Delhi HC: FCRA department gives no chance to certificate holder before suspension
Fact and Issue of the case
It is the case of the petitioner, being Commonwealth Human Rights Initiative (hereinafter, „CHRI‟) that it is an independent, non-profit, civil society organisation, headquartered in New Delhi, India since 1993, working to promote access to justice, access to information and timely fulfilment of the United Nations Sustainable Development Goals (SDGs) in India and in Commonwealth countries. The petitioner was registered under the Societies Registration Act, 1860 on July 21, 1993.
It is stated in the petition that several institutions of the Central and State Governments including Human Rights Commissions, Central and State Information Commissions, law enforcement agencies and legal aid authorities, recognise the petitioner as a resource partner in the domains of police and prison reform and transparency in governance. On September 03, 1993, the petitioner was granted a Certificate of Registration No. 231650671 under the Foreign Contribution Regulation Act, 1976. Thereafter, on October 28, 2016, the petitioner’s registration was renewed up to October 31, 2021, under the Foreign Contribution (Regulation) Act, 2010 (hereinafter, „FCRA, 2010‟). On June 07, 2021, the petitioner’s FCRA Registration was suspended for 180 days under Section 13 of the FCRA, 2010 pending consideration of cancellation of Certificate of Registration of the petitioner under Section 14(1)(d) of the FCRA, 2010.
On June 26, 2021, the petitioner communicated its response to the impugned suspension order, wherein it is stated that there was no violation of the FCRA, 2010 or Foreign Contribution (Regulation) Rules, 2011 (hereinafter, „FCRR, 2011‟) by the petitioner as alleged. Accordingly, the petitioner requested urgent revocation of the impugned suspension order by June 30, 2021.
On December 01, 2021, the impugned suspension was extended for another period of 180 days. On December 07, 2021, a Show Cause Notice under Section 14(2) of the FCRA, 2010, was served on the petitioner. According to the Show Cause Notice, the respondent had authorised an audit of the petitioner’s books of accounts and activities for the first time vide order dated July 29, 2021, passed under Section 20 and Section 23 of the FCRA, 2010. The said audit was conducted from August 09, 2021, to August 14, 2021. Upon scrutiny of audited records, certain observations were drawn and shared with the petitioner vide letter dated October 07, 2021, for comments.
The Petitioner, therefore, prays that in the facts and circumstances of the present case this Hon’ble Court may be pleased to:
a) Issue a writ, order, or direction in the nature of Certiorari quashing the Impugned Suspension Order dated June 07, 2021, Number F.No. II/21022/58(855)/2016-FCRA(MU} passed by the Deputy Secretary to the Government of India, Foreigners Division [FCRA Monitoring Unit], Ministry of Home Affairs under Section 13 of the Foreign Contribution Regulation Act, 2010.
b) Pass such other and further orders as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.”
Observation of the court
On this, the submissions of Mr. Datar and Mr. Singh were, (1) that the Section 13 of the FCRA, 2010 requires recording of reasons as to why the competent authority was satisfied that the drastic and optional action of suspension was necessary pending consideration of the question of cancellation of the certificate on any of the grounds mentioned in Section 14(1) of the FRCA, 2010, however, no such reasons explaining the necessity of suspension has been recorded in the impugned order dated June 07, 2021. (2) The drastic nature of the power of suspension under Section 13(1) to bring an organisation to a grinding halt and to thereafter damage its reputation and existence, this particular safeguard of recording reasons for the necessity of suspension enshrines an important principle of natural justice which has been violated.
Suffice to state, there is nothing in the provision to show that these violations cannot be construed as reasons which weighed with the Central Government, to suspend the certificate. Surely, if the violation makes a strong prima facie case against the certificate holder, if proved, would lead to cancellation of certificate under Section 14(2), then the Central Government will be justified in suspending the certificate. In other words, suspension order can be passed by the Central Government considering the gravity of violations, the nature of evidence available and effect on public interest. These aspects can be deduced from the material available on record including the annual returns filed / the replies to the questionnaires. So, it follows that the violations of FCRA, 2010 can be reasons to suspend the certificate. In that sense, the reasons and grounds are inter-related. This conclusion of mine shall negate the submission of Mr. Datar and Mr. Singh that the order of suspension is wholly alien / ultra vires to the scheme of suspension under Section 13(1) of the FCRA, 2010.
