2011 (6) TMI 670 - HC - Companies Law

Regulation of foreign contribution and foreign hospitality - deemed permission - Petitioner-trust had been receiving foreign contributions/donations after obtaining prior permission from respondent No. 1-MHA - Petitioner filed two applications on 3-12-2009 and 16-6-2010 to respondent for prior permission to receive amounts from foreign donors but respondent before expiry of ninety days wrote letters, dated 25-3-2010 and 6-10-2010 to petitioner that permission of Central Government could not be granted at relevant time and that it should not receive any foreign contribution till prior permission was issued by ministry Held that - if there was a deemed permission that was already granted under the FCRA 1976 at the time of the FCRA 2010 coming into effect, such deemed permission should be taken to have been granted under the FCRA 2010. Viewed from the perspective of the FCRA 2010 as well, the deemed permission in respect of the two applications of the Petitioner dated 3-12-2009 and 16-6-2010 in terms of the Proviso to section 11(2) FCRA 1976 remains unaffected. Also, the proviso to section 11(2) FCRA 1976 regarding deemed permission in respect of applications for prior permission cannot be defeated by the Central Government by simply keeping applications pending beyond the outer limit within which such applications were required to be disposed of in terms of the FCRA 1976. Writ petition is allowed

Issues Involved:
1. Interpretation of section 11(2) of the Foreign Contribution (Regulation) Act, 1976 (FCRA 1976) read with section 6(1A).
2. Effect of the repeal of FCRA 1976 by the Foreign Contribution (Regulation) Act, 2010 (FCRA 2010).
3. Deemed permission under Proviso to section 11(2) FCRA 1976.
4. Validity of communications dated 25-3-2010 and 6-10-2010 from the Ministry of Home Affairs (MHA).

Issue-wise Detailed Analysis:

1. Interpretation of section 11(2) of the FCRA 1976 read with section 6(1A):

The court examined whether the Petitioner, a trust registered under the Indian Trusts Act, 1882, had complied with the requirements under FCRA 1976 for receiving foreign contributions. The Petitioner had been receiving foreign contributions after obtaining prior permission from the MHA under section 6(1A) of the FCRA 1976. The Petitioner applied for permanent registration under section 6(1) of the FCRA 1976 after completing three financial years. The court noted that under section 11(2) of the FCRA 1976, if an application for prior permission is not disposed of within ninety days from the date of receipt, the permission is deemed to have been granted.

2. Effect of the repeal of FCRA 1976 by FCRA 2010:

The court considered the impact of the repeal of FCRA 1976 by FCRA 2010, which came into effect on 26-9-2010. The court noted that section 54(2) of the FCRA 2010 contains a savings clause, which ensures that actions taken under the repealed Act are deemed to have been taken under the corresponding provisions of the new Act, provided they are not inconsistent with the new Act. The court held that the deemed permissions under FCRA 1976 remain valid under FCRA 2010.

3. Deemed permission under Proviso to section 11(2) FCRA 1976:

The court examined whether the Petitioner's applications for prior permission dated 3-12-2009 and 16-6-2010 were deemed to have been granted under the Proviso to section 11(2) FCRA 1976. The court found that the MHA had not disposed of the applications within the stipulated ninety days. The MHA's letters dated 25-3-2010 and 6-10-2010 merely stated that permission could not be granted "at present" and that it would take further time to dispose of the applications. The court held that these communications did not constitute a refusal to grant permission and that the applications were deemed to have been granted after the expiry of ninety days.

4. Validity of communications dated 25-3-2010 and 6-10-2010 from the MHA:

The court set aside the MHA's communications dated 25-3-2010 and 6-10-2010, which had indefinitely extended the time for granting permission. The court held that these communications were inconsistent with the Proviso to section 11(2) FCRA 1976, which mandates that if the Central Government informs the applicant of special difficulties within ninety days, the application shall not be deemed to have been granted until the expiry of a further period of thirty days. The court found that the MHA had not informed the Petitioner of any special difficulties within the stipulated time frame.

Conclusion:

The court allowed the writ petition, set aside the MHA's communications dated 25-3-2010 and 6-10-2010, and directed the Respondents to pass necessary orders within four weeks clarifying the deemed permission granted in relation to the Petitioner's applications dated 3-12-2009 and 16-6-2010. The court held that the deemed permissions under the FCRA 1976 remained valid under the FCRA 2010.

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