The Delhi High Court had held in one of its judgment that Section 43 of the Foreign Contribution (Regulation) Act, 2010 and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 aren't arbitrary, unreasonable, ultra vires and violative of Articles 14 and 21 of the Constitution of India.
The High Court dismissed the petition challenging the constitutional validity of the said section of the act and rule.
What is Section 43 of FCRA?
What is Rule 22 of FCRR?
The relevant facts of the present cases are that Govt of India, Ministry of Home Affairs, Foreigners Division (FCRA Wing), Monitoring Unit vide its letter dated 04 th Aug 2017 requested the CBI to carry out an investigation in accordance with Section 43 of FCRA. In the said letter, it was averred that M/s. Advantage India and its office bearers had obtained registration under FCRA and during the years 2012 to 2016 had received foreign contributions of about Rupees Ninety crores for undertaking social/educational activities. It was further averred that during an inspection under Section 23 of FCRA it was found that M/s. Advantage India had falsely claimed to have spent about Rupees Seventy Two crores on medical facilities and stationery. It was alleged that the claim of M/s.Advantage India, that it had purchased medicines worth Rupees Twenty six crores ninety-seven lakhs from M/s. Aastha Pharma and M/s. Hind Pharma was found to be false. It was also stated that M/s. Advantage India had claimed expenses on the basis of forged and fabricated bills raised by its associates. It was pointed out in the said letter dated 04 th August, 2017 that the Managing Director, Shri Raman Kapoor of M/s. Accordis Health Care Private Limited company had confessed before the Income Tax Authorities that he had booked bogus expenses and had indulged in overpricing of mobile medical units. CBI was requested to investigate whether the activities of the entities as stated in the said letter also attracted the provisions of other laws, i.e., IPC etc. for having diverted the funds for the personal benefit of the office bearers or any other individuals apart from the violations of various provisions of FCRA.
The letter dated 04 th August 2017 became the basis of registration of FIR under Sections 33, 35 and 37 of FCRA and Sections 120B/199/468/471/511 read with Section 417 of IPC with Anti Corruption Wing, CBI, New Delhi.
PETITIONER'S CASE and HIGH COURT'S RESPONSE
WHOSOEVER IS AUTHORIZED TO INSPECT IS VESTED WITH COMPLETE POWER TO INVESTIGATE?
PC: Learned Counsel for petitioners submit that in terms of Section 23 read with Section 43 of the FCRA, the Central Government can authorize either a Gazetted Officer or any other officer or authority or organization for the purpose of investigation of a commission of offenses under the FCRA.They emphasise that once the Central Government has chosen the route of empowering and authorising a particular officer/authority to conduct inquiry and investigation into commission of alleged offences by appointing and authorizing him under Sections 23 to 26 and 42 of the FCRA, then it is only that authority which can investigate and file a criminal complaint, if so warranted in terms of Section 40 of the Act. They submit that letter dated 04th August, 2017 requesting the CBI to investigate is unsustainable after completion of investigation by the authorized officer.
HC: To contend that whosoever is authorized to inspect is vested with complete power to investigate under Chapter VIII of FCRA is not correct. Though there is no statutory prohibition that inquiry and investigation cannot be carried out by the same authority, yet it is known to law that inquiry and investigation can be carried out by different authorities. At times inquiry report giving prima facie findings leads to subsequent criminal investigation by police or specialised agencies. For instance, departmental inquiry report concluding that an officer has committed malfeasance or violations to benefit himself personally can lead to subsequent criminal investigation and prosecution by the police. Similarly a sexual harassment committee report can lead to subsequent investigation by police into allegation of rape or outraging modesty of a woman. Even under FCRA for instance, it is possible that an inspection ordered by Central Government may reveal that foreign funds received by an organisation certified by the Central Government had been used to fund terror activities in the country and in such circumstances, no one can say that investigation under Chapter VIII offences as well as IPC and other terror acts cannot be transferred to specialized agencies like CBI „midstream‟. In fact, the officer appointed by the Central Government under Section 23 of FCRA would neither have the wherewithal nor the expertise to carry out such an investigation.
