Section XIII

Offences, Penalties And Compounding Of Certain Offences

Section XIII

Question 227

What are the offences and penalties under FCRA, 2010?

Answer: 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 officer 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 member of the governing body of such society, trade union or other Association of individuals. 

Section 40: Bar on 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 other 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 a 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.

Question 228

Which are the offences that can be compounded and what would be the penalties therefor?

Answer: The nature of offences that can be compounded and the quantum of penalty for compounding such offences have been specified as under through MHA’s Notifications number S.O. 3025(E) dated 01/07/2022 read with S.O. 778(E) dated 20/02/2023:

 

S. No. Offences Amount of penalty

1.

 

 

Offence punishable under section 35 for accepting any hospitality in contravention of section 6 of the Act.

(Section 6 imposes restriction on acceptance of foreign hospitality by an MP/MLA, office bearer of a political party/Govt. servant/PSU employee.)

Rs. 10,000/-
2.

Offence punishable under section 37 for transferring any FC to any other person in contravention of section 7 of the Act or any rule made thereunder.

Provided that transfer of FC (inclusive of more than one instance of transfer, if any) shall be compoundable only once.

(Section 7 is regarding prohibition to transfer FC by an association having FCRA registration/PP to any another person.)

 

Rs. 1,00,000/- or 10% of such transferred FC, whichever is higher.
3.

Offence punishable under section 37 for defraying of FC beyond 20% of the contribution received for administrative expenses in contravention of section 8 of the Act.

(Amended Section 8 puts a cap of 20% of FC received in a FY towards administrative expenses.)

 

Rs. 1,00,000/- or 5% of such FC so defrayed beyond the permissible limit, whichever is higher.
4.

Offence punishable under section 35 for accepting or utilising FC in contravention of section 11 of the Act.

(Section 11 is regarding prohibition for acceptance of FC without FCRA registration/ PP.)

 

Rs. 1,00,000/- or 30% of the FC received or utilised, as the case may be, whichever is higher.
5.

Offences punishable under section 37 read with section 17 of the Act for-

(a) receiving FC in any account other than specified account in his application for grant of certificate;

Section 17(1) mandates the associations having FCRA registration/PP to receive inward remittances of FC from overseas only in the designated FCRA Account at SBI, NDMB and the provisos thereto allows them to have ‘another FCRA Account’ in any other bank for keeping & utilising the FC received in the designated account at SBI, NDMB and Utilisation Account(s) for utilising the FC.

Rs. 1,00,000/- or 5% of the FC received in such account, whichever is higher.

(b) non-reporting the prescribed amount of foreign remittance or source and manner of such remittance by banks and authorised persons.

Section 17(2) mandates the banks and authorised persons to report receipt of foreign remittance in the account of any association/person vide Rule 16 of FCRR, 2011. This penalty is for the defaulting Banks.

 

Rs. 1,00,000/- or 3% of the FC received or deposited in such account, whichever is higher.

(c)  receiving & depositing any fund other than FC in the account or accounts opened for receiving FC or for utilizing the FC.

This is a violation of Section 17(1) because only FC can be received/deposited in the designated FCRA Account and ‘another FCRA Account’ and Utilisation Account(s).

 

Rs. 1,00,000/- or 2% of such deposit, whichever is higher.
6.

Offence punishable under section 37 for non-furnishing of intimation of the amount of each FC received and the source from which and in the manner in which, such FC is received as required under section 18 of the Act.

Section 18 is about filing of mandatory Annual Return as per procedure prescribed under Rule 17 of FCRR, 2011.

 

Rs.       1,00,000/- or 5% of such FC for which intimation under section 18 of the Act is not furnished, whichever is higher.
7.

Offence punishable under section 37 for not maintaining the account and records of each FC received and manner of its utilisation as required under section 19 of the Act.

Section 19 mandates maintenance of separate set of accounts and records of receipt and utilisation of FC exclusively in the prescribed manner as per Rule 11 of FCRR, 2011.

Rs. 1,00,000/- or 5% of such FC for which accounts and records of FC are not maintained under section 19 of the Act, whichever is higher.
8. Offence punishable under sections 3, 11 and 35 of the Act read with rule 6 for failure to intimate about receipt of FC within the prescribed time limit. 5% of such FC received in a financial year.
9. Offence punishable under section 37, section 17 and section 19 of the Act read with clause (e) of sub-rule (1) of rule 9 for failure to intimate about opening of account or accounts within the prescribed time. Rs.10,000/- per utilisation account for failure to intimate within the prescribed time.
10. Offence punishable under section 37, section 17 and section 19 of the Act read with clause (e) of sub-rule (2) of rule 9 for failure to intimate about opening of account or accounts within the prescribed time. Rs.10,000/- per utilisation account for failure to intimate within the prescribed time.
11. Offence punishable under section 37, section 11 and section 17 of the Act read with rule 17A, for failure to intimate about details within the prescribed time. Rs.10,000/- for each violation of failure to intimate within the prescribed time.
12.

