FOREIGN CONTRIBUTION (REGULATION) ACT

As per the preamble to the FC(R)A, 1976 - the purpose (or) object of the Act is :to regulate the acceptance & utilisation of foreign contribution (or) foreign hospitality by - certain Persons (or) Associations with a view to ensuring that - Parliamentary Institutions, Political Associations, and Academic & other Voluntary organisations, as well as Individuals - working in important areas of National Life - may function in a manner - consistent with the values of a Sovereign Democratic Republic.

Sec. 2(1)(a) - Association - means an Association of Individuals, - whether incorporated (or) not - having an office in India and includes a society - whether registered under the Societies Registration Act, 1860 (or) not and any OTHER organisation, by whatever name called.


Sec. 2(1)(b) - CANDIDATE for ELECTION - means A Person who has been duly NOMINATED as a CANDIDATE for ELECTION to any LEGISLATURE.

Sec. 2(1)(e) - FOREIGN SOURCE The term Foreign Source has been defined to include :(i) The Government of any Foreign Country or Territory and any agency of such Government. (ii) Any international Agency, ( not being the United Nations or any of its Specialized Agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification in the official Gazette, specify in this behalf ).

Sec. 2(1)(e) - FOREIGN SOURCE

(iii) A Foreign company within the meaning of Section 591 of the Companies Act, 1956 ( including a Company which is a subsidiary of a Foreign Company, and a multi-national Corporation within the meaning of this Act ). (iv) A Corporation, NOT being a Foreign Company, incorporated in a Foreign Country or Territory. (v) A multi-national Corporation within the meaning of this Act,

Sec. 2(1)(e) - FOREIGN SOURCE

(vi) A Company within the meaning of the Companies Act, 1956, - if MORE than one-half of the nominal value of its Share Capital is held, either singly or in the aggregate, by one or more of the following, namely : (a) Government of a Foreign Country or Territory ; (b) Citizens of a Foreign Country or Territory ; (c) Foreign Corporation (d) Foreign Trusts, Societies (or) Other Assn. of Individuals

Sec. 2(1)(e) - FOREIGN SOURCE

(vii) A trade union in any Foreign Country or Territory, whether or not registered in such foreign country or territory, (viii) A foreign trust by whatever name called, or a foreign foundation (ix) A society, club or other association of individuals - formed or registered outside India, (x) A citizen of foreign Country,

Sec. 2(1)(e) - FOREIGN SOURCE

But does not include any foreign institution - which has been permitted by the Central Govt, by notification in the official gazette, - to carry on its activities in India.

Sec. 2(1)(c) - Foreign CONTRIBUTION means the donation, delivery (or) transfer - made by ANY Foreign Source (i) of ANY Article, NOT being an article given to a Person as a GIFT for his personal use ( if the MARKET VALUE in India - of SUCH article - on the DATE of such Gift does NOT exceed Rs. 1,000 ) (ii) of ANY Currency, whether Indian or Foreign ; (iii) of ANY Foreign Security ( as defined - in FEMA, 1999 )


Clarification to Sec. 2(1)(c) above Indirect Foreign Contribution - It has been clarified that a Donation, Delivery or Transfer of - any article, currency or foreign security - by any Person who has received it from any Foreign Source, - either directly or through one or more persons, shall also be deemed to be foreign contribution.

Sec. 2(1)(d) - FOREIGN HOSPITALITY means ANY offer NOT being a purely casual one MADE by a Foreign Source for providing a Person the following two :(i) with the costs of travel to ANY Foreign Country (or) Territory. ( or ) (ii) with FREE Boarding, Lodging, Transport (or) Medical Treatment


Sec. 2(1)(g) - POLITICAL PARTY - means the following 2 (i) an Association (or) Body of Individual Citizens of India which is (or) is deemed to be, Registered with the Election Commission of India as a POLITICAL PARTY. ( or ) which has set up candidates for ELECTION to ANY Legislature - ( but it is NOT so registered (or) deemed to be registered with the ELECTION COMMISSION of India ) ; (ii) a POLITICAL PARTY mentioned in the NOTIFICATION of the ELECTION COMMISSION of INDIA.