THE OFFICER AUTHORISED TO CARRY OUT INSPECTION OF RECORDS AND ACCOUNTS UNDER SECTION 23 OF FCRA IN THE PRESENT CASES WAS AUTHORISED AND HAD CARRIED OUT INSPECTION AND ENQUIRY ONLY UNDER CHAPTER V OF FCRA.
PC: They stated that to somehow justify the issuance of the impugned communication dated 04th August, 2017, the respondents are erroneously interpreting the expression "may also be investigated into by" in Section 43. According to them, the said expression means that apart from those officers/authorities/organisations authorized by Central Government under Sections 23 to 26 and 42 of FCRA, investigation can also be done by CBI or Crime Branch officials, as the case may be, subject to the fact that authorization is issued in their favour at the very inception/the first instance. In support of their submission, learned counsel for petitioners rely upon the Supreme Court‟s judgment in Directorate of Enforcement vs. Deepak Mahajan & Anr.
HC: The Court stated that by virtue of authorisation letter dated 07th February, 2017 issued under Section 23 of FCRA, the officer appointed in the present cases had been authorised to exercise power under Sections 23 to 26 and 42 of FCRA only. No power to investigate offences under Section 43 had been conferred upon the said officer.Just because the inspecting authority has been empowered to seize the account or record and produce the same before the Court, does not mean that it has to mandatorily carry out investigation under Section 43 of FCRA also. The proceedings under Chapter V of FCRA cannot be termed as “investigation” as the provisions under the said Chapter pertain to inspection and seizure of accounts/records only. Under Chapter V of FCRA, no procedure for filing of a complaint/charge-sheet has been mentioned. There is also nothing to suggest either in the FCRA or in the letter dated 7th February, 2017 that investigation under Chapter VIII of FCRA had to be carried out by the Inquiry Officer. Even in the letter dated 04th August, 2017 while referring the matter for investigation to CBI, the Ministry of Home Affairs had opined that its inquiry had „prima facie‘ and not „conclusively‟ revealed violation of various provisions of FCRA. Since the officer authorized under Section 23 FCRA did not have any power to investigate offences under Chapter VIII, the judgment in Directorate of Enforcement vs. Deepak Mahajan & Anr. (supra) does not apply to the present cases.
MATTER OF APPOINTMENT/SELECTION OF AN INVESTIGATIVE AGENCY UNDER SECTION 43 OF FCRA SAVES IT FROM ATTACK ON THE GROUND THAT IT VIOLATES ARTICLES 14 AND 21 OF THE CONSTITUTION.
PC: Learned counsel for petitioners submit that the Central Government cannot pick and choose, according to their whims and fancies, the investigative agency, i.e., whether the investigation should be carried out by the officer authorised by the Central Government or the CBI under Section 43 of FCRA. They submit that the manner in which the respondents seek to implement the provisions of Section 43 of FCRA and Rule 22 of FCRR confers uncontrolled or unguided power upon the respondents, which renders Section 43 manifestly arbitrary, unreasonable, ambiguous, unconstitutional and ultra vires on the vice of Articles 14 and 21 of the Constitution of India. Learned counsel for the petitioners suggest that the condition precedent of “recording of reasons” as envisaged under Section 23 FCRA should be read into Section 43 to render it constitutional. In support of their submission, they rely upon Supreme Court‟s judgment in State of Punjab vs. Khan Chand (1974) 1 SCC 549.
HC: As regards investigation of offences under FCRA is concerned, this Court is of the opinion that there is no possibility of any ‗pick and choose‘ of investigative agency or parallel investigation or re-investigation as from the additional affidavit dated 08th August, 2019 filed by Union of India, it is apparent that by virtue of established practice/convention/principle and notification dated 27th October, 2011 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/or 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 so as to enable it to discriminate between persons or things similarly situated. Accordingly, this Court is of the view that Petitioner‟s reliance upon State of Punjab vs. Khan Chand (supra) is misconceived.
FIRs REGISTERED RELATE TO DIFFERENT OFFENCES AND ARE ENTIRELY DIFFERENT IN SCOPE
PC: They submitted that it is settled law that there cannot be multiple FIRs when the offences pertain to the "same transaction". In support of their submission, they rely upon Supreme Court‟s judgment in Amitbhai Anilchandra Shah vs. The Central Bureau of Investigation &Ors.