Offence punishable under section 37, and section 19 of the Act read with rule 13, for failure to place on website as prescribed in clause (a) of rule 13 within the prescribed time.

This is contradictory to the provision of Rule 13(a) because that Rule prescribes that the details regarding receipt of FC for every FY is to be placed on the official website of the Association concerned or on the website of MHA. In other words, placing such details on the official website of the Associations is not mandatory and that submission of the Annual Return in Form FC-4 on MHA’s website should meet the compliance requirement under Rule 13(a) and section 18. Further, the penalty of non-submission of Annual Return has already been prescribed at Sl. No. 6 above.

Rs.10,000/- for each violation.

 

Please note that as per the Notification dated 01/07/2022, the amount of penalty computed under column (3) in respect of any offence or offences referred to in column (2) above shall not be more than the value of the FC received and that the application to compound offences may be processed in physical or electronic form as may be specified by the Central Government. The aforesaid Notification has been issued in supersession of MHA’s Notification number S.O. 2291(E) dated 05/06/2018 except as respects things done or omitted to be done before such supersession. Also, please note that MHA’s Notification number S.O. 778(E) dated 20/02/2023 stipulates that this notification shall be applicable for pending cases and prospective cases only and the cases which have been disposed before publication of this notification shall not be reopened. It may please be noted that Section 41 of FCRA, 2010 prescribes that only those offences which are not punishable by imprisonment only can be compounded before institution of any prosecution.

Question 229

How to apply for compounding of an offence under FCRA, 2010?

Answer: As per Rule 21 of FCRR, 2011, an application for compounding of an offence under section 41 is to be made to the Secretary, Ministry of Home Affairs, New Delhi in electronic form and shall be accompanied by fee of Rs. 3000/- only, which shall be paid through the payment gateway specified by the Central Government. If any notice for compounding of an offence is issued by MHA, the Association concerned has to respond against the Compounding Notice on website https://fcraonline.nic.in. ​

Question 230

What happens after an offence is compounded?

Answer: After payment of the penalty imposed and compounding of the offence in respect of the offences categorised under S.O. 3025(E) dated 01/07/2022, no further action is taken against the defaulting Associations.​

Question 231

What if the person is unwilling or unable to pay the penalty imposed?

Answer: In the event of failure to pay the penalty, for whatever reason, necessary action for prosecution of the person shall be initiated. The competent authority in MHA may also decide to (i) suspend/cancel the registration of the Association, (ii) place the Association in PP category, (iii) freeze the bank account(s) of the Association and, (iv) prohibit the Association from receiving FC and dealing with the FC in its possession, as the case may be.

Question 232

Could there be prosecution for an offence even after the offence has been compounded?

Answer: No.  As per Section 41(5) of FCRA, 2010, 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.

Question 233

What if the person commits the same offence after compounding of one offence?

Answer: If an offence is committed by an individual or Association or its officer or other employee within a period of 3 years from the date on which a similar offence committed by it or him was compounded, the provision of compounding the latter offence will not be available and investigation and prosecution by the authorities concerned will follow as per the Act vide Section 41(2) of FCRA, 2010. 

However, any second or subsequent offence committed after the expiry of a period of 3 years from the date on which the first offence was previously compounded, shall be deemed to be a first offence. In other words, compounding will be allowed in the case of the second or subsequent offence if the first offence was compounded more than 3 years ago vide Explanation under Section 41(2) of FCRA, 2010.

Question 234

What happens in the case of offences that cannot be compounded?

Answer: Offences that cannot be compounded will be liable to investigation and prosecution by the Central Bureau of Investigation or the State Police concerned, depending on the amount of FC involved.  It is up to the competent authority in MHA to decide whether the case should be sent to the Investigating Agency concerned for further investigation or whether there are sufficient grounds for suspension/cancellation of the registration or whether the Association should be placed in PP category.  The competent authority in MHA may also decide to freeze the bank account(s) of the Association and/or prohibit the Association from receiving FC and dealing with the FC in its possession in terms of Sections 9 and 10 of FCRA, 2010 and/or impose a monetary penalty.

Question 235

Could the offences committed under FCRA, 1976, i.e., before FCRA, 2010 came into force, be compounded under FCRA, 2010?

