FCRA CANCELLATIONS – Further developments

Friends,

I continue with our Dialogue on cancellation of FCRA. There is no doubt that due to large scale cancellations many genuine organisations have also been put in a lot of difficulty and anguish. Several of them, if not all, have upto date filing of returns.  Despite the same, these organisations are facing uncertainty about their future, due to freezing of their bank accounts. These organisations do not know how to manage their activities. They have to pay salaries, rents, food for children and for other essential and genuine needs. If they withdraw funds from FCRA account, they are going against the law, since they cannot touch that money once FCRA is cancelled. However they may not have much choice considering the ground realities of running projects.

FCRA Dept. seems to live in its own world. While it is acknowledged that they have to weed out non-compliant, but I am sure they can do so in a manner that least disrupts the activities of the genuine organisations. FCRA Dept.’s defence seems to be that they have sent notices to all the cancelled organisations and they took this action only because either these notices have been returned, undelivered or remained unanswered. Such a large number of organisations were untraceable seems a bit difficult to digest, however even if it is accepted, why not consider suspending the registration under S. 13 of FCRA 2010 Act. In fact the very purpose of bringing suspension clause was realisation, at the time of drafting the legislation, that before cancellation a final opportunity needs to be provided considering its severity. However the Dept. has gone ahead and cancelled registration of more than 4100 organisations.

Further S. 14 (2) goes on to state that ‘No Order of cancellation of certificate under this section shall be made unless the person concerned has been given a reasonable opportunity of being heard’. How many have been given this opportunity is anybody’s guess.

This is not the first time that the Dept. has taken such brazen action. Last year, rules required that all organisations transferring funds even to registered organisations would require prior permission from the Dept. This despite several representations submitted to the Dept. by several organisations, including two by SRRF, that this is against the very principle of the FCRA Act which allows registered organisations to receive funds. Soon they realised the Rule was not practical since the Dept. could never handle the scrutiny of such a large volume of transfers. They had to initially issue clarification and subsequently amend the rule.

Address
Some confusion is there, if organisations have to have their registered office address with FCRA Dept. It is clarified that the Dept. asks for ‘postal address’ when one applies for the registration and not registered office address (see new Forms FC3 & FC4 – application for registration & prior permission ). Problem is that once this address has been put on record, and if your postal address has changed, you need to update the same with Dept., otherwise any notices issued by the Dept. may not be received. This is to be done manually by submitting relevant form for the same.

Silver Lining
Even in case of cancellations there may be a silver lining for some of the cancelled organisations who have otherwise complied with the law. It is suggested that all such organisations should immediately submit evidence that they have complied with various provisions of the Act.

A lot of pressure is being built on the Department on this account and let us hope it will result in some positive development, but in the meantime ensure that you have put up your case with the dept.

Hoping for early resolution

Subhash Mittal
 
 
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7 Responses to FCRA CANCELLATIONS – Further developments

  1. Bharat Gupta says:

    Dear all,

    I had mentioned the name of GPF by mistake in the list of Cancelled NGO’s (refer point 3 in tha mail below). Kindly ignore the same! Probably confused it with another similar sounding NGO. My regrets!

    Their name did appear in the 2005 list but does no more appear in the recent List of ‘FCRA Cancelled NGO’s’, possibly due to subsequent revocation by MHA.

    Thanks and best wishes

    Bharat Gupta

  2. DIVYESH SURATI says:

    Dear Shri Subhashji,

    Greetings from NFD !

    As we all are aware about the fact that the decision for cancellation of registration is a very much drastic for NGOs.
    It may be sure that the notices for the same might be served to the organization earlier but without knowing the exact reason it is very much difficult to understand the reality.

    We all have concern to this situation and hope in future it should not be happen due to incorrect address of self or FCRA Division.

    I suggest to have one additional form with the FCRA return FC-6 for asking the details of organization for changes happen in the organization such as;

    Change in the Board of Trustees
    Change of Address
    Change of Acting Director/Secretary etc.
    Change in the Thrust Areas of work
    Change in Designated bank Address
    Change in the email address
    Change in the Office Phone Nos.

    There are nos. of reasons for change.

    I also suggest that FCRA Division has to give public notice for their change in any matter or address for submission and a contact nos. for asking several queries related to FCRA

    If such form is to be sent every time with FC-6, the change happen during the year would be reflected and updated by FCRA Division.

