M/s Advantages India & Anr Vs Union of India & Ors (Delhi High Court)
This Court is 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.
Also as the Notification dated 27th October, 2011 is neither an interpretation nor an understanding of Section 43 of FCRA but a convention/practice/policy to be followed by the Union of India while implementing Section 43, this Court is of the view that judgment of the Apex Court Bhuwalka Steel Industries Ltd. vs. Bombay Iron and Steel Labour Board & Anr. (supra) is inapplicable to the present case.
Consequently, the Notification dated 27th October, 2011 as well as the consistent practice followed by the Central Government lay down a principle and/or policy in the matter of appointment/selection of an investigative agency under Section 43 of FCRA and saves it from attack on the ground that it violates Articles 14 and 21 of the Constitution.
The letter dated 04th 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 sub-delegated the investigation to CBI‟ in the present cases.
Further 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.
Additionally, 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.
In view of the aforesaid, 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.
Consequently, 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.
To submit that once the Central Government has chosen the route of empowering and authorising a particular officer/authority to conduct inquiry 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, is untenable in law.
In any event, absence of power to arrest, if any, cannot be a ground either for seeking declaration that Section 43 of FCRA is ultra vires or for quashing of the impugned FIR.
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.
Even if it is assumed that some of the IPC offences mentioned in the FIR overlap with the offences under FCRA, yet the same will not render the registration of the impugned FIR illegal. In any event, the said plea will have to be decided after the investigation is over and that too by the appropriate court. Further, this cannot be a ground to challenge the constitutional validity of the provisions of FCRA.
Keeping in view the aforesaid findings, this Court is of the view that present batch of writ petitions are without any merit. Accordingly, the writ petitions along with all pending applications are dismissed without any order as to costs and all interim orders stand vacated.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. The present batch of writ petitions seek to challenge the constitutional validity of Section 43 of the Foreign Contribution (Regulation) Act, 2010 (hereinafter referred to as „FCRA‟) and Rule 22 of Foreign Contribution (Regulation) Rules, 2011 (hereinafter referred to as FCRR) on the ground that they are arbitrary, unreasonable, ultra vires and violative of Articles 14 and 21 of the Constitution of India. The petitioners further seek quashing of the letter dated 4th August, 2017 entrusting the investigation of their cases to the Central Bureau of Investigation (for short „CBI‟). The petitioners also seek quashing of the investigation being carried out by the CBI and Enforcement Directorate in pursuance to RC-DAI-2017-A-0036 dated 16th November, 2017 (hereinafter referred to as „RC 36/2017‟) and ECIR bearing no. ECIR/HQ/19/2017. Section 43 of FCRA as well as Rule 22 of FCRR are reproduced here in below:-
A) Section 43 of FCRA:-
“43. Investigation into cases under the Act – Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act may also be investigated into by such authority as the Central Government may specify in this behalf and the authority so specified shall have all the powers which an officer-in-charge of a police station has while making an investigation into a cognizable offence.“
B) Rule 22 of FCRR:-
“22. Returns by the Investigating Agency to the Central Government. – The Central Bureau of Investigation or any other Government investigating agency that conducts any investigation under the Act shall furnish reports to the Central Government, on a quarterly basis, indicating the status of each case that was entrusted to it, including information regarding the case number, date of registration, date of filing charge sheet, court before which it has been filed, progress of trial, date of judgment and the conclusion of each case.“
RELEVANT FACTS
2. The relevant facts of the present cases are that Government of India, Ministry of Home Affairs, Foreigners Division (FCRA Wing), Monitoring Unit vide its letter dated 04th August, 2017 requested the CBI to carry out 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 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 04th 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 over pricing 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 personal benefit of the office bearers or any other individuals apart from the violations of various provisions of FCRA. The letter dated 04th August, 2017 along with its annexures is reproduced here in below:-
“F.No.II/21022/58(0641)/2016-FCRA(MU)//S-3
Government of India
Ministry of Home Affairs
Foreigners Division (FCRA Wing)
(Monitoring Unit)
NDCC-II Building, Jai Singh Marg,
New Delhi, the 4th August, 2017
To
The Director,
Central Bureau of Investigation,
Plot No.5-B, CGO Complex, Lodhi Road,
New Delhi-110003
Subject: Investigation under Section 43 of the FCRA, 2010 for contravention of FCRA-2010 by Advantage India, New Delhi-reg.
Sir,
M/s. Advantage India, 101-102, Oriental House, Gulmohar Enclave, New Delhi, is registered under the Foreign Contribution (Regulation) Act 2010 vide Registration No.231660389R for carrying out educational and social activities. The association has received total foreign contribution amounting to Rs.90.72 crores during FYs 2012-13 to 2015-16 and also received bank interest amounting to Rs.6.69 crores on foreign contributions during the said period. The background of the foreign donors as well as utilization of foreign contribution is enclosed at Annexure I and the details of major beneficiaries of foreign contribution by the Association Advantage is enclosed at Annexure II.
