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Anusuya is from the relatively impoverished central Indian state of Chhatisgarh. The 32 year old, mother of three works as domestic help in the posh neighbourhood of South Delhi.She’s never heard of the Right to Education (RTE) Act passed by the previous Congress led government in 2009. Widely hailed by social activists and those who supported the government’s entitlement based approach, as we shall see the RTE has had many perverse effects on actually worsening access to and quality of education.Anusuya’s three children attend a local municipal primary school located in the fancy neighbourhood of Hauz Khas, Delhi, not far from the the Village, of the same name, an area popular with artists, well to do locals and expats.None of Anusuya’s Memsaabs (the well to do women who employ her as domestic help) send their children to the local school where Anusuya’s children study—or try to.“Children don’t learn anything in the school,” worries Anusuya.Her daughter Jayanti (name changed), 8 years old, is in the third grade but can barely read or write.As she tells her mother, “Madam” (i.e., the teacher) abandons the children in the class and sits in the staff room gossiping with other “madams’”.Now consider someone higher up in the social hierarchy.Nidhi Sharma (name changed), 33, is a housewife who lives in Gurgaon, a suburb of Delhi in the neighbouring state of Haryana. Before that, she lived in South Delhi. Her two sons, Kanay and Aayan, are both in good private schools in Gurgaon as they were before that in Delhi. The older son, Kanay is presently at Shriram School where he will get an International Baccalaureate certification (IB).Nidhi was insistent that her children not attend a conventional Central Board of Secondary Education (CBSE) school. Other options were a school such as Mirambika (run by the Shri Aurobindo Ashram) which is an “alternative” or “free progress” school, with fewer children per class and a diverse, non-traditional curriculum and pedagogy. At one point she even considered homeschooling her children.“I don’t want my kids to suffer from exam fever, feel stressed due to homework or be burdened with school books. I just don’t believe in the same old uniform syllabus and pedagogy,” Nidhi explains.But it turns out that if Nidhi had decided to homeschool her kids, she would have run afoul of the RTE, which mandates that every child be registered in either a public school or a recognised private school but which bars homeschooling.Fortunately, she is well to do and the private schools her kids are actually attending would not draw the ire of the RTE and those trying to enforce it. As we shall see, the real victims of this misguided piece of legislation are those who suffer poor quality education in government schools and the many “budget” private schools (BPSs) geared towards lower income kids which don’t meet the RTE’s excessively stringent requirements.To quote the RTE: “It shall be the duty of every parent or guardian to admit or cause to be admitted his or her child or ward, as the case may be, to an elementary education in the neighbourhood school.” (Section 10, RTE 2009)RTE and HomeschoolingThe policy makers who framed this law clearly weren’t thinking about Shreya Sahai, a 12 year old girl from Delhi.A budding painter and photographer, Shreya wished to devote more time to music and the arts. She’s one of the small number of children whose parents prefer to homeschool rather than sending them to a regular school.She wished to attend the National Institute for Open Schooling (NIOS), which fosters open schooling and would, prior to RTE, have allowed someone who had been homeschooled to sit for exams.But when Shreya approached NIOS in April 2010, the school denied her request for taking the eighth grade examination, thanks to the RTE Act having come in force on April 01, 2010.Shreya and her parents filed a case in Delhi High Court and the government, in its initial response, supported the right to home school.Around the same time, a well-known leftist journal, Economic and Political Weekly (EPW), published an article by Jandhyala Tilak, a professor at the National University of Education Planning and Administration, opposing homeschooling. Tilak argued that “the principle of individual choice is not valid in the case of compulsory education and that children have to go only to recognised, not alternative schools”.Ashok Agrawal, a lawyer and activist, perhaps inspired by this line of reasoning, intervened in Shreya’s case, objecting to the government’s stand as well as the petitioner’s pro-homeschooling stand. He argued that the parental right over a child is subordinate to that of the state and an interpretation of the RTE Act in favour of homeschooling would result in a proliferation of sub-standard schools run by non-government organisations (NGOs).Subsequently, the government reversed its stand through another affidavit. Eventually, the case was withdrawn as the Court refused to pass a direction to the Government to amend the Act.To quote the High Court judgement: “it would not be justified for the Court to issue directions to the Government to make any amendment to Section 2(p) of the Right of Children to Free and Compulsory Education Act, 2009 as it is the right of the Government and legislature to amend any Act or any provision of the Act.”At the time of writing the NIOS has not shut down the Open Basic Education Programme for children under 15 years of age. So theoretically Shreya could have completed her certification. The problem is that there’s no clarity or certainty whether the program will continue into the future and more generally, no clarity on whether homeschooling in general will remain legal in India.Ironically, Kapil Sibal, the then-Minister of Human Resource Development (HRD), responsible for the school system, had declared in 2010 that RTE posed no issue to home schooling as the government had no interest in micromanaging the education system.Homeschooling, after all, does not mean no exam and no certification. Most Western countries which allow homeschooling have regulatory systems in place. In India as well, children take exams through the NIOS for academic certification.But the government’s reversal on Shreya’s case and the Court’s refusal to intervene confuses further an already confused situation. After all, why would parents take the risk that if they homeschool their children they might not be able to get them certified? It would be a huge risk to take for the future of one’s children given the prevailing uncertainty. So definitely this will have a dampening effect on parents who’re considering homeschooling in the future.It would appear that the “right” to education carries a very illiberal implication in India.What do parents want for their children?Rich or poor, parents want the best education for their children, and they’ve shown by their choices that government-run schools are not providing it. Parents are “voting with their feet”, and their rupees. Between 2008-09 and 2009-10, enrolment in private schools went up by 32 lakhs, while government schools saw an almost identical drop in enrolment over the same period.This might be expected among the middle class and wealthy but it is striking behaviour coming from those parents who are poor.On the face of it, government schools are a bargain hard to refuse if you are poor. They charge virtually no fee, provide free books, uniforms, shoes and meals. Yet, poor parents, often themselves illiterate, prefer to seek admission for their children to budget private schools and are willing to spend a great deal of their monthly income on their children’s education.The growing revealed preference for private schools reflects the fact that even poor parents who themselves might lack much formal education are able to tell the difference between good and bad schooling and that they are prepared to invest substantial resources in their children’s education.According to a study by Geeta Kingdon, who holds the Chair in Education Economics at the University of London, in 2007-08 for rural Uttar Pradesh and Bihar, the absence rate of regular teachers in government schools was 23-25 per cent, while private school teachers’ absence rate was much lower at 13-17 per cent. Government school teachers spent on average 74 per cent of their typical school hours in teaching children, while private school teachers spent 90 per cent.It might be true that some private schools are only marginally better than local government schools on the above metrics. But they make this up by offering extra subjects as well as having extra hours or days of teaching.As a study by Karthik Murlidharan of the University of California, San Diego and Venkatesh Sundararaman of the World Bank shows, private schools in Andhra Pradesh are three times more efficient than government schools (in the sense that their cost per student is one-third). The study also suggests that, in addition to a cost advantage, the typical private school delivers slightly better results on average across a range of subjects compared to a typical government school.Further, private schools generally spend significantly less instructional time on mathematics and Telugu, and use the extra time to teach more English, science, social studies, and Hindi. In general, private schools have longer school days, fewer holidays, lower teacher absence and lower pupil to teacher ratios. What’s more, extra language subjects such as Hindi and English expand the scope of job opportunities in the future compared to students who study only in Telegu.Private school teachers are paid less but work harder and achieve better educational outcomes for students than their counterparts in government schools. The reasons are obvious if one thinks like an economist. Government school teachers are, essentially, civil servants, and cannot be fired if they do not teach well or even if they do not show up at all — hence the high absentee rates. By contrast, teachers in private schools have an incentive to do their job because they will be fired if they do not.The real clincher is that most teachers in government schools themselves don’t seem to believe in the system they work for. In Tamil Nadu, only 27% of primary and middle primary government school teachers sent their children to government schools while a whopping 73% sent their children to private schools.Where do government servants, more generally, send their children? And how socially inclusive are the schools preferred by such parents? There is no data on this, but my conjecture is that it would match what we see with government school teachers.Increasing the burden on affordable private schoolsThe fact is that the RTE Act limits options for poor parents by increasing the burden on affordable private schools. As it is, these schools struggle to survive, and the RTE just makes this situation worse.For example, government regulations typically mandate that schools have to have a weatherproof building, which increases construction and maintenance cost. State rules even stipulate the minimum size of the plot of land on which a school is built, the number and size of class rooms, the numbers of toilets, and minimum number of books in a library. In the arcane world of government regulations, the rules sometimes even stipulate the size of doors, stairs and windows!The rules are so onerous that many NGO-run schools — such as Deepalaya in Delhi, that operates in a slum — will have to be shut down if the rules are strictly enforced. The rules say that a school cannot have classrooms located across from a slum, nor can it have mobile buildings. The school must be a fixed structure — a weatherproof one at that! — sitting on a plot at least 200 square yards in Delhi specifically, and it must have separate toilets for boys and girls.In 2003, Sam Hoakip, originally from Manipur, started Ebyon, a budget private school in Khajuri Khas, north east Delhi. Despite having just five rooms, a large unplastered hall and plagued by frequent power cuts with the odd patch of sunlight seeping through the cracks, Ebyon has attracted more than 100 students annually.Almost 80% of the parents who send their children to Ebyon are daily wage earners who pay a monthly fee of Rs. 200. Shaziya Parveen, a teacher at the school, has only completed grade 12 but she has seven years of teaching experience. While she’s providing a valuable educational service under less than ideal circumstances, technically this is against the rules, as according to the letter of the law, she would have to have a formal educational degree or diploma in order to teach.Farman, 12 years old, is the son of an unskilled labourer who works as a painter. He goes to a neighbourhood government school in the mornings and attends Ebyon after lunch.Why does he do this?Even though Farman enjoys attending Ebyon, it’s not a recognised school and not likely to be anytime soon. So by attending the government school in the morning, he will ensure that he gets a valid graduation certificate, even though his actual learning takes place at unrecognised Ebyon. These are the perversities of the system.This is hardly a unique example of an affordable private school providing valuable educational services running afoul of excessively stringent government regulations.Pratham,is one of India’s largest NGOs providing quality, affordable education to underprivileged children in India. In their 2011-12 Annual Status of Education Report (ASER), many schools were surveyed, of which 24 schools—15 government and 9 private schools— were in Seelampur, in north east Delhi, the area where Ebyon operates.The survey showed that government schools are by and large RTE compliant while most private schools are not. That is because they operate in residential buildings since real estate prices are high and they cannot afford RTE compliant commercial space. What’s more they’re unlikely to become RTE compliant anytime soon as these constraints aren’t likely to change.However, being RTE-compliant doesn’t mean that these government schools are delivering on their mission to provide education.The ASER survey showed that half the children who were in grade five in Municipal Corporation of Delhi (MCD) schools and Delhi government schools, at the time of the survey, had not yet reached the level of educational attainment expected in grade two.Even in grade three, about half the children in MCD schools and a third in government schools struggled with basic number recognition.The report concluded despite their RTE compliance —which includes having trained and qualified teachers and adequate infrastructure— government schools had lower learning outcomes. On the other hand, learning outcomes of children in private schools were substantially higher.It’s evident that despite formally meeting RTE requirements, government schools don’t create a good learning environment partly for a reason we’ve seen before in the case of Anusuya’s daughter Jayanti and in the academic study from Andhra Pradesh: teachers in government schools who have job security and are well paid compared to those in many private schools have no incentive to do their job well as there’s no penalty if they don’t.By comparison, affordable private schools, which theoretically are on the wrong side of the RTE have by and large better motivated teachers and students who actually want to be there, leading to overall better educational outcomes, despite the poor infrastructure and lack of formal training of many of the teachers.But in the black and white world envisaged by the RTE Act, there’s no room for such nuances.Sam Hoakip’s school, Ebyon, is not RTE compliant. Apart from the substandard physical infrastructure, he would need to pay his teachers six times their current salary. And while he’s at it, he would have to fire teachers like Shaziya Parveen and hire new teachers who have the “right” credentials.This would substantially increase his costs and Sam would have to increase the fees he charges the students by many fold. Not only would Shaziya be out of a job, but Farman would have to stop going to school. His father, who is the only earner in a family of five, would not be able to afford the substantially higher fee that Sam would have to charge if he were to try to make Ebyon RTE compliant and receive a certificate of recognition, without which he would have to shut down. And then, given how arbitrarily the rules are enforced, there’s no guarantee he’d get recognition even if he managed to jump through all the hoops.The saving grace is that excessively stringent rules within the RTE Act are sometimes redeemed by not actually being enforced. Ebyon continues to operate to this day as the Delhi government has not in fact shut down a single school as it would be required to do under the RTE.The same good sense — or good politics — in the face of a bad law is not unfortunately universal. For example, the Punjab Government has shut down more than 1100 private schools and the government in Haryana ordered the closure of more than 1300 schools.School owners in Haryana were fortunate to get a stay order from the High Court of Punjab and Haryana at Chandigarh. It’s ironic that the same High Court ordered the closure of schools in Punjab.Balraj Singh from Gurdaspur district had filed a public interest litigation (PIL) in 2010 in the High Court asking for an independent primary education regulator to be constituted. In the three years that followed, thanks to the PIL, the Court made itself an ad-hoc self appointed regulatory agency, closing down private schools having inadequate infrastructure. Government officials acted on the High Court orders and submitted a compliance report confirming closure of 1170 schools.This zeal in enforcing a law that doesn’t make sense is not just of academic interest. The lives of real people have been deleteriously affected.Simran (name changed), 7 and Rani (name changed), 9 – two students in Mansa district, Punjab earlier would walk barely 50 steps to reach their school. Now, they have to walk almost 4 km everyday to attend their new school. Their old school, which charged approximately Rs 160-200 as fees was attended by almost 300 children and staffed by 12 female teachers, but had to close down for alleged non-compliance with RTE.