The plea of Mr. Datar and Mr. Singh, that given the drastic nature of the power of suspension to bring an organisation to a grinding halt can be answered by noting the safeguard stipulated in proviso to Section 13(2)(a), empowering the Central Government to permit receipt of foreign contribution by such person on such terms and conditions as it may specify. Section 13(2)(b) stipulate permission being granted for the utilisation of the foreign contribution in the custody, which is 25% of the unutilised amount as per the FCRR, 2011. There is no dispute that in the month of August, 2021 the respondent carried audit and inspection of the petitioner in terms of Sections 20 and 23 of the FCRA, 2010, and based on the outcome of the audit, the suspension was extended for a further period of 180 days and also the Show Cause notice dated December 07, 2021, was issued. The decision of the Central Government to carry out the audit / inspection under Sections 20 and 23 is an inquiry as contemplated under Section 14(1) of the FCRA, 2010 to ascertain whether there has been a contravention of any provisions of the Act, rules, or order made thereunder to take action for cancellation of the certificate The plea of Mr. Datar and Mr. Singh that the first three allegations in the impugned suspension order of non-intimation of specific accounts are erroneous as vide response to the suspension order dated June 26, 2021, the petitioner had demonstrated that the same is not in violation of the FCRA, 2010 and FCRR, 2011 is concerned, suffice to state the respondents have justified the reasons which I have noted in the paragraphs 30 to 32 above. The satisfaction is of the Central Government and this Court cannot substitute the reasons unless such reasons are perverse. The scope of judicial review is very limited and should be exercised only when it is a case of mala fide, arbitrariness, or an ulterior motive.
Much reliance has been placed by Mr. Datar and Mr. Singh on the judgment of a Coordinate Bench of this Court in the case of Indian Social Action Forum (INSAF) (supra). The judgment has been relied upon to contend that this Court in the said case has held that by the time suspension order was passed, the Central Government had neither issued any notice of hearing / Show Cause notice in terms of sub-section (2) of Section 14 nor had it initiated an inquiry in terms of the said Section. Therefore, there was no occasion to suspend the certificate of the petitioner in terms of Section 13(1) of the Act. Whereas Ms. Bhati submitted that petitioner has misread the ratio of the judgment in support of its contention that Show Cause notice under Section 14(2) is a precursor to suspension under Section According to her it is amply clear from the bare reading of the judgment, especially paragraph 5 thereof that the suspension, in that case, was found to be contrary to the scheme of the Act only because the Central Government had neither issued any notice of hearing / Show Cause notice in terms of sub-Section 14 nor had it initiated an inquiry in terms of the said section. She also stated in the instant case, the inquiry was underway when the order of suspension was passed which itself records as many as five contraventions that were found in the accounts of the petitioner.
I must state that on a first blush, the submission made by Mr. Datar and Mr. Singh looked appealing, but on deeper consideration, I find that this Court, in the facts of that case had set aside the suspension order on two grounds, firstly, no reasons have been spelt out in the suspension order and secondly, the respondents have neither issued Show Cause notice nor initiated an inquiry by the time the suspension order was passed. Insofar as, stating the reasons for suspension is concerned, as concluded above, I am of the view that the reasons have been given in the impugned order. To that extent, the judgment has no applicability. Insofar as the conclusion of the Court by the time the suspension order was passed neither an inquiry was initiated nor any Show Cause notice was issued is concerned, it is my conclusion that the process of inquiry was started in the year 2017. So, it is not a case where neither any inquiry was initiated nor any Show Cause notice was issued. So, the judgment relied upon by Mr. Datar and Mr. Singh is clearly distinguishable.
Insofar as the reliance placed by Mr. Datar and Mr. Singh on the judgment in the case of Modern Dental College and Research Centre and Ors. (supra) the same is inapplicable to the present case, inasmuch as, the impugned order suspending the petitioner is in consonance with the object which the instant legislation/statute strives to achieve and has not gone in excess of that object, as my findings above would depict, and as such, satisfies the doctrine of proportionality. As far as the judgment in the case of Shayara Bano (Supra) relied upon by Mr. Datar and Mr. Singh is concerned, the same have no applicability in the facts of this case and in view of my conclusion above. In view of my above discussion, I do not see any reason to interfere with the impugned order dated June 07, 2021. The writ petition is dismissed. No costs.
The Court dismissed the order and ruled against the petitioner