Restrictions - on Acceptance of Foreign Contribution - Sec. 4

Sec. 4(1) - Prohibition - of Contribution Direct Foreign

The following Persons shall NOT accept F/C

-

A Candidate for Election, Member of ANY Legislature Political Party (or) its Office Bearers A Correspondent, Columnist, Cartoonist, Editor, Owner, Printer (or), Publisher ( of a regd. newspaper) Judge, Government Servant (or) Employee of ANY Govt. Corporation ( including a Govt. Co.)

Sec. 4(2) - PROHIBITION - of INDIRECT Foreign Contribution (a) Any Person - who is RESIDENT in INDIA (and) any CITIZEN of India who is resident OUTSIDE India CANNOT accept any F/Ctn (or) acquire (or) agree to acquire ANY currency from a FOREIGN SOURCE - either on behalf of any Political party (or) on behalf of any Person prohibited from accepting F/C ( referred to in Sec.4(1) above ) (or) Both.

Sec. 4(2) - PROHIBITION - of INDIRECT Foreign Contribution

(b) Any Person - RESIDENT in India shall NOT deliver ANY currency ( whether INDIAN or FOREIGN) which has been accepted from ANY Foreign Source to ANY Person - if he knows (or) has reasonable cause to believe - that SUCH Person intends (or) is likely to deliver such currency - to - ANY Political Party (or) - any PERSON prohibited from accepting F/C ( referred to in Sec. 4(1) above ) or BOTH.

Sec. 4(2) - PROHIBITION - of INDIRECT Foreign Contribution (c) Any CITIZEN of INDIA - who is a Resident OUTSIDE India - shall NOT deliver ANY currency ( whether Indian or Foreign ) - which has been accepted from ANY Foreign Source (1) to any POLITICAL Party (or) any PERSON prohibited from accepting F/Ctn - ( referred to Sec. 4(1) above ) or BOTH ; ( or ) (2) to any OTHER PERSON - if he knows (or) has reasonable cause to believe - that such OTHER PERSON intends (or) is likely, to deliver SUCH currency - to a POLITICAL PARTY (or) to any PERSON prohibited from accepting F/C ( referred in Sec.4(1) above ) or Both.)

(iii)

Sec. 4(3) - PROHIBITION - of MIS-USE - of F/Ctn - for Certain ASSOCIATIONS

Any Person receiving ANY currency ( whether Indian (or) Foreign ) from a FOREIGN SOURCE - on behalf of ANY Association referred to in Sec.6(1) ( i.e. a cultural, economic, educational religious (or) social associations ) - shall NOT deliver such currency to the following 2 :(a) to ANY Association (or) Organisation OTHER THAN the Association for which it was received (or) (b) to any OTHER PERSON - it he knows (or) has reasonable cause to believe - that such OTHER PERSON intends (or) is likely to deliver SUCH currency - to an Association OTHER THAN the Association - ( for which such currency was received ).

Restrictions - on Acceptance of F/Ctn. - by Accepta Political Orgn. - Sec. 5

Restrictions - on Direct F/C - Sec. 5(1) Any Organisation of POLITICAL NATURE ( NOT being a Political Party ) - CANNOT accept any Foreign Contribution EXCEPT with the PRIOR permission of the Central Government

Organisations of Political Nature - means such Organisation as the Central Govt. may SPECIFY by order ( published in the Official Gazette ) - While making SUCH an Order - the Government shall consider - - the activities, ideology (or) programme of the Organisation or Association. Thus, ONLY if it is NOTIFIED by the C/ Govt. ( by a Gazette Notification ) - will an Organisation be treated as an Organisation of Political Nature ( NOT being Political Parties ).

Restrictions - on Indirect F/C - Sec. 5(2) (a) A Person RESIDENT in India or a CITIZEN of India - who is a Resident OUTSIDE India shall NOT accept any F/Contribution ( or acquire or agree to acquire any F/Currency ) on - behalf of an Organisation of Political Nature ( referred to in Sec. 5(1) above ) - EXCEPT with the PRIOR permission of the Central Govt.


(b) A Person RESIDENT in India - shall NOT deliver any F/Currency - to ANY person - if he knows ( or has reasonable cause to believe ) that such OTHER PERSON - intends ( or is likely ) - to DELIVER such currency - to an Organisation of Political Nature ( referred to Sec. 5(1) above ) - EXCEPT with the PRIOR Permission of the Central Govt.