2. Based on the news in the print media regarding the Income Tax search of M/s. Advantage India and thereafter a field inquiry, an off-site inspection of Book/records of the Association was conducted on 21.02.2017. On examination and scrutiny of the records of the Association, it was observed that the Association has not substantiated its various expenses that it has claimed to have incurred during FYs 2012-13 to 2015-16. The Ministry’s inquiry has prima-facie revealed that the said Association has violated various provisions of Foreign Contribution (Regulation) Act, 2010 as per details given below:-
1. On record the Association has claimed to have purchased medicines worth Rs.26.97 Crores for various health camps from two Pharma entities i.e. M/s. Aastha Pharma adjoining AIIMS Trauma Centre, New Delhi and M/s. Hind Pharma, Bhagirath Palace, New Delhi. Whereas association had also made agreements with M/s. Accordis Health Care stating that M/s. Accordis Health Care shall be solely responsible for the operational aspects of the projects and it will be the responsibility of the Accordis Health Care to ensure availability of requisite medical instruments, apparatus, medicines along with sufficient number of doctors and paramedical staff. The said point i.e. need for purchase of medicines from M/s.Aastha Pharma and M/s. Hind Pharma point has not been satisfactorily replied by the association. Further, on enquiries both the firms have categorically stated in their letters dated 11.05.2017 and 28.04.2017 respectively that they have not dealt with the Association. The Bills and vouchers furnished by the Association in respect of the above two Pharma firms were found to be fictitious and bogus. The contention of the association vide its letter dated 27th June, 2017 claiming that the invoices of these firms were genuine was not found to be tenable. Independent enquiries made by the Income tax department in regard to the above two firms revealed that there was no such concerns at the given addresses and the amount received by these two firms from Advantage India were rotated through many bank accounts which prima facie were found to be bogus. The Income tax department has therefore found these two concerns as bogus and the expenses claimed on purchase of medicines from these two concern as fictitious and bogus. The facts on record clearly make out violation of Section 8(1)(a) (utilization of FC for the purpose it has been received), Section 18 (intimation), Section 19 (maintenance of accounts) and Section 33 of FCRA, 2010 (making of false statement, declaration or delivering false accounts).
II. Agreements dated 05.10.2010, 18.12.2010 & 17.01.2013 with M/s. Accordis Health Care by the Association in support of its purchases of Mobile Medical Units/medicines etc. From the said company were verbatim, self-serving, full of contradictions and appeared to have been made on same day but signed for different dates. The said agreements are thus concocted. As per the documents provided by Income Tax authority, it is revealed that during the search by Income Tax authority in the premises of M/s Accordis Health Care Private Limited company, the managing director Sh. Raman Kapoor, confessed that he has booked bogus expenses and has done overpricing of the MMUs supplied to the Association. The association could not substantiate the geniuses of the expenses claimed to have incurred in regard of M/s. Accordis Health Care Private Limited. The reply of the Association is evasive and does not cover all the issues. Thus, Association has violated Section 8(1)(a) (utilization of FC for the purpose it has been received), Section 18 (intimation), Section 19 (maintenance of Accounts) and Section 33 of FCRA, 2010 (making of false statement, declaration or delivering false accounts).
III. It is on record that Rs.30,37,458/- were spent by Association for foreign travel of Sh. Deepak Talwar during the period 09.05.2015 to 23.01.2016 without due justification. The reply of Association that the travels were undertaken for the welfare of NGO is neither explained specifically nor substantiated. The same is therefore not convincing. Thus making it clear that the funds of the Association have been utilized for making payment related to other business activities and personal purposes of the founder member of the Trust implying violation of section 8(1)(a) and Section 12(4)(vi) of FCRA, 2010 by the Association knowingly.
IV. The ownership of premises of Association i.e. 101-Oriental House, Gulmohar Enclave, Commercial Complex, New Delhi-49 belongs to Sh. Deepak Talwar. The Association has made rent payment amounting Rs.79,83,441/- to shri Deepak Talwar for the period 2012-2013 to December 2015. This act of Association proved that foreign contribution was used for providing personal gain to sh. Deepak Talwar and is against the purpose for which the same was received. Thus, violating the Section 12(4)(vi) of FCRA, 2010.
V. The Association made a paymenet of Rs.4,92,89,993/- (Rs. Four Crores Ninety Two Lakhs Eighty Nine Hundred Ninety Three) to two publishers i.e. M/s. Capital Print Process Pvt. Ltd., Chandigarh & M/s. Capital Impex Ltd., New Delhi for the procurement of huge quantities of Exercise Note Books without following quotation/tender process. This is in a violation of Section 12(4)(vi) and Section 33 of the FCRA.
VI. During the scrutiny of agreements, it was observed that the Association has given the following two bank account numbers while signing the agreements:-