“After the school was inspected, I received a phone call by the Block Education Officer [the official responsible for enforcing RTE] to close down the school in the middle of the academic year without giving me any formal written notice. When I declined to close down the school, police officials visited my school and tried to force me to write a self-declaration that I am closing down the school on my own.”This is how Ashwini Pal (name changed) angrily explained how she was forced to shut down her school, leaving students like Simran and Rani no choice but to travel further and pay higher fees.Why don’t the owners of affordable private schools like Ashwini complain more vociferously when proper procedure isn’t followed by government officials and they’re all but bullied into shutting down?The difficulty is that these schools are already operating in a grey area and very likely are technically on the wrong side of the law, such as operating in residential buildings. But their frustration is obvious and visible.“We grow a plant, give water, nourish it and then the government comes and takes away the root”, says Tejinder Singh Brar (name changed), owner of an affordable private school in Barnala, Punjab.According to information from the Punjab government’s education department available on its website, in 2013-14, 1,170 private schools in Punjab were shut down, affecting more than 40,000 students. A recent field study conducted in Punjab by the Centre for Civil Society (CCS) found that many of the schools mentioned in the list had already closed down with the past three years. Some closed for their own reasons while others were closed by government officials without any written notice.Of those that were notified in writing, some were told that it was due to non-compliance with Section 12, a section of the RTE which stipulates a 25% reservation for children from low income and disadvantaged groups.School owners say that most parents didn’t know about this 25% reservation and therefore they didn’t receive applications within this reserved category. Moreover, the RTE makes no provision for school closure as a penalty for not complying with the 25% clause.Yet another equally dubious reason for forcing some schools to close was that in some cases, the government officials insisted on a 30 year lease for the school building. This also makes no sense, since the norm in the market place is a lease for no more than five years. In other cases, they insisted on ownership of the plot of land as a way to close the schools.One has to ask why such dubious methods were used to close down private schools in Punjab.One thing is for sure: government officials didn’t bother to check what should be the most important aspect of their survey, which is to look at the learning outcomes.Unlike Delhi, not all government schools in Punjab are fully compliant with RTE. In fact, 6000 government schools would have been forced to close if the same rules were applied to them as were being used to close private schools. That would be a basic test of fairness in applying the rules, no matter how bizarre they are. But the High Court refused to entertain a PIL challenging discriminatory treatment of private schools, thus adding insult to injury.By contrast, Gujarat is not shutting down any private schools. The state government appoints independent third parties to assess government and private schools alike. They give a weight of 15% to infrastructure and 85% to learning outcomes and extra curricular achievements. Thus, all schools, government or private, have a strong incentive to ensure good learning outcomes, and there’s no discrimination between government and private schools.This common sense approach matches what research studies tell us.Physical infrastructure such as the quality of building material, toilets, and playground and human capital such as qualified teachers are helpful but not essential for learning outcomes. Having well motivated teachers and students is essential. However, government and bureaucrats seem to think otherwise, at least in the rest of India.Anusuya’s daughter Jayanti will be promoted to grade four next year. Her ‘Madam’ does not teach, but that doesn’t matter. If Jayanti does not learn in the classroom, that’s also not an issue. That’s because, even if Jayanti does not attend school, she will still get passing grades, at least up to eighth grade. Passing is a “right” even if many parents feel it is not right. Is it surprising that more than half the children in grade nine in Delhi government schools fail when they are no longer being automatically graduated to the next grade?As Abhishek Gupta, who challenged the “no holding back” clause of the RTE in the Supreme Court, said, “passing is compulsory and education is optional in the Right to Education scheme“.RTE: Right or Wrong? – Swarajya

I got this wonderful article from Good Karma for NGOsINTRODUCTIONThe Foreign Contribution (Regulation) Act, 2010 (42 of 2010) dated the 26th September, 2010 was notified in the Gazette of India – Extraordinary – Part II – Section I dated the 27th September 2010.However, the Act has come into force with effect from the 1st May, 2011 vide Gazette Notification vide G.S.R. 349 (E) dated the 29th April, 2011. Consequently, the earlier Act, viz., the Foreign Contribution (Regulation) Act, 1976 has been repealed. The Foreign Contribution (Regulation) Rules, 2011 made under section 48 of FCRA, 2010 have also come into force simultaneously with FCRA, 2010 vide GazetteNotification vide G.S.R. 349 (E) dated the 29th April, 2011. While the provisions of the repealed FCRA, 1976 have generally been retained, the FCRA, 2010 is an improvement over the repealed Act as more stringent provisions have been made in order to prevent misutilization of the foreign contribution received by the associations. The prime objective of the Act is to regulate the acceptance and utilization of foreign contribution and foreign hospitality by persons and associations working in the important areas of national life. The focus of the Act is to ensure that the foreign contribution and foreign hospitality is not utilized to affect or influence electoral politics, public servants, judges and other people working the important areas of national life like journalists, printers and publishers of newspapers, etc. The Act also seeks to regulate flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to the national interest and to ensure that individuals and organizations may function in a manner consistent with the values of the sovereign democratic republic.Organizations seeking foreign contributions for definite cultural, social, economic, educational or religious programs may either obtain registration or prior permission to receive foreign contribution from Ministry of Home Affairs by making application in the prescribed format and furnishing details of the activities and audited accounts. The registration is granted only to such association which has proven track record of functioning in the chosen field of work during last three years and after registration, such organization is free to receive foreign contribution from any foreign source for its stated objectives.Registration is granted only after thorough security vetting of the activities and antecedents of the organization and office bearers thereof. However, such organizations which are newly established and do not have proven track record of functioning may also receive foreign contribution for specific activities, for a specific purpose and from a specific source after seeking project based prior permission (PP) from the Ministry of Home Affairs.In order to bring in transparency in the administration of the Foreign Contribution (Regulation) Act, 2010 and the Rules framed there under, improve the functioning, disseminate the information and enhance user friendliness of the various procedures, the Ministry of Home Affairs’ web-site on FCRA (http://mha.nic.in/fcra.htm) is uploaded with all the related information for guidance of all concernedSome of the FCRA Online Services available in MHA FCRA website:Online filing of FCRA Annual ReturnsInstructions for filing online of FCRA Annual ReturnsOnline filing of application for grant of FCRA RegistrationInstructions for filing online grant of FCRA RegistrationOnline filing of application for grant of FCRA Prior PermissionInstructions for filing online grant of FCRA Prior PermissionOnline filing of Application for Accepting Foreign Hospitality Under FCRAInstructions for filing Online of FCRA Hospitalityread more, The Lokpal and ICHARTER FOR ASSOCIATIONS APPLYING FOR GRANT OF PRIOR PERMISSION/REGISTRATION UNDER THE FOREIGN CONTRIBUTION (REGULATION) ACT, 2010Any Association/NGO wishing to receive foreign contribution (FC) must have a definite cultural, economic, educational, religious or social program.It shall neither receive nor utilize any FC without obtaining either prior permission or registration from the Central Govt.Details of FC received prior to obtaining either prior permission or registration should be mentioned clearly at the time of applying for prior permission or registration, as the case may be.Application for grant of registration is to be made online in Form FC–3.An application seeking prior permission to accept foreign contribution is to be made online in Form FC–4.The application should be complete in all respects and no column should be left blank.Each Prior permission application should be sent for receiving a specific amount, for a specific purpose and from a specific donor.Following documents should be enclosed with the application for grant of Registration:Hard-copy of the online application, duly signed by the Chief Functionary of the association;Certified copy of registration certificate or Trust deed, as the case may be;Details of activities during the last three years;Copies of audited statement of accounts for the past three years (Asset and Liabilities, Receipt and Payment, Income and Expenditure);If functioning as editor, owner, printer or publisher of a publication registered under the Press and Registration of Books Act, 1867, a certificate from the Registrar of Newspaper for India that the publication is not a newspaper in terms of section 1(1) of the said Act.A copy of the PAN, if issued by Income Tax authorities.A fee of by means of demand draft or banker’s cheque of Rs. 2000/- in favour of the “Pay and Accounts Officer, Ministry of Home Affairs”, payable at New Delhi.Following documents should be enclosed with the application for grant of Prior Permission:Hard-copy of the online application, duly signed by the Chief Functionary of the association;Certified copy of registration certificate or Trust deed, as the case may be;Commitment letter from foreign donor specifying the amount of foreign contribution;Copy of the project report for which foreign contribution is solicited/being offered;If functioning as editor, owner, printer or publisher of a publication registered under the Press and Registration of Books Act, 1867, a certificate from the Registrar of Newspaper for India that the publication is not a newspaper in terms of section 1(1) of the said Act.A copy of the PAN, if issued by Income Tax authorities.A fee of by means of demand draft or banker’s cheque of Rs. 1000/- in favour of the “Pay and Accounts Officer, Ministry of Home Affairs”, payable at New Delhi.Note: The hard copy of the online application along with all the documents mentioned above must reach the Ministry of Home Affairs, Foreigners Division (FCRA Wing) within thirty days of the submission of the online application, failing which the request of the person for grant of registration or prior permission, as the case may be, shall be deemed to have ceased.FCRA, 2010, FCRR, 2011, FAQs thereon and all other related information and, the Forms FC-3 and FC-4 as also link to FCRA Online Services are available at the website of the Ministry of Home Affairs athttp://mha.nic.in/fcra.htmCHARTER FOR ASSOCIATIONS WHO HAVE BEEN GRANTED PRIOR PERMISSION OR REGISTRATION UNDER FCRAAn association granted prior permission or registration under the repealed Foreign Contribution (Regulation) Act, 1976 shall be deemed to have been registered or granted prior permission, as the case may be, under the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) and such registration shall be valid for a period of 5 years from the 1st May, 2011, i.e., up to the 30th April, 2016.Every certificate of registration granted under FCRA, 2010 shall be valid for a period of five years from the date of its issue.Every certificate of registration shall have to be renewed. The application for renewal is to be made in Form FC-5 along with the prescribed fee, six months before the date of expiry of the certificate of registration. An association implementing an ongoing multi-year project shall apply for renewal twelve months before the date of expiry of the certificate of registration. In case no application for renewal of registration is received or such application is not accompanied by the requisite fee, the validity of the certificate of registration shall be deemed to have ceased from the date of completion of the period of five years from the date of the grant of registration.An association granted prior permission or registration under the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) should receive the foreign contribution in the same exclusive designated Bank Account mentioned in the order granting prior permission or registration. This account number would be the same as has been intimated by the organization in their application for prior permission/registration. Deposit of any local fund in this bank account is not allowed. One or more accounts in one or more scheduled banks may be opened for utilizing the foreign contribution provided that no funds other than foreign contribution shall be received or deposited in such account or accounts. Section 17 of the FCRA, 2010 may please be referred.Foreign contribution cannot be mixed with local funds being handled by the organization.An association granted prior permission or registration is required to carry out the activities, for which foreign contribution is received, in India only and the amount should not be utilized for purposes other than for which it is received.Any fixed asset acquired out of the foreign contribution and any article received in kind from the foreign source should be in the name of the association and not in the name of any individual in the association.Not more than 50% of the foreign contribution shall be defrayed to meet the administrative expenses of the association. What constitutes ‘administrative expenses’ has been defined in Rule 5 of the Foreign Contribution (Regulation) Rules, 2011 (FCRR, 2011).Any foreign contribution or any income arising out of it shall not be used for speculative business. What constitutes ‘speculative business’ has been defined in Rule 4 of FCRR, 2011.An association granted prior permission or registration should maintain a separate set of accounts and records, exclusively for a foreign contribution received and utilized. If the foreign contribution relates only to articles, the intimation shall be submitted in Form FC-7. If the foreign contribution relates to foreign securities, the intimation shall be submitted in Form FC-8. Every report submitted shall be duly certified by a chartered accountant.Every account giving details of the receipt and purpose-wise utilization of the FC, including the interest earned on the FC amount, should be maintained on a yearly basis, commencing on the 1st day of April each year, and every such yearly account is to be submitted, in prescribed Form FC – 6 along with the income and expenditure statement, balance sheet and statement of receipt and payment, duly certified by a chartered accountant in duplicate, within nine months of the closure of the year, i.e., before 31st December. Every such return in Form FC-6 shall also be accompanied by a copy of a statement of account from the bank where the exclusive foreign contribution account is maintained by the person, duly certified by an officer of such bank. The cash book and ledger account on double entry basis, where the FC relates to currency received and utilized. The annual return in Form FC-6 shall reflect the foreign contribution received in the exclusive bank account and include