'No Reasonable Opportunity Of Being Heard': Plea In Andhra Pradesh HC Challenges Provisions Relating To Cancellation Of FCRA Certificate

A writ petition has been filed before the Andhra Pradesh High Court challenging the constitutional validity of certain provisions of the Foreign Contribution Regulation Act, pertaining to cancellation of FCRA certificate.The matter will be heard next month. Meanwhile, the High Court has sought for complete paper book of the related matters pending before the Supreme Court, to avoid overlapping proceedings. The petition seeks declaration that Sections 14(1) (d), 14(3) and 15 of Foreign Contribution Regulation Act, 2010 and Rule 15 of the Foreign Contribution Regulation Rules, 2011 are ultra vires Articles 14, 19 and 21 of the Constitution and consequently for quashing of the aforementioned provisions as null and void. The plea also challenges the circular issued by the Union Ministry of Home Affairs dated 18.10.2019 which cancelled petitioner's FCRA registration certificate under Section 14, for not filing returns for F.Y. 2017-18 without granting reasonable opportunity to be heard. It is averred that the petitioner has been penalized due to inadvertently failing to file the returns for F.Y. 2017-18 and despite it having paid a penalty of Rs. 1,98,798/-, filing the missing returns and re-registering in accordance with Union Ministry of Home Affairs Scheme, its application for re-registration was rejected. Further it is stated that due to the cancellation, the Petitioner cannot accept or use foreign contribution for its charitable activities as its bank account has been freezed. Brief Facts The Petitioner is a charitable society, registered in Andhra Pradesh since 1993. It claims to be reliant on foreign contributions to carry out its activities, including employing its staff, supporting the needs of communities through charitable work and providing relief during this unprecedented COVID-19. The Foreign Contribution Registration Act, as amended in 2010, regulates the acceptance and utilization of foreign contribution. Section 11 of the FCRA provides that no person having definite cultural, economic, educational, religious, or social programme shall accept foreign contribution unless it obtains a certificate of registration from Government. Section 18 of FCRA read with Rule 17 of FCRA Rules prescribes that every person who has been granted a certificate shall give an intimation in the form of Annual Return to the Government about the amount of foreign contribution received by it, its source, and the purpose for which and manner in which such Foreign Contribution was utilized for every financial year. Such return is to be filed within nine months of the closure of financial year. The Petitioner had valid FCRA registration certificate since 2003. However, the FCRA registration of the Petitioner society and 1807 other such NGOs stood cancelled via notice dated 18.10.2019 due to non-filing of Annual returns for F.Y. 2017-18. Challenged provisions of FCRA Section 14(1) of FCRA states that a certificate issued may be cancelled by the Government for various grounds. One of the grounds under clause (d) is "holder of the certificate has violated any of the provisions of this Act or rules or order made thereunder." Section 14(3) reads that "any person whose certificate has been cancelled under this section shall not be eligible for registration or grant of prior permission for a period of three years from the date of cancellation of such certificate." Section 15 of FCRA deals with the management of foreign contribution of person whose certificate has been cancelled. The foreign contribution of persons whose certificate has been cancelled may vest in such authority as prescribed by the central government. The provision also grants the prescribed authority the power to manage activities of the person whose certificate has been cancelled. Rule 15 of FCR Rules, 2011 reads that "if the certificate of registration of a person who has opened a FCRA Account under Section 17 is cancelled, the amount of foreign contribution lying unutilized in that Account shall vest with the prescribed authority under the Act." Grounds of constitutional challenge raised by the Petitioner in Writ Petition The Petitioner contends that no reasonable opportunity of being heard was granted and it had received no prior information before cancellation. The concerned Bank informed the Petitioner in October 2019 that its account for receiving foreign funds has been attached and became non-operational meaning the funds from Foreign Contribution cannot be used by the Petitioner. The Union Ministry had released a public notice that a few organizations including Petitioner's will be given a "one-time exception" from Section 14(3) if the organizations uploaded the missing returns, paid the prescribed penalty and submitted their application for re-registration. The Petitioner Society took immediate steps to file its missing income tax returns and...

'No Reasonable Opportunity Of Being Heard': Plea In Andhra Pradesh HC Challenges Provisions Relating To Cancellation Of FCRA Certificate

Jagriti Sanghi

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