TaxTMI 
TaxTMI 
2026 (9) TMI 462
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....ties. Petitioner was established for promoting, facilitating and co-ordinating the social action initiatives of the 32 Catholic Diocesan Social Service Societies across the State of Kerala. Petitioner has a valid registration under section 12A of the Income Tax Act, 1961 and obtained initial registration under the FCRA on 25.04.1985 and thereafter, it has been renewed uninterruptedly, without any blemish. According to the petitioner, the last renewal under the FCRA was on 01.11.2016 for a period of five years and hence, it applied for further renewal on 07.05.2021, in accordance with section 16 of the FCRA. Petitioner alleges that, without even issuing any show-cause notice or affording an opportunity of hearing, the respondent rejected the renewal application as per Ext.P6 communication dated 04.10.2023, by merely referring to sections 12(4)(a)(vi) and 12(4)(f)(iii) of the FCRA. Challenging the order of refusal to renew the certificate, petitioner preferred a revision petition under section 32 of the FCRA. However, by Ext.P9 order dated 10.06.2024, the revision petition was dismissed, after referring to the report of a Central Security Agency accusing the petitioner of financially....
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....ied documents and information relied upon by them were furnished through a Central Security Agency, which finds mention in Schedule II to the Right to Information Act, 2005 (for short 'RTI Act'), as a result of which, the report is exempted from disclosure under section 24(1) of the RTI Act. Further, respondents allege that Ext.P9 revision order specifies the reasons for rejection of petitioner's application for renewal of certificate and therefore the allegation regarding non communication of reasons is not justified. It is also alleged that since petitioner's FCRA certificate of registration has ceased to be in force due to the refusal to renew the application, petitioner is not entitled to utilize any unutilized foreign contribution or the assets created out of such foreign contribution, unless and until a fresh certificate of registration is granted by the Central Government. Reliance is made to rules 12(5) and 12(6-A) of the Foreign Contribution (Regulation) Rules, 2011 in that regard. Respondents also relied upon the judgment in Noel Harper and Others v. Union of India and Another [(2023) 3 SCC 544] to contend that there is no right to receive unbridled and unregulate....
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....on of funds received and its use for undesirable purposes, petitioner is not entitled to have its registration certificate renewed. 6. I have considered the rival submissions. 7. The question that arises for consideration is the validity of the order rejecting the application for renewal of the certificate under the FCRA. It needs to be mentioned at this juncture that during the course of hearing, since it was prima facie felt that reasons have not been provided in the impugned order Ext.P6, on a query by the Court regarding the reasons, the learned Central Government Counsel submitted that those reasons cannot be divulged to the petitioner, but can be provided in a sealed cover to the Court for consideration. Accordingly, the report of the Central Security Agency was furnished in a sealed cover. 8. Petitioner is a charitable organization engaged in various social welfare activities. Petitioner's certificate to receive foreign contribution has been in existence since 1985 and it was always renewed, without even a single instance of blemish. However, when it applied for renewal in the year 2021, the application was kept pending till 2023 and thereafter, rejected, referring ....
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....vernment does not renew the certificate within the said period of ninety days, it shall communicate the reasons therefor to the applicant: Provided further that the Central Government may refuse to renew the certificate in case where a person has violated any of the provisions of this Act or rules made thereunder." 13. There is no dispute that the petitioner was an existing certificate holder under section 12 of the FCRA. Nevertheless, the renewal application can be refused if the petitioner has violated the provisions of the FCRA as specified in the proviso to section 16(3). Since some of the provisions of section 12 of the FCRA are alleged to have been violated, the relevant provisions of section 12 are extracted below: "12. Grant of certificate of registration. (1) An application by a person, referred to in section 11 for grant of certificate or giving prior permission, shall be made to the Central Government in such form and manner and along with such fee, as may be prescribed. (1A) ... (omitted as not relevant) (2) ......(omitted as not relevant). (3) If on receipt of an application for grant of certificate or giving pri....
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....sed; (d) in case the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence pending against him; (e) in case the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him; (f) the acceptance of foreign contribution by the person referred to in sub-section (1) is not likely to affect prejudicially (i) the sovereignty and integrity of India; or (ii) the security, strategic, scientific or economic interest of the State; or (iii) the public interest; or (iv) freedom or fairness of election to any Legislature; or (v) friendly relation with any foreign State; or (vi) harmony between religious, racial, social, linguistic, regional groups, castes or communities; (g) the acceptance of foreign contribution referred to in sub-section (1),-- (i) shall not lead to incitement of an offence; (ii) shall not endanger the life or physical safety of any per....
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....ther that reasons substitute subjectivity by objectivity. 16. Viewed in the perspective of the above legal principles, the proviso to section 16(3) of the FCRA cannot be perceived as confined only to provide reasons for the delay. It would be quite preposterous to read the statute as laying down the principle that reasons must be given only for the delay and not when the application is rejected. The rights of the parties are affected not only when there is delay in considering the application for renewal, but also when the application is rejected. The very terminology used in the statute itself indicates that reasons have to justify rejection. Even if the permission to receive foreign contribution is a form of regulatory mechanism, instituted under the FCRA, and no person has a fundamental right to receive foreign contribution, still, such a mechanism cannot discard the need for divulging reasons. Further, without understanding the reason for rejecting an application, an applicant will be put to serious prejudice. Hence, reasons for rejecting an application for renewal of a certificate under the FCRA has to be furnished and the said requirement emanates out of the proviso to sec....
