The validity of Ministry of Home Affairs' notification dated April 26, 2013, specifying the officers competent for compounding the offences before institution of any prosecution, issued under sec. 41(1) of the Foreign Contribution (Regulation) Act, 2010 was upheld by the High Court of Delhi in Mizpah Charitable Trust V. Union Of India.
The principal question to be addressed was whether the impugned notification violates the provisions of the FCR Act and / or is ultra vires the Constitution of India.
The Court observed that the FCR Act and FCR Rules came into force with effect from 01.05.2011. Failure to file annual returns in terms of Rule 17 of the FCR Rules prior to 01.05.2011 cannot be construed as an offence under the FCR Act. Clearly, the petitioner could not be held guilty of an offence of not filing the returns under the FCR Act, prior to it coming into force.
The Court referred to The Queen v. The Inhabitants of St. Mary, Whitechapel (1848) 12 QB 120 wherein it has been held that “The Statute which in its direct operation of prospective cannot properly be called a retrospective statute because a part of the requisites for that action is drawn from the time antecedent to its passing”.
Therefore, the Court held that “In view of the above, the impugned order to the extent it stipulates payment of penalty for the delay in filing the annual return for the financial year 2009-10, is set aside.”
The Court also held that “Before concluding, it would also be relevant to clarify that the impugned order enables the petitioner to compound the offence of non-filing of the annual return within the stipulated time. However, the petitioner is not compelled to pay the penalty and apply for compounding of the offences, if he does not wish to do so. The only consequence of not availing the opportunity to compound the offence is to run the risk of prosecution that may be instituted. Needless to state, if such a prosecution is initiated, the petitioner is not precluded from raising such defences as may be available in law.”