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2023 (10) TMI 891 - HC - FEMAForeign contribution utilized for undesirable purposes - Suspension of certificate - seeking Release/permit the Petitioner to utilize 25% of the total foreign contribution amount/funds held by the Petitioner u/s 13(2)(b) of the Foreign Contribution (Regulation) Act - HELD THAT - Section 13(2) of the FCRA permits utilization of foreign contribution which is in custody of the person whose certificate has been suspended. There is no occasion to restrict the term his custody only to the current account. The amounts which are held in fixed deposits or in government bonds etc. are also unutilized foreign contributions which can be made available to the person whose account has been suspended pending the inquiry u/s 14 of the FCRA. There is no reason for this Court to disbelieve the statement that the Petitioner has already utilized the figures given by it regarding the expenses to be incurred for its survival pending consideration of the cancellation of registration u/s 14 of the FCRR. There is nothing in the said Section which restricts that only the amounts lying in the current account can be permitted to be utilized, this Court is inclined to allow the Petitioner to utilize the 25% of the total FCRA funds held it in fixed deposits, government bonds etc. pending consideration of the cancellation of registration under Section 14 of the FCRR. The outward disbursement of the amounts shall only be for the purpose of carrying out the day-to-day activities and for no other expenses. A complete statement of the Petitioner s FCRA account and the amounts deposited in fixed deposits and government bonds etc. along with expenses incurred from the date of suspension shall be submitted to the Respondent periodically.
Issues:
The issues involved in the judgment include the application for direction to release 25% of foreign contribution funds, challenge to the order suspending registration, interpretation of Section 13(2)(b) of FCRA, and the calculation of the amount available for utilization. Application for Direction to Release 25% of Foreign Contribution Funds: The petitioner filed an application seeking a direction to release 25% of the total foreign contribution funds held under Section 13(2)(b) of FCRA read with Rule 14(a) of FCRR. The respondent had suspended the registration of the petitioner pending consideration of cancellation due to alleged misuse of foreign contributions. Challenge to Order Suspending Registration: The petitioner challenged the order suspending its registration under FCRA, alleging that the foreign contributions were being utilized for purposes other than those registered, leading to a violation of FCRA. The respondent had suspended the certificate pending further inquiry. Interpretation of Section 13(2)(b) of FCRA: Section 13(2)(b) of FCRA prohibits the receipt of foreign contributions during the suspension period and allows utilization of such funds with prior approval. The petitioner sought to utilize 25% of the unspent amount, including funds in fixed deposits and government bonds, for declared aims and objects. Calculation of Amount Available for Utilization: The petitioner argued that the respondent only considered the current bank account balance for calculating the 25% of the contribution available for utilization. However, the petitioner claimed that unutilized amounts in different deposit accounts and schemes should also be included. The petitioner faced financial difficulties, unable to pay employee salaries, and sought permission to use the entire unutilized foreign contribution. Conclusion: The court allowed the petitioner to utilize 25% of the total foreign contribution funds, including amounts in fixed deposits and government bonds, for day-to-day activities. The petitioner was directed to submit a complete statement of its FCRA account, deposits, and expenses periodically. The judgment clarified that the term "his custody" in Section 13(2) of FCRA is not limited to the current account, allowing for the utilization of unspent funds from various sources.
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