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Knappily Daily
Session 87
The use & misuse of FCRA | Draft Model Tenancy Law | Japan South Korea trade dispute
CBI raids on Indira Jaising and Anand Grover
• CBI is currently conducting raids on senior advocates Indira Jaising and Anand Grover, in connection with the FIR it
filed against Lawyers Collective for alleged violation of the Foreign Contribution (Regulation) Act. The raids
follow the registration of a case by the CBI against the NGO, Lawyers Collective, of which Jaising and Grover are
office bearers.
• The Under Secretary to the Union Ministry of Home Affairs has complained that after inspection of the books of
accounts and the records of the NGO, a prima facie violation of the FCRA 2010 was noticed. Suspected offences
involve criminal conspiracy, criminal breach of trust, cheating, making of false statement in the declaration
under the FCRA 2010, and criminal misconduct under the Prevention of Corruption Act, 1988.
• In July 2016, a written reply was submitted by the NGO, which was again found to be unsatisfactory and did not
provide "adequate explanation vis-a-vis the violations found". Eventually, in November 2016, the MHA cancelled
the FCRA registration for Lawyers Collective.
• Jaising received a salary of Rs. 96.60 lakh from Lawyers Collective while serving as Additional Solicitor General
from 2009 to 2014, and this is seen as a violation of the FCRA. More recently, a PIL was filed by another NGO
named Lawyers Voice, seeking a direction to the Central government for registration of an FIR against Jaising,
Grover, and Lawyers Collective for offences under the IPC, PMLA and PC Act. The Supreme Court Bench headed by
Chief Justice of India Ranjan Gogoi had issued notice in the case.
• This PIL led to Senior Counsel Indira Jaising, Grover, and Lawyers Collective issuing a press statement claiming
victimisation for taking up the issue of sexual harassment allegations against CJI Ranjan Gogoi.

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Foreign Contribution (regulation) Act, 2010
• The original Foreign Contribution (Regulation) Act was enacted in 1976 by the Indira Gandhi-led government
during the Emergency. It prohibits electoral candidates, political parties, judges, MPs and even cartoonists from
accepting foreign contributions. As the inclusion of ‘cartoonists’ under its ambit suggests, the intent was to clamp
down on political dissent.
• FCRA, 2010 has been enacted by the Parliament to consolidate the law to regulate the acceptance and utilization
of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit
acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national
interest and for matters connected therewith or incidental thereto.
Three changes render the new Act more stringent than the old one.
• Firstly, FCRA registration under the earlier law was permanent, but under the new one, it expires after five
years, and has to be renewed afresh. In 2016, 11,319 NGOs lost their FCRA licences without the government
having to either examine their records or suspend their registrations individually — their licences simply expired
as the deadline for renewal passed.
• Second, the new law put a restriction (50 per cent) on the proportion of foreign funds that could be used for
administrative expenses, thereby allowing the government to control how a civil society organisation (CSO)
spends its money.
• The third and most important distinction is that while the 1976 law was primarily aimed at political parties, the
new law set the stage for shifting the focus to “organisations of a political nature”.
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The problems with this law
• The right to freedom of association is incorporated under the International Covenant on Civil and Political
Rights, to which India is a party. Access to resources, particularly foreign funding, is part of the right to freedom of
association.
• Restrictions in the name of “public interest” and “economic interest” as invoked under the FCRA rules fail the test
of “legitimate restrictions”. The terms are too vague and give the state excessive discretionary powers to apply
the provision in an arbitrary manner.
• One cannot deny that corrupt NGOs exist, or that unscrupulous NGOs that receive foreign funds may serve as
conduits for money laundering. But there are better ways to address these concerns than an FCRA that institutes
an ‘Inspector Raj’ for the NGO sector.
• A seven-member task force was set up way back in 2009 to create a national-level self-regulatory agency, the
National Accreditation Council of India (NACI), that would monitor and accredit NGOs. It was to be an
independent, statutory body along the lines of the Bar Council. This was never taken up by the government.
• In March 2016, the government amended the law to retroactively legalize funding by foreign entities to political
parties. This amendment is especially ironic given that the FCRA was enacted primarily to prohibit political
parties, politicians, and election candidates from accepting foreign support to prevent foreign interests from
affecting Indian elections! No party protested this, of course.