(c) Except with the prior approval of the Central Govt. any CITIZEN of INDIA - who is a Resident OUTSIDE India - shall NOT deliver ANY currency ( whether Indian or Foreign ) - which has been accepted from ANY Foreign Source (i) to ANY Organisation of Political Nature ( referred in Sec. 5(1) above ) ( OR ) (ii) to ANY person - if he knows ( or has reasonable cause to believe ) that SUCH person intends ( or is likely ) to DELIVER such Currency to an Organisation of Political Nature ( ref.to Sec. 5(1) above)

Obligation - to give Intimation to Central Government - Sec. 6 Acceptance of F/Ctn - by registered Associations - Sec. 6(1) An Association [ but NOT Organisations covered U/s 5(1) ] having a definite program regarding the following activities : (i) Cultural ; (ii) Economic ;(iii)Educational ;(iv) Religious ( or ) ; (v) Social shall not accept F/Ctn - unless the following 2 conditions are satisfied :(a) Registration with Central Government ; and (b) Agrees to receive F/Ctn - ONLY through specified Bank Branches only.

Intimation to Central Government Every Registered Association is required to give Intimation ( to Central Govt. ) within the prescribed time & prescribed manner regarding the following 5 Items :-

(i) The AMOUNT - of each F/Ctn received ( by it ) (ii) The SOURCE - from which such F/Ctn was received (iii) The MANNER - in which such F/Ctn was received (iv) The PURPOSES - for which such F/Ctn was utlised & (v) The MANNER - in which such F/ctn was utlised ( by it )

Intimation to be given in Form FC-3 within 9 months from end of Financial Year.

Prior Permission - of Central Govt. In the following 3 circumstances, the Central Govt. gives a notification - that such Associations shall not ( after the notification date ) accept F/Ctn. - except with the prior permission of the Central Government :

(a) If such Association obtains F/Ctn. through non-specified bank branches(or) (b) If such Association fails - to give an Intimation ( or ) (c) If such Association gives - a false Intimation.

Acceptance - by unregistered Association - Sec. 6(1A) Every Association ( Referred in 6(1) above ) if it is not registered - with the Central Govt. as per Sec.6(1) can accept F/Ctn - only if the following 2 conditions are satisfied :(i) ONLY after the prior permission of the Central Govt. and (ii) Gives Intimation - regarding 5 items above -

(i) The AMOUNT - of each F/Ctn received ( by it ) (ii) The SOURCE - from which such F/Ctn was received (iii) The MANNER - in which such F/Ctn was received (iv) The PURPOSES - for which such F/Ctn was utlised & (v) The MANNER - in which such F/ctn was utlised ( by it )

Acceptance - of F/Ctn. - by a Candidate for Election - Sec. 6(2) Every Candidate for Election - who had received any F/Ctn within 180 days - Prior to his nomination for election - shall give Intimation ( in Form FC-4 ) regarding 5 items.

Scholarship Receipts - Intimation to Central Government - Sec. 7

Intimation - of Receipts of Scholarships etc. Sec. 7(1) -

Citizens of India receiving - any stipends, scholarships, similar payments from any Foreign Source are required to give intimation ( in Form FC5 ) to Central Govt. - regarding the amount and the purposes.

Recurring Scholarships etc. Sec. 7(2

If Citizen of India receives any recurring payments by way of - scholarships, stipends, similar payments - it is sufficient if the above intimation [ in Section 7(1) ] includes precise information regarding - intervals and purposes.

No Intimation - is required - Sec. 7(3) Intimation referred to in Section 7(1) or 7(2) above is not necessary - if annual value of such scholarships, stipends, similar payments etc. does not exceed specified limits [ at present Rs. 36,000 per annum ].


Such above Annual specified Value Includes : Amounts received for :(i) Books; (ii) Clothing;(iii) Equipment ; (iv) Sight-seeing in Foreign Country. Excludes : (i) Air fare ( from India to foreign country and back ). (ii) Tuition fees and Other Fees. ( spent by Foreign Source ).