the details in respect of the funds transferred to other bank accounts for utilization.The accounting statements shall have to be preserved by the NGO/association for a period of six years.Even if no FC is received during a year, a ‘Nil’ return is required to be filed with the Ministry of Home Affairs within the prescribed time limit.Associations/NGOs granted registration or prior permission, which have received foreign contribution in excess of one crore rupees, or equivalent thereto, in a financial year, shall place the summary data on receipts and utilization of the foreign contribution pertaining to the year of receipt as well as for one year thereafter in the public domain.No FC should be transferred to an association which has not obtained either prior permission or registration under FCRA or to any person or association, prohibited under FCRA from receiving any FC. However, if the foreign contribution is proposed to be transferred to a person who has not been granted a certificate of registration or prior permission by the Central Government, the person concerned may apply for permission to the Central Government to transfer a part of the foreign contribution, not exceeding ten per cent, of the total value of the foreign contribution received. The application shall be countersigned by the District Magistrate having jurisdiction in the place where the transferred funds are sought to be utilized. The District Magistrate concerned shall take an appropriate decision in the matter within sixty days of the receipt of such request from the person. The donor shall not transfer any foreign contribution until the Central Government has approved the transfer. Any transfer of foreign contribution shall be reflected in the returns in Form FC-6 as well as in Form FC-10 by the transferor and the recipient.Change of name, address, registration, nature of activities or aims and objectives of an association should be intimated to the Ministry of Home Affairs within 30 days of effecting the change, along with the documentary evidence affecting the change.Prior permission of the Ministry of Home Affairs should be obtained for replacing 50% or more of the office bearers.Prior permission of Ministry of Home Affairs should be obtained for changing bank account for valid and convincing reasons.CHARTER FOR THE CHARTERED ACCOUNTANTS,/h4>Since the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) is national security legislation; associations are required to exercise extreme care and caution in dealing with foreign contribution from the time of its receipt to its final utilization. As the Chartered Accountants audit the accounts of the associations and certify the accounts before submission to the Government, they are required to provide proper guidance to the associations who is either applying for a grant of prior permission/registration or who have been granted prior permission/registration under FCRA, 2010. The Chartered Accountants are requested to get themselves thoroughly familiarized with FCRA, 2010 and the Foreign Contribution (Regulation) Rules, 2011 (FCRR, 2011) so that they can help the associations:To verify whether the associations are eligible to receive foreign contribution.To guide the applicant organization in the submission of an application for registration/prior permission;To ensure that the association receives and utilizes the foreign contributions through its bank account exclusively opened for the purpose in accordance with the provisions of FCRA, 2010 and FCRR, 2011 and that foreign contribution is not deposited or utilized from the bank account being used for domestic funds.To assist in the proper maintenance of prescribed books of accounts in accordance with the provisions of FCRA, 2010 and FCRR, 2011;To ensure that the annual returns of an association have been prepared in accordance with the provisions of the FC(R) Act, 2010 and FCRR, 2011.CHARTER FOR THE BANKSBanks have given a very crucial role in ensuring that the provisions of the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) the Foreign Contribution (Regulation) Rules, 2011 (FCRR, 2011) are scrupulously followed by the associations who have been granted prior permission/registration under FCRA, 2010 as also by all other person(s), as defined in the Act. No bank should credit any foreign contribution to the account of an association/NGO unless it produces documentary evidence of having obtained registration/prior permission from the Central Government for the same. In case any foreign contribution is credited to the account of an NGO/Association/Trust directly, the bank should not allow utilization of such fund and inform the NGO/Association/Trust concerned to obtain necessary permission/registration from the Central Government for the same. Simultaneously, the bank should inform the Deputy Secretary (FCRA), Ministry of Home Affairs, Govt. of India, New Delhi about such receipt. Non-compliance of the above by the bank will constitute a violation and will render the defaulting bank liable for appropriate action by the Reserve Bank of India. The attention of the Banks is drawn specifically to the following provisions of FCRA, 2010 and FCRR, 2011:“Section 17: (1)Every person who has been granted a certificate or given prior permission under Section 12 shall receive a foreign contribution in a single account only through such one of the branches of a bank as he may specify in his application for grant of a certificate;Provided that such person may open one or more accounts in one or more banks for utilising the foreign contribution received by himProvided further that no funds other than foreign contribution shall be received or deposited in such account or accounts(2)Every bank or authorised person in foreign exchange shall report to such authority as may be specified-(a) prescribed amount of foreign remittance;(b) the source and manner in which the foreign remittance was received; and(c) other particulars,in such form and manner as may be prescribed.“Section 18: – (1)Every person who has been granted a certificate or given prior approval under this Act shall give, within such time and in such manner as may be prescribed, an intimation to the Central Government, and such other authority as may be specified by 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 received, and the purposes for which, and the manner in which such foreign contribution was utilised by him.(2)Every person receiving foreign contribution shall submit a copy of a statement indicating therein the particulars of foreign contribution received duly certified by officer of the bank or authorised person in foreign exchange and furnish the same to the Central Government along with the intimation under sub-section(1).”“Rule-16: – Reporting by banks of receipt of foreign contribution:- (1)Every bank shall send a report to the Central Government within thirty days of any transaction in respect of receipt of foreign contribution by any person who is required to obtain a certificate of registration or prior permission under the Act, but who was not granted such certificate or prior permission as on the date of receipt of such remittance.(2)The report referred to in sub-rule(1) shall contain the following details:-(a) Name and address of the donor. (b) Name and address of the recipient. (c) Account number. (d) Name of the Bank and Branch. (e) Amount of foreign contribution (in foreign currency as well as Indian Rupees). (f) Date of receipt. (g) The manner of receipt of foreign contribution (cash/cheque/electronic transfer etc.). (3)The bank shall send a report to the Central Government within thirty days from the date of such last transaction in respect of receipt of any foreign contribution in excess of one crore rupees or equivalent thereto in a single transaction or in transactions within a duration of thirty days, by any person, whether registered or not under the Act and such report shall include the following details:-(a) Name and address of the donor. (b) Name and address of the recipient. (c) Account number. (d) Name of the Bank and Branch. (e) Amount of foreign contribution (in foreign currency as well as Indian Rupees). (f) Date of receipt. (g) The manner of receipt of foreign contribution (cash/cheque/electronic transfer etc.).”THE ILLUSTRATIVE PROGRAMS PERMITTED TO BE CARRIED OUT BY ASSOCIATIONS HAVING DIFFERENT NATURE ARE INDICATED BELOWReligiousCelebrations of religious functions/festivals etc.Construction/repair/maintenance of places of worship, religious schools.Education of priests and preachers; (dissemination of the message of goodwill etc. from their holy books).Publication and distribution of religious books/ literature.Maintenance of priests/preachers / other religious functionaries.Any other activities related to the above.EducationalConstruction and maintenance of school/college.Construction and running of hostel for poor students.Grant of stipend/Scholarship/assistance in cash and kind to poor/deserving children.Purchase and supply of educational material-books, notebooks etc.Conducting adult literacy programs.Conducting Research.Education/Schools for the mentally challenged.Non-formal education projects/coaching classes.Any other activities related to the above.EducationalFollowing activities (Not being commercial or profit-making activities)Micro-finance projects, including setting up banking co-operative and self-help groups.Self-sustaining income generation projects/Schemes.Agricultural activity.Rural Development.Animal husbandry projects.Setting up and running handicraft centre/cottage and khadi industry/social forestry projects.Vocational training, tailoring, motor repairs, computers etc.Any other activities related to the above, not being commercial activities.SocialConstruction/Running of Hospital/dispensary/clinic.Construction of community halls etc.Construction and Management of old age home.The welfare of the aged widows.Construction and Management of Orphanage.The welfare of the orphans.Construction and Management of Dharamshala /shelter.Holding of free medical/health/family welfare/immunisation camps.Supply of free medicine, and medical aids, including hearing aids, visual aids, family planning aids etc.Provision of aids such as Tricycles, callipers etc. to the handicapped.Treatment/Rehabilitation of drug addicts.Welfare/Empowerment of women.The welfare of children.Provision of free clothing/food/to the poor. Needy and destitute.Relief/Rehabilitation of victims of natural calamities.Help the victims of riots/other disturbances.Digging of bore wells.Sanitation including community toilets etc.Awareness camp/Seminar/workshop/meeting/conference.Providing free legal aid/Running legal aid centre.Holding sports meet.Awareness about Acquired Immune Deficiency Syndrome (AIDS)/Treatment and rehabilitation of persons affected by AIDS.The welfare of the physically and mentally challenged.The welfare of the Scheduled Castes.The welfare of the Scheduled Tribes.The welfare of the Backward Classes.Environmental programs.Survey for Socio-economic and other welfare programs.Preservation & maintenance of Wild Life.Preservation of Natural Resources.Awareness against social evils.Rehabilitation of victims of heinous crimes.Rehabilitation of beggars, bootleggers, child labour etc.Creating awareness of Government schemes & Law to the general public.Any other activities related to the above.CulturalA celebration of national events (Independence/Republic day/festivals.Theatre/Films etc.Maintenance of places of historical and cultural importance.Preservation of ancient/tribal art forms.Preservation & promotion of Cultural Heritage & Literature of India.Cultural shows.Any other activities related to the above.COMMON GROUNDS FOR REJECTION OF APPLICATIONS UNDER FCRA, 2010Certain guidelines have been laid down for considering applications for grant of prior permission/ registration under the Act. Some of the common grounds for rejection of applications are enlisted below as illustrations to bring in transparency and benefit the applicants in taking due care and caution:-If the association is not registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956.If any of the office bearers/trustees including the chief functionary is a foreign national, other than of Indian origin.If the association has a single office bearer/member.If the association is found to have been formed for personal gain or for diversion of the funds for undesirable purposes.If the association is found to be fictitious or ‘benami’ in nature.If the credibility of any member of the governing body is in doubt.If the association has close links with another association which has been refused registration under FCRA or prohibited under FCRA or violated the provisions of FCRA.If the association has links with any banned organizations.If the principal office bearers of the association have been convicted by any court of law under any act or if a prosecution for any offence is pending against them.If the principal office bearers of the association have been found guilty of diversion or misutilization of funds of the said association or any other association in the past.If the activities of the association are found to be aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another.If the association is found to propagate sedition or to advocate violent methods to achieve its ends.If the association is found to be creating communal tensions or disharmony.If the office bearers of the association are also office bearers of another association and one of these associations has come to adverse notice.If the association’s printed work is not certified by the Registrar of Newspapers for India not to be a newspaper in terms of section 1(1) of the Press Registration of Books Act, 1867.If the source of foreign contribution is found to be adverse to the interests of the country.If the acceptance of foreign contribution by the association is likely to be prejudicial to (a) the sovereignty and integrity of India; (b) free and fair elections to any Legislature or House of Parliament; (c) public interest; (d) friendly relations with a foreign state; or (e) harmony between any religious, social, linguistic, regional groups, caste or community.If the association has not filed its annual returns of receipt and utilization of foreign contribution received with prior permission, within the stipulated period.If the association has violated any provisions of the Act or Rules in the preceding three years and the said violation has not been remedied or rectified.ADDITIONAL GROUNDS FOR REJECTION OF APPLICATIONS FOR REGISTRATION.If the association has not been in existence for three years from the date of its registration under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or Section 25 of the Companies Act, 1956.If the association has not carried on any activity in its chosen field during the last three years.If the association has not received a foreign contribution, with prior permission, during the preceding three years.If the association has not made any substantial contribution, i.e., at leastRs.10,00,000/- over a period of three years, in its field of activity excluding expenditure on administration.Additional grounds for rejection of applications for Prior PermissionIf the application is not accompanied by the ‘commitment letter’ of the donor.If the application is not accompanied by the copy of the project for which foreign contribution was solicited/is being offered.FORMS TO BE FILED RELATING TO FOREIGN CONTRIBUTIONSForm DescriptionFC-1Intimation to the Central Government of receipt of a foreign contribution by way of gift from a relative.FC-2Application for seeking prior permission of the Central Government to accept foreign hospitality.FC-3Application for ‘registration’ under section 11(1) of the Foreign Contribution (Regulation) Act, 2010 for the acceptance of foreign contribution by an Association having definite cultural, economic, educational, religious or social programme.FC-4Application for ‘prior permission’ under sub-section (2) of section 11 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010) for the acceptance of foreign contribution by an Association having definite cultural, economic, educational, religious or social programme.FC-5Application for seeking renewal of ‘registration certificate’ under section 13 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010).FC-6A yearly account of Foreign Contribution received and utilised.FC-7Intimation about Foreign Contribution (Articles) Account.FC-8Intimation about foreign contribution (securities) Account.FC-9Intimation to the Central Government of Receipt of Foreign Contribution received by a candidate for Election [section 21 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010).FC-10Application for seeking permission for transfer of foreign contribution to other registered/unregistered persons.Correction FormApplication form for change in Name/Address of Associations.Correction FormApplication form for change in Bank Account/Bank of AssociationsFREQUENTLY ASKED QUESTIONS (FAQs) ON FCRAQ.1 What is a foreign contribution?Ans. As defined in Section 2(1)(h) of FCRA, 2010, “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, is not more than such sum** as may be specified from time to time by the Central Government by rules made by it in this behalf; (ii) of any currency, whether Indian or foreign; (iii) of any security as defined in clause (h) of section 2 of the Securities Contracts(Regulation) Act, 1956 and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange Management Act, 1999.Explanation 1 – A donation, delivery or transfer or any article, currency or foreign security referred to in this clause 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 with the meaning of this clause.Explanation 2 ‒ The interest accrued on the foreign contribution deposited in any bank referred to in sub-section (1) of Section 17 or any other income derived from the foreign contribution or interest thereon shall also be deemed to be foreign contribution within the meaning of this clause.Explanation 3 ‒ Any amount received, by an person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause.