FCRA registration not a right to get foreign money credited; always subject to MHA clearance: Karnataka High Court

The Karnataka High Court recently said that the possession of a permanent registration under the Foreign Contribution (Regulation) Act of 2010 (FCRA), does not create any right in favour of a person or organisation to get the foreign donation amount credited in the bank account [Manasa Centre For Development And Social Action Vs. The Managing Director, The Development Credit Bank Ltd]..Justice KS Hemalekha explained that the credit of money from foreign sources is always subject to clearance from the Union Ministry of Home Affairs (MHA).“Mere possession of the permanent registration under the FCRA, 2010 does not permit the petitioner to get the amounts credited to the designated savings bank account, which is always subject to the clearance of the Ministry of Affairs,” said the Court.The Court took note of a Government of India letter, as per which the authorities can take a decision to place a foreign donor into a ‘Prior Reference/Permission Category’ on the basis of feedback or inputs received from the field or security agencies..The observations were made by the Court in its decision on a petition filed by the Manasa Centre For Development And Social Action, a Bengaluru-based registered society that had sought the release of funds kept aside by the Development Credit Bank in 2013.Manasa submitted that the bank had dishonoured a cheque citing insufficient funds even though there were sufficient funds in its account.The bank had intimated that an amount of over ₹29 lakh has been kept aside and that any remittance being received from a foreign entity, ‘Dan Church Aid’, could only be credited to the account after receiving clearance from the MHA. However, Manasa claimed that the funds in the account were also from other agencies..The Court noted that in 2013, the Reserve Bank of India (RBI), on the basis of a communication from the MHA, had directed all the banks to ensure that any fund flow to any individual or entity in India from ‘Dan Church Aid’ is brought to the notice of the ministry before clearance. Manasa had received two inward remittances from the ‘Dan Church Aid’ in their account at Bengaluru. Accordingly, the DCB had sought clearance from the MHA, the Court noted. However, the bank was told not to credit the foreign contribution into Manasa’s account as per the order.The Court said that since the MHA, in a letter dated October 31, 2013, had clearly instructed the bank not to credit the amount received from ‘Dan Church Aid’ to the account without a clearance from the ministry, Manasa was not entitled to the funds.Accordingly, the Court concluded that the petition lacked merit and dismissed it..Advocate Siji Malayil represented Manasa Centre For Development And Social Action. Advocate VL Sreenath represented the Development Credit Bank. Deputy Solicitor General Shanthi Bhushan represented the Union Ministry of Home Affairs..[Read Judgment]