. Restrictions - on Acceptance of Foreign Hospitality - Sec. 9

The following 5 Persons while visiting any Country or Territory outside India, shall not accept F/H except with the prior permission of the Central Govt.:(a) Member of Legislature ; (b) Office bearer of a Political Party ; (c) Judge (d) Govt. servants ; (e) Employee of Corporation

No Prior Permission No prior permission is required for an emergent medical aid ( on account of sudden illness ) during a visit outside India - But intimation to be given to Central Govt. within 1 month from date of receipt ( of such F/H ) as to the :- (a) Receipt ; (b) Source & (c) Manner - of receipt such F/H by him.

General Exemption - through Notifications

Exemption - from prior permission is granted vide Central Govt. Notifications as follows :(a) Notification dated 3/1/1986 - for Member of Delegation ( sponsored by the Central Govt. ) (b) Notification dated 30/12/1987 - for Govt. Servants and Corporation Employees if in accordance with Bilateral agreement between Govt. of India and Govt. of Foreign Country ( duly approved by Dept. of Economic Affairs ) & for attending programmes duly approved by Department of Personnel Affairs.)

Power of Central Government - Sec. 10, 11, 12, 30 & 31

Power of Central Govt. - to prohibit Receipt of F/Ctn, F/H etc. - Sec. 10 The Central Govt. is empowered to :(a) prohibit - any Association ( not specified in Sec. 4 ) or any Person - from accepting F/Ctn. (b) require - any Association specified in Sec. 6(1) - to obtain prior permission before accepting any F/C. (c) require - any Person, Class of Persons or any Association ( not specified in Section 6 ) to give intimation ( within prescribed time and manner ) - with regard to receipt, source, manner, purpose, manner.

Power of Central Govt. - to prohibit Receipt of F/Ctn, F/H etc. - Sec. 10

(d) require any Person / Class of Persons not specified in Sec.9 to obtain prior permission - of the Central Govt. before accepting any F/H. (e) require any Person / Classes of Persons not specified in Sec. 9 to furnish intimation ( with in prescribed time and manner ), as to receipt, source and manner of such F/H.

Govt. not authorised - to exercise Power under Section 10, - with regard to the above prohibition etc. unless such acceptance of F/Ctn. and F/H - by such Association or Persons is likely to affect prejudicially any of the following 5 :(i) the Sovereignty and Integrity of India ( or ) (ii) Public interest ( or ) (iii) freedom or fairness of Election to any Legislature( or )

(iv) friendly relations with any Foreign State ( or ) (v) Harmony between religious, racial, linguistic or regional groups, castes or communities

Prior permission - to accept F/Ctn. or F/H etc. - Sec. 11

Every Individual, Association, Organisation or any Other Person required under the Act to obtain prior permission of Central Government ( under Sec. 5(1), 5(2), 6(1), 6(1A), 9 ) to accept F/Ctn. or F/H has to make an application for such permission in the prescribed time and manner.

If application for permission is not disposed within 90 days ( from the date of receipt of the Application) the permission so applied - is deemed to have been granted by Central Government

Extended period - of 30 days The above period is extended by another 30 days if the Govt. informs the applicant of any special difficulty ( in dealing with such an application ).

Prohibition - of Payment of Currency - in Contravention of the Act - Sec. 12 The Central Government is satisfied ( after making an inquiry ) that any Person has in his control or custody - any Article or Currency ( Indian or foreign ) - accepted by such Person - in contravention of the provisions of FC(R)A, 1976, it may by order prohibit such Person from paying, delivering, transferring or other wise dealing - with such article or currency.
 

Power - to make rules - Sec. 30 Sec. 30(1) deals with the power of Central Govt. to make rules - for carrying out the provisions of this act. This is done through a notification in the Official Gazette.

Sec. 30(2) such Rules may provide for any or all of the following 9 matters :(a) the time and manner of Intimation by Association with respect to F/Ctn received by it u/s.6. (b) the limits of receipt of scholarships, stipends etc. - for which no intimation to Central Govt. is required u/s. 7(3).

(c) the time and manner for Intimation to be given by Persons receiving any scholarships, stipends etc. u/s 7(1), 7(2). (d) the time and manner in which a Candidate for Election should give an intimation - with regard to the amount of F/Ctn received by him u/s. 6(2).