* In terms of FCRA, 2010 “person” includes ‒ (i) an individual; (ii) a Hindu undivided family; (iii) an association; and (iv) a company registered under section 25 of the Companies Act, 1956.**The sum, as stated at (i) above, has been specified as Rs. 25,000/- vide the Foreign Contribution (Regulation) Amendment Rules, 2012 [G.S.R. 292 (E) dated 12th April, 2012].Q.2 Whether earnings from the foreign client(s) by a person in lieu of goods sold or services rendered by it is treated as a foreign contribution?Ans. No. As clarified at Explanation 3 above, foreign contribution excludes earnings from the foreign client(s) by a person in lieu of goods sold or services rendered by it as this is a transaction of commercial nature.Q.3 Section 2(c)(i) of repealed FCRA, 1976 inter alia defined foreign contribution as the donation, delivery or transfer made by any foreign source of any article, not given to a person as a gift for personal use, if the market value, in India, of such article, exceeds one thousand rupees. What limit has been prescribed in FCRA, 2010 in respect of such articles?Ans. The limit has been specified as Rs. 25000/- through the insertion of the following Rule 6A in FCRR, 2011 vide the Foreign Contribution (Regulation) Amendment Rules, 2012 [G.S.R. 292 (E) dated 12th April 2012]:“6A. When articles gifted for personal use do not amount to foreign contribution. – Any article gifted to a person for his personal use whose market value in India on the date of such gift does not exceed rupees twenty-five thousand shall not be a foreign contribution within the meaning of sub-clause (i) of clause (h) of sub-section (1) of section (2).”Q.4 What is a foreign source?Ans. Foreign source, as defined in Section 2(1) (j) of FCRA, 2010 includes:-(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, specify in this behalf;(iii) a foreign company; (iii) a corporation, not being a foreign company, incorporated in a foreign country or territory; (iv) a multi-national corporation referred to in sub-clause (iv) of clause (g); (v) a company within the meaning of the Companies Act, 1956, and 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) the Government of a foreign country or territory; (B) the citizens of a foreign country or territory; (C) corporations incorporated in a foreign country or territory; (D) trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory; (E) Foreign company; (vi) a trade union in any foreign country or territory, whether or not registered in such foreign country or territory; (vii) a foreign trust or a foreign foundation, by whatever name called, or such trust or foundation mainly financed by a foreign country or territory; (viii) a society, club or other association or individuals formed or registered outside India; (ix) a citizen of a foreign country;”List of agencies of the United Nations, World Bank and some other International agencies/multilateral organisations, which are not treated as ‘foreign source’, are available on the website http://mha.nic.in/fcra/intro/FCRA-exemptedAgenciesUN.pdfQ.5 Who can receive foreign contribution?Ans. A ‘person’, as defined in Section 2(1)(m) with the exclusion of those mentioned in Section 3 of FCRA, 2010, having a definite cultural, economic, educational, religious or social programme can receive foreign contribution after it obtains the prior permission of the Central Government, or gets itself registered with the Central Government. Illustrative but not exhaustive lists of activities which are permissible and may be carried out by associations of different nature are available on the website —http://mha.nic.in/fcra/intro/permitted_programs.htmQ.6 Who cannot receive foreign contribution?Ans.As defined in Section 3(1) of FCRA, 2010, a foreign contribution cannot be accepted by any:(a) a candidate for election; (b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper; (c) Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government; (d) member of any legislature; (e) political party or office bearer thereof; (f) organization of a political nature as may be specified under subsection (1) of Section 5 by the Central Government. (g) association or company engaged in the production or broadcast of audio news or audiovisual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (i) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication; (h) correspondent or columnist, cartoonist, editor, owner of the association or company referred to in clause (g). (i) individuals or associations who have been prohibited from receiving foreign contribution.Explanation – In clause (c) and section 6, the expression “corporation’ means a corporation owned or controlled by the Government and includes a Government company as defined in section 617 of the Companies Act, 1956.Q.7 Are there any banned organisations from whom foreign contribution should not be accepted?Ans. Yes. FCRA is meant to ensure that foreign contribution is received from legitimate sources and utilised for legitimate purposes by any person. A list of banned organisations is available on MHA’s website http://mha.nic.in/uniquepage.asp?Id_Pk=292. In particular, the list of foreign entities/ individuals can be seen http://inhttp://www.un.org/sc/committees/1267/AQList.htmQ.8 Whether donation was given by Non-Resident Indians (NRIs) is treated as ‘foreign contribution’?Ans. Contributions made by a citizen of India living in another country (i.e., Non-Resident Indian), from his personal savings, through the normal banking channels, is not treated as foreign contribution. However, while accepting any donations from such NRI, it is advisable to obtain his passport details to ascertain that he/she is an Indian passport holder.Q.9 Whether donation given by an individual of Indian origin and having foreign nationality is treated as ‘foreign contribution’?Ans. Yes. Donation from an Indian who has acquired foreign citizenship is treated as foreign contribution. This will also apply to PIO card holders and to Overseas Citizens of India. However, this will not apply to ‘Non-resident Indians’, who still hold Indian citizenship.Q.10 Whether foreign remittances received from a relative are to be treated as a foreign contribution as per FCRA, 2010?Ans. The position in this regard as given in Section 4(e) of FCRA, 2010 and Rule 6 of FCRR, 2011 are as under:Subject to the provisions of section 10 of the FCRA, 2010, nothing contained in section 3 of the Act shall apply to the acceptance, by any person specified in that section, of any foreign contribution where such contribution is accepted by him from his relative.However, in terms of Rule 6 of FCRR, 2011, any person receiving a foreign contribution in excess of one lakh rupees or equivalent thereto in a financial year from any of his relatives shall inform the Central Government in Form FC-1 within thirty days from the date of receipt of such contribution. This form is available on the website http://mha.nic.in/fcra/forms/fc-1.pdfQ.11 Whether individuals not covered under Section 3 or a HUF can accept foreign contribution freely for the purposes listed in section 4 of FCRA, 2010?Ans. Yes. Since, subject to the provisions of Section 10, even the persons specified under section 3, i.e., persons not permitted to accept foreign contribution, are allowed to receive foreign contribution for the purposes listed in section 4, it is obvious that Individuals in general and a HUF are permitted to accept foreign contribution without permission for the purposes listed in section 4. However, it should be borne in mind that the monetary limit for acceptance of a foreign contribution in the form of an article given as a gift to a person for his personal use has been specified as Rs.25,000/ vide FCR Amendment Rules, 2012.Q.12 Can the fee paid by the foreign delegates/participants attending/participating in a conference/ seminar etc. be termed as a foreign contribution and thus require permission from FCRA?Ans. “Delegate/participation Fees” paid in foreign currency by foreign delegates/participants for participation in a conference/seminar and which is utilized for the purpose of meeting the expenditure of hosting the conference/seminar is not treated as a foreign contribution and as such no permission under FCRA is required.Q.13 Whether a Company incorporated in India under the Companies Act, 1956 having its operations in 2 or more countries is to be treated as an MNC/foreign source under FCRA, 2010?Ans. No. However, as defined under section 2(j)(vi), a company within the meaning of the Companies Act, 1956 having more than one-half of the nominal value of its share capital held, either singly or in the aggregate, by one or more of the following will be treated as a “foreign source”:(A) the Government of a foreign country or territory;(B) the citizens of a foreign country or territory;(C) corporations incorporated in a foreign country or territory;(D) trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory”Q.14 Can foreign contribution be received in rupees?Ans. Yes. Any amount received from ‘foreign source’ in rupees or foreign currency is construed as ‘foreign contribution’ under the law. Such transactions even in rupees term are considered a foreign contribution.Q.15 Will interest or any other income earned from foreign contribution be considered foreign contribution?Ans. Yes.Q.16 Whether interest or any other income earned out of foreign contributions be shown as fresh foreign contribution receipt during that year or not?Ans. Yes. The interest or any other income earned out of such deposit should be shown as second/subsequent foreign contribution receipt in the annual return during the year in which it is earned.Q.17 Can NGOs use the foreign contributions for investment in Mutual Funds and other speculative investments?Ans. No. Speculative activities have been defined in Rule 4 of FCRR – 2011 as under:- 1. (a) any activity or investment that has an element of risk of appreciation or depreciation of the original investment, linked to market forces, including investment in mutual funds or in shares; (b) Participation in any scheme that promises high returns like investment in chits or land or similar assets not directly linked to the declared aims and objectives of the organization or association. 1. A debt-based secure investment shall not be treated as a speculative investment. 2. Every association shall maintain a separate register of investments. 3. Every register of investments maintained under sub-rule (3) shall be submitted for audit. In view of the above, secure investments and fixed deposits in any bank or Government approved financial institution which ensures a fixed return will not be treated as a speculative investment.Q.18 Can capital assets purchased with the help of foreign contributions be acquired in the name of the office bearers of the association?Ans. No. Every asset purchased with foreign contribution should be acquired and possessed in the name of the association since an association has a separate legal entity distinct from its members.Q.19 Can an association invest the foreign contribution received by it in profitable ventures and proceeds can be utilized for welfare activities?Ans. No. The association should utilize such funds for the welfare purpose or activities for which it is received. The utilization should be in line with the objectives of the association. However, foreign contributions can be utilized for self-sustaining activities, not meant for commercial purposes.Q.20 Can foreign contribution be received in and utilised from multiple Bank Accounts?Ans. No fund other than foreign contribution can be deposited in the exclusive single FC account of a Bank, as mentioned in the order for registration or prior permission granted by MHA, to be separately maintained by the associations. However, one or more accounts in one or more banks may be opened for utilising the foreign contribution after it has been received provided that no funds other than that foreign contribution shall be received or deposited in such account or accounts and in all such cases, intimation on plain paper shall have to be furnished to MHA within 15 days of the opening of the account.Q.21 Whether inter-account funds transfer shall be allowed within the multiple accounts that an Association is now permitted to open for the purpose of utilizing the foreign contributions and the level of diligence required on the part of the Banks in this regard?Ans. Transfer of funds is allowed from the designated FC account of an Association to the multiple accounts or accounts opened for its utilization. However, no funds other than the amount received in the designated FC account shall be received or deposited in such multiple account or accounts. Inter-account transfer of funds between the multiple accounts is not permissible. As such, the banks should apply full diligence to keep track of the transfers.Q.22 Can foreign contribution be mixed with local receipts?Ans. No. Foreign contribution cannot be deposited or utilised from the bank account being used for domestic funds.Q.23 Whether expenses like ‘interest paid to the bank’, ‘bank charges’, ‘hospitality’ etc. can be included in ‘administrative expenses’?Ans. No. The definition of as ‘administrative expenses’, as given in Rule 5 of FCRR, 2011 is explicit in this regard.Q.24 Is there any restriction on transfer of funds to other organisations?Ans. Yes. Section 7 of FCRA, 2010 states:-“No person who – (a) is registered and granted a certificate or has obtained prior permission under this Act; and (b) receives any foreign contribution, shall transfer such foreign contribution to any other person unless such other person is also registered and had been granted the certificate or obtained the prior permission under this Act: Provided that such person may transfer, with the prior approval of the Central Government, a part of such foreign contribution to any other person who has not been granted a certificate or obtained permission under this Act in accordance with the rules made by the Central Government.” Rule 24 of FCRR, 2011, as amended vide the Foreign Contribution (Regulation) Amendment Rules, 2012 [G.S.R. 292 (E) dated 12th April, 2012] prescribes the procedure for transferring foreign contribution as under: “24. Procedure for transferring foreign contribution to any unregistered person. ─ (1) A person who has been granted a certificate of registration or prior permission under section 11 and intends to transfer part of the foreign contribution received by him to a person who has not been granted a certificate of registration or prior permission under the Act, may transfer such foreign contribution to an extent not exceeding ten per cent of the total value thereof and for this purpose, make an application to the Central Government in Form http://FC-10.http://mha.nic.in/fcra/forms/fc-10.pdf (2) Every application made under sub-rule (1) shall be accompanied by a declaration to the effect that- (a) the amount proposed to be transferred during the financial year is less than ten per cent of the total value of the foreign contribution received by him during the financial year; (b) the transferor shall not transfer any amount of foreign contribution until the Central Government approves such transfer. (3) A person who has been granted a certificate of registration or prior permission under section 11 shall not be required to seek the prior approval of the Central Government for transferring the foreign contribution received by him to another person who has been granted a certificate of registration or prior permission under the Act provided that the recipient has not been proceeded against under any of the provisions of the Act. (4) Both the transferor and the recipient shall be responsible for ensuring proper utilisation of the foreign contribution so transferred and such transfer of foreign contribution shall be reflected in the returns in Form FC-6 to be submitted by both the transferor and the recipient.”