Answer: Yes.

Question 236

Can the quantum of penalty be waived or reduced keeping in view the amount of contribution received or financial condition of an Association or its charitable work for the beneficiaries?

Answer: No.  The power to grant exemption in terms of Section 50 of FCRA, 2010 vests with the Union Home Minister but, it is extremely unlikely that exemption would be granted in any such case of violation of the Act. Please note that as per Notification number S.O. 3025 (E) dated 01/07/2022, the amount of penalty computed in respect of any offence or offences mentioned in reply to Q. 228 shall not be more than the value of the FC involved.

Question 237

A foreign donor sends money through electronic transfer to the bank account of an Association which is not registered or having PP under FCRA, 2010 without the knowledge of the Association and the money is credited by the bank to the account of that Association.  Will this constitute a violation of the Act and if so, what will be the penalty?

Answer: Acceptance of the money would be a violation of FCRA, 2010.  If the Association does not accept the money received and returns it to the sender, there would not be any penalty. 

However, if the Association utilises any amount from the money received, the quantum of penalty would be Rs. 1 lakh or 30% of the amount involved, whichever is higher, subject to the condition that the amount of penalty shall not be more than the value of the money received. In this case, the Association concerned will have to submit an application with the prescribed fee of Rs. 3000/- for compounding the offence and the offence will be compounded after the penalty is paid by the Association.

Question 238

An Indian citizen (NRI), i.e., Indian passport holder, working abroad collects some donation from a foreign source.  Thereafter, he passes on the contribution to an Association in India, which is registered under FCRA, 2010.  Whether that money will be treated as foreign contribution?  If so, was there any violation of the Act?

Answer: Yes.  Firstly, in terms of Section 1(2) of FCRA, 2010, the Act applies to the NRI concerned because he is a citizen of India outside India.  Therefore, he should have taken prior permission of the Government before accepting the donation from a foreign source.  Secondly, he has transferred the donation received to an Association in India.  He should have taken approval of MHA before transferring the money to the Association.  The contribution received by the Association will be treated as foreign contribution although it did not receive the same directly from the foreign source.  Since the Association is registered under FCRA, its acceptance of the donation would not be questionable. However, the NRI concerned would be liable to payment of penalty and he should apply for compounding the offence of accepting the donation without prior permission.  Please refer to the Reply to Q. 228 regarding the quantum of penalty for such violation.  No Indian citizen, whether an NRI or any person/delegation visiting abroad, should collect donations abroad and they should request the prospective foreign donors to send their donations through SWIFT mode to the Association’s ‘designated FCRA Account’ at SBI, NDMB.

Question 239

An Association having FCRA registration received FC over a period of several years. The Association utilised part of the FC on its aims & objectives and transferred the balance FC to a number of smaller Associations, who also used the money on their charitable programmes.  The recipient Associations did not have registration/ PP.   What will happen in such a case?

Answer: The FCRA registered Association committed the offence of transferring its FC and all the smaller Associations committed the offence of accepting and utilising FC without registration/ PP and.  MHA will conduct inspection of the books of account and records of all the transferor and recipient Associations to verify whether or not the end utilisation of the FC was proper.  If inspections reveal that FC was not diverted or misutilised towards any purpose other than the bonafide objectives or purpose for which the same was received and records of receipt and utilisation have been kept properly, then each of these Associations shall have to pay a penalty for compounding their offence.  Please refer to the Reply to Q. 228 regarding the quantum of penalty for compounding such violation. In each case, the amount of penalty will be subject to the condition that it shall not be more than the value of the FC involved.

Question 240

A foreign citizen in his will leaves some money for an Association in India.  After his death, the solicitors of the deceased foreigner request the Association to collect the money and after confirmation, the same is electronically transferred to the bank account of the Association. The Association is not registered under FCRA and it did not take permission from MHA before accepting the money.  Whether acceptance of the money attracts the provisions of FCRA, 2010 and if so, how to regularise it?

Answer: The money would be treated as FC and its acceptance by the unregistered Association was a violation of Section 11 of FCRA, 2010.  The Association should submit application in the prescribed manner to MHA for compounding the offence.  Please see the reply to Q. 228 for the quantum of penalty for such offence.​

PREVIOUS CHAPTER
BACK TO HOME
NEXT CHAPTER
All original content is ©2023 J K Chattopadhyay. All rights reserved. No part of this website and online edition may be reproduced or republished in any form without written permission of the author/publisher.

GET THE FCRA, 2010 APP
HOW TO USE THE WEBAPP

 

DISCLAIMER
CONTACT

 

error: Sorry you are not allowed to copy or print page content.