En masse Inspections by Govt

En masse Inspections by Govt

Further to our last post on this subject (http://blog.srr-foundation.org/?p=3860), it is now clear that FCRA Dept has issued notices en masse to a large number of NPOs, with large amount of funds under FCRA. These are not just international NPOs, who are registered in India, but also include totally Indian NPOs, who receive large FCRA funds. In this post we examine the legality of notice that has been served to these NPOs.

Notice has been issued under S.23 of FCRA 2010 to undertake inspections. S.23 obligates the Govt to ‘record in writing any ground to suspect that any provision of this Act has been or is being contravened’. The words record in writing is important, and the Dept must not only record these reasons in writing but also disclose the same when asked for.

Some have argued that the notice issued does provide reasons as it state that the Govt ‘has reasons to believe after a preliminary scrutiny of the Annual Returns that some provisions of the FCRA Act have been violated’. Exactly same language has been used in all notices. However this is too general while reasons to be recorded need to be specific.

In fact S.20 of FCRA Act provides for an audit exactly on the grounds mentioned in the notice. One may wonder then why has FCRA issued the notice under S.23, where one could challenge the Notice, and not under S.20. It may be noted that S.23 authorises the authority appointed to seize accounts and records and produce before the court. This could initiate a series of actions which would not remain within the control of the NPO. Further it may be noted that S.23 requires that the person to undertake inspection must be a gazetted officer holding Group A post. Though the section goes on to authorize the Dept to authorize any other officer or organisation to undertake the inspection, one needs to carefully examine the legal ramifications of the same.

In conclusion, it is time for NPOs to weigh carefully consequences of not challenging the notice and submitting themselves for inspection under the belief it to be a routine inspection.

—

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008