. http://mha.nic.in/fcra/forms/fc-6.pdfQ.25 How would an organisation that is registered or has obtained prior permission under FCRA and intends to transfer a part of the foreign contribution received by it to another organisation know whether the recipient organisation has been proceeded against under FCRA?Ans. Where any organisation is proceeded against under FCRA, it is done with due intimation to the organisation concerned. Therefore, the donor organisation is advised to insist on a written undertaking from the intending recipient organisation.Q.26 What are the eligibility criteria for grant of registration?Ans. For grant of registration under FCRA, 2010, the association should:(i) be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956 etc; (ii) normally be in existence for at least three years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised. For this purpose, the association should have spent at least Rs.10,00,000/- over the last three years on its activities, excluding administrative expenditure. Statements of Income & Expenditure, duly audited by a Chartered Accountant, for last three years are to be submitted to substantiate that it meets the financial parameter.Q.27 What are the eligibility criteria for grant of prior permission?Ans. An organisation in the formative stage is not eligible for registration. Such organisation may apply for a grant of prior permission under FCRA, 2010. Prior permission is granted for receipt of a specific amount from a specific donor for carrying out specific activities/projects. For this purpose, the association should: (i) be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956 etc; (ii) submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to be given; and (iii) submit copy of a reasonable project for the benefit of the society for which the foreign contribution is proposed to be utilised.Q.28 Whether the amount of foreign contribution for which prior permission has been granted can be received by an association in instalments?Ans. There is no bar on receiving such foreign contribution in instalments. However, the aggregate amount should not exceed the specified amount for which prior permission has been granted. The association shall have to submit the mandatory return in FC-6 form for receipt and utilisation of the foreign contribution on a yearly basis, till the amount of foreign contribution is fully utilised. Even if no transaction takes place during a year, a NIL return should be submitted.Q.29 Whether an association should open an exclusive FC A/c before submission of an application for registration or prior permission?Ans. Yes. Since the FC A/c through which foreign contribution is proposed to be received and utilised is to be mentioned in the application seeking registration or prior permission, as the case may be, the association should open such an exclusive FC A/c with a Bank. This A/c number would be mentioned in the letter granting registration or prior permission to the association.Q.30 Whether Banks should allow an association which is applying for registration or prior permission under FCRA, 2010 to open an exclusive FC A/c with INR?Ans. Yes. However, the Banks should not allow any foreign inward remittance in that A/c till such time the association is granted registration or prior permission, as the case may be.Q.31 Whether Banks should credit any foreign contribution received by an association to its account even if the association does not have registration/prior permission from MHA and subsequent reporting can be made by Banks to MHA?Ans. Rule 16 (1) of FCRR, 2011 states that every bank shall send a report to the Central Govt. within 30 days of receipt of foreign contribution by any person who is required to obtain a certificate a registration or prior permission under the Act, but who was not granted such certificate or prior permission on the date of receipt of such remittance. Further, Rule 16(3) prescribes that the banks shall send a report to the Central Govt. within 30 days from the date of such last transaction in respect of receipt of any foreign contribution in excess of Rs.1 Crore or equivalent thereto in a single transaction or in transactions within a duration of 30 days, by any person whether registered or not under the Act.In view of the above, it follows that bank may credit any foreign contribution received by an Association without registration or prior permission. However, while the banks can prevent such a situation in cases where a cheque is presented by the recipient of foreign contribution for deposit in its savings/current account, it may not always be possible when the foreign remittance is through wire transfer. Therefore, in all such cases, besides sending a report to MHA as per Rule, the bank should not allow any withdrawal or transfer or utilisation of the FC amount till such time the Association produces documentary evidence from MHA permitting it to do so.Q.32 Should the Banks report transactions pertaining to foreign contributions which are returned back to the remitter by the beneficiary Association for want of registration/prior permission from MHA?Ans. It is not necessary for the bank to report such foreign contribution that is returned to the donor without crediting in the account of the recipient.Q.33 Whether reporting by Banks is also applicable for transfer of funds between FCRA accounts of two or more associations?Ans. Yes. Reporting by Banks is also applicable to transfer of funds from one FCRA registered Association to another.Q.34 Whether the reference period prescribed in Rule 16(3) of FCRR, 2011 for reporting by Banks in respect of transactions during the 30-days period should mean calendar month?Ans. For the purpose of reporting to MHA, 30 days period may be construed as a calendar month.Q.35 What are the conditions to be met for the grant of registration and prior permission?Ans. In terms of Sec.12 (4) of FCRA, 2010, the following shall be the conditions for the grant of registration and prior permission:(a) The ‘person’ making an application for registration or grant of prior permission-(i) is not fictitious or benami;(ii) has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another;(iii) has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country;(iv) has not been found guilty of diversion or misutilization of its funds;(v) is not engaged or likely to engage in the propagation of sedition or advocate violent methods to achieve its ends;(vi) is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;(vii) has not contravened any of the provisions of this Act;(viii) has not been prohibited from accepting foreign contribution;(ix) the person is an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him. (x) the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.(b) the acceptance of foreign contribution by the association/ person is not likely to affect prejudicially –(i) the sovereignty and integrity of India; or(ii) the security, strategic, scientific or economic interest of the State; or(iii) the public interest; or(iv) freedom or fairness of election to any Legislature; or(v) friendly relation with any foreign State; or(vi) harmony between religious, racial, social, linguistic, regional groups, castes or communities.(c) the acceptance of foreign contribution-(i) shall not lead to incitement of an offence;(ii) shall not endanger the life or physical safety of any person.Q.36 Can a private limited company or a partnership firm get registration or prior permission under FCRA, 2010?Ans. As per the definition of the “person” in the FC(R)Act, 2010 which includes an “association” which in turn is defined as 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, a private limited company too may seek prior permission/ registration for receiving foreign funds in case they wish to do some charitable work at some point of time.Q. 37 Whether an individual or a Hindu Undivided Family (HUF) can be given registration or prior permission to accept a foreign contribution in terms of section 11 of FCRA, 2010?Ans. The definition of the ‘person’ in the Foreign Contribution (Regulation) Act, 2010 includes any individual and ‘Hindu Undivided Family’ among others. As such an Individual or a HUF is also eligible to apply for prior permission to accept foreign contribution.Q.38 Whether infusion of foreign share capital in a company registered under section 25 of the Companies Act, 1956 attracts the provisions of FCRA, 2010?Ans. Yes, infusion of foreign share capital in a company registered under section 25 of the Companies Act, 1956 is treated as foreign contribution.Q.39 Is recommendation of District Collector or Deputy Commissioner or District Magistrate mandatory for submission of an application for registration or prior permission?Ans. No. Submission of verification certificate from the District Collector or Deputy Commissioner or District Magistrate is not mandatory. However, in certain cases, if the amount of foreign contribution for which prior permission is being sought is less than Rs.50 lakh, submission of such a certificate assists in speedy clearance of the application.Q.40 If an application for registration or prior permission is submitted online by an association, does it need to submit that application in physical form also?Ans. Yes. When an application is filed online, a printout of the same is to be taken after submission and thereafter, it should be submitted, duly signed by the Chief Functionary of the Association, along with the requisite documents to the Ministry of Home Affairs.The prescribed forms for submission of an application for grant of Registration and Prior Permission are FC-3 and FC-4 respectively. The forms are available at MHA website http://mha.nic.in/fcra/forms/fc-3.pdf http://andhttp://mha.nic.in/fcra/forms/fc-4.pdf respectively.Q.41 What are the documents to be enclosed with the application?Ans.(a) Following documents should be enclosed with the application for grant of Registration:(a) A hard copy of the online application, duly signed by the Chief Functionary of the association;(b) Certified copy of registration certificate or Trust deed etc., as the case may be;(c) Activity Report indicating details of activities during the last three years;(d) Copies of audited statement of accounts for the past three years (Assets and Liabilities, Receipt and Payment, Income and Expenditure);(e) If functioning as editor, owner, printer or publisher of a publication registered under the Press and Registration of Books Act, 1867, a certificate from the Registrar of Newspapers for India that the publication is not a newspaper in terms of section 1(1) of the said Act.(f) A fee of Rs. 2000/- by means of demand draft or banker’s cheque in favour of the “Pay and Accounts Officer, Ministry of Home Affairs”, payable at New Delhi.(b) Following documents should be enclosed with the application for grant of Prior Permission:(i) A hard copy of the online application, duly signed by the Chief Functionary of the association;(ii) Certified copy of registration certificate or Trust deed etc., as the case may be;(iii) Commitment letter from foreign donor specifying the amount of foreign contribution and the purpose for which it is proposed to be given;(iv) Copy of the project report for which foreign contribution is solicited/being offered and is proposed to be utilised;(v) If functioning as editor, owner, printer or publisher of a publication registered under the Press and Registration of Books Act, 1867, a certificate from the Registrar of Newspapers for India that the publication is not a newspaper in terms of section 1(1) of the said Act.(vi) A fee of Rs. 1000/- by means of demand draft or banker’s cheque in favour of the “Pay and Accounts Officer, Ministry of Home Affairs”, payable at New Delhi.Note: The hard copy of the online application along with all the documents mentioned above must reach the Ministry of Home Affairs, Foreigners Division (FCRA Wing), NDCC-II Building, Jai Singh Road, New Delhi – 110 001 within thirty days of the submission of the online application, failing which the request of the person for grant of registration or prior permission, as the case may be, shall be deemed to have ceased.Q.42 How to find the status of a pending application for registration/prior permission?Ans. Status of pending applications for grant of registration or prior permission may be checked online from the Ministry of Home Affairs website –http://mha.nic.in/fcraweb/fc_online.htm. One needs to fill in the numbers on acknowledgement letter or any correspondence from MHA (Foreigners Division) in the blank format which pops up on the screen after selection of status enquiry icon (registration/prior permission, as the case, may be)Q.43 Whether foreigners can be appointed as Executive Committee members of an association seeking registration or prior permission?Ans. Organisations having foreign nationals, other than of Indian origin, as members of their executive committees or governing bodies are generally not permitted to receive foreign contribution. Foreigners may, however, be allowed to be associated with such associations in an ex-officio capacity, representing multilateral bodies, foreign contribution from whom is exempted from the purview of the Foreign Contribution (Regulation) Act, 2010, or in a purely honorary capacity depending upon the persons stature in his/her field of activity. Subject to relaxation given on a case to case basis, foreign nationals fulfilling the following conditions may be appointed as Executive Committee members, after obtaining prior approval of the Central Government:(i) the foreigner is married to an Indian citizen;(ii) the foreigner has been living and working in India for at least five years;(iii) the foreigner has made available his/her specialized knowledge, especially in the medical and health-related fields on a voluntary basis in India, in the past;(iv) the foreigner is part of the Board of Trustees/Executive Committee in terms of the provisions in an inter-governmental agreement;(v) the foreigner is part of the Board of Trustee/Executive Committee, in an ex-officio capacity representing a multilateral body which is exempted from the definition of foreign source. The need for such an appointment should, however, be adequately justified.Q.44 Whether Government servants, Judges and employees of a Government-owned/controlled company/body can be on the executive committees/boards of an association?Ans. Yes. The legal entity of a ‘person’ under FCRA, 2010 is distinct from an individual person. Therefore, individuals who cannot receive foreign contribution may happen to be on the executive committees/boards of such an association.Q.45 Whether organisations under Central/State Governments are required to obtain registration or prior permission under FCRA, 2010 for accepting foreign contribution?Ans. In terms of Gazette Notification S.O. 1492(E) dated 01.07.2011,http://mha.nic.in/pdfs/ExempStatBodi-010711.pdf all statutory bodies constituted or established by or under a Central Act or State Act requiring to have their accounts compulsorily audited by the Comptroller & Auditor General of India are exempted from all the provisions of FCRA, 2010.Q.46 What is the procedure for seeking change in the name/address of an association registered under FCRA?Ans. For seeking change in the name/address of the association, one should use the prescribed form available on MHA’s website http://mha.nic.in/fcra/forms/chng_name_addr.pdf and submit the same along with the requisite documents specified therein.Q.47 What is the procedure for change of designated FC Bank Account?Ans. For change of the bank account, an application in prescribed form mentioning the details of the old bank account and the proposed new bank account along with justification for change of designated bank, name/ address of the society, copy of registration under FCRA, copy of fresh resolution of the executive committee ( in English or Hindi) for change of designated bank account, certificate from the proposed bank (copy of Bank Pass Book is not acceptable) that the account is being opened exclusively for FCRA, may be submitted to MHA. This form is available on http://websitehttp://mha.nic.in/fcra/forms/chng_bank_acnt.pdfQ.48 Whether intimation regarding the change of Members of the Executive Committee/Governing Council of the association is to be given to the Government?Ans. Yes. If at any point of time, such change causes replacement of 50% or more of such Members of the Executive Committee/Governing Council of the association, intimation is to be given to MHA within thirty days of such change in accordance with the undertaking & declaration given by the association in its application for registration or prior permission, as the case may be. Further, as per the undertaking & declaration, the association should not accept any foreign contribution except with prior permission till the permission to replace the office bearer(s) has been granted by MHA.Q.49 What is the procedure for filing Annual Returns?Ans. An association permitted to accept foreign contribution is required under law to maintain a separate set of accounts and records exclusively for the foreign contribution received and submit an annual return, duly certified by a Chartered Accountant, giving details of the receipt and purpose-wise utilisation of the foreign contribution. The return is to be filed for every financial year (1st April to 31st March) within a period of nine months from the closure of the year i.e. by 31st December each year. Submission of a ‘Nil’ return, even if there is no receipt/utilization of foreign contribution during the year, is mandatory. The return is to be submitted, in prescribed Form FC – 6, duly accompanied with the balance sheet and statement of receipt and payment, which is certified by a Chartered Accountant. The form is available on MHA’s website –http://mha.nic.in/fcra/forms/fc-6.pdf. For further