    Please convey your comments/suggestion in respect to this matter.

    With regards,
    DNSurati

  3. uday chaturvedi says:

    Dear Friends,

    1. One of the many benefits of Registered Societies and Trusts is employment generation while creating best models of development as acknowledged by several States’ Governments and also Central Government.
    Violations of laws/clauses/rules laid for cancelling FCRA registrations can be fought in Courts of Law after making valid efforts to get things corrected.

    2. Massive training programme on new FCRA rules and timely compliance not only for the chief functionaries but also Accounts and programme staff of Registered Societies and Trusts is the need of the hour.

    3. If only our Central Government and its various regulatory bodies took timely and proper care of Corporate affairs just as they seem to be attending to the Third sector(Socities and Trusts), Loksabha would not have been disrupted so frequently and the Country would not have incurred huge losses and deficits of various kinds would not have arisen in the first place.

    Udayashankar

  4. soma sastry says:

    Dear Subhashji,

    Greetings from Hyderabad!

    Many thanks for sharing the views of Mr. Gupta, who also happens to be a close friend of yours. The analysis is very interesting for me as I was not at all aware of the 2005 list.

    We all agree on one point and the point is that action is suspect. It is very difficult to digest the fact that notices to 4200 (which infact is more than 10% of the FCRA registered NGOs) NGOs have returned on account of incorrect address. I would like to put on record that Centre for World Solidarity (CWS), the organization for which I work, had submitted its change of address request way back in year 2000 and till now the address has not changed.

    If am correct, the clause of “no reasonable activity” has come up in FCRA 2010 and Rules 2011. If this were to be the case, the clause should apply to NGOs after April 2013 and not now.

    I sincerely hope that all the cancellations of the genuine NGOs are restored and that they are able continue with their good work. Best wishes and support to all.

    Thanks and regards,

    B V Soma Sastry

    • Bharat Gupta says:

      Dear Mr. Sastry,

      Thanks for the note and suggestions.

      Just to put the records straight, I would like to clarify that I am also a member of the dialogue group and have had the privilege to go through the various mails being exchanged. Only, I have not been sharing my views regularly. I have attended a couple of SRRF meets and hope to continue my learning and sharing.

      Some issues from your mail:

      You are right reg. the ‘no reasonable activity for 2 years’ point.
      As for the 4126 NGOs figure it seems from a preliminary research that roughly at least 60% NGO’s are from the 2005 list, i.e about 2,500 NGO’s. (took a sample of 270 odd NGO’s at random from A.P., Delhi, Punjab, Rajasthan, U.P and UK)
      These NGO’s were given time from 2005 till 2009 to submit the pending FC returns or clarify, which it appears they have not done. Possibly many of these NGO’s are either ‘defunct’ (I know of couple of dissolved NGO’s), or not interested in FCRA funds (e.g., Jamia university, JNU, GPF etc..), or may not have not seen the notifications/ MHA web-site at all (e.g., Karam Manovikas, Alwar), hence could not respond..

      Main issue therefore is regarding the remaining apprx. 40% NGOs or say about 1600 NGO’s (of which 75% are pre-2003 registered NGO’s while the remaining are the ones registered after 2003, as per my research).

      The reasons for their cancellations are not clear. The MHA list says ‘on violation’, which is vague. In fact, if you look at the FCRA cancellation of Christian Children’ fund (CCF), Delhi (FCRA No. 231650034), their request for FCRA cancellation is dated 12.09.03 requested due to merger with their Bangalore unit… hence, obviously, FCRA cancellation is not ‘on violation’ in this case as shown in the list! MHA should therefore give clear reasons for each NGO, in my opinion!

      Now what could be the correct reasons? This is the big question which everyone is trying to understand. Subhashji also shared some views yesterday. There are also others who say/affirm:

      NGO’s could not be contacted at the given/documented addresses by the FCRA officials who visited them, i.e Address change not intimated.

      It is due to non submission of FC returns for more than 3 years, like in the earlier 2005 list.
      NGO’s were being closely monitored by the state level Officers who may have given adverse reports for whatever reasons
      Non compliance of some sections of FCRA regarding nature of activities, sub-granting, not intimating changes in membership, etc. .

