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CASE NO.: Special Leave Petition (crl.) 84-86  of  2001

PETITIONER: STATE REP. BY C.B.I. & ANR.

       Vs.

RESPONDENT: M. KURIAN CHIEF FUNCTIONARY OF THE CROSS

DATE OF JUDGMENT:       26/03/2001

BENCH: G.B. Pattanaik & U.C. Banerjee.

JUDGMENT:

PATTANAIK,J. L...I...T.......T.......T.......T.......T.......T.......T..J

       Delay condoned.  Leave Granted.

   These appeals by the Central Bureau of Investigation are directed  against the judgment dated 27th September, 1999 of a learned Single Judge of Delhi High Court.  By the impugned judgment,  the High Court in exercise of power under Section 482 of the Code of Criminal Procedure, has come to hold that a  breach  of the undertaking given by an Association  under Section  6(1)(b)  of the Foreign  Contribution  (Regulation) Act,  1976 [hereinafter referred to as the Act] would  not amount  to contravention of the provisions of the Act within the  meaning  of Section 23 of the said Act and as such  the criminal  prosecution that had been launched, would not lie. The  High  Court  having quashed the  criminal  proceedings, arising  out  of  the  two F.I.Rs , the  Central  Bureau  of Investigation is in appeal.

   The  respondent-society, submitted an application in the prescribed  form for registration under Section 6 of the Act for  receiving  foreign  contribution.    It  was  indicated therein  that the foreign contribution will be received only through  the  main  branch  of  the  State  Bank  of  India, Hyderabad  and  a separate bank account was opened  for  the purpose.   The society was allotted a registration number by the Central Government in accordance with Section 6(1)(a) of the  Act.   The said society entered into an agreement  with M/s  HEKS, Switzerland and the latter agreed to finance  the project  of  teaching aid non-formal education.  The  said M/s  HEKS issued instructions to the Canara Bank, Cantonment Branch,  Bangalore,  pursuant to which two Bank Drafts  were issued  amounting  to  Rs.  2 lacs and Rs.   1.65  lacs,  in favour  of  the  respondent-society  by  the  Canara   Bank, Bangalore.  The respondent society instead of depositing the same  in  the  main  branch  of the  State  Bank  of  India, Hyderabad,  in  accordance with the terms of the  agreement, deposited  the  same  into  the   account  of  Canara  Bank, M.G.Road,  Secunderabad.   It was further alleged  that  the respondent  society  even  failed to  intimate  the  Central

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Government  about  the receipt of the contribution from  M/s HEKS,  as  required under Section 6(1)(b) of the  Act.   The Central  Government  in exercise of its power under  Section 10(b)  of  the  Act, issued a  notification,  requiring  the society  to  have prior permission of the Government  before accepting  any  contribution.   But  that  notification  was quashed  by  the High Court on a writ petition being  filed. The  Central Government, thereafter got the accounts of  the respondent  society  inspected  by the  Assistant  Director, appointed  under  Foreign Contribution (Regulation) Act,  in the  Ministry  of Home Affairs and on the basis  of  reports submitted   by  the  said   Assistant  Director,  two  First Information  Reports  were lodged against the society.   The investigating agency, after inspecting into the allegations, submitted  a charge-sheet under Section 6 read with  Section 20(3)  and  it  is at that stage, the respondent  filed  the petition under Section 482 of the Code of Criminal Procedure for  quashing  of  the   criminal  proceedings.   As  stated earlier,  the  High Court having allowed the  petitions  and having  quashed the criminal proceedings, the Central Bureau of Investigation is in appeal before this Court.

