Charitable registration cannot be denied for temporary borrowings where educational activities are genuine and government-funded.

Refusal of registration under section 12AB was unjustified where the trust was running educational institutions for poor tribal students in a remote area and was substantially funded by Government grant-in-aid. Temporary private borrowings taken to meet delays in grant release, and the absence of PAN details for small loans, did not show lack of genuineness of charitable activities or any disqualifying violation of the Maharashtra Public Trusts Act. The adverse finding was held to have no basis, and denial and cancellation of registration were set aside; registration under section 12A(1)(ac)(vi) was directed to be granted.

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Issues: Whether the refusal to grant registration under section 12AB on the ground of alleged lack of genuineness of activities and alleged violation of the Maharashtra Public Trusts Act was justified.

Analysis: The trust was found to be running educational institutions for poor tribal students in a remote and backward area and was substantially supported by Government grant-in-aid. The alleged infirmity rested mainly on temporary borrowings from private during delays in grant release and on the absence of PAN details for such small loans. The record showed that the borrowings were only for exigencies and there was no material to show that the trust's charitable activities were not genuine or that the borrowings attracted any disqualifying violation of the State trust law. The adverse conclusion was therefore held to be without basis.

Conclusion: The denial and cancellation of registration were not sustainable, and registration under section 12A(1)(ac)(vi) was directed to be granted.

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