The Ghosts of Emergency Past

The mood of the chamber is not hard to reconstruct. The Lok Sabha had just extended its own term, postponing the election due that March, and A.K. Gopalan was protesting the extension minutes before the Bill was taken up for debate: “Not to have an election is not good… It shows that they are afraid of going to the people”. He was told the Emergency “has benefited the peaceful life of a developing people”. In that chamber, minutes later, the FCR Bill was moved, and subsequently passed that evening.

The Foreign Contribution (Regulation) Amendment Bill, 2026, is a direct descendant of the 1976 Bill made law during those tumultuous times, in more ways than is immediately obvious. The rhetoric then was about anti-communist activities funded through missionaries; the rhetoric now is missionaries being funded for conversion activities. What has not changed is the state’s appetite for power: to grow more intrusive, weaken property rights and expand the discretionary powers with which it can spare its friends and smite its foes.

This should not be a partisan issue. Governments change, and the opposition eventually inherits the powers accumulated by its predecessors.

FCRA 2.0

The Foreign Contribution (Regulation) Amendment Bill, 2026, introduced in Lok Sabha on 25 March 2026 and pending, enlarges Central Government control over FCRA enforcement in three important ways.

First, no FCRA investigation can begin without prior Central Government approval, including investigations by state Crime Branches and the CBI.

Second, clause 16 widens the principal offence to cover “accepts, utilises or assists” in the acceptance or utilisation of foreign contribution, while cutting its maximum imprisonment from five years to one. That combination matters because a one-year maximum ordinarily brings the offence within a one-year limitation period.

Third, the Bill replaces the existing custodial regime for assets with a forfeiture system. Property can provisionally vest in the state even where it was acquired partly with Indian funds, and can become permanently vested if registration is not restored within a period left to rules.

The Bill therefore gives the executive control at three consequential points: whether an investigation can begin, whether enough time remains to prosecute the principal offence, and whether provisionally vested property is returned.

Two existing powers reinforce that control. Compounding determines which violations ever reach prosecution, while commencement determines when different parts of the new machinery begin operating.

Compounding and commencement

Compounding lets a violator pay a prescribed sum and avoid criminal prosecution. Section 41 makes FCRA offences compoundable in principle, leaving the Central Government to specify the officers, offences and amounts by notification. Seven substantive notification regimes, in 2011, 2013, 2016, 2018, 2022, 2023 and 2026, have filled in that blank. Parliament voted on none of them.

The changes are not merely technical. A late annual return carried a minimum penalty and a ₹500 daily charge in 2013; that became a ₹10,000 ceiling in 2016, then a ₹1 lakh minimum in 2018. The price of settling the core acceptance offence also rose sharply: the 2011 table put some forms of unregistered acceptance at two per cent of the contribution involved; the 2022 table put the section 35 offence of accepting foreign contribution without registration or prior permission at thirty per cent.

In February 2023, the compounding notification expressly contemplated compounding for “utilising” foreign contribution, even though the principal offence then did not use that word. The Bill now inserts “utilises” into section 35. The notification also decided its own temporal reach, applying to pending cases while barring reopening of disposed cases.

The point is not that every change is improper. It is that Parliament creates the framework while the practical price and scope of compounding are repeatedly altered by executive notification.

The commencement power is normally less dramatic. It allows different provisions of a law to come into force on different dates. But it can leave a parliamentary decision without legal effect. In 2021 Parliament amended the limitation schedule to remove GST and benami offences from ordinary limitation, but made those amendments dependent on separate commencement notifications. Five years later, those provisions remain uncommenced.

The Bill makes commencement consequential because its provisions interact. The government can choose when the reduced punishment, investigation veto and forfeiture machinery take effect, and the sequence can affect pending cases.

Other systems put limits on this discretion. British deferred-prosecution agreements require judicial approval; German settlements require court consent. Canada automatically repeals provisions left uncommenced for ten years and publishes an annual backlog. Australian provisions can commence automatically if no proclamation is issued within six months. India’s commencement power has no comparable judge, list, fuse or default.

The one-year timebomb

The most consequential change is the combination of the one-year sentence and the investigation veto.

Under the existing law, the principal FCRA offence carries a maximum five-year sentence. That places it outside the ordinary limitation periods. Investigating agencies can also begin an FCRA investigation without first obtaining Central approval. The Central Government’s existing control comes later: no court can take cognizance without its previous sanction.

The Bill reverses the order. The principal offence now carries a maximum of one year, bringing it within the BNSS provision that ordinarily imposes a one-year limitation period. At the same time, no investigation may begin without prior Central Government approval. Nothing in the Bill expressly excludes the time spent waiting for that approval from the limitation period.

That is the timebomb: the Ministry controls whether the ordinary investigative route can start, while the legal clock for bringing the principal offence before a court can continue to run.

The old sanction power operated at the end of the process. An investigation could be completed and the file placed before the government. The limitation chapter expressly excludes time spent obtaining a sanction required for prosecution. The new approval is different. It is required before investigation begins, and the Bill contains no equivalent express exclusion for waiting for that permission.

If the Ministry wants a case pursued, it can approve the investigation promptly. If it does not, delay can become consequential without a formal refusal. A court can compel the government to make a decision, but the Bill supplies no criteria governing that decision.

There are possible escape routes. A private complainant can approach a Magistrate, and a timely complaint or police information may have consequences for limitation. But the Bill leaves important questions unresolved: whether a complaint can stop the limitation clock when investigation itself requires Central approval; whether registration of an FIR amounts to initiating an investigation; and whether the Magistrate’s power under the BNSS to direct an investigation survives the Bill’s express prohibition.