(e) the form and manner - in which application for prior permission u/s 11 - to receive F/Ctn. or F/H ( Section 5(1), 5(2), 6(1), 6(1A), 9 ). (f) the Manner of service of a prohibitory order made u/s.12. (g) the Form and manner of maintenance of accounts or records referred to u/s.13.

(h) the Limits upto which - an Officer ( not below the Rank of an Assistant Sessions Judge ) - may make an adjudication of confiscation. u/s. 19. (i) Any other matter - which is required to be or may be prescribed.

Sec. 30(3) Every rule made by the Central Govt. under this Act shall be laid before each House of Parliament & such rule may be modified or annulled by the Parliament.

Power - to exempt

- Sec. 31

If the Central Govt. is of the opinion - that it is necessary in the interest of the General Public - it may by order ( subject to such conditions ) exempt any Association ( but not Political Party ), Organisation or any Individual ( but not Candidate for Election ) - from the operation of all or any of the provisions of this Act. - Such an Order may whenever necessary - be revoked or modified by the Central Govt.

Accounts, Audit, Records etc. - Sec. 13 to 15A

Recipients of F/Ctn. - to Maintain Accounts 13. - Sec.

Every Association referred to in Section 6 shall maintain in the prescribed form and manner :(a) an account of F/Ctn. received by it and (b) a record of manner of utilisation of such F/Ctn..

Inspection - of Accounts or Records - Sec. 14

If the Central Govt. - for any reason ( to be recorded in writing ) has any ground to suspect that any provisions of this Act - have been contravened by any person , political party, organisation, or association , then it may by order ( either general or special ), authorize a Gazetted Officer ( holding a Group A post ) to

inspect any accounts ( maintained by such above persons ).

The Authorised Officer - is entitled to enter the premises at any reasonable hour before sunset or after sunrise - for the purpose of Inspecting ( such accounts or records ).  Such Gazetted Officer - shall be holding that post ( i.e. Group A post ) - in connection with the affairs of the Union or State - for a minimum of 10 yrs.


Seizure - of Accounts or Records - Sec. 15

Section 15 empowers the Authorised Officer to seize the accounts or records  if he has reasonable cause to believe ( after inspection of Accounts or records ) that  the provisions of this Act or any Law ( relating to foreign exchange ) - has been or being contravened.


Seizure - of Accounts or Records - Sec. 15

The seized accounts or records - to be produced before the Court - in which any proceedings are brought for such contravention.  However, if no proceedings are brought within 6 months ( from the date of such above seizure ) - then, such accounts, or record shall be returned to the person ( from whom they were seized ).


Audit - of Accounts


- Sec. 15A

Any Organisation or Association which fails to furnish any return ( within the specified time ) ( or ) the furnished returns are not in accordance with law ( or ) after inspection ( of such returns ) - the Central Govt. believes any provisions of this Act are contravened. then,

the C/Govt. - by General or Special Order authorise such Gazetted Officer ( holding Group A post ) to audit any books or Accounts - kept or maintained - by such Organisation or Association.  Any Information obtained, from such audit is to be kept confidential and shall not be disclosed ( except for the purposes of this Act ).


Seizure, Confiscation etc. Sec. 16 to 20

Seizure - of Article or Currency Sec. 16 Any Gazetted Officer authorised by the Central Govt. - by general or special order can seize any Article ( exceeding Rs. 1.000 in value ) or currency ( Indian or foreign ) if received in contravention of the provisions of this Act.

Confiscation - of Article or Currency - Sec. 18 Any article or currency seized under Sec. 16 above, is liable to confiscation - if such article or currency has been adjudged ( u/s. 19 ) to have been received or obtained in contravention of this Act.

Adjudication - of Confiscation - Sec. 19 Any confiscation referred to in Sec. 18 above may be adjudged :(a) without limits by the Sessions Court ( within whose jurisdictional limits the seizure was made ) and (b) subject to such limits ( as may be prescribed ) by such Officer ( not below the rank of an Assistant Sessions Judge ) as the Central Govt. may specify through a notification.

Opportunity - of Representation Sec. 20 The above order of adjudication of Confiscation ( U/s. 19 ) can be made only after a reasonable opportunity of making an representation ( against such confrontation ) is given to the Person ( from whom any article or currency has been seized ).