details, please refer to Sections 17, 18 and 19 of FCRA, 2010 and Rule 17 of FCRR, 2011. Note: It may be noted that the annual return for the financial year 2010 – 2011 was to be filed by the 31st December 2011 in Form FC-3, i.e., as per FCRA, 1976.Q.50 For how many years an association which has been granted prior permission to receive foreign contribution should file the mandatory annual return?Ans. ‘Prior permission’ is granted to an association to receive a specific amount of foreign contribution from a specific donor for a specific purpose. After receipt of approval from the Government, the association should submit the mandatory return in FC-6 form for receipt and utilisation of the foreign contribution on a yearly basis, till the amount of foreign contribution is fully utilised. Even if no transaction takes place during a year, a NIL return should be submitted.Q.51 What are the offences and penalties under FCRA, 2010?Ans. Section 11 of the FCRA, 2010 prescribes that no person, save as otherwise provided in the Act, shall accept foreign contribution unless such person obtains a certificate of registration or prior permission of the Central Government. Therefore, acceptance of foreign contribution without obtaining registration or prior permission from the Central Government constitutes an offence under the Act and is punishable.The provisions of FCRA, 2010 regarding offences and penalties are ‒Section 33: Making of false statement, declaration or delivering false accounts:Any person, subject to this Act, who knowingly, —(a) gives false intimation under sub-section (c) of section 9 or section 18; or(b) seeks prior permission or registration by means of fraud, false representation or concealment of material fact, shall, on conviction by a court, be liable to imprisonment for a term which may extend to three years or with fine or with both.Section 34: Penalty for article or currency or security obtained in contravention of Section 10:If any person, on whom any prohibitory order has been served under section 10, pays, delivers, transfers or otherwise deals with, in any manner whatsoever, any article or currency or security, whether Indian or foreign, in contravention of such prohibitory order, he shall be punished with imprisonment for a term which may extend to three years, or with fine, or with both; and notwithstanding anything contained in the Code of Criminal Procedure, 1973, the court trying such contravention may also impose on the person convicted an additional fine equivalent to the market value of the article or the amount of the currency or security in respect of which the prohibitory order has been contravened by him or such part thereof as the court may deem fit.Section 35: Punishment for contravention of any provision of the Act:Whoever accepts, or assists any person, political party or organisation in accepting, any foreign contribution or any currency or security from a foreign source, in contravention of any provision of this Act or any rule or order made thereunder, shall be punished with imprisonment for a term which may extend to five years, or with fine, or with both.Section 36: Powers to impose additional fine where article or currency or security is not available for confiscation:Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the court trying a person, who, in relation to any article or currency or security, whether Indian or foreign, does or omits to do any act which act or omission would render such article or currency or security liable to confiscation under this Act, may, in the event of the conviction of such person for the act or omission aforesaid, impose on such person a fine not exceeding five times the value of the article or currency or security or one thousand rupees, whichever is more, if such article or currency or security is not available for confiscation, and the fine so imposed shall be in addition to any other fine which may be imposed on such person under this Act.Section 37: Penalty for offences where no separate punishment has been provided:Whoever fails to comply with any provision of this Act for which no separate penalty has been provided in this Act shall be punished with imprisonment for a term which may extend to one year, or with fine or with both.Section 38: Prohibition of acceptance of foreign contribution:Notwithstanding anything contained in this Act, whoever, having been convicted of any offence under section 35 or section 37, in so far as such offence relates to the acceptance or utilisation of foreign contribution, is again convicted of such offence shall not accept any foreign contribution for a period of three years from the date of the subsequent conviction.Section 39: Offences by companies: (1) Where an offence under this Act or any rule or order made thereunder has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly;Provided that nothing contained in this sub-section shall render such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act or any rule or order made thereunder has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officers shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation – for the purposes of this section,‒(a) “company” means any body corporate and includes a firm, society, trade union or other association of individuals; and(b) ‘director” in relation to a firm, society, trade union or other association of individuals, means a partner in the firm or a members of the governing body of such society, trade union or other association of individuals.Section 40: Bar on the prosecution of offences under the Act:No court shall take cognizance of any offence under this Act, except with the previous sanction of the Central Government or any officer authorised by that Government in this behalf.Section 41: Compounding of certain offences: (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, any offence punishable under this Act (whether committed by an individual or association or any officer or employee thereof), not being an offence punishable with imprisonment only, may, before the institution of any prosecution, be compounded by such officers or authorities and for such sums as the Central Government may, by notification in the official Gazette, specify in this behalf.(2) Nothing in sub-section (1) shall apply to an offence committed by an individual or association or its officer or another employee within a period of three years from the date on which a similar offence committed by it or him was compounded under this section.Explanation – For the purposes of this section, any second or subsequent offence committed after the expiry of a period of three years from the date on which the offence was previously compounded, shall be deemed to be the first offence.(3) Every officer or authority referred to in sub-section (1) shall exercise the powers to compound an offence, subject to the direction, control and supervisions of the Central Government.(4) Every application for the compounding of an offence shall be made to the officer or authority referred to in sub-section (1) in such form and manner along with such fee as may be prescribed.(5) Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, against the offender in relation to whom the offence is so compounded.(6) Every officer or authority referred to in sub-section (1), while dealing with a proposal for the compounding of an offence for a default in compliance with any provision of this Act which requires by an individual or association or its officer or other employee to obtain permission to file or register with or deliver or sent to, the Central Government or any prescribed authority any return account or other document, may, direct by order, if he or it thinks fit to do so, any individual or association or its officer or other employee to file or register with, such return, account or other document within such time as may be specified in the order.Q.52 Which are the offences that can be compounded and what would be the penalties there for?Ans. In terms of Gazette Notification S.O. 1976 (E) dated 26.08.2011,http://mha.nic.in/fcra/forms/ComOffNoti-260811.pdf the categories of offences that can be compounded under section 41 of FCRA, 2010 and the quantum of penalty for compounding, as indicated against each of the offences, are ‒Sl. No Nature of offence Quantum of penalty(i) Acceptance of cheque or draft towards foreign contribution by a ‘person’ without registration or prior permission of the Central Government even in cases where the cheque or draft has not been deposited in a Bank by the ‘person’. Rs. 10,000/- or 2 per cent of the foreign contribution involved, whichever is higher.(ii) Acceptance of cheque or draft by a ‘person’ towards foreign contribution without registration or prior permission of the Central Government and depositing the same in a Bank notwithstanding non-utilisation of the amount of the foreign contribution. Rs. 25,000/- or 3 per cent of the foreign contribution involved, whichever is higher.(iii) Acceptance of foreign contribution by a ‘person’ without registration or prior permission of the Central Government and utilisation of the same notwithstanding any inquiry which revealed that the contribution received was not diverted towards any purpose other than the objectives or purpose for which the same was received, utilisation of the contribution was as per the objectives of receipt of the same and records of receipt and utilisation have been kept properly. Rs. 1,00,000/- or 5 per cent of the foreign contribution involved, whichever is higher.(iv) Acceptance of foreign contribution in kind by a ‘person’ without registration or prior permission of the Central Government notwithstanding that nothing adverse was reported after inquiry. Rs.10,000/- or 2 per cent of the foreign contribution involved, whichever is higher.Q.53 How to apply for compounding of an offence under FCRA, 2010?Ans. An application for the compounding of an offence under section 41 is to be made to the Secretary, Ministry of Home Affairs, New Delhi on a plain paper along with a fee of Rs.1000/- (One Thousand only) in the form of a demand draft or a banker’s cheque in favour of the “Pay and Accounts Officer, Ministry of Home Affairs”, payable at New Delhi.Q.54 What happens after an offence is compounded?Ans. After payment of the penalty imposed and compounding of the offence, the person may be granted registration or prior permission, as the case may be, subject to its fulfilling all parameters.Q.55 What if the person is unwilling or unable to pay the penalty imposed?Ans. In the event of failure to pay the penalty, for whatever reason, necessary action for the prosecution of the person shall be initiated.Q.56 Which are the investigating agencies for investigating and prosecuting a person for a violation of FCRA?Ans. In terms of Gazette Notification S.O. 2446 (E) dated 27.10.2011, The Central Bureau of Investigation or the investigating agencies (Crime Branch) of the State Governments, the cause of action which arises in their respective States, are the designated agencies for investigating and prosecuting a person for a violation of FCRA.Q.57 Can the Government cancel the certificate of registration granted to a person under FCRA?Ans. Yes. The conditions for cancellation of the certificate, as prescribed under section 14 of FCRA, 2010 are ‒ 14 (1) The Central Government may if it is satisfied after making such inquiry as it may deem fit, by an order, cancel the certificate if —(a) the holder of the certificate has made a statement in, or in relation to, the application for the grant of registration or renewal thereof, which is incorrect or false; or(b) the holder of the certificate has violated any of the terms and conditions of the certificate or renewal thereof; or(c) in the opinion of the Central Government, it is necessary for the public interest to cancel the certificate; or(d) the holder of the certificate has violated any of the provisions of this Act or rules or order made thereunder.(e) if the holder of the certificate has not been engaged in any reasonable activity in its chosen field for the benefit of the society for two consecutive years or has become defunct.14 (2) No order of cancellation of a certificate under this section shall be made unless the person concerned has been given a reasonable opportunity of being heard.14 (3) Any person whose certificate has been cancelled under this section shall not be eligible for registration or grant of prior permission for a period of three years from the date of cancellation of such certificate.Q.58 Can the Government suspend the certificate of registration granted to a person under FCRA?Ans. The conditions for suspension of a certificate, as prescribed under section 13 of FCRA, 2010 are ‒13(1) Where the Central Government, for reasons to be recorded in writing, is satisfied that pending consideration of the question of cancelling the certificate on any of the grounds mentioned insub-section (1) of Section, 14, it is necessary so to do, it may, by order in writing, suspend the certificate for such period not exceeding one hundred and eighty days as may be specified in the order.13(2) Every person whose certificate has been suspended shall ‒(a) not receive any foreign contribution during the period of suspension of certificate:Provided that the Central Government, on an application made by such person, if it considers appropriate, allow receipt of any foreign contribution by such person on such terms and conditions as it may specify;(b) utilise, in the prescribed manner, the foreign contribution in his custody with the prior approval of the Central Government.In terms of Rule 14 of the Foreign Contribution (Regulation) rules, 2011, the unspent amount that can be utilised in case of suspension of a certificate of registration may be as under: –(a) In case the certificate of registration is suspended under sub-section (1) of section 13 of the Act, up to twenty-five per cent of the unutilised amount may be spent, with the prior approval of the Central Government, for the declared aims and objects for which the foreign contribution was received.(b) The remaining seventy-five per cent of the unutilised foreign contribution shall be utilised only after revocation or suspension of the certificate of registration.Q.59 Can an organization, whose violation under FCRA, 1976 has been condoned, apply for registration/prior permission?Ans. After the violation committed by an association has been condoned, the association can apply for prior permission (PP) only by submitting an application in form FC-4 http://mha.nic.in/fcra/forms/fc-4.pdf. Once the PP has been granted and foreign contribution received for a specific purpose has been fully/partially utilized and the organisation has submitted annual http://FC-6http://mha.nic.in/fcra/forms/fc-6.pdf returns and accounts in prescribed format pertaining to the PP, it becomes eligible for consideration of registration under FCRA. Registration would be granted under FCRA if other parameters are fulfilled by the association.Q.60 What is the status of the applications submitted under the repealed FCRA, 1976 but have not been disposed of?Ans. In terms of Rule 9(5) of FCRR, 2011, every application made for registration or prior permission under FCRA, 1976 but not disposed of before the date of commencement of these rules, i.e., 01.05.2011, shall be deemed to be an application for registration or prior permission, as the case may be, under FCRR, 2011 subject to the condition that the applicant furnishes the prescribed fees for such registration or prior permission, as the case may be.Q.61 Whether the registration certificate or prior permission granted under the repealed FCRA, 1976 shall remain valid when FCRA, 2010 has come into force?Ans. Yes. An association granted prior permission or registration under the repealed FCRA, 1976 shall be deemed to have been registered or granted prior permission, as the case may be, under FCRA, 2010. Registration granted under FCRA, 1976 shall remain valid for a period of 5 years from the 1st May 2011, i.e., up to the 30th April 2016.Q. 62 Whether prior permission granted under FCRA, 1976 would also remain valid for next 5 years from the 1st May 2011, i.e., the date when FCRA, 2010 came into force?Ans. Prior permission granted under FCRA, 1976 as also under FCRA 2010 remains valid till receipt and full utilisation of the amount of FC for which the permission was/is granted.Q.63 Whether the certificate of registration is to be renewed and what is the procedure for such renewal?Ans. Section 16 of FCRA, 2010 and Rule 12 of FCRR, 2011 may please be seen in this regard.Q.64 When should an Association which has been granted registration under FCRA, 1976 apply for renewal of registration?Ans. In terms of Rule 12 (2) of FCRR, 2011, an Association registered under FCRA should apply in Form FC-5 for renewal of its registration six months before the date of expiry of the certificate of registration. Since registration granted to Associations under the repealed FCRA, 1976 shall be valid up to 30th April 2016, such Associations should apply for renewal of their registration on or before 1st November 2015.An Association granted registration under FCRA, 2010, i.e., after 1st May 2011, shall have to apply for renewal of registration six months before the date of expiry of the validity of its certificate of registration. Associations implementing an ongoing multi-year project should apply for renewal twelve months before the date of expiry of the certificate of registration.Q.65 What is foreign hospitality?Ans. Foreign Hospitality means any offer, not being a purely casual one, made in cash or kind by a foreign source for providing a person with the costs of travel to any foreign country or territory or with free board, lodging, transport or medical treatment.Q.66 Who cannot accept foreign hospitality without prior approval of the Ministry of Home Affairs?Ans. Section 6 of FCRA, 2010 prescribes that “No member of a Legislature or office bearer of a political party or Judge or Government servant or employee of any corporation or any other body owned or controlled by the Government shall, while visiting any country or territory outside India, accept, except with the prior permission of the Central Government any foreign hospitality. Provided that it shall not be necessary to obtain any such permission for an emergent medical aid needed on account of sudden illness contracted during a visit outside India, but, where such foreign hospitality has been received, the person receiving such hospitality shall give, within one month from the date of receipt of such hospitality an intimation to the Central Government as to the receipt of such hospitality, and the source from which, and the manner in which, such hospitality was received by him.”Q.67 Whether approval of the Ministry of Home Affairs is required in cases where the proposed foreign visit is being undertaken by a person in his/her personal capacity and the entire expenditure thereon is being met by the person concerned?Ans. No. Any person belonging to any of the categories specified in Section 6 of FCRA, 2010 would require such approval only if the person concerned is seeking foreign hospitality from a foreign source.Q.68 How one can seek permission of the Government for receiving foreign hospitality?Ans. Application form (Form FC-2) for this purpose is available on MHA’s website – http://mha.nic.in/fcra/forms/fc-2.pdf. In terms of Rule 7 of FCRR, 2011:(i) Every application for acceptance of foreign hospitality shall be accompanied by an invitation letter from the host or the host country, as the case may be, and administrative clearance of the Ministry or department concerned in case of visits sponsored by a Ministry or department of the Government.