V.K. Jain, J.@mdashThe petitioner before this Court is a society registered under the Societies Registration Act, 1860. Vide order dated
30.4.2013 issued by the Director to the Government of India, Ministry of Home Affairs, Foreigners Division (FCRA Wing), the permanent
registration of the petitioner association was suspended in exercise of the powers conferred upon the Central Government u/s 13 of the Foreign
Contribution (Regulation) Act, 2010. While suspending the said registration, it was also directed that the petitioner association can utilize the funds
available with it, only after taking prior permission of the Central Government in terms of Section 13(2)(b) of the FARA, 2010. Being aggrieved
from the aforesaid order dated 30.4.2013, the petitioner is before this Court seeking setting aside of the said order. In their counter-affidavit, the
respondents have stated that reports were received by the Government which revealed that foreign funds received by the petitioner were being
transferred to other FCRA registered as well as non-FCRA registered NGOs, which were utilizing the said fund for organizing the protest, etc.
against the welfare policies of the Government and such utilization of foreign contribution may prejudicially affect the public interest. In its rejoinder,
the petitioner has denied having transferred funds to any non-FCRA registered NGOs.
2. Section 13(1) and 14(1) and (2) of the Foreign Contribution (Regulation) Act, 2010, read as under:-
13. Suspension of certificate. - (1) Where the Central Government, for reasons to be recorded in writing, is satisfied that pending consideration of
the question of cancelling the certificate on any of the grounds mentioned in sub-section (I) of section 14, it is necessary so to do, it may, by order
in writing, suspend the certificate for such period not exceeding one hundred and eighty days as may be specified in the order.
14. Cancellation of certificate. - (1) The Central Government may, if it is satisfied after making such inquiry as it may deem fit, by an order, cancel
the certificate if
(a) the holder of the certificate has made a statement in, or in relation to, the application for the grant of registration or renewal thereof, which is
incorrect or false; or
(b) the holder of the certificate has violated any of the terms and conditions of the certificate or renewal thereof; or
(c) in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate; or
(d) the holder of certificate has violated any of the provisions of this Act or rules or order made thereunder; or
(e) if the holder of the certificate has not been engaged in any reasonable activity in its chosen field for the benefit of the society for two consecutive
years or has become defunct.
3. The scheme of the Act, therefore, is that if the Central Government, after making such enquiry as it may deem appropriate in this regard, is of
the opinion that it is necessary in the public interest to do so, it can cancel the certificate after giving a reasonable opportunity of hearing to the
organization concerned. If, while considering the cancellation of registration in terms of Section 14 of the Act, the Central Government is satisfied
that it is necessary to suspend the certificate, during such consideration, it can suspend the certificate of the organization concerned for a period not
exceeding 180 days provided reasons for such suspension are recorded by the Government.
4. Admittedly, by the time the suspension order dated 30.04.2013 was passed, the Central Government had neither issued any notice of
hearing/show-cause notice in terms of sub-section (2) of Section 14 nor had it initiated any enquiry in terms of the said Section. Therefore, there
was no occasion to suspend the certificate of the petitioner in terms of sub-section (1) of Section 13 of the Act. The respondents wrote to the
petitioner seeking certain information for the first time vide letter dated 02.05.2013, i.e., after the registration of the petitioner-society had already
been suspended. The suspension, therefore, was contrary to the scheme of the Act which envisaged such suspension only when the issue of
cancellation is already pending consideration of the Central Government. For this reason alone, the impugned order dated 30.04.2013 is liable to
be quashed.
5. Yet another reason which warrants quashing of the impugned order dated 30.04.2013 is failure of the Central Government to record the
reasons which necessitated suspension of the certificate in terms of sub-section (1) of Section 13 of the Act. Though on account of use of the word
''may'' in sub-section (1) of Section 13, the respondent has taken the plea that recording of the reasons is not a mandatory requirement, the plea, in
my view, is wholly misconceived. A careful perusal of sub-section (1) of Section 13 would show that the requirement of recording reasons which
necessitate suspension of the organization is a mandatory requirement and the word ''may'' has been used only in the context of giving a discretion
to the Central Government whether to suspend the registration or not. In other words, the Central Government may or may not suspend the
certificate of an organization, pending consideration of cancellation of the said certificate but, if the Government decides to suspend such certificate
it can be done only for reasons to be recorded and such reasons, in my view, need to be incorporated in the suspension order itself so that the
organization is in a position to know what were the reasons which impelled the Government to suspend its registration and in case the organization
feels that certificate has been suspended for the reasons which are not envisaged under sub-section (1) of Section 13 or are not otherwise cogent,
objective and transparent, it can challenge such suspension by way of appropriate proceedings. Such reasons cannot be given, by way of
extraneous evidence at a later stage. In the absence of reasons, it would not be possible for the organization to challenge the suspension. For the
reasons stated hereinabove, the impugned order dated 30.04.2013 is hereby set aside. It is, however, made clear that this order will not come in
the way of respondent initiating a fresh action in terms of the provisions of the Act in the light of this order. The respondent is directed to release
the account of the petitioner forthwith.
Dasti under the signature of Court Master.