   Mr.   Altaf  Ahmed,  the  learned  Additional  Solicitor General,  appearing  for  the  appellants  contends  that  a conjoint  reading  of Section 6(1)(b) and Section 23 of  the Act  read  with Section 3(a) and the prescribed  form  FC-1, required  to  be  filed, seeking permission of  the  Central Government   for   accepting   foreign  contribution   would unequivocally   indicate  that   the  contravention   and/or violation  of any terms and conditions contained in the very application  form, would constitute the contravention of the provisions of the Rules made under the Act and as such would be punishable under Section 23 of the Act and the High Court committed  an  error  in  holding that  there  has  been  no contravention  of  the  provisions  of  the  Act.    Learned Additional  Solicitor General further contended that the Act in  question having been enacted to regulate the  acceptance and   utilization  of  foreign   contribution   or   foreign hospitality by persons or associations with a view to ensure that  parliamentary institutions, political associations and other  voluntary  organisations  may function  in  a  manner consistent with the values of sovereign democratic republic, any  contravention of the provisions of the Act or the Rules made  thereunder should be strictly construed, and on  being so  construed, if an applicant indicates the mode or channel of  foreign contribution in his application and in violation of  the  same receives through a different mode or  channel, that   would  constitute  an   infraction  of  the  relevant provisions  of  the Rules, on the information given  by  the persons  concerned  and such infraction must be held  to  be punishable  under Section 23 of the Act and the same  cannot be lightly brushed aside.

   Dr.   M.P.   Raju, appearing for the respondent, on  the other  hand contended that Section 23 of the Act makes  only the  contravention of any provisions of the Act or any  Rule made  thereunder punishable, and the information provided in form  FC-1  and  violation thereof, would not  constitute  a contravention  of  the provisions of the Act or  Rules  made thereunder  and as such, the High Court rightly quashed  the criminal proceedings.  The learned counsel contends that the penal  statutes  which  create offences, must  be  construed strictly  and there is no rhyme or reason for construing the same   liberally  and  thus   construed,  violation  of  any particulars   given  in  the  form   for  receipt   of   the

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contribution  in  a particular bank would not  constitute  a violation  of either the provisions of the Act or Rules made thereunder  and  as such, it would not be an offence  within the ambit of Section 23 of the Act.

   In  order  to  appreciate the correctness of  the  rival stand,  it  would  be  necessary  to  examine  some  of  the provisions  of  the Act and the Rules made thereunder.   But before  focussing  attention on the same, it may be  noticed that when political associations and voluntary organisations as  well  as  individuals  working  in  important  areas  of national  life  were  found  to be  in  receipt  of  foreign contribution  and  foreign hospitality, the Parliament  came forward  to enact the Act.  The main object was to  regulate and  keep  a control over the acceptance and utilization  of foreign contribution.  The entire purpose behind the Act was that the recipients of such foreign contribution may not act in  a  manner inconsistent with the values of the  sovereign republic  which  our  founding  fathers have  given  to  us. Without   prohibiting   the   receipt    of   such   foreign contribution, the Act intends to regulate the same and it is for  that  purpose,  it is required that recipient  of  such contribution must intimate the Central Government within the time and in the manner to be prescribed by the Rules.  Since several  recipients  did  not   send  the  intimations,  for effectively  monitoring the receipt of foreign contribution, Section  6(1)  of  1976 Act was amended by Act  1  of  1985, making  it obligatory for the associations to get themselves registered  with the Central Government and then they  could accept the contribution only through a specified branch of a bank.   The  act  enables  the Central  Government  even  to inspect the accounts of persons or associations by insertion of  Section  15-A.  The Act also has inserted  Section  25-A even  prohibiting  acceptance of foreign contribution  under certain  circumstances.   This   indicates  the  legislative intent  and  purpose  behind  the Act  and,  therefore,  the provisions  of  the  Act  are   required  to  be   construed accordingly.   Section  6  of the Act prohibits  receipt  of foreign   contribution   by  an   association   unless   the association   gets  itself  registered   with  the   Central Government,  and agrees to receive contribution only through such one of the branches of a bank, as it may specify in its application  for such registration.  Section 6(1) of the Act is extracted herein below in extenso:

   Section   6(1)  :   No   association  [other  than   an organisation  referred  to in sub-section (1) of Section  5] having   a   definite   cultural,   economic,   educational, religious,   or  social  programme   shall  accept   foreign contribution unless such association,-

   (a)registers  itself  with  the  Central  Government  in oaccordance with the rules made under this Act;  and

