Unreasonable restriction on the rights of a person under Article 19(1)(c) of the Constitution to form associations as well as under Article 19(1)(g) of the Constitution of India.
The Lokpal & Lokayukta Act, 2013 (LLA) is an Act intended to Regulate and Control Corruption in ‘Public Institutions’.
Unfortunately NGOs and charitable institutions which are voluntary organisations for public purposes and public good have also been included within the purview of this Act.
The Act has deemed trustees and officers of charitable institutions and NGOs as ‘Public Servants’ and requires them under this law to declare their assets to the ‘competent authority’
Definition of ‘Public Servants’ under the Act?
Section 14(1) (f), (g) & (h) are of particular relevance for most charitable institutions
Under Section 14(1)(f):
“Any person who is or has been a Chairperson or Member or Officer or Employee in any Body or Board or Corporation or Authority or Company or Society or Trust or Autonomous Body (by whatever name called) established by an Act of Parliament or Wholly or Partly financed by the Central Government or Controlled by it”.
Several charitable institutions are ‘partly financed’ by the Central Government and the term ‘partly financed’ is neither defined nor explained where this particular sub-clause is concerned.
Under Section 14(1)(g):
“Any person who is or has been a Director, Manager, Secretary or other Officer of every other Society or Association of Persons or Trust (whether registered under any law for the time being in force or not), by whatever name called, wholly or partly financed by the Government and the annual income of which exceeds Rs. 1 Crore”
This section clearly deems as ‘public servant’ every trustee, manager, officer etc., of a charitable trust or society which is wholly or partly financed by the Government and the annual income of which exceeds Rs. 1 Crore.
There is also a technical loop-hole. This sub-clause does not refer to Section 8 (earlier Section 25) companies, although some feel Section 8 companies would get covered under “by whatever name called”, as also, the ‘Explanation’ u/s 14(1) does clarify that a ‘corporate’ entity would be covered under clause (f) and (g).
Under Section 14(1)(h):
“Any person who is or has been a Director, Manager, Secretary or other Officer of every other Society, or Association of Persons or Trust (whether registered under any law for the time being in force or not) in receipt of any donation from any foreign source under the Foreign Contribution (Regulation) Act, 2010 in excess of Ten lakhs Rupees in a year or such higher amount as the Central Government may, by notification, specify.
The Explanation under Section 14(1) adds:
“For the purpose of clauses (f) and (g), it is hereby clarified that any entity or institution, by whatever name called, corporate, society, trust, association of persons, partnership, sole proprietorship, limited liability partnership (whether registered under any law for the time being in force or not), shall be the entities covered in those clauses”
The implications and consequences of the arbitrary deeming fictions in the said Act are serious and unconstitutional and we are of the view that the inclusion of the persons enumerated in Section 14(1 )(f), (g) & (h) of the Lokpal & Lokayukta Act 2013 within the definition of “public servant” is arbitrary, illegal, unconstitutional and void for the following reasons:
1)There is no cogent foundation for treating private individuals as “public servant” simply because they happen to work (often in a voluntary or fiduciary capacity) in a charitable organization receiving more than one million Indian Rupees from a private foreign source. This classification amounts to treating un-equals as equals since private individuals and entities, such as persons enumerated in Section 14(1) (f) (g) & (h) of the Lokpal & Lokayukta Act 2013, do not wield or exercise the same powers nor do they have the same duties, responsibilities and obligations as functionaries of the State enumerated in the other clauses of Section 14(1) of the Act.
2) The term “corruption” has not been defined under the Lokpal Act. In the broadest sense, corruption includes the improper or selfish exercise of power and influence attached to “Public Office”. The persons enumerated in Section 14(1) (f), (g) & (h) of the Lokpal & Lokayukta Act 2013 do not occupy a “public office” nor are they discharging any “official government duty”. The entities in these three clauses of Section 14(1) cannot be equated with the State or the Government.
3) Adequate regulatory and legislative measures already exist to safeguard against any misappropriation and/or breach of trust that may be committed by private individuals who are officers of the entities enumerated in Section 14(1)(f) (g) & (h) of the Lokpal & Lokayukta Act 2013.
4) The object and purpose of the Lokpal and Lokayukta is to provide an independent and impartial institution for expeditious means of redress in respect of matters, such as the dishonest exercise of discretion by Ministers and other Government authorities arising out of bribery, for which remedies are either not available or to which recourse is not reasonably accessible.
5) The Lokpal and Lokayukta are institutions that do not have any Constitutional recognition. Besides Section 14(1) purports to regulate the functioning of trusts, societies and associations which are entities within the exclusive jurisdiction of the Sate under List II of the Seventh Schedule of the Constitution. The provisions of Section 14(1) (f) (g) & (h) are beyond the legislative competence of the Union Legislature.
6) Clause (h) of Section 14(1) is totally arbitrary and violates Article 14 of the Constitution of India. There is absolutely no “public duty” being carried out by a trust or society that receives a donation of above one million rupees under FCRA and there is no justification whatsoever to deem persons who are officers in such associations to be deemed “public servant” for the purpose of the Prevention of Corruption Act. The FCRA and the Rules framed there under have sufficient safeguards and adequately regulate not just the acceptance of foreign contributions but also the utilization thereof.
7) Unlike persons holding Government office, persons who are officers in associations described in section 14(1) (f) (g) & (h) may have legitimate independent sources of professional or business income. These are not persons who have a fixed salary such that any amount not disclosed by them can be deemed to be the product of corruption.
8) The deeming provision effectively suggests that non disclosure of an asset leads to an inference that it is ill-gotten. While this may make sense in the context of what is per se a public office, it is apposite to one that is only deemed to be a ‘public office’.
9) Placing onerous conditions and exposing the persons enumerated in Section 14(1) (f) (g) & (h) of the Lokpal & Lokayukta Act 2013 to liability and scrutiny under the provisions of the Act has resulted in needless anxiety and resignations and going forward it is going to get really difficult for charitable institutions to attract and retain talent and good human resource both at Board and officer levels.
These provisions are acting as a dampener and discouraging individuals from participating in or running charitable institutions and from carrying out social activities. This amounts to unreasonable restriction on the rights of a person under Article 19(1)(c) of the Constitution to form associations as well as under Article 19(1)(g) of the Constitution of India.
Noshir H. Dadrawala