Supreme Court reverses High Court ruling on Foreign Contribution Act breach, stresses compliance

The Supreme Court overturned the High Court's decision to quash criminal proceedings in a case involving breach of undertaking under the Foreign Contribution (Regulation) Act, 1976. The Court held that deviating from the specified bank for receiving foreign contributions constituted a contravention of the Act, punishable under Section 23. Emphasizing the need for strict compliance to ensure effective regulation, the Supreme Court directed the Magistrate to proceed with the matter promptly, highlighting the importance of adhering to registration terms under the Act.

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Issues:
Breach of undertaking under Foreign Contribution (Regulation) Act, 1976; Interpretation of Section 6(1)(b) and Section 23 of the Act; Quashing of criminal proceedings by High Court.

Analysis:

1. Breach of undertaking under Foreign Contribution (Regulation) Act, 1976:
The case involved a respondent-society that received foreign contribution through a bank account different from the one specified in their registration application under Section 6 of the Act. The Central Government issued a notification requiring prior permission for accepting contributions, which was later quashed by the High Court. Subsequently, criminal proceedings were initiated by the Central Bureau of Investigation. The respondent filed a petition under Section 482 of the Code of Criminal Procedure to quash the proceedings, which the High Court allowed. The issue revolved around whether such breach of undertaking constituted a contravention of the Act within the meaning of Section 23.

2. Interpretation of Section 6(1)(b) and Section 23 of the Act:
The Additional Solicitor General argued that any violation of the terms and conditions in the registration application form would amount to a contravention of the Act, punishable under Section 23. He emphasized that the Act aims to regulate foreign contributions to ensure compliance with democratic values. On the other hand, the respondent's counsel contended that only contraventions of the Act or Rules made thereunder are punishable under Section 23, not mere violations of particulars in the application form. The court delved into the provisions of the Act, highlighting the importance of strict construction of penal statutes and the legislative intent behind regulating foreign contributions.

3. Quashing of criminal proceedings by High Court:
The High Court quashed the criminal proceedings based on the interpretation that the breach of undertaking did not constitute a violation of the Act. However, the Supreme Court disagreed, emphasizing that any deviation from the specified bank for receiving foreign contributions would indeed amount to a contravention of Section 6(1)(b) and, consequently, an offence under Section 23. The Court held that such violations would defeat the purpose of regulation and inspection by the Central Government, rendering the provisions ineffective. Thus, the Supreme Court set aside the High Court's decision and directed the Magistrate to proceed with the matter promptly.

In conclusion, the judgment clarified the significance of adhering to the terms of registration under the Foreign Contribution (Regulation) Act, 1976, and underscored the repercussions of deviating from the specified procedures for receiving foreign contributions.

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