Appeals, Penalties, Punishments, Offences etc. Sec. 21 - 29

Sec. 21(1) - Appeal - against Sec. 19 - Any person aggrieved by an order ( made u/s 19 ) may prefer an appeal within 1 month from the date of communication of the order - where such order ( U/s. 19 ) has been made - by the Sessions Court to the High Court or - by the Officer ( specified u/s 19(b) ) to the concerned Sessions Court.

Note : Extension of Period - The above period may be extended - by a further period of 1 month by the appellate Court - if it is satisfied that the appellant was prevented - by sufficient cause from preferring the appeal ( within the normal period of 1 month ).

Sec. 21(2) - Appeals - against Sec. 5, 9 & 10

Any Organisation in Sec. 5 or any Person or Association in Sec 9 or 10 - which is aggrieved by the following orders :(i) order - in Explanation to Sec. 5(1) ( i.e. declaring an Organisation of Political Nature ) (ii) order - of Central Govt.- refusing to give permission - u/s. 9 (iii) order - by Central Govt. u/s.10
- may within 60 days from date of such an order prefer an appeal to the High Court.

The above appeal shall be to that High Court :within the local jurisdictional limits (1) where the Appellant - ordinarily resides or - carries an business or - personally works for gain. (2) if the appellant is on Organisation or Association - where the principal office of such organisation or association is located.

Penalties, punishments etc. Sec. 22, 23, 24, 25

Sec. 22 - PENALTY for obtaining any article or currency - in contravention of Sec. 12. - Imprisonment upto 3 yrs. or fine or both. and /or - additional fine equal to 5 times the market value of the article / currency.

Sec. 23(1) - PENALTY for Accepting any F/Ctn. or Currency - in contravention of the provisions of this Act. - Imprisonment upto 5 yrs. or fine or both. Sec. 23(2) - PENALTY for Accepting F/H in contravention of any provisions of this Act. - Imprisonment upto 2 yrs. or fine or both.


Sec. 24 - PENALTY for Article or Currency - not available for confiscation . - Additional fine upto 5 times the value of Article or Currency or Rs. 1,000 whichever is higher (+) - any other penalty imposed under the Act. Sec. 25 - PENALTY - where No separate punishment provided after failing to comply with the provision of this Act. - Imprisonment upto 5 yr. or fine of Rs. 1,000 or both.


Prohibition - of acceptance of F/Ctn. Sec. 25A Any Person convicted of any offence u/s 23(1) or under Section 25 - if such offence relates to the acceptance or utlization of F/Ctn. - is again convicted of such an offence - shall not accept any F/Ctn. for a period of 3 yrs.- from the date of the subsequent conviction.

Offences - by Companies Sec. 26

Sec. 26(1) - Offence or Rules - committed by company If any Offence under this act or any violation of rule made under the Act has been committed by a Company - then, every person who at the time of committing the offence was in charge and responsible for the conduct of the business of the Company as well as the Company itself shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

However, if a person above who is liable to any punishment - proves that the offence was committed without his knowledge or - he has exercised all due diligence to prevent the commission of such an offence - then, - the punishment u/s 26(1) above shall not apply to such a person.

Sec. 26(2) - Offence - with the Consent of Director, Manager, Secretary etc.

If an offence under this act or any rule made there under has been committed by a Company and - it is proved that the offence has been committed with the consent (or) participation of (or) is attributable to any neglect on the part of any Director, Manager, Secretary or Other Officer then, - such above mentioned persons shall also be deemed to be guilty - of that offence and - shall be liable to be proceeded against and punished accordingly.

Others - Sec. 27, 28, 29 Sec. 27 - Previous Sanction - of Central Govt. No Court can take cognizance of any offence under this Act - except - with the previous sanction of the Central Govt. or - any Officer authorised by that Govt. in this behalf.

Sec. 28 - Investigation - into cases under the Act - Every offence punishable under this Act may also be investigated - by such authority as the Central Govt. may specify in this behalf and - the authority so specified - shall - have all the powers which an officer in charge of police station has.

Sec. 29 - Protection of Action - taken in good faith - No suit or other legal proceedings shall lie against the Central Govt. - in respect of any loss or damage caused or likely to be caused by any thing - which is in good faith done or is intended to be done - in pursuance of this Act, Rules, Provisions or Orders under this Act.