CHRI Vs Union Of India: Delhi HC Allows CHRI To Utilise 25% Of Its Foreign Contributions To Meet Its Necessary Professional Expenses

Case Background

• The Deputy Secretary to the Government of India, Foreigners Division, Home Ministry had passed an order on 7th June 2021 that suspended the Commonwealth Human Rights Initiative’s (CHRI) registration under the Foreign Contribution (Regulation) (FCR) Act, 2010.
• This order was made with reference to Section 13 of the FCR Act owing to some pending investigation into some affairs of the Initiative.
• The effect of the order was that the Initiative’s receipt and utilisation bank accounts were frozen.
• The CHRI approached the respondent seeking its approval to utilise a portion of its foreign contributions to pay off the salaries of its employees.
• However, since there was no response from the respondent’s side, the CHRI placed the matter before the Delhi High Court.

Petitioner’s Submission

• The petitioner submitted that the salaries of its employees were not yet paid, and the utilisation of a portion of its foreign contributions is necessary for the same.
• It stated that the same would also be used to meet its other operational expenses in respect of the projects commenced prior to the order of the department.

Respondent’s Submission

• When the matter was heard earlier, the High Court Bench, on 19th July 2021 sought response and considerations of the respondents in this issue.
• It was submitted that the respondents had not filed any response and are waiting for a report, in this respect, from a foreign agency.

Important Provisions

• The FCR Act: The Act was enacted in 1976, and was later amended in 2010. It is an Act that regulates the utilisation of foreign donations made by individuals, groups, associations, and even NGOs.
• Registration is compulsory to receive foreign contributions for various purposes. The initial valid period of registration is 5 years which may be extended if the registered members comply with all of its norms.
• Suspension or Cancellation of Registration: Sections 13 and 14 of the FCR Act deals with the suspension and cancellation of Registration respectively. Under Section 13, a registration can be suspended by an order of the Ministry of Home Affairs for a period of 180 days.
• The effect is that the suspended association cannot receive any foreign contribution, and cannot utilise more than 25% of its own foreign contributions.
• Section 14 provides for cancellation of registration on grounds in Sub-section 1 thereunder. Such person would not be able to register for three years from the date of cancellation.

Court’s Order

• Considering the current pandemic situation wherein people are experiencing financial strains, the Court ordered the petitioner, CHRI, to utilise 25% of the foreign contributions lying in its custody to meet its necessary professional expenses.
• It further directed the petitioner to maintain an account of its expenses and submit it to the respondent, on a monthly basis.
• The Court observed that a decision regarding the permission to allow the petitioner to utilise the foreign contributions in its possession should be necessarily decided based on a foreign agency’s report by virtue of Section 13(2) of the FCR Act read with Rule 14 of the Foreign Contribution (Regulation) Rules, 2011.

What are your views on this case and the order?