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2022 (2) TMI 794 - HC - FEMAViolation of provisions of FCRA, 2010 - Suspension of certificate - suspension u/s 13(1) of the FCRA, 2010 - HELD THAT - This Court, in the facts of that case had set aside the suspension order on two grounds, firstly, no reasons have been spelt out in the suspension order and secondly, the respondents have neither issued Show Cause notice nor initiated an inquiry by the time the suspension order was passed. Insofar as, stating the reasons for suspension is concerned, as concluded above, the reasons have been given in the impugned order. To that extent, the judgment has no applicability. Insofar as the conclusion of the Court by the time the suspension order was passed neither an inquiry was initiated nor any Show Cause notice was issued is concerned, it is my conclusion that the process of inquiry was started in the year 2017. So, it is not a case where neither any inquiry was initiated nor any Show Cause notice was issued. So, the judgment relied upon by Mr. Datar and Mr. Singh is clearly distinguishable. Insofar as the reliance placed by Mr. Datar and Mr. Singh on the judgment in the case of Modern Dental College and Research Centre and Ors. 2016 (5) TMI 1366 - SUPREME COURT the same is inapplicable to the present case, inasmuch as, the impugned order suspending the petitioner is in consonance with the object which the instant legislation/statute strives to achieve and has not gone in excess of that object, as my findings above would depict, and as such, satisfies the doctrine of proportionality.
Issues Involved:
1. Legality of the suspension order dated June 07, 2021, under Section 13 of the FCRA, 2010. 2. Alleged violations of the FCRA, 2010 and FCRR, 2011 by the petitioner. 3. Requirement of inquiry before suspension under Section 13 of the FCRA, 2010. 4. Recording of reasons for suspension under Section 13 of the FCRA, 2010. 5. Applicability of the doctrine of proportionality and arbitrariness. Detailed Analysis: 1. Legality of the Suspension Order: The petitioner challenged the suspension order dated June 07, 2021, issued under Section 13 of the FCRA, 2010. The petitioner argued that the suspension was issued without an inquiry and without giving an opportunity to be heard, which is impermissible. The court clarified that Section 13(1) does not require an inquiry or an opportunity to be given before suspension. The court noted that the suspension is an interim measure pending the consideration of cancellation under Section 14 and is not a final action. The court emphasized that the suspension order must be based on reasonable grounds and should not be arbitrary or vindictive. 2. Alleged Violations of the FCRA, 2010 and FCRR, 2011: The suspension order cited multiple violations by the petitioner, including: - Failure to provide details of activities/projects for which foreign contributions were received and utilized in the FC-4 Form for FY 2018-19. - Non-intimation of a bank account opened on February 18, 2016, where foreign contributions were received. - Non-intimation of a utilization account for FYs 2016-17 and 2017-18. - Refund of foreign contributions back to the donor in FYs 2013-14 and 2014-15, allegedly violating Section 8(1)(a) of the FCRA, 2010. - Mixing of foreign contributions with domestic donations, violating Section 17 of the Act. The petitioner contended that these allegations were erroneous and that they had provided the necessary information. However, the court found that the respondents had justified the reasons for the suspension, and the satisfaction of the Central Government could not be substituted unless the reasons were perverse. 3. Requirement of Inquiry Before Suspension: The petitioner argued that an inquiry was necessary before suspension under Section 13. The court clarified that Section 13(1) does not contemplate any inquiry before suspension. The court noted that the process of inquiry had started in 2017, and the suspension order was based on material available on record, including annual returns and replies to questionnaires. 4. Recording of Reasons for Suspension: The petitioner argued that the suspension order did not record reasons explaining the necessity of suspension. The court held that the violations cited in the suspension order could be construed as reasons for suspension. The court emphasized that the reasons and grounds for suspension are inter-related and that the Central Government must record reasons in writing to show its satisfaction that suspension is necessary pending consideration of cancellation. 5. Applicability of the Doctrine of Proportionality and Arbitrariness: The petitioner contended that the suspension order violated the doctrine of proportionality and was arbitrary. The court noted that the suspension order was in consonance with the object of the FCRA, 2010, and satisfied the doctrine of proportionality. The court found no reason to interfere with the suspension order and dismissed the writ petition. Conclusion: The court dismissed the writ petition, upholding the suspension order dated June 07, 2021. The court found that the suspension was justified based on the material available on record, and no inquiry was required before suspension under Section 13(1) of the FCRA, 2010. The court also dismissed the related applications.
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