      Reasons are therefore not yet clear. But, definitely, Cancellation u/s 14 should be the last resort as it is the severe most penal action. Suspension as per section 13 of the Act should be the earlier resort even in difficult cases as stated by Subhashji. In fact, a warning at the stated address and/or on the public media/ mha web-site would have been better before any penal action.

      As suggested therefore, the affected NGO’s should take this up with the ministry, find out the reasons and subsequently clarify or comply, as required, and seek redressal/solution. As per the act, the Government officer under the direction of the Government has the power to revoke it’s earlier order. The other option is the affected NGO’s go to court but then they cannot approach MHA then! A difficult choice to make?! Subhashji may be able to better suggest here!

      Finally, reg. change of address of CWS, you may want to apply to the MHA once again for updation of their records.

      Best regards!

      Bharat

  5. Subhash Mittal says:

    Dear Friends,

    I have received an excellent response from a close friend on my yesterday’s write-up on SRRF-Dialogue relating to FCRA cancellations. Considering the quality of write-up I had no choice but share it on the Dialogue with other members. Bharat, I know you are rather reticent in sharing a public platform, however please bear with me for taking the liberty in the interests of providing better background relating to FCRA cancellations.

    Subhash Mittal

  6. Bharat Gupta says:

    Subhashji,

    Greetings!

    I could not resist joining the dialogue on FCRA cancellations, being a subject
    of my professional interest, as also affecting some members of the dialogue
    group, and would like to share a few comments from my side.

    1. Firstly, it is quite sad that many genuine NGO’s are
      suffering due to the sudden FCRA cancellations and it’s a big support that
      you have as usual taken up the cause for them within the legal framework and
      have provided a platform for a free and frank dialogue.
    2. I also saw names of a couple of known NGO’s
      appearing in the list and inquired from them reg. the background and
      possible reasons. They had been submitting the FC returns regularly
      and had not received any written notice from the ministry. They
      seemed to be in the dark and quite upset and were looking for
      guidance and support.
    3. I have the following to add here (which is the outcome of a brief research) 
    • The cancelled list seems to include names
      of some NGO’s that were included in the list of 8673 NGO’s in
      2005 for non submission of FC-3’s for 2001-05 period (ref.
      Gazette Notification S.O.1621 (E) dated 26th October, 2005
      published on 18th November, 2005). Thereafter, amnesty scheme
      was announced vide gazzette Notification S.O. 924 (E) dated 16th
      June, 2006 published on 21st June, 2006 and many NGO’s penal
      action was revoked. Thereafter vide 407(e), dtd. 10.2.2009
      further time was granted for 6 months to these NGO’s to file
      returns for the previous years starting 2001-2002.
    • The application of this penal action
      however varies from state to state. For e.g, In Punjab out of 7
      cancelled NGO’s 5 were in the earlier list of 2005 while the
      only 2 cancelled NGO’s in Uttarakhand were not in the 2005 list.
    • Similarly, there are many Rajasthan NGO’s
      from the 2005 list and also in case of other states like Delhi,
      A.P., Tamil Nadu, Maharashtra etc.. However, this requires a
      detailed assessment which can be separately taken up.
    • Out of the 4 NGO friends who have informed
      SRRF reg. the cancellations, at least one of the NGO Karam ManoVikas Sansthan, Alwar”:) has it’s name in that list, while the other 3 do not seem to appear to be in the 2005 list (may need to be re-checked by them as I do not have their FCRA number!

    As pointed out by Mr. Soma Sastry and other friends, there could be
    other reasons also for the cancellation like no reasonable activity
    for 2 years, adverse State IB report, non information of changed
    address or other important particulars, other non compliances  etc..
    but, as also rightly pointed out by you and others, at least with
    regard to the NGO’s that do not fall in the 2005 list, only after
    exhausting other options like written notice/newspaper/web-site
    notice etc., the ‘suspension’ clause could have been applied
    initially by MHA! The intentions can otherwise be suspect and can
    also create chaos and harm to NGO work.          

    I do hope that this kind of Penal Action by MHA is made more clear,
    considerate and transparent by the MHA as was done in the case of
    the 2005 notification.

    Looking forward, and with all support,

    Bharat Gupta