   (b)  agrees  to receive such foreign contributions  only through  such  one,  of  the branches of a bank  as  it  may specify  in its application for such registration, and every association  so registered shall give, within such time  and in  such  manner as may be prescribed, an intimation to  the Central  Government  as  to  the   amount  of  each  foreign contribution  received by it, the source from which and  the manner in which such foreign contribution was utilised by it :

   Provided that where such association obtains any foreign

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contribution through any branch other than the branch of the bank  through  which  it  has   agreed  to  receive  foreign contribution  or  fails to give such intimation  within  the prescribed  time  or in the prescribed manner, or gives  any intimation  which  is false, the Central Government may,  by notification  in  the  official Gazette,  direct  that  such association  shall  not,  after the date of  issue  of  such notification,  accept  any foreign contribution without  the prior permission of the Central Government."

   Section 23 which is the penal provision, provides thus:

   Sec.   23.-Punishment  for  the  contravention  of  any provision of the Act.   (1) Whoever accepts, or assists any person,  political  party or organisation in accepting,  any foreign  contribution or any currency from a foreign source, in  contravention  of any provision of this Act or any  rule made  thereunder, shall be punished with imprisonment for  a term  which  may extend to five years or with fine  or  with both.   (2)Whoever  accepts  any   foreign  hospitality   in contravention  of any provision of this Act or any rule made thereunder  shall  be punished with imprisonment for a  term which  may  extend  to three years, or with  fine,  or  with both.

   A  plain reading of Section 23 would make it clear  that any  receipt of foreign contribution in contravention of the provisions  of  the  Act or Rules  made  thereunder  becomes punishable.   Section  30  confers   power  on  the  Central Government  to make Rules for carrying out the provisions of the Act.  In exercise of such powers, the Central Government has  framed  the  Rules   called  the  Foreign  Contribution (Regulation)  Rules,  1976 [hereinafter referred to as  the Rules].   The  expression Form has been defined  in  Rule 2(b)  to mean a form appended to the rules.  Rule 3 provides that  an  application for obtaining prior permission of  the Central  Government  to receive foreign  contribution  under sub-section  (1) of Section 5, or clause (a) of  sub-section (2)  of  that  Section,  shall be made in  Form  FC-1.   The aforesaid  Form  FC-1 at serial No.  5, stipulates that  the applicant  should intimate the mode/channel of receipt.  The form also provides the declaration, which the applicant must declare  to the effect that the particulars furnished by the applicant  are true and correct.  This form must be held  to be  a  statutory form being appended to the Rules and  being the form prescribed under Rule 3 for obtaining permission to receive   foreign  contribution.    Reading  the   aforesaid provisions  together  and  giving a literal meaning  to  the expressions  contained  in  the  aforesaid  provisions,  the conclusion  is irresistible that receipt of contribution and depositing  the same in a bank other than the bank indicated in  the  application form FC-1, would be a violation of  the provisions   of  Section  6(1)(b)   itself  inasmuch  as  no association  is  entitled  to accept  foreign  contribution, unless  the  association  agrees  to  receive  the   foreign contribution  only  through such one of the branches of  the bank, as it may specify in its application for registration. The violation being a violation of the provisions of Section 6(1)(b),  it  would constitute an offence under  Section  23 and,  therefore,  the High Court, in our opinion,  committed serious  error  in  quashing the criminal proceedings  on  a finding  that  it  does not tantamount to violation  of  any provisions  of  the  Act.   Needless   to  mention  that  if associations  and  political  parties would  be  allowed  to receive  foreign contribution and would deposit the same  in

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any  bank  they like notwithstanding their declaration  with the Central Government at the time of registration, then the very  purpose of conferring power on the Central  Government to  regulate,  would be frustrated and all other  provisions for inspections and auditing conferring power on the Central Government  would be futile.  In the aforesaid premises,  we have  no hesitation to come to the conclusion that the  High Court  committed  serious  error by  quashing  the  criminal proceedings  in  the  impugned   judgment  on  an  erroneous interpretation  of  the provisions of the Act and the  Rules made  thereunder,  as stated above and we,  accordingly  set aside  the same.  These appeals are allowed.  The Magistrate is directed to proceed with the matter expeditiously.