HC: Upon perusal of RC 9/2013, ECIR 10/2017 and RC 36/2017, this Court is of the opinion that while RC 9/2013 and ECIR 10/2017 have been registered in relation to undue pecuniary advantage given to Airbus Industry which has caused corresponding loss to the Government, impugned RC 36/2017 relates to violation of FCRA provisions as well as the offences committed under IPC in the process of committing violations W.P.(Crl.) 3595/2017 & Ors. Page 59 of 59 under FCRA by the petitioners. In fact, the primary allegation in RC 9/2013 and ECIR 10/2017 is that the concessions obtained by the Empowered Group of Ministers (for short „EGOM‟) regarding setting up of training centre for US$ 75 million and creation of Maintenance, Repair and Overall facility (for short „MRO‟) for US$ 100 million were deliberately not made part of the final agreement signed by Indian Airlines with Airbus Industries. Accordingly, RC 36/2017 has nothing to do with pecuniary advantage given to Airbus Industry by the public servants by abusing their official positions. Consequently, this Court is of the view that Petitioner‟s reliance upon Amitbhai Anilchandra Shah vs. The Central Bureau of Investigation & Ors. (supra) is wholly misconceived as RC 9/2013 and RC 36/2017 relate to different offences and are entirely different in scope and ambit and they cannot be termed as two FIRs in the course of the "same transaction".
BOTH THE LETTERS UNDER SECTIONS 23 AND 43 WERE ISSUED BY THE SAME AUTHORITY, CONSEQUENTLY, A DELEGATEE HAD NOT SUB-DELEGATED THE INVESTIGATION TO CBI IN THE PRESENT CASES.
PC: Learned counsel for the petitioners contend that ―a delegatee cannot sub-delegate‖. They contend that the entrustment of investigation in the case “by respondent No.2” instead of “by Central Government” renders the issuance of the impugned communication dated 04th August, 2017 wholly without jurisdiction. Consequently, according to them, reference by respondent No.2 to CBI is per-se illegal and is, therefore, beyond the command of law. In support of their contention, they rely upon Supreme Court‟s judgment in Hussein Ghadially Alias M.H.G.A. Shaikh & Ors. Vs. State of Gujarat.
HC: The letter dated 04 th August 2017, issued by the Ministry of Home Affairs, FCRA Wing, signed by the Director (FC & MU), states that the inquiry conducted by the Ministry had prima facie revealed that the petitioner association i.e. M/s Advantage India had violated various provisions of FCRA and it was suggested to be a fit case for detailed investigation and criminal prosecution under Section 43 FCRA by CBI, ‗if found fit‘. Accordingly, both the letters under Sections 23 and 43 were issued by the same authority i.e. Government of India, Ministry of Home Affairs, FCRA Wing, Director (FC & MU). Consequently, this Court is of the view that the judgment in Hussein Ghadially Alias M.H.G.A. Shaikh & Ors. Vs. State of Gujarat (supra) relied upon by the Petitioners does not apply to the present cases as the statutory provisions were followed and the inspecting officer as well as investigating authority, both were appointed by the Government of India and „a delegatee had not subdelegated the investigation to CBI‟ in the present cases.
ARGUMENT THAT THE POWER OF ARREST HAS BEEN GIVEN TO OFFICERS UNDER CUSTOMS ACT, CENTRAL EXCISE ACT, PMLA ETC. AND NOT UNDER FCRA IS FALLACIOUS
PC: They submit that the FCRA which is a later and consolidating Act, provides for “prosecution”, but without any specific “power to arrest” contained therein, unlike many other Special Enactments such as Customs Act, 1962, Central Excise Act, 1944, PMLA 1999, Railway Property (Unlawful Possession) Act, 1966 and Prevention of Food Adulteration Act, 1954. According to learned counsel for the petitioners as the offences under FCRA are punishable under either of the two alternate punishments stipulated and separated with a disjunctive “OR” i.e. ―if punishable with imprisonment for less than 3 years ―OR‖ if punishable with fine only‖, they are necessarily “non-cognizable” in accordance with the said two alternatives contained in the last entry of Part II of the First Schedule to Cr.P.C. They submit that irrespective of the alternative maximum term of imprisonment, each of the alleged offences under FCRA are covered by the term ―or punishable with fine only‖. They emphasize that as Section 41 of FCRA provides for composition/compounding of all the offences under FCRA, the said offences under FCRA are compoundable. Furthermore, Section 41 of FCRA is a unique provision as it allows compounding before initiating prosecution.
