IN THE HIGH COURT OF DELHI AT NEW DELHI
W. P. (C) 566/2011
Reserved on: May 24, 2011
Decision on: June 1, 2011
SARVAJAN UNNATI BODHINI ..... Petitioner
Through: Mr. Rakesh Kumar Khanna, Senior
Advocate with Mr. Rajiv Tyagi,
Advocate.
versus
SECRETARY TO THE GOVERNMENT
OF INDIA AND ANR ..... Respondents
Through: Ms. Maneesha Dhir, Sr. Panel Counsel
with Ms. Preeti Dalal, Advocate.
CORAM: JUSTICE S. MURALIDHAR
1. Whether Reporters of local papers may be
allowed to see the judgment? No
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in Digest? Yes
JUDGMENT
01.06.2011
1. This petition involves the interpretation of Section 11 (2) of the Foreign
Contribution (Regulation) Act, 1976 („FCRA 1976‟) read with Section 6 (1A) thereof
and the effect of the repeal of the FCRA 1976 by the Foreign Contribution
(Regulation) Act, 2010 („FCRA 2010‟).
Factual background
2. The Petitioner, Sarvajan Unnati Bodhini, is a trust registered under the Indian Trusts
Act, 1882 and was created by a Trust Deed dated 4th May 2007. The Petitioner states
that its objects include the provision of education and medical care to the under
privileged. It also collaborates with non-governmental organizations (NGO‟s)
functioning in remote and backward areas for imparting education about the benefits
of health care, health insurance and risk sharing coverage at the grassroots level. The
W.P. (C) 566 of 2011 Page 1 of 9
Petitioner is dependent on funding from philanthropic organizations. It is stated that
the Petitioner has, since its inception and until the recent past, received foreign
contributions/donations after obtaining prior permission from Respondent No. 1
Ministry of Home Affairs („MHA‟), FCRA Division under Section 6 (1A) of the
FCRA 1976. The Petitioner completed three financial years of existence and became
entitled to apply for permanent registration in Form FC 8 under the Foreign
Contribution (Regulation) Rules, 1976 („FCR Rules 1976‟) read with Section 6 (1) of
the FCRA 1976. The Petitioner states that it has been regularly furnishing returns to
the MHA, FCRA Division, Government of India in Form FC 3 in respect of the source
and application of the foreign contributions received by it from time to time. It is
stated that returns have been accepted by the MHA.
3. The Petitioner received a communication dated 1st December 2009 from Erasmus
Universiteit, Rotterdam for remittance of the balance grant of Euros 2,80,701 from
European Community in respect of the project titled “Developing efficient and
responsive community based Micro Health Insurance for India”. It is stated that the
Petitioner had earlier received the first part of the donation of Euros 70,000 from the
same University for which prior permission was applied for and granted by a letter
dated 11th November 2009. Subsequently, on 3rd December 2009, the Petitioner
applied online to the FCRA Division for prior permission to receive an amount of
Euros 2,80,701 from Erasmus Universiteit, Rotterdam. The application was also filed
physically on 7th December 2009.
4. By a letter dated 5th January 2010, the FCRA Division informed the Petitioner that
they expected to take a final view of the application within ninety days and therefore,
it would be appreciated if queries about the status of the application are made “only
after two months from the date of issue of this letter”. This was followed by a letter
dated 5th March 2010 of the MHA informing the Petitioner as under:
“2. Due to certain difficulties, it is not possible to dispose of your
application within ninety days. Accordingly, you are informed that
it will take another thirty days from 7th March 2010 to dispose of
your application”.
5. Thereafter on 25th March 2010, the MHA wrote the following letter to the
W.P. (C) 566 of 2011 Page 2 of 9
Petitioner:
“I am directed to refer to your application dated 3rd December
2009 seeking grant of prior permission for receiving foreign
contribution under Section 6 (1A) of the Foreign Contribution
(Regulation) Act, 1976 and to inform that the permission of
Central Government cannot be granted at present under the said
Act as it will take further time to dispose of your case.
2. Further you are advised that no foreign contribution should be
accepted by you till prior permission for receiving foreign
contribution is issued by this Ministry.” (emphasis in original)
6. It is stated that further information was sought by the MHA from the Petitioner by
letters dated 5th April 2010 and 9th April 2010 with respect to the Petitioner‟s
application dated 3rd December 2009. According to the Petitioner, it did not hear
anything on the said application thereafter.
