Foreign contribution investigation scheme upheld; court rejects arbitrariness and second FIR challenge in separate-transaction prosecution.

The Delhi High Court upheld the foreign contribution investigation scheme, holding that Section 43 of the Foreign Contribution (Regulation) Act, 2010 and Rule 22 were not arbitrary or violative of Articles 14 and 21 because the governing notification and settled practice supplied a clear policy for selecting specialised investigating agencies. It also rejected the challenge to the CBI reference and FIR, finding that inspection and criminal investigation operated in different fields, the reference was made by the Central Government, and the later FIR concerned distinct offences and a different transaction. The writ petitions were therefore found to be without merit and the impugned action sustained.

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Issues: (i) Whether Section 43 of the Foreign Contribution (Regulation) Act, 2010 and Rule 22 of the Foreign Contribution (Regulation) Rules, 2011 were unconstitutional as arbitrary, unreasonable and violative of Articles 14 and 21 of the Constitution of India; (ii) Whether the reference of the matter to the CBI and the registration of the impugned FIR amounted to an impermissible second FIR or reinvestigation.

Issue (i): Whether Section 43 of the Foreign Contribution (Regulation) Act, 2010 and Rule 22 of the Foreign Contribution (Regulation) Rules, 2011 were unconstitutional as arbitrary, unreasonable and violative of Articles 14 and 21 of the Constitution of India.

Analysis: The provision confers power on the Central Government to specify the authority for investigation of offences under the Act. The impugned notification and established practice showed that investigation of Chapter VIII offences was carried out by specialised agencies on the basis of pecuniary threshold and not by the officer authorised for inspection under Section 23. The Court applied the settled principles that a statute carries a presumption of constitutionality, that judicial restraint is required in testing validity, and that a provision is not invalid merely because discretion exists, so long as a guiding principle or policy is disclosed. The Court held that the notification dated 27 October 2011 and the consistent practice supplied the necessary guidance and removed any arbitrariness, vagueness or uncontrolled discretion.

Conclusion: The challenge to the constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 and Rule 22 of the Foreign Contribution (Regulation) Rules, 2011 failed.

Issue (ii): Whether the reference of the matter to the CBI and the registration of the impugned FIR amounted to an impermissible second FIR or reinvestigation.

Analysis: The Court found that the inspection under Section 23 and the investigation under Section 43 operated in different fields, and that the officer authorised for inspection did not conduct criminal investigation under Chapter VIII. It further held that the reference to the CBI was made by the Central Government and not by a delegate acting beyond authority. On the plea of second FIR, the Court held that the earlier proceedings and the impugned FIR related to different offences and different factual allegations, and therefore were not FIRs in the course of the same transaction. The Court also rejected the argument that offences under the Indian Penal Code were wholly subsumed in the Foreign Contribution law, and found no illegality in the registration of the FIR.

Conclusion: The challenge to the CBI reference and the FIR was rejected.

Final Conclusion: The writ petitions were found to be devoid of merit and the impugned statutory action and criminal investigation were upheld.

Ratio Decidendi: Where the statute and the governing notification disclose a clear policy for selecting the investigating agency, and where the later FIR concerns distinct offences and a different transaction, the statutory scheme is neither arbitrary nor unconstitutional and the proceeding cannot be quashed as a second FIR.

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