Group members please find latest notification on compounding of FCRA violations by the Ministry of Home Affairs on FCRA ACT, 2010 S.O. 1976 (E), Dated 26-8-2011.
SECTION 41 OF THE FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 – COMPOSITION OF CERTAIN OFFENCES – SPECIFIED OFFENCES & AUTHORITY
NOTIFICATION NO S.O. 1976(E), DATED 26-8-2011
WHEREAS “foreign contribution” has been defined under clause (h) of sub-section (1) of section 2 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010) (hereinafter referred to as the “Act”).
WHEREAS “person” has been defined under clause (m) of sub-section (1) of section 2 of the Act.
WHEREAS section 11 of the Act prescribes that no person, save as otherwise provided in the Act, shall accept foreign contribution unless such person obtains a certificate of registration or prior permission of the Central Government and therefore, acceptance of foreign contribution without obtaining registration or prior permission from the Central Government constitutes an offence under the Act.
WHEREAS sub-section (1) of section 41 of the Act prescribes that notwithstanding anything contained in the Code of Criminal Procedure, 1973, any offence punishable under this Act (whether committed by an individual or association or any officer or employee thereof), not being an offence punishable with imprisonment only, may, before the institution of any prosecution, be compounded by such officers or authorities and for such sums as the Central Government may, by notification in the Official Gazette, specify in this behalf.
NOW, THEREFORE, in exercise of the powers conferred by sub-section (1) of section 41 of the Act, the Central Government hereby specifies that the following offences by any ‘person’ may, before the institution of any prosecution, be compounded for the payment of sums as penalty, as indicated against each of the offences under the Act:-
| S.No. | Nature of offence | Quantum of penalty |
| (i) | Acceptance of cheque or draft towards foreign contribution by a ‘person’ without registration or prior permission of the Central Government even in cases where the cheque or draft has not been deposited in a Bank by the ‘person’. | Rs. 10,000 or 2 per cent of the foreign contribution involved, whichever is higher. |
| (ii) | Acceptance of cheque or draft by a ‘person’ towards foreign contribution without registration or prior permission of the Central Government and depositing the same in a Bank notwithstanding non-utilisation of the amount of the foreign contribution. | Rs. 25,000 or 3 per cent of the foreign contribution involved, whichever is higher. |
| (iii) | Acceptance of foreign contribution by a ‘person’ without registration or prior permission of the Central Government and utilisation of the same notwithstanding any inquiry which revealed that the contribution received was not diverted towards any purpose other than the objectives or purpose for which the same was received, utilisation of the contribution was as per the objectives of receipt of the same and records of receipt and utilisation have been kept properly. | Rs. 1,00,000 or 5 per cent of the foreign contribution involved, whichever is higher. |
| (iv) | Acceptance of foreign contribution in kind by a ‘person’ without registration or prior permission of the Central Government notwithstanding that nothing adverse was reported after inquiry. | Rs. 10,000 or 2 per cent of the foreign contribution involved, whichever is higher. |
(2) In exercise of the powers conferred by sub-section (1) of section 41 of the Act, the Central Government hereby specifies that the Director or Deputy Secretary in charge of the FCRA Wing of the Foreigners Division in the Ministry of Home Affairs shall be the authority for exercising the powers for compounding of an offence under the Act.
Friends,
This is the new policy under FCRA where department would charge penalties as compounding charges for any regularisation of violations under FCRA. I believe it is a better move than where a damocles
sword of cancellation of Registration was always hanging over an NGO. Circular basically covers following situations:
1. If cheque accepted (without having registration / prior permission) even if not deposited in the bank would be considered as an offence and punishable with a fine of Rs 10,000 or 2% of FC whichever is higher.
2. If cheque deposited even if fund not utilised would attract a fine of Rs 20,000 or 3% of FC whichever is higher.
3. Utilsation of funds without permission would attract a fine of Rs 100,000 or 5% whichever is higher, even if the funds have been used for the purposes of the objectives of the grant.
4. Utiilisation of FC in kind without permission would attract a fine of Rs 10000 or 2% whichever is higher.
Presently the circular covers only the above stated situations however does not cover, I am sure several other permutations and combinations that would be possible. For example, what if a person has prior permission but has received & utilised more funds than was permitted, strictly speaking it does not fall under 3 above, but dept. could try to fit it in the same.
However yet another important implication of this notification is, would the Dept. now take onus on itself, if the FCRA grant is diverted by the NGO? Till now most funding agencies did not know whether they could approach FCRA in such a situation, it needs to be seen if the FCRA Dept. would start investigating NGO and punish it if the funds are diverted. Would the Dept. institute an inquiry if it receives a complaint of diversion of funds ?
Under the provisions, the Dept may not renew FCRA registration or suspend / cancel the same if the the concerned NGO has been found guilty of ‘mis-utilising’ or ‘diverting’ the funds. (Refer relevant cluses under S. 12, 13 & 14). Thus perhaps the Dept. could institute an inquiry if it receives a complaint of the same, but it is not clear if the Dept. is bound to institute an inquiry, if it receives a complaint of such a nature.
rgds
subhash
Dear Sir,
Thank you Very Much
Regards,
Valan