HC: The argument that the power of arrest has been given to officers under Customs Act, Central Excise Act, PMLA etc. and not under FCRA is fallacious as in Customs Act, Central Excise Act, PMLA Acts, the power is given to the officer conducting investigation in the said Acts who is not a police officer. In the present cases, the power to investigate has been given to the CBI which has all the powers which an officer in charge of a police station has while making an investigation into a cognizable offence. This Court has no doubt that the investigative agency and the Trial Courts shall keep in mind the maxim that 'bail is the rule and jail is an exception‘. In any event, absence of power to arrest, if any, cannot be ground either for seeking a declaration that Section 43 of FCRA is ultra vires or for quashing of the impugned FIR.
AS THE CASE RELATES TO TWO OR MORE OFFENCES OF WHICH AT LEAST ONE IS COGNIZABLE, THE CASE BY VIRTUE OF SECTION 155 (4) CR.P.C. SHALL BE DEEMED TO BE A COGNIZABLE CASE NOTWITHSTANDING THAT THE OTHER OFFENCES ARE NON-COGNIZABLE.
PC: They submit that Section 43 of FCRA being an enabling provision permitting exercise of the same powers in respect of the investigation in FCRA as an officer in-charge of a police station may exercise in a cognizable offence, would not make the offences under FCRA „cognizable offences‟ or give CBI ‗through the back door‘ the authority to arrest. They lastly submitted that FCRA is a special law dealing with a special field and hence general law cannot be applied. They state that Sections 33, 35 and 37 encompass and imbibe the substance and spirit of penal provisions pertaining to cheating, forgery of documents, falsification and fabrication of records, criminal misappropriation and hence, external penal provisions under Sections 199, 468, 471 and 511, IPC cannot be invoked qua FCRA. They emphasize that Section 40 of the FCRA provides for sanction for prosecution of only the offences mentioned under the FCRA which contemplates the procedure of a complaint case and does not provide for the power of arrest. Hence, according to them, the registration of the FIR by CBI is non-est, unsustainable in the eyes of law and is thus liable to be quashed including all the proceedings emanating from registration of the said FIR.
HC: In the present cases, all the offences which are mentioned in the RC 36/2017 are not non-cognizable by virtue of Part-II of First Schedule of Cr.P.C, as contended by the learned counsel for the petitioners, because as per Schedule II of Cr.P.C., if any offence is punishable with imprisonment for less than three years or with fine, then only it shall be classified as non-cognizable. In the present cases, the impugned RC 36/2017 had been registered even under Section 35 of FCRA which provides for imprisonment upto five years or fine or both. Further not all offences punishable with imprisonment or with fine or both are non-cognizable. For instance, Section 429 IPC which prescribes imprisonment for five years or fine or both is cognizable The impugned RC 36/2017 has been registered by CBI for offences not only under FCRA, but also under various sections of IPC like Section 468 IPC which is both cognizable and non-bailable. Consequently, as the case relates to two or more offences of which at least one is cognizable, the case by virtue of Section 155 (4) Cr.P.C. shall be deemed to be a cognizable case notwithstanding that the other offences are noncognizable. In any event, as this Court is of the opinion that Section 43 of FCRA is constitutionally valid, the offences punishable under FCRA will have to be investigated as cognizable offences irrespective of anything contained in the Cr.P.C.
CONCLUSION
Keeping in view the aforesaid findings, the High Court was of the view that the batch of writ petitions were without any merit and thus it dismissed them accordingly.
The Judgement has been delivered by Justice MANMOHAN and Justice SANGITA DHINGRA SEHGAL on 23-2019.
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