NGO Filed Plea in Delhi High Court Seeking Extension to Open a FCRA Account with SBI, DHC Issues Notice

(Judicial Quest News Network)

In a plea filed by a NGO seeking extension by six months for the opening of the FCRA account in SBI Delhi branch, Delhi High Court has issued notice on Friday.

The Petitioner is an economic, educational, and social organization that carries out various social and educational charitable activities for persons across communities. It has played a pivotal role in COVID-19 relief efforts to several poor families in need of financial and medical assistance. The Petitioner is reliant on Foreign Contribution to carry out its economic, educational, and social activities, including employing its staff, supporting the needs of communities and providing relief during this unprecedented COVID-19 pandemic.

It is also prayed in the plea that a direction to set aside for 6 months the restriction on receiving foreign contribution in existing FCRA accounts from 1 April,2021, as mandated by the Ministry of Home Affairs in a public notice dated Ocober,12, 2020, as well as direction to process the petitioner’s application to open FCRA account.

The Foreign Contribution (Regulation) Act, 2010 was enacted to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.

2. The said Act has come into force on the 1st day of May, 2011 and has been amended twice. The first amendment was made by section 236 of the Finance Act, 2016 and the second amendment was made by section 220 of the Finance Act, 2018.

3. The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act.

Many of them were also found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts. This has led to a situation where the Central Government had to cancel certificates of registration of more

than 19,000 recipient organisations, including non-Governmental organisations, during the period between 2011 and 2019. The criminal investigations also had to be initiated against dozens of such non-Governmental organisations which indulged in outright misappropriation or mis-utilisation of foreign contribution.

4. Therefore, there is a need to streamline the provisions of the said Act by strengthening the compliance mechanism, enhancing transparency and accountability in the receipt and utilisation of foreign contribution worth thousands of crores of rupees every year and facilitating genuine non-Governmental organisations or associations who are working for the welfare of the society.

A bench of Justice Pratibha. M. Singh heard the matter and proceeded to issue notice in the same.

It is further submitted that the petitioner NGO is reliant on foreign contribution to carry out its economic, educational and social activities, including employment of staff, supporting the needs of communities and providing relief during the COVID-19 pandemic.

The filed by Advocates Abhishek Jebaraj and Srishti Agnihotri,

After the recent amendment the Foreign Contribution Act, 2010, requires the opening of a designated FCRA account, which is an exclusive account in which foreign contribution is to be received.

Under section 17 of FCRA Amendment Act 2020, now requires that a primary FCRA account for any organisation in India needs to be exclusively opened with state bank of India, New Delhi Branch.

The plea further submits that an application on March, 25 2021, the elaborate process for permission and the various documentation to be submitted, combined with serious delays due to COVID-19, has resulted in the application still remain pending. Due to this the petitioner is unable to receive foreign contribution

“As a consequence, the Petitioner is neither able to receive foreign contribution in its existing non-SBI FCRA account nor open a primary FCRA account with SBI to receive foreign contribution. This is severely restricting its activities, including providing COVID related relief and paying of urgent salaries of staff, as well as affecting its charitable and educational activities, due to administrative delays completely out of its control”

It is also submitted that the petitioner-NGO has already applied for the opening of a SBI account but the petitioner-NGO did not get any letter from SBI which is required to apply for the FC6C certificate od approval by ministry of Home Affairs.

The Petitioner preferred its application to open its FCRA account on 25 March 2021. However, the resurgence of the COVID-19 pandemic brought activities across all sectors to a standstill. The Petitioner came to know that the State Bank of India, Main Branch was functioning in a limited capacity similar to other companies, organisations, and government offices. Moreover, the SOP requirement of waiting for the approval of Respondent No. 1 prior to allowing inflow of foreign funds has slowed the process down even further. Mentioned in the plea.

This has caused immense hardship for the petitioner and other similarly situated persons who are seeking to open FCRA Accounts.

. There is significant administrative expense and hardship in opening and maintaining a new bank account in another city for organisations located outside Delhi, such as the Petitioner. There is also severe inconvenience involved in submitting copies of all the necessary papers and personal documents, such as Aadhar card copies and the KYCs of signatories and other persons. Moreover, members of organizations such as the Petitioner, as well as their trustees, are unable to affix their signatures to the requisite documents, or carry out any other necessary compliances, as they are residing in different parts of the country and cannot travel due to COVID-19 restrictions.

Aggrieved by this grave situation in spite of having a valid FCRA registration and being in urgent need of foreign contribution during the pandemic, it is unable to receive the same from readily available donors, the Petitioner-NGO has approached the Delhi High Court for  directions to the ministry to extend the last date to open a primary FCRA account on humanitarian grounds