(ii) The application for grant of permission to accept foreign hospitality must reach the appropriate authority ordinarily two weeks before the proposed date of onward journey.(iii) In case of emergent medical aid needed on account of sudden illness during a visit abroad, the acceptance of foreign hospitality shall be required to be intimated to the Central Government within sixty days of such receipt giving full details including the source, approximate value in Indian Rupees, and the purpose for which and the manner in which it was utilized.Provided that no such intimation is required if the value of such hospitality in emergent medical aid is up to one lakh rupees or equivalent thereto.Foot Note: For applicants who are individuals, the criteria of registration under Societies/Trust Act will not be applicable.

Supreme Court of IndiaThe State Of Tamil Nadu Rep. By ... vs K. Balu & Anr on 15 December, 2016Author: D Y Chandrachu[1] dBench: T.S. Thakur, D.Y. Chandrachud, L. Nageswara Rao REPORTABLE    IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION   CIVIL APPEAL Nos .12164-12166 OF 2016  [Arising out of SLP (C) Nos.14911-14913 of 2013]   THE STATE OF TAMILNADU .....APPELLANTS REP. BY ITS SECRETARY HOME, PROHOBITION & EXCISE DEPT & ORS   Versus  K BALU & ANR .....RESPONDENTS    WITH   CIVIL APPEAL No. 12167 OF 2016  [Arising out of SLP (C)No.8267 OF 2014]   CIVIL APPEAL Nos. 12168 OF 2016  [Arising out of SLP(C) No.8971 OF 2014]   CIVIL APPEAL No. 12169 OF 2016  [Arising out of SLP (C) No.35454 OF 2014]   CIVIL APPEAL No.12170 OF 2016  [S.L.P.(C) No.36787 of 2016 @ of CC No.231 OF 2015]   CIVIL APPEAL Nos. 12171-12172 OF 2016  [S.L.P.(C) Nos.36788-36789 of 2016 @ of CC Nos.18587-18588 OF 2015]   CIVIL APPEAL No.12173 OF 2016  [Arising out of SLP(C) No.34525 OF 2015]     AND   T.P.(C) No.739-741OF 2016      J U D G M E N T Dr D Y CHANDRACHUD, J Delay condoned.Leave granted.The issue which we address in this case is about the presence of liquor vends on national and state highways across the country. The backdrop to the case is provided by alarming statistics on the occurrence of road accidents. They have claimed human lives and caused debility and injury. Both on a personal scale (in terms of the injuries and loss of life) as well as in a social context, restitution in the form of mandatory awards of compensation can never undo the trauma of loss and the pain of suffering. The law can only imperfectly alleviate the consequences of road accidents. In terms of personal suffering caused to individuals and families as well as in terms of deprivation caused to society of its productive social capital, road accidents impose unacceptable costs. We will analyse the issues which have been raised in this case on the basis of facts which are not in dispute and on the foundation of policy statements of the Union government which have been formulated after careful consideration. In doing that, the court must ensure that the parameters for the exercise of its jurisdiction are confined to the familiar terrain of enforcing the constitutional right to lead a life of dignity and self-worth.2 The Union and the State Lists of the Seventh Schedule to the Constitution distribute (in conjunction with Articles 245 and 246) legislative jurisdiction over the highways which traverse the length and breadth of India, between Parliament and the State Legislatures. The constitutional pattern in relation to the distribution of legislative heads is replicated in this area : what is national is reserved to Parliament while that which has a state-centric orientation is reserved to the state legislatures. Entry 23 of the Union List is thus :“23. Highways declared by or under law made by Parliament to be national highways”.Entry 13 of the State List is thus :“13. Communications, that is to say, roads, bridges, ferries, and other means of communication not specified in List I; municipal tramways; ropeways; inland waterways and traffic thereon subject to the provisions of List I and List III with regard to such waterways; vehicles other than mechanically propelled vehicles.” 3 The Union Ministry of Road Transport and Highways in its Transport Research Wing has brought out a publication titled “Road Accidents in India- 2015”. The cover depicts in rather graphic terms vehicles involved in car crashes. There is a large group of persons assembled in the foreground, an ambulance bearing the ‘108’ logo and a police car. Familiar sights on Indian roads. The publication tells us that :“11.1 During 2015, within the category of drivers’ fault, accidents caused and persons killed due to ‘Exceeding lawful speed’, accounted for a high share of 62.2 per cent (2,40,463 out of 3,86,481 accidents) and 61.0 per cent (64,633 out of 1,06,021 deaths), respectively.However taking into account the total road accidents and total road accident killings, the share of over speeding comes to 47.9 per cent (2,40,463 out of 5,01,423 accidents) and 44.2 per cent (64,633 out of 1,46,133 deaths) respectively.11.2 Intake of alcohol/drugs by drivers resulted in 16,298 road accidents and 6,755 fatalities in 2015 within the category of drivers’ fault, intake of alcohol/drugs accounted for 4.2 per cent and 6.4 per cent respectively.However taking into account the total road accidents and total road accident killing, the share of intake of alcohol/drugs comes to 3.3 per cent (16,298 out of 5,01,423 accidents) and 4.6 per cent (6,755 out of 1,46,133 deaths) respectively.” 4 The total number of persons killed in road accidents on national highways was 48,768 in 2012 and 51,204 in 2015. In 2014, on the national highways there were 1.24 lakh accident cases resulting in 1.35 lakh persons injured and 46,110 deaths. During the same year, on state highways, there were 1.13 lakh accident cases resulting in 1.24 lakh injured and 39,352 deaths. The expressways witnessed 4,208 accident cases, 4,229 injured and 1,802 deaths.[1]. Figures are also available of the distribution of road accidents by causes during 2014. 1.38 lakh persons were injured in road accidents involving dangerous or careless driving and 42,127 deaths occurred. Injuries caused in accidents due to over-speeding stood at 1.81 lakh while there were 48,654 deaths. 7,307 accident cases involving driving under the influence of drugs/alcohol were registered resulting in 7,398 injuries and 2,591 deaths. In regard to the figures of death or injury due to drunken driving there is a tendency to under estimate or under—report in order not to impede the right of victims and/ or their legal heirs to receive compensation.5 Now in this background, it would be necessary to elucidate the policy adopted by the Union government. The National Road Safety Council (NRSC) is an apex body for road safety established under Section 215 of the Motor Vehicles Act, 1988. NRSC unanimously agreed in a meeting which was held nearly thirteen years ago on 15 January 2004 that licences for liquor shops should not to be given along the national highways. The Ministry of Road Transport and Highways (MoRTH) issued a circular to all the state governments advising them to remove liquor shops situated along national highways and not to issue fresh licenses. Since 26 October 2007, when an advisory was issued, MoRTH has consistently advised all the state governments to remove liquor shops and not to issue fresh licences to liquor vends along national highways.6 On 1 December 2011, MoRTH in an advisory to the Chief Secretaries of all the States and Union Territories noted that India had reported the highest number of road accident fatalities in the world and data of 2009 indicated that a road accident occurred every four minutes. Drunken driving, it was stated, was a leading cause of road accidents with as many as 27,152 road accidents being caused under the influence of alcohol in that year. The advisory drew attention to the provisions of Section 185 of the Motor Vehicles Act, 1988 and solicited the following enforcement action :“(i) Strict enforcement of section 185 of MV Act 1988 preferably pursuing cases in various courts for award of penalty of imprisonment followed by adequate publicity which will together act as a deterrent for drunken driving.(ii) Removal of Liquor shops along National highways.(iii) No fresh license may be issued to Liquor vendors to open shops along National highways.(iv) Wherever licenses have been given in the past to open liquor shops along National highways, such cases may be reviewed and corrective action taken under intimation to this Ministry.” Section 185 to which a reference has been made in the above circular provides as follows :“185. Driving by a drunken person or by a person under the influence of drugs.Whoever, while driving, or attempting to drive, a motor vehicle,--has, in his blood, alcohol in any quantity, howsoever small the quantity may be, or is under the influence of a drug to such an extent as to be incapable of exercising proper control over the vehicle, shall be punishable for the first offence with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both; and for a second or subsequent offence, if committed within three years of the commission of the previous similar offence, with imprisonment for a term which may extend to two years, or with fine which may extend to three thousand rupees, or with both.Explanation.--For the purposes of this section, the drug or drugs specified by the Central Government in this behalf, by notification in the Official Gazette, shall be deemed to render a person incapable of exercising proper control over a motor vehicle.” .Section 185 is indicative of a Parliamentary intent to follow a zero- tolerance policy towards driving under the influence of alcohol.The position was illustrated in another advisory dated 18 March 2013 of MoRTH to the Chief Secretaries of States and Union Territories where it was stated that in 2011, 1.42 lakh people were killed in 4.9 lakhs road accidents. 24,655 road accidents were caused due to drunken driving resulting in 10,553 deaths and injuries to 21,148 persons. The advisory requested the removal of all liquor vends on national highways and a ban on the issuance of fresh licences on the ground that “prevention is better than cure”.7 In an advisory dated 21 May 2014, MoRTH stated that in 2012, 1.38 lakh people were killed in 4.9 lakh road accidents. 23,979 road accidents were caused due to drunken driving resulting in 7835 deaths and injuries to 23,403 persons.8 The Union government has constantly issued advisories setting out, as a matter of policy, its position.9 The material which has been placed on record indicates that :(i) India has a high rate of road accidents and fatal road accidents – one of the advisories states that it is the highest in the world with an accident occurring every four minutes;(ii) There is a high incidence of road accidents due to driving under the influence of alcohol;(iii) The existence of liquor vends on national highways is in the considered view of the National Road Safety Council and MoRTH – expert authorities with domain knowledge – a cause for road accidents on national highways;(iv) Advisories have been issued to the State Governments and Union Territories to close down liquor vends on national highways and to ensure that no fresh licences are issued in the future. The reason why these advisories are confined to the national highways is because of the distribution of legislative competence between the Union and the States under the Seventh Schedule to the Constitution. State highways fall under the domain of the states.10 The figures which are available on the record indicate that the occurrence of a large number of road accidents is not a phenomenon confined to national highways nor is the prevalence of road accidents, including fatalities, confined only to the national highways. Both the national highways and state highways share a common experience of an unacceptably high number of road accidents, the prevalence injuries and fatalities; drunken driving being one of the major causes. Hence, the content of the advisories which have been issued by the Union government as well as their basis, rationale and foundation would equally apply to state highways. Human life is precious. As the road network expands in India, road infrastructure being an integral part of economic development, accidents profoundly impact on the life of the common citizen. For a nation on the cusp of economic development, India can well avoid the tag of being the accident capital of the world. Our highways are expanding, as are the expressways. They provide seamless connectivity and unheralded opportunities for the growth of trade and industry and for the movement of goods, persons and capital. They are the backbone of the freedom of trade and commerce guaranteed by Article 301 of the Constitution. Our highways are dotted with sign boards warning of the dangers of combining speed and alcohol. Together, they constitute a heady cocktail. The availability of liquor along the highways is an opportunity to consume. Easy access to liquor shops allows for drivers of vehicles to partake in alcohol, in callous disregard to their own safety and the safety of others. The advisories of the Union government to the states are founded on a logical and sound rationale.11 We are conscious of the fact that the policy of the Union government to discontinue liquor vends on national highways may not eliminate drunken driving completely. A driver of a motor vehicle can acquire liquor even before the commencement of a journey or, during a journey at a place other than a national or state highway. The law on preventing drunken driving also requires proper enforcement. Having said this, the court must accept the policy of the Union government for more than one reason. First and foremost, it is trite law that in matters of policy, in this case a policy on safety, the court will defer to and accept a considered view formed by an expert body. Second as we have seen, this view of the Union government is based on statistics and data which make out a consistent pattern year after year. Third the existence of liquor vends on highways presents a potent source for easy availability of alcohol. The existence of liquor vends; advertisements and sign boards drawing attention to the availability of liquor coupled with the arduous drives particularly in heavy vehicles makes it abundantly necessary to enforce the policy of the Union government to safeguard human life. In doing so, the court does not fashion its own policy but enforces the right to life under Article 21 of the Constitution based on the considered view of expert bodies.12 There is no fundamental right under Article 19(1)(g) to trade in liquor. Liquor has been regarded as res extra commercium : State of Bihar v. Nirmal Kumar Gupta, (2013) 2 SCC 565; Amar Chandra Chakraborty, Appellant v. Collector of Excise, Govt of Tripura, Agartala, (1972) 2 SCC 442; Nashirwar v. State of Madhya Pradesh, (1975) 1 SCC 29; Har Shankar v. Deputy Excise and Taxation Commissioner, (1975) 1 SCC 737; Secretary to Government, Tamil Nadu v. K. Vinayagamurthy, (2002) 7 SCC 104; State of Punjab v. Devans Modern Breweries Ltd. (2004) 11 SCC 26. State of Kerala v. Kandath Distilleries, (2013) 6 SCC 573.13 Liquor licences in respect of potable alcoholic liquor are granted by the state governments. Entry 51 of the state list provides for duties of excise on alcoholic liquors for home consumption manufactured and produced in the state and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India. The power of the states to grant liquor licences is undoubted. The issue is whether such liquor licences should be granted on national and state highways at the cost of endangering human lives and safety. In our view, which is based on the expert determination of the Union government, we hold that the answer should be in the negative. Though, excise duty is an important source of revenue to the states, a prohibition on the grant of liquor licences to liquor shops on the national and state highways would only regulate the grant of such licences in a manner that would ensure that the consumption of alcoholic liquor does not pose dangers to the lives and safety of the users of national and state highways. May we also remind ourselves that among the Directive Principles contained in the Constitution is that in Article 47 :“47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health:The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health.” 