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Draft model tenancy law
• The draft law proposes to set up an independent authority in every state for the registration of all tenancy agreements, and a
separate court for resolving tenancy-related disputes. It also has a provision to cap rent rates, and thus check any arbitrary hikes.
However, the proposed legislation is a ‘model act’ because land is a state subject.
• The rent authority will be headed by a deputy collector-rank officer, and will be set up by district collectors with the approval of the
respective state governments. The authority will set up a website where the details of all agreements will be put up.
• It will be mandatory for both the landlord and the tenant to inform the rent authority after getting into an agreement. This will
ensure that a landlord does not arbitrarily increase the rent in variance with what has been agreed to in the agreement. It will also
ensure that the tenant is not evicted at the whim of the landlord.
• The proposed act will also safeguard the interests of the landlord by ensuring that a tenant does not ‘squat’ on the property against
the terms of the agreement. Landlords will also be able to charge rents — to be decided by the respective state governments — on
par with market rates.
• If the landowner refuses to carry out the required repairs, the tenant can get the work done and deduct the same from periodic rent.
A landowner cannot enter the rented premises without 24-hour prior notice to carry out repairs or replacement.
• All disputes will be heard at rent courts that states will have to set up. Civil courts will no longer hear such cases, as it happens now. At
present, thousands of rent-related disputes are pending in courts across India.
• It has also proposed hefty penalty for tenants who fail to vacate the rented property after their tenancy has been terminated by order,
notice or as per agreement. A landowner will be entitled to get compensation of double of the monthly rent for two months and
four times of the monthly rent after that.
• The model law has also fixed the security deposit to be paid by the tenant in advance, which will be a maximum of two months’ rent
in case of residential property, and a minimum of one month’s rent in case of a non-residential property.
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Mixing business with history
• Relations took a turn for the worse when Japan said it would tighten curbs on exports of the materials used to
make chips and display panels because trust with South Korea had been broken over the forced labour dispute.
• Tokyo has imposed export restrictions on three materials: fluorinated polyamides, used in smartphones;
photoresists, used in semiconductors; and hydrogen fluoride, used in semiconductors. South Korean firms are
heavily reliant on Japan for all three – in May, the country sourced 94 per cent of fluorinated polyamides and 92
per cent of photoresists from Japan.
• The Japanese restrictions affect companies such as Samsung Electronics and SK Hynix, which supply chips (they
control 60% of the chip market) to companies such as Apple.
• Japan's export restrictions follow its frustration over what it sees as South Korea's failure to act in response to a
ruling by one of its courts last October ordering Japan's Nippon Steel Corp to compensate former forced
labourers. Japan says the issue of forced labour was fully settled in 1965 when the neighbours restored diplomatic
relations.
• The issue of forced labourers and ‘comfort women’ — those who worked in Japanese brothels during the Second
World War — has repeatedly flared between the countries. Japan considers the matter settled owing to language
in the 1965 negotiations as well as a 2015 agreement in which the country agreed to finance a victims' fund.
• The deepening dispute will damage not only South Korean tech behemoths like Samsung and LG Display – both of
which are heavily reliant on Japanese suppliers – but also for Japanese firms, which will need to find new
customers and could see their own supply chains disrupted if relations continue to sour.
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China’s gain?
• As a result of its trade war with the US, China has been pushing ahead with the development of its own
microchip industry, reducing its industrial reliance on foreign countries.
• At the core of that plan is its semiconductor industry. Under the Made in China 2025 plan, Beijing aims to produce
40 per cent of the semiconductors it uses by 2020 and 70 per cent by 2025 – up from less than 10 per cent at
present.
• If China can take advantage of the present tensions, it would merely be continuing a decades-long jostling of
power between the three countries in the semiconductor industry. In the 1990s and 2000s, Japan was dominant;
from the 2010s South Korea has been in the ascendancy.
• China has long been wary that three-way ties between the US, Japan and South Korea could develop into a
global alliance aimed at keeping in check China’s military expansion in the Pacific.

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