gtag('config', 'UA-154374887-1');

Delhi HIgh Court Orders on FCRA Account Opening amid COVID-19

delhi-high-court-orders-on-fcra-account-opening-amid-covid-19

As per an amendment to Section 17 of the Foreign Contribution Regulation Act, 2010, (“Act”) which came into effect from September, 2020, NGOs which receive foreign contributions are required to open an FCRA account with the State Bank of India in the New Delhi Main Branch (SBI, NDMB) for the purpose of receiving foreign contributions.


As per a public notice issued by the Ministry of Home Affairs (“MHA”) on October 13, 2020, the deadline for applying for opening such an account was April 1, 2021.


However, owing to the second wave of the COVID-19 pandemic and various difficulties which the NGOs are facing and because of no relaxation in the form of extension by the government in this regard, some NGOs have moved to courts for appropriate reliefs.



Due to the expiry of the deadline of 31st March, 2021 to open the account with the SBI, NDMB and non-receipt of approval of the government even after opening the account owing to the second wave of the pandemic and subsequent lockdowns many states including Delhi, the NGOs are not able to receive foreign funds in their existing FCRA bank accounts. 


Non-receipt of this contribution would lead to non-rendering of services, especially during the pandemic situation where there is an enormous need for such services.


In this context, the Delhi High Court in the case of Christian Educational Society vs. UoI & Anr. in W.P.(C) 5215/2021 had asked the Ministry of Home Affairs to consider if April 1, 2021, deadline for opening FCRA Account for NGOs seeking to receive foreign funds can be extended in view of the COVID-19 pandemic on 7th May 2021. The Court had issued notices to SBI, NDMB also.


In this case, the petitioner, an NGO namely the Christian Educational Society from Andhra Pradesh pleaded that the Petitioner is a Non-Governmental Organisation, which has its FCRA bank account in the State Bank of India, Yerragondapalem Mandal Branch, Andhra Pradesh.


The Petitioner in terms of the amendments to Section 17 of the Act, wanted to open its FCRA bank account in SBI, New Delhi. The last date as per the notification dated 13th October, 2020 for submitting the application was 1st April, 2021. The Petitioner had submitted its documents to the SBI, New Delhi on 25th March, 2021. Thereafter, certain defects were raised in respect of the application. The same were communicated to the Petitioner on 27th March, 2021 and on 8th April, 2021. Thereafter, the Petitioner’s representative located in Delhi, had submitted hard copies of all the required documents to open the FCRA Account in SBI, Delhi. However, owing to the pandemic situation, there had been some delay in the said submission of documents, and possibly even in the processing of the same by the SBI.


The counsel for the Petitioner submitted that an extension may be granted for the opening of the said FCRA account beyond 31st March, 2021.The counsel also expresses a difficulty that in the meantime, the NGO is unable to accept any foreign contributions or funding which is jeopardizing its actions, given the dire situation of the pandemic, and the need for such funding to provide social and economic help to the needy persons.


In the meantime, on 10th May 2021 the SBI, NDMB had opened the account of the petitioner NGO.


In other cases, Mothers Touch Charity Foundation vs. UoI & Anr. in W.P.(C) 5287/2021 and Comfort Ministries & Anr. vs. UoI & Anr. in W.P.(C) 5310/2021, the Delhi High Court had noticed that there are several organisations, including NGOs, which have been approaching the Court in respect of the opening of their FCRA accounts and the approvals by the MHA. After opening of the bank account at SBI, NDMB, the next step would be the filing of the form for the FC6 form with the MHA 


NGOs are stated to be facing tremendous difficulty both in the opening of the FCRA account as also in the subsequent approval which is to be obtained from the MHA as, without the approval of the MHA, no foreign contributions can be received by them. Hence, a prayer is made for extending the deadline of 1st April, 2021 permitting receiving of foreign contributions by a period of six months and for directing the MHA to grant FC6C certificates to the Petitioners in an expeditious manner. 


In these petitions, the amendment to Section 17 is not under challenge, however, owing to the second wave of the Covid-19 pandemic and various difficulties which the organisations are be facing, the MHA shall consider as to whether the deadline of 1st April, 2021 can be extended and if so, till when.


At this juncture, the MHA has issued a Public Notice on 18.05.2021 extending the date to open FCRA Account in the SBI, NDMB till June 30, 2021.


Finally, the Delhi High Court on May 20, 2021 directed the SBI to ensure that applications for opening the FCRA account by NGOs who seek to receive foreign contributions shall be processed at the earliest and shall make the bank accounts operational within 10 days of receipt of the FC6 certificate from the concerned applicant.


Lastly, the petitioners were granted liberty to move an application for revival of these petitions in case the respondents fail to adhere to the schedule indicated in the order.


Download the Delhi HIgh Court Orders on FCRA Account Opening amid COVID-19


Sl. No.

Case Title

Download Order Dated

1.

Christian Educational Society vs. UoI & Anr. 

W.P.(C) 5215/2021

7.5.2021

12.5.2021

20.5.2021

2.

Mothers Touch Charity Foundation vs. UoI & Anr. 

W.P.(C) 5287/2021

12.5.2021

13.5.2021

20.5.2021

3.

Comfort Ministries & Anr. vs. UoI & Anr. 

W.P.(C) 5310/2021

13.5.2021

20.5.2021


The matter pertains to the amended Section 17 of the Foreign Contribution Regulation Act, 2010 w.e.f. 29th September 2020 read with a Public Notice issued by the MHA on 13th October 2020 which made it mandatory for NGOs that receive foreign contributions to open an FCRA Account in the State Bank of India, New Delhi Main Branch upto 31st March 2021. Thereafter, from 1st PAril, 2021, they are forbidden to receive any fund in any other FC Bank Account other than the designated Bank account with SBI, NDMB.


Before the Court, various NGOs had submitted that they were facing tremendous difficulty both in the opening of the FCRA account and also in the subsequent approval from the MHA which is required after opening the designated bank account. It is to be noted that without the approval of the MHA, no foreign contributions can be received by any of the NGOs.


Hence, petitions were filed and a prayer was made for extending the deadline of 1st April, 2021 permitting receiving of foreign contributions in existing bank accounts and for directing the MHA to grant FC6C certificates to the Petitioners in an expeditious manner.


As many as 10 NGOs moved the petition before the court to operationalize their SBI, NDMB FCRA Account. Even if an account is opened in the bank within the time and applied to the MHA for its approval, the accounts were not operationalized for want of an FC6C certificate which is issued by the MHA. Opening a FCRA account with the SBI involves both the bank and the Ministry of Home Affairs.


FC6C is an authorisation certificate mandatory to operationalise a bank account with the SBI, NDMB.


There is a difference between opening an account and operationalising it. The SBI opened the account but it cannot function till the bank receives an authorisation certificate from the ministry. There were no clear timelines, the ministry has now undertaken that if all the papers are complete, it will release the certificate within seven days.


Further, as per media reports, the MHA informed the Delhi High Court that it would release authorisation certificates to operationalise the FCRA bank accounts of NGOs within 7 days of receiving a request.


Read Also:

Delhi HIgh Court Orders on FCRA Account Opening amid COVID-19

Govt Extends Validity of FCRA Registration Certificates to 30.09.2021

Govt Extends FCRA Account Opening Date to 30.06.2021 with NDMB of SBI



Get all latest content delivered straight to your inbox
Socialize with Us

Post a Comment

0 Comments