7. The Petitioner received a communication from another donor – Deutscher
Gennossenschaffts und Raiffeisenverband E.V. (DGRV), stated to be a renowned
economic organization in Germany, expressing its commitment to contribute an
amount of Euros 80,000 to the Petitioner. The Petitioner applied to the MHA online on
16th June 2010 for prior permission to receive the donation of Euros 80,000. It is also
stated that the Petitioner applied physically on 17th June 2010. The Petitioner
mentioned that during the financial year 2009-10 it had received an amount of Euros
95,000 from the same donor DGRV for which the Respondents had granted prior
permission by its letter dated 11th November 2009.
8. On 6th October 2010 the MHA wrote the following letter to the Petitioner:
“I am directed to refer to your application dated 16th June 2010
seeking grant of prior permission for receiving foreign
contribution under Section 6 (1A) of the Foreign Contribution
(Regulation) Act, 1976 and to inform that the permission of
Central Government cannot be granted at present under the said
Act as it will take further time to dispose of your case.
2. Further you are advised that no foreign contribution should be
accepted by you till prior permission for receiving foreign
contribution is issued by this Ministry.” (emphasis in original)W.P. (C) 566 of 2011 Page 3 of 9
9. Thereafter, the Petitioner did not hear from the MHA even after the expiry of ninety
days. Aggrieved by the letters dated 25th March 2010 and 6th October 2010 of the
MHA, the Petitioner, in this petition, seeks quashing of the said letters and a
declaration that the Petitioner is entitled to unconditionally accept donations for which
it had applied for prior permission by applications dated 3rd December 2009 and 16th
June 2010.
Submissions of counsel
10. Mr. Rakesh Khanna, learned Senior counsel appearing for the Petitioner submits
that in terms of the Proviso to Section 11 (2) FCRA 1976 there was a deemed grant of
permission on the expiry of the period of ninety days after the date of the receipt of the
respective applications by the MHA. It is submitted that once there is a deemed grant
of prior permission, it cannot be affected by subsequent repeal of the FCRA 1976 by
the FCRA 2010 which came into effect from 26th September 2010. Mr. Khanna
pointed out that as far as the letter dated 6th October 2010 was concerned, the MHA
had not informed the Petitioner of any special difficulty.
11. Appearing on behalf of the Respondents Ms. Maneesha Dhir, learned counsel
submitted that the letters dated 25th March 2010 and 6th October 2010 must be
construed as refusal to grant permission although the letters stated that the FCRA
Division would take further time to dispose of the applications dated 3rd December
2009 and 16th June 2010 respectively. According to her, the deeming provision under
the Proviso to Section 11 (2) FCRA 1976 was not attracted. It is further submitted
that in terms of Section 54 (2) of the FCRA 2010 all applications pending as on the
date of coming into force of the FCRA 2010, i.e. 26th September 2010, must be treated
as pending under the corresponding provisions of the FCRA 2010 and therefore, if at
all, would have to be processed under the FCRA 2010. Ms. Dhir submitted that under
Section 12 of the FCRA 2010 (which corresponds to Section 11 of the FCRA 1976)
there was no deemed grant of permission on the expiry of ninety days. According to
her, since the amounts for which prior permission was sought by the Petitioner was
substantial and since reports of the State Government on the activities of the Petitioner
were not forthcoming despite reminders, the prior permission could not be granted
within the prescribed time limit. Ms. Dhir reiterated the stand taken in the counter
affidavit that during the course of processing of the applications for receipt of foreign
W.P. (C) 566 of 2011 Page 4 of 9
contributions under the FCRA 1976, unless it was convinced that the verification
reports are in order and the targeted people are actually benefited, no permission may
be given by the central government especially when the applicant has received huge
foreign funds previously. Hence, it may not be possible that all the prior permission
cases can be decided within the stipulated period of ninety days. Often the exact
reasons are not conveyed to the applicants due to security considerations.
Deemed permission under Proviso to Section 11 (2) FCRA 1976
12. The first issue to be considered is whether there was deemed permission in terms
of the proviso to Section 11 (2) FCRA 1976. Under Section 6 (1) of the FCRA 1976 it
is incumbent on the applicant association “having a definite cultural, educational,
religious or social programme” to register itself with the central government in
accordance with the FCR Rules before it accepts any foreign contributions. Once
registered, the association shall give within such time and in such manner as may be
prescribed, an intimation to the central government as to the amount of each foreign
contribution received by it, and the source from which and the manner in which such
foreign contribution was utilized by it. An association not registered with the central
government in accordance with the FCR Rules 1976 can in terms of Section 6 (1A),
accept any foreign contribution “only after obtaining the prior permission of the
central government”. As far as the Petitioner was concerned, since it had applied in
Form FC 8 and was awaiting grant of registration under Section 6 (1) FCRA 1976, it
was incumbent upon the Petitioner to apply in Form FC 1A for prior permission in
terms of Section 6 (1A) of the FCRA 1976 read with Rule 3 (aa) of the FCR Rules
1976.
13. Section 11 of the FCRA 1976 reads as under:
“11. Application to be made in prescribed form for obtaining
prior permission to accept foreign contribution or hospitality
–
(1) Every individual, association, organization or other person,
who is required by or under this Act to obtain the prior permission
of the central government to accept any foreign contribution or
foreign hospitality, shall, before the acceptance of any such
contribution or hospitality, make an application for such
permission to the Central Government in such form and in such
manner as may be prescribed.
W.P. (C) 566 of 2011 Page 5 of 9
(2) If an application referred to in sub-section (1) is not disposed
of within ninety days from the date of receipt of such application,
the permission prayed for in such application shall, on the expiry
of the said period of ninety days, be deemed to have been granted
by the Central Government.
Provided that, where, in relation to an application, the central
government has informed the applicant the special difficulties by
reason of which his application cannot be disposed of within the
said period of ninety days, such application shall not, until the
expiry of a further period of thirty days, be deemed to have been
granted by the Central Government.”
14. Under Section 11 (2) of FCRA 1976 if an application for prior permission is not
disposed of within ninety days from the date of receipt of such application, the
permission prayed for in such application is, on the expiry of the said period of ninety
days, deemed to have been granted by the central government. The Proviso to Section
11 (2) FCRA 1976 states that if the central government has informed the applicant
about the “special difficulties by reason of which his application cannot be disposed of
within the said period of ninety days” such application shall not “until the expiry of a
further period of thirty days, be deemed to have been granted by the central
government”.
The first application dated 3rd December, 2009
15. The first application dated 3rd December 2009 was, admittedly, received online by
the FCRA Division on that date itself. The ninety day period would come to an end on
2nd March 2010. On 5th March 2010 the central government in terms of the Proviso to
Section 11 (2) stated that “it will take another thirty days from 7th March 2010” to
dispose of the application. In other words, the FCRA Division was treating the date of
the physical filing of the application, i.e. 7th December 2009, as the date of the
application and was seeking for further thirty days after the expiry of ninety days in
terms of the Proviso to Section 11 (2). The thirty day extension period was coming to
an end on 7th April 2010. By a letter dated 25th March 2010 the Petitioner was simply
informed that “permission of the central government cannot be granted at present”
and that “it will take another thirty days from 7th March 2010 to dispose of your
application.” The subsequent letter dated 25th March 2010 indefinitely extended the
time for granting the permission notwithstanding the deeming provision in the form of
W.P. (C) 566 of 2011 Page 6 of 9
the Proviso to Section 11 (2) FCRA 1976. Clearly, the communication dated 25th
March 2010 was not consistent with the Proviso to Section 11 (2) FCRA 1976. In
other words, the expiry of thirty days beyond the period of ninety days would result in
grant of deemed permission. The communication dated 25th March 2010 by the MHA
defeated the Proviso to Section 11 (2) FCRA 1976 stating that “it will take further
time to dispose of”. In light of the unambiguous wording of the Proviso to Section 11
(2) FCRA 1976, the MHA could not have kept the Petitioner‟s application pending
beyond 6th April 2010.
16. It is not possible to accept the contention of the MHA that the letter dated 25th
March 2010 was in fact a refusal to grant permission. A reading of the letter only
states that permission cannot be granted “at present” and further that “it will take
further time to dispose of the case”. The Petitioner‟s application dated 3rd December
2009 was still treated by the central government as pending on that date, i.e. 25th
March 2010. There was no communication of refusal to grant permission and, there
was no question of keeping the said application pending after the expiry of thirty days
beyond 7th March 2010, i.e., beyond 7th April 2010. By that time the FCRA 1976 had
not been repealed and the deemed permission automatically came into effect.
Therefore, in terms of the Proviso to Section 11 (2) FCRA 1976, it must be held that
insofar as the Petitioner‟s application dated 3rd December 2009 is concerned there was
a deemed permission of the central government for the Petitioner to receive foreign
contribution covered by the said application.