Those questions would have to be resolved in litigation while the clock runs. FCRA offences also have no conventional private victim: the regulatory injury is to the state’s scheme itself. A rival or whistleblower can complain, but whoever wants the case kept alive bears the cost of resolving these questions.

The result is not that every FCRA prosecution will automatically expire after one year. It is more precise than that. The Bill puts the ordinary investigative route under executive control at the same time as it places the principal offence inside a much shorter limitation regime. That gives ministerial delay a power it did not previously have.

Prosecution on demand

The state still has ways to keep alive the cases it wants to pursue.

A more serious FCRA offence, where the facts genuinely support it, can carry a longer limitation period. The separate offence concerning property ordered to be frozen carries a three-year maximum and is non-bailable. Independent offences such as forgery, conspiracy or cheating are outside the FCRA investigation veto and can carry their own penalties and limitation periods. The prosecution may also argue that utilisation is a continuing offence, although the Bill does not expressly say so. And the BNSS permits limitation to run from later knowledge in specified circumstances and allows courts to extend the period in appropriate cases.

These routes matter because they make the system asymmetric. When the government wants a prosecution, it can use the legally available route with the longer period. When it does not, the principal FCRA route cannot even begin without its approval.

The Bill also widens vicarious liability. Its new “key functionary” category reaches trustees, Kartas of HUFs, office bearers, members of governing bodies and anyone responsible for management or affairs. The important expansion is to trusts and Hindu undivided families and the open-ended category of persons responsible for management.

The forfeiture code

The Bill’s second major change is to property.

The current law is custodial. When registration is cancelled or surrendered, assets pass to a government-appointed custodian, who manages them and must return them if the organisation is registered again. There is no comparable deadline after which the custodian automatically becomes the owner.

The Bill replaces that system with a Designated Authority and an Administrator, both operating under the Central Government’s “directions or orders, whether general or special”. Cancellation and surrender remain triggers, but lapse of registration is added. Assets can be frozen when registration is suspended, before any finding of wrongdoing. Property then provisionally vests in the Designated Authority.

The striking feature is what happens to mixed assets. An asset can vest wholly even where it was acquired partly from foreign contribution and partly from Indian sources. The owner can seek return of a “distinct or ascertainable portion” attributable to those other sources. The period for restoring registration before provisional vesting becomes permanent is not fixed in the Bill; it is left to rules. If that period expires, the property “shall thereupon stand permanently vested” in the Designated Authority.

Consider a building funded eighty per cent by Indian donations and twenty per cent by foreign contribution. The whole building can provisionally vest. The owner must then establish the distinct or ascertainable Indian-funded portion before the authority holding the building.

No judicial finding of wrongdoing is required before permanent vesting. Once permanently vested, the property can be transferred to a government or local authority or sold, with the proceeds credited to the Consolidated Fund of India. The former organisation and its people cannot buy the property back. Vested property is also protected from attachment or execution by civil courts, cutting off ordinary creditors.

The scale is substantial. On Ministry figures compiled by PRS in July 2026, there were 22,498 cancelled registrations and 15,212 deemed expired: 37,710 dead registrations against 14,449 live ones. The Bill reaches this existing stock as well, deeming assets already vested under section 15 to be provisionally vested in the new system from commencement.

The Central Government can also exempt any person or class from the forfeiture provisions where it considers this necessary or expedient in the public interest.

The executive therefore controls the period for restoring registration, the registration decision itself and the exemption power. A regime that previously required a custodian to return property after restoration can become permanent state ownership after a rule-made deadline.

The courtroom irony

The FCRA’s investigation scheme is already before the courts. In the Advantages India case, petitioners challenged the government’s ability to choose the investigating agency. The Delhi High Court upheld the arrangement partly because allocation between the CBI and Crime Branches rested on an objective criterion, the amount involved, while the agencies then investigated independently. The Supreme Court agreed to hear an appeal in 2024, and it remains pending.

The Bill would superimpose prior Central approval on every FCRA investigation, without prescribing statutory criteria for the exercise of that power. If enacted before the appeal is decided, the Union will have replaced the arrangement it defended with the very case-by-case discretion that its critics had challenged.

The property question is different. In Noel Harper, the Supreme Court upheld the 2020 FCRA amendments and held that there is no fundamental right to receive foreign contribution. But that judgment did not decide the constitutionality of permanently taking property already lawfully acquired under a valid registration, including the Indian share of mixed assets, without a judicial finding of wrongdoing. The Bill therefore raises a distinct question under the constitutional right to property.

1976, again

The 1976 Act needed an Emergency: a jailed opposition, a self-extended Lok Sabha, and a chamber that had just been told that postponing elections benefited the peaceful life of a developing people.

The 2026 Bill needs none of that theatre. Its architecture works through ordinary delegated powers. Parliament will vote on the words; the Ministry will decide, through approvals, notifications, rules and commencement dates, much of how those words operate.

That is why this should not be treated as a partisan question. Every government inherits the powers created by its predecessor.

The lesson of 1976 was not merely that extraordinary governments can abuse extraordinary powers. It was that powers created for one government’s purposes survive the government that created them.

The decisive instrument in 2026 is quieter: an approval withheld, a rule-made deadline, a notification delayed, a provision left uncommenced. The government changes; the machinery remains.