Mere possession of permanent registration under the Foreign Contribution (Regulation) Act, 2010, does not create a right in favour of an organisation to get the amounts, received from foreign countries, credited to their designated savings bank account, the High Court of Karnataka has said.
The contributions received from abroad are always subject to further clearance by the Ministry of Home Affairs (MHA) as per the provisions of the FCR Act, the court made it clear.
Justice K.S. Hemalekha passed the order while rejecting a petition filed in 2014 by Bengaluru-based Manasa Centre for Development and Social Organisation, a non-governmental organisation (NGO).
Complaining that Development Credit Bank Ltd., Bengaluru, in 2013 illegally did not allow the withdrawal of the amount from the account even though the petitioner is a registered NGO to receive foreign contributions under the FCR Act, the petitioner-NGO had sought direction to the bank to release the amount along with ₹10 lakh as damages.
However, the court noted that the MHA, on securing feedback and inputs from the field/security agency, takes a decision to place foreign donors in the “prior reference/permission category” under the relevant provisions of the FCR Act, 2010.
The details of such “prior reference/permission category” are further communicated to the Reserve Bank of India (RBI) under Section 46 of the FCR Act, 2010 to instruct all the banks and their branches to ensure that any fund flow from any organisation/person/agency mentioned in the “prior reference/permission category” to any bank account in India will be brought to the notice so that such funds are allowed to be credited in the accounts of the recipient only after due clearance from the MHA, the court said.
In one such “prior reference/permission category”, the court pointed out, the MHA in 2013 communicated to the RBI to direct all banks to ensure that any fund flow to any individuals/entity in India from ‘Dan Church Aid’ is brought to the notice of the Ministry for clearance before crediting into the account of the recipient, NGOs, associations, etc.
The court observed that the petitioner-NGO had received two contributions, of ₹5.23 lakh and ₹23.89 lakh, from ‘Dan Church Aid’ in 2013 and the bank had sought approval from the MHA to credit the amount to the petitioner’s account. The bank declined to credit the amount on the instruction received during June-October from the MHA not to credit the amount till approval by the Ministry.
The petitioner was not entitled for credit of the amount into its account without the clearance from the MHA, the court said while rejecting the petition.
