Reasonable Opportunity To Be Heard Before Cancelling FCRA Registration Not Restricted To Issuing Show-Cause Notice, Includes Personal Hearing: Karnataka HC

The Karnataka High Court has set aside an order passed by the Union Ministry of Home Affairs cancelling the certificate of registration issued under the Foreign Contribution (Regulation) Act, 2010, to a trust Centre for Wildlife Studies, on the grounds that no personal hearing was granted to the trust before passing the order.

A single judge bench of Justice M Nagaprasanna allowed the petition filed by the trust whose Chief functionary is Ullas Karanth, grandson of novelist Dr. K Shivarama Karanth and set aside the order dated 04-09-2023.

It said “Principles of natural justice, is trite cannot be stretched to unlimