2013 (9) TMI 1282 - HC - FEMA

High Court overturns suspension order under Foreign Contribution Act, stresses need for reasons

The High Court of Delhi set aside the suspension order of a society under the Foreign Contribution (Regulation) Act, 2010, finding it improper due to lack ... - Issues involved: Suspension of registration of a society under the Foreign Contribution (Regulation) Act, 2010 u/s 13, legality of suspension order, necessity of recording reasons for suspension.Summary:The High Court of Delhi considered a case where a society registered under the Societies Registration Act, 1860 had its registration suspended by the Central Government u/s 13 of the Foreign Contribution (Regulation) Act, 2010. The suspension order directed that the society could only utilize funds with prior permission. The society challenged this order, denying allegations of transferring funds to non-FCRA registered NGOs.The Court analyzed Sections 13 and 14 of the FCRA, which outline the process of suspension and cancellation of registration. It noted that the Central Government can suspend registration for up to 180 days if it deems necessary in the public interest, after conducting an appropriate inquiry and providing a hearing to the organization. However, in this case, the suspension was deemed improper as no prior notice or inquiry was conducted before the suspension order was issued.Furthermore, the Court emphasized the importance of recording reasons for suspension as a mandatory requirement u/s 13(1) of the Act. It clarified that while the decision to suspend is discretionary, the reasons for suspension must be clearly stated in the order itself. Failure to provide reasons hinders the organization's ability to challenge the suspension effectively.Consequently, the Court set aside the suspension order dated 30.04.2013, highlighting the lack of proper procedure and reasoning. It allowed the respondent to take fresh action in accordance with the law but directed the immediate release of the petitioner's account.