The second application dated 16th June, 2010
17. As regards the second application dated 16th June 2010, the period of ninety days
came to an end on 15th September 2010. After the expiry of the ninety day period, the
central government on 6th October 2010 simply stated that the permission could not be
granted „at present‟ and that „it will take further time to dispose of the case‟.
Importantly, the central government did not invoke the provisions of the FCRA 2010
which came into effect on 26th September 2010. In terms of the Proviso to Section 11
(2) FCRA 1976, the central government failed to inform the Petitioner of the special
difficulties because of which the application could not be disposed of within a period
of ninety days.
W.P. (C) 566 of 2011 Page 7 of 9
18. The central government has to necessarily inform the applicant of the „special
difficulties‟ in not granting the permission within ninety days of the receipt of the
application. The wording of the Proviso to Section 11 (2) FCRA 1976 makes this
requirement mandatory. Even after the expiry of ninety days no special difficulties
were expressed by the central government as far as the Petitioner‟s application dated
16th June 2010 was concerned. In fact, even the communication dated 6th June 2010
was not one under the Proviso to Section 11 (2) FCRA 1976 since the central
government did not refer to any special difficulties it was encountering in granting the
permission. This position becomes clear when the letter dated 6th October 2010 is
contrasted with letter dated 5th March 2010 where special difficulties were expressed
by the central government as the reason for not being able to dispose of the
Petitioner‟s first application dated 3rd December 2009. Thus even the thirty day
extension in terms of the Proviso to Section 11 (2) FCRA 1976 was not available to
the FCRA Division in respect of the second application dated 16th June 2010. The
deemed permission became effective on 15th September 2010.
Effect of repeal of FCRA 1976 by FCRA 2010
19. The FCRA 2010 no doubt repeals the FCRA 1976. However FCRA 2010 also
contains a savings clause in the form of Section 54 (2). The relevant portion of Section
54 (2) reads as under:
“54. Repeal and saving.
…
(2) Notwithstanding such repeal, –
(a) anything done or any action taken or purported to have been
done or the provisions under the repealed Act shall, insofar as it is
not inconsistent with the provisions of this Act, be deemed to have
been done or taken under the corresponding provisions of this Act;”
20. The deemed permission became effective in respect of both the applications filed
by the Petitioner under Section 6 (1A) read with the Proviso to Section 11 (2) of the
FCRA 1976 prior to the coming into force of the FCRA 2010. That deemed
permission would therefore remain undisturbed in terms of Section 54 (2) of the
FCRA 2010. Further, the Proviso to Section 11 (1) FCRA 2010 reads as under:
“11. Registration of certain persons with Central Government. –
W.P. (C) 566 of 2011 Page 8 of 9
(1) Save as otherwise provided in this Act, no person having a definite cultural,
economic, educational, religious or social programme shall accept foreign
contribution unless such person obtains a certificate of registration from the
Central Government:
Provided that any association registered with the Central Government under
section 6 or granted prior permission under that section of the Foreign
Contribution (Regulation) Act, 1976 (49 of 1976), as it stood immediately
before the commencement of this Act, shall be deemed to have been registered
or granted prior permission, as the case may be, under this Act and such
registration shall be valid for a period of five years from the date on which this
section comes into force.”
21. The above Proviso to Section 11 (1) FCRA 2010 makes it clear that if there was a
deemed permission that was already granted under the FCRA 1976 at the time of the
FCRA 2010 coming into effect, such deemed permission should be taken to have been
granted under the FCRA 2010. Viewed from the perspective of the FCRA 2010 as
well, the deemed permission in respect of the two applications of the Petitioner dated
3rd December 2009 and 16th June 2010 in terms of the Proviso to Section 11 (2) FCRA
1976 remains unaffected. Also, the proviso to Section 11 (2) FCRA 1976 regarding
deemed permission in respect of applications for prior permission cannot be defeated
by the central government by simply keeping applications pending beyond the outer
limit within which such applications were required to be disposed of in terms of the
FCRA 1976.
Conclusion
22. For all the aforesaid reasons, this writ petition is allowed and the communications
dated 25th March, 2010 and 6th October, 2010 of the MHA are hereby set aside. The
Respondents will now pass necessary orders within four weeks from today clarifying
the deemed permission granted in relation to the Petitioner‟s applications dated 3rd
December 2009 and 16th June 2010.
S. MURALIDHAR, J
June 1, 2011
rk
W.P. (C) 566 of 2011 Page 9 of 9