TaxTMI 
TaxTMI 
1990 (9) TMI 270
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....given to the appellant before the order was passed and no reasons were stated in the order although it was alleged that the conduct of the appellant was "prejudicial to the public interest". The appellant-association was registered as a society under the Societies Registration Act on December 16, 1958. The principal object of the association is the welfare of the rural communities. With this end in view, the association works for the mutual co-operation of the voluntary agencies. It works as a clearing house for information on rural welfare and publishes monographs, periodicals, journals, etc., for that purpose. It also holds seminars on the welfare of the rural population. It carries on other activities for rural development, including preparation of master plan and assistance in its implementation. Smt. Kamla Devi Chattopadhayay was the founder president of the association. Later on, late Shri Jai Prakash Narain was elected as its president and continued as such till 1979. Between 1979 and 1981 the association received approximately a sum of Rs. 20 lakhs in Indian currency from the Ford Foundation office in India. Before making this contribution the Ford Foundation had obta....
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....ociation under sub-section (1) of section 6 of the Foreign Contribution (Regulation) Act, 1976 (49 of 1976), vide registration No. 23165002i; Whereas the Central Government is satisfied that acceptance of foreign, contribution by the said Association of Voluntary Agencies for Rural Development, New Delhi, is likely to affect prejudicially the public interest; Now, therefore, in exercise of the powers conferred by clause (b ) of section 10 of the Foreign Contribution (Regulation) Act, 1976, the Central Government hereby requires, in public interest, the said Association of Voluntary Agencies for Rural Development, 5(FF), Institutional Area, Deen Dayal Upadhayaya Marg, New Delhi-110 002 (including its branches and units), to obtain prior permission of the Central Government, to accept any foreign contribution from the date of this order, until further orders. The said association may make a representation against this order, if it so desires, within thirty days of the receipt of this order. (Sd) Indira Misra, Joint Secretary to the Govt. of India" It may be necessary at this stage to know some provisions of the Act. The Foreign Contribution (Regulation) Act, 1976, w....
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....agreed to receive foreign contribution or fails to give such intimation within the prescribed time or in the prescribed manner or gives any intimation which is false, the Central Government may, by notification in the Official Gazette, direct that such association shall not, after the date of issue of such notification, accept any foreign contribution without the prior permission of the Central Government." Section 10(b) of the Act gives power to the Central Government to prohibit receipts of foreign contributions in certain contingencies, although the association falls within the provisions of section 6(1). The said provision reads: "10. The Central Government may- ... (b) without prejudice to the provisions of sub-section (1) of section 6, require any association specified in that sub-section, to obtain prior permission of the Central Government before accepting any foreign contribution: Provided that no such prohibition or requirement shall be made unless the Central Government is satisfied that the acceptance of foreign contribution by such association or person or class of persons, as the case may be, the acceptance of foreign hospitality by such person, is likely ....
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....can require the association to obtain prior permission of the Central Government before any contribution is accepted. The Central Government can do it by issuing an official notification in the Gazette in regard to the date from which the permission is necessary. It is implied in the provisions of section 6 that before taking such an action, a show-cause notice would be given to the erring association and the orders would be passed on objective material and considerations. But, if the Central Government has reasonable suspicion in regard to an association, it can direct special inspection, seizure of accounts and records and special audit. These powers are given to the Central Government to see that the provisions of the Act in regard to receipt of foreign contribution and its utilisation are complied with by the association. Section 10 provides a very drastic power to the Central Government to prohibit receipt of foreign contributions, where the actions of an assoication are likely to prejudicially affect sovereignty and integrity of India or public interest or freedom or fairness of elections to any Legislature or friendly relations with any foreign State or harmony between relig....
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....nd integrity of India, there will be such a public outcry that the association would be required to close down without even a chance of explaining it to the public as to what is the true nature of its activities. Thus, it is not merely a violation or an injury of a civil right, but an adverse predicament for the functioning of any voluntary agency. Any order passed under section 10, therefore, must be passed on objective material and facts disclosed to the concerned association. A show-cause notice and an opportunity of explaining alleged objective material must be given to the voluntary association. The final order must disclose that the "satisfaction" is founded on objective material and must furnish proper reasons for non-acceptance of the explanation of the association against which the order is to be passed. None of these requirements of ensuring fair play are observed in passing the impugned order. In the impugned order, the Central Government merely states that it is "satisfied" that the AVARD is likely to affect prejudicially the public interest by its acceptance of foreign contributions. The order does not state the material on the basis of which the satisfaction is arr....