRA”).
M/s. Advantages India (“Petitioner”) received foreign contribution upwards of INR 90 crore for undertaking social and educational activities. It was alleged that the Petitioner used the funds for the personal use of the Petitioner’s office bearers. Subsequently, in accordance with Section 23 of the FCRA, the central government appointed an officer to investigate this allegation. Subsequently, in accordance with Section 43 of the FCRA, the Monitoring Unit of Foreigners Division of the Ministry of Home Affairs ordered a CBI probe into the matter.
Against the order of the Ministry of Home Affairs, the Petitioners filed a writ petition and challenged the constitutional validity of Section 43 of the FCRA. Section 43 of the FCRA allows the investigation agency authorized by the central government to investigate any possible violation of FCRA. The Petitioners claimed that, as an investigation was already conducted under Section 23 of the FCRA, the investigation carried by the CBI would amount to multiple, parallel, re-investigation and prosecution in respect of the same offence. The Petitioners further contended that Section 43 of the FCRA grants uncontrolled and unguided power to the central government thereby making it arbitrary.
The central government responded that the scope of the investigation under Section 23 of the FCRA is different than that of the investigation carried out under Section 43 of the FCRA. If the person/organisation is found guilty under Section 23 of FCRA, then the entity’s registration is cancelled. Whereas, if an entity is found guilty under Section 43 of FCRA, then a criminal prosecution will be initiated against the entity. The central government also contended that not all cases are handed over to CBI under Section 43 of the FCRA and only cases involving serious offences like forgery, misappropriation or misutilisation of foreign contribution are given to CBI for investigation under Section 43 of the FCRA.
The Court, rejected the petition, and agreed with the central government’s contentions. The Court noted that there are a set of guidelines the central government is required to follow under Section 43 of the FCRA prior to handing over the investigation to the CBI.
The Court also observed that the scope of the 2 investigations in this case was different. It observed that the investigation under Section 23 of the FCRA dealt with the alleged misutilisation of foreign contribution. Whereas, the Court observed that the CBI, under Section 43 of the FCRA was investigating an offence of cheating under the provisions of Indian Penal Code, 1860. Therefore, as the scope of both investigations are different, both investigations can be proceeded parallelly. In view of the above arguments, the Court held that the Section 43 is constitutionally valid.
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This is an important judgment by the Court as it clarifies the judicial stand on two types of investigation under the FCRA provision. The investigation by CBI under Section 43 was always thought of as an oppressive tool used by the central government, however, the same cannot be said after this judgment. The Court has clarified that since the grounds, scope and result of the investigation under Section 23 is different than that under Section 43, both of them can be conducted parallelly.
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Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.