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.... for denying renewal of the certificate as the field inquiry carried out through a Central Security Agency apparently revealed that petitioner had transferred amounts to the agitators during protest programmes against development projects in Vizhinjam. It is also mentioned that the foreign contribution is likely to be used for personal gains or likely to be diverted for undesirable purposes and also likely to affect public interest, thereby violating sections 12(4)(a)(vi) and 12(4)(f)(iii) of the FCRA. A reading of the revisional order reveals that the contents of the report of the Central Security Agency is classified as secret and hence reasons cannot be divulged. 21. The concept of not divulging the reason on account of a report of the security agencies was considered in Ex-Armymen's Protection Services and Digi Cable Network cases (supra). However, in Madhyamam Broadcasting Limited v. Union of India and Others [(2023) 13 SCC 401] a claim was made by the Ministry of Home Affairs that all reports of investigative agencies are confidential. While dealing with the said contention, the Supreme Court observed as follows: "MHA has made a general claim that all reports ....
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....would injure national security. The court observed: "54. Of course, the Respondent - Union of India may decline to provide information when constitutional considerations exist, such as those pertaining to the security of the State, or when there is a specific immunity under a specific statute. However, it is incumbent on the State to not only specifically plead such constitutional concern or statutory immunity but they must also prove and justify the same in Court on affidavit. The Respondent - Union of India must necessarily plead and prove the facts which indicate that the information sought must be kept in secret as their divulgence would affect national security concerns. They must justify the stand that they take before a Court. The mere invocation of national security by the State does not render the Court a mute spectator." 96. The issue is not whether the inference that national security concerns are involved is judicially reviewable. It is rather on the standard of proof that is required to be discharged by the State to prove that national security concerns are involved. It is necessary that we understand the meaning and implications of the term national ....
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....he phrase. The phrase derives its meaning from the context. It is not sufficient for the State to identify its purpose in broad conceptual terms such as national security and public order. Rather, it is imperative for the State to prove through the submission of cogent material that non - disclosure is in the interest of national security. It is the Court's duty to assess if there is sufficient material for forming such an opinion. A claim cannot be made out of thin air without material backing for such a conclusion. The Court must determine if the State makes the claim in a bona fide manner. The Court must assess the validity of the claim of purpose by determining (i) whether there is material to conclude that the non-disclosure of the information is in the interest of national security; and (ii) whether a reasonable prudent person would arrive at the same conclusion based on the material. ...........The court allows due deference to the State to form its opinion but reviews the opinion on limited grounds of whether there is nexus between the material and the conclusion." (emphasis supplied) 23. The claim of confidentiality or secretive nature of the report is not justified....
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.... OF HOME AFFAIRS) "1) Is there any fictitious or benami office bearers in the NGO? Please give details. No. 2) Whether the association has been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another? No. 3) Whether the association has been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country? No. 4) Whether the association has been found guilty of diversion or misutilization of its fund? No. 5) Whether members/key functionaries are engaged or likely to engage in propagation of sedation or advocating violent methods of achieving the stated objectives? No. 6) While utilising the foreign contribution, is there likelihood of personal gain or diversion of foreign contribution for undesirable purposes by members/office bearers of NGO? No. 7) Whether the association has contravened any of the provisions of the FCRA 2010? No. 8) Whether in case the person being an individua....
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....ion No. 16, which is a recommendatory column, there is a reference to providing financial support to the agitators during protest programmes against Vizhinjam Port by KCBC. Petitioner has denied any financial support provided by it to any of the agitators. Merely because a portion of the agitators belong to the Catholic community, or that the Bishops Council of the Catholic Church supported the agitation, cannot be a reason to assume that petitioner had funded the protests. Hence such an assumption without any basis is itself perverse and illegal. 27. Apart from the above, the agitation referred to in the report of the Central Security Agency, extracted earlier, was the objection raised by the local fishermen community who protested against the setting up of the new port project at Vizhinjam, a small fishing hamlet near the capital city of Kerala. With a natural depth of 24 metres, developing the Vizhinjam Port was identified as a chance to boost trade and commerce. However, the nearby fisherfolk community raised objections about setting up such a large port at Vizhinjam. Various environmentalists, local fishermen and others raised their objections and concerns in the setting up....
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....nstitution guarantees the right of every citizen to assemble peacefully, without arms while the right to form associations for collective bargaining flows out of the right under Article 19(1)(c) of the Constitution of India. Reference to the decisions in In Re Ramlila Maidan Incident [(2012) 5 SCC 1], and in Mazdoor Kisan Shakti Sangathan v. Union of India and Another [(2018) 17 SCC 324], wherein it was declared that the right to protest is a fundamental right. The following observations in the latter case are appropriate: "The right to protest is, thus, recognised as a fundamental right under the Constitution. This right is crucial in a democracy which rests on participation of an informed citizenry in governance. This right is also crucial since it strengthens representative democracy by enabling direct participation in public affairs where individuals and groups are able to express dissent and grievances, expose the flaws in governance and demand accountability from State authorities as well as powerful entities. This right is crucial in a vibrant democracy like India but more so in the Indian context to aid in the assertion of the rights of the marginalised and poorly ....