14 Well over a decade ago, the Union government had formulated for consideration and adoption by the states a document titled “Model Policy/taxation/act/rules for alcoholic beverages and alcohol”. The Model Policy inter alia made general provisions relating to liquor vends. Para 92(2) of the Model Policy inter alia provides as follows :“(2) No licence for sale of liquor shall be granted to a retail vend selected within a distance of 100 metres from any religious or educational institution or hospital or outside the inhabited site of village /town/city or any Office of the State/Central Government or Local Authorities or within a distance of 220 metres from the middle of the State/National Highways.Explanation – For the purpose of this rule :“National Highway” or “State Highway” shall not include such parts of the National Highway or State Highway as are situated within the limits of Municipal Corporation, City or Town Municipal Council or such other authority having a population of twenty thousand or more.” This Model Policy provided for a minimum distance from the state/national highways for locating liquor shops. However, an exception was carved out to the effect that the national or state highways would not include such parts of them as are situated within the limits of the local authorities with a population of 20,000 or more. By an order of this Court dated 8 September 2015, the attention of the authorities was drawn to the fact that the model policy had been prepared nearly a decade earlier and several decisions of the High Courts have been delivered since. Hence, the court opined that it was necessary that the policy is revisited by the states and union territories and by the Union government together in regard to the sale of liquor and alcoholic beverages in the proximity of national and state highways. MoRTH however has informed the court on affidavit that a model policy on alcoholic beverages and alcohol does not fall within its purview, and hence it may not be in a position to review the model policy. MoRTH while stating this has emphasised its considered view and position based on the statistics of road accidents that liquor shops should not be situated along national highways. We see no rational basis to exclude stretches of national highways and state highways which fall within the limits of a municipal or local authority (with a population exceeding a stipulated figure) from the ambit of the suggested prohibition. Where a national or state highway passes through a city, town or through the area of jurisdiction of a local authority, it would completely deny sense and logic to allow the sale of liquor along that stretch of the highway. Such an exclusion would defeat the policy since the presence of liquor shops along such stretches of a national or state highway would allow drivers to replenish their stock of alcohol, resulting in a situation which the policy seeks to avoid in the first place. Once it is an accepted position that the presence of liquor vends along the highways poses a grave danger to road safety an exception cannot be carved out to permit the sale of liquor along a stretch of the highway which passes through the limits of a city, town or local authority. Such an exception would be wholly arbitrary and violative of Article 14.15 During the course of the hearing, learned counsel appearing on behalf of the State of Punjab stated before the court that based on the model policy the Punjab Excise (Amendment) Act, 2016 was brought into force on 28 March 2016. Section 26A of the Punjab Excise Act, 1941 provides as follows :"26-A. (1) The location of the liquor vends shall be regulated by the Government: Provided that this section shall be applicable only to liquor vends situated in areas adjoining the National Highways and State Highways for consumption, off the premises. (2) No licence for sale of liquor shall be granted to a liquor vend situated within the road reservation of National Highways and State Highways and beyond road reservation neither the liquor vends nor their entry points shall be visible or directly accessible from the National Highways and State Highways. Explanation.– (i) “Visibility” means existence of any signboard, direction mark, display of stock of liquor, display of rates or any direct/indirect invitation to the commuter travelling on such Highway; and (ii) “Directly Accessible” means such liquor vend shall not be directly approachable from the National Highway and State Highway. (3) The restrictions referred to in sub-section (2) shall not apply to the liquor vends situated in the areas adjoining to National Highway and State Highway, passing through the limits of Municipal Corporation/Municipal Council/ Municipal Committee/ Notified Area Committee/ Nagar Council/ Cantonment Board or any other Authority having a population of twenty thousand or more."16 Explanation 3 by its operation merely confers an enabling power upon the state government to grant liquor licences in the area as described therein. We are of the view that the exercise of this enabling power by the State government must not obstruct or impede the overwhelming public interest in ensuring that the sale of liquor along national or state highways should be discontinued having regard to the danger to road safety.17 These proceedings have arisen under Article 136of the Constitution from the judgments of the High Courts at Madras and Punjab and Haryana respectively. The Madras High Court was seized with a public interest litigation seeking the removal of retail outlets for liquor on national and state highways, contrary to the advisory of the Union government dated 1 December 2011. The High Court noted that in the state of Tamil Nadu liquor shops along the highways are being run by Tamil Nadu State Marketing Transport Corporation (TASMAC). Before the High Court, the Managing Director of TASMAC stated that :“It was also submitted that TASMAC Ltd has been taking all prudent steps to remove the shops located in Highways and has instructed all the Senior Regional Managers to refrain from giving new licenses to shops that are proposed to be located on the Highways and also shift the existing shops to some other place without violating the Rule 8 of the Tamil Nadu Liquor Retail Vending (in Shops and Bars) Rules, 2003 and other relevant laws.” The affidavit stated that nearly 504 shops are situated along national highways and sometime would be required to relocate them. It was stated that 75 shops have been shifted and a new location for 335 shops had been identified. Six months’ time was sought for shifting the shops; the affidavit having being filed in March 2013. The High Court by a judgment and order of its Division Bench dated 25 February 2013 granted time until 31 March 2013 for the relocation of existing liquor shops being run on national/state highways. This order of the High Court has been questioned by the State of Tamil Nadu and TASMAC.18 During the pendency of these proceedings, this Court by its order dated 7 May 2013 directed that liquor vends along national highways be removed by 14 August 2013. Notice was issued, confined to the closure of liquor vends along state highways. An affidavit was filed before this Court on 22 August 2013 by the state government stating that 504 TASMAC retail liquor shops along the national highways have been shifted. The additional affidavit filed by the state on 29 April 2013 sets out the position in regard to state highways.The total length of state highways is divided into five regions namely,(i) Chennai; (ii) Coimbatore (iii) Madurai; (iv) Salem; and (v) Trichy and traverses 9520.4 kilometres. The total number of shops situated thereon is stated to be 1731. 839 liquor shops out of them are situated in market areas abutting the state highways in towns, municipalities and corporations while 892 are liquor shops in rural areas abutting the state highways. These figures which have been disclosed by the state government indicate the serious nature of the problem. The proliferation of liquor shops on state highways (1731 shops over 9520 kilometres) indicates the easy availability of liquor on the state highways. Evidently within a distance of a few kilometres a liquor shop is available to cater to the demand of the users of the highways. There can be no valid distinction between a national highway and state highway insofar as the location of liquor shops abutting the highway is concerned. Accidents take place both on national and state highways and the easy availability of liquor possess a grave danger to the safety and lives of those who use these highways.19 Insofar as the State of Punjab is concerned, the petition for special leave has been filed by the state government against a judgment and order of a Division Bench of the High Court dated 18 March 2014. Like the case before the Madras High Court, the proceedings before the Punjab and Haryana High Court were instituted in public interest (in this case by the Arrive Safe Society of Chandigarh) seeking directions for the removal of liquor vends from highways. The High Court directed the State of Haryana to ensure in its liquor policy that no liquor vend shall be located along the national highways/state highways and that liquor shops are not accessible or visible from those highways or from the service lanes running along such highways. The High Court rejected the case of the state that the prohibition should be confined only to the national highways. The High Court has, in our view, justifiably held that it can hardly be contended that drunken driving is not permissible on national highways but does no harm on state highways. In relation to the States of Punjab as well as Haryana the High Court has held that the prohibition would apply to state and national highways.20 For the reasons that we have already indicted, we have come to the conclusion that the views of the High Court of Madras and the High Court of Punjab and Haryana are unexceptionable. No distinction can be made between national and state highways in regard to the location of liquor shops. In regulating the use of national and state highways, the safety of the users of the road is of paramount concern. It would defy common sense to prohibit liquor shops along national highways while permitting them on state highways. Drunken driving as a menace and as a cause of road accidents is a phenomenon common to both national and state highways. Nor, is it a plausible defence to urge that while it is impermissible to drink and drive on a national highway, it is permissible to do so on a state highway.21 Moreover, we find merit in the restrictions suggested by the Punjab and Haryana High Court that the prohibition should extend not merely to the national and state highways but must be so appropriately tailored so as to ensure that the policy is not defeated by locating liquor shops in close proximity of the highway. A restriction that the shop should not be accessible or visible from the national or state highways or from a service lane along such highways is necessary to ensure that the policy is not surreptitiously violated. Our attention has been drawn during the course of the hearing to a report filed by the OSD Vigilance before the High Court indicating that the prohibition was sought to be defeated by setting up liquor vends which, though not visible from the highway, were situated in close proximity with signboards indicating their presence. The entry to the shop is camouflaged or placed at the rear portion to evade the judicial direction. A detailed survey has been made by the OSD in which observations in regard to liquor shops located along the highway have been recorded. We may also advert at this stage to a letter dated 4 August 2012 of the Project Director of National Highways Authority of India (NHAI) to the Deputy Commissioners of various regions in Punjab. The letter highlights that on a stretch of 291 kilometres on the Panipat-Jalandhar section of NH- 1, there are as many as 185 liquor shops (though in comparison the trauma centres and hospitals where immediate medical service can be provided to road accident victims is almost negligible). Many of the liquor shops have encroached on national highway land. Though, NHAI has sought the removal of these shops, “concrete action” is yet to be taken due to the lack of support from various quarters. Liquor shops, the Project Director notes, are owned by influential people making the removal of unauthorised encroachment impossible without the support of the district administration.22 For all these reasons, we have come to the conclusion that no licences for liquor shops should be allowed both on the national and state highways. Moreover, in order to ensure that this provision is not defeated by the adoption of subterfuge, it would be necessary to direct that no exception can be carved out for the grant of liquor licences in respect of those stretches of the national or state highways which pass through the limits of any municipality corporation, city, town or local authority. Necessary safeguards must be introduced to ensure that liquor vends are not visible or directly accessible from the highway within a stipulated distance of 500 metres form the outer edge of the highway, or from a service lane along the highway.23 However, we have also duly borne in mind the practical difficulty which has been expressed on behalf of the licence holders (including those in the town of Mahe) and the states that there are licences which have been duly renewed and whose term is still to expire. The states apprehend that premature termination may lead to claims for refund of licence fee for the unexpired term, with large financial implications. Hence we would direct that current licences may continue for the existing term but not later than 1 April 2017.24 We accordingly hereby direct and order as follows :All states and union territories shall forthwith cease and desist from granting licences for the sale of liquor along national and state highways;The prohibition contained in (i) above shall extend to and include stretches of such highways which fall within the limits of a municipal corporation, city, town or local authority;The existing licences which have already been renewed prior to the date of this order shall continue until the term of the licence expires but no later than 1 April 2017;All signages and advertisements of the availability of liquor shall be prohibited and existing ones removed forthwith both on national and state highways;No shop for the sale of liquor shall be (i) visible from a national or state highway; (ii) directly accessible from a national or state highway and (iii) situated within a distance of 500 metres of the outer edge of the national or state highway or of a service lane along the highway.All States and Union territories are mandated to strictly enforce the above directions. The Chief Secretaries and Directors General of Police shall within one month chalk out a plan for enforcement in consultation with the state revenue and home departments. Responsibility shall be assigned inter alia to District Collectors and Superintendents of Police and other competent authorities. Compliance shall be strictly monitored by calling for fortnightly reports on action taken.These directions issue under Article 142 of the Constitution.25 We dispose of the appeals and transfer petitions in the above terms. There shall be no order as to costs.….......................................CJI [T S THAKUR] ….............................................J [Dr D Y CHANDRACHUD] ...........................................J [L NAGESWARA RAO] New Delhi December 15, 2016.-----------------------[1] [2] See death A.7 page 160Footnotes[1] The State Of Tamil Nadu Rep. By ... vs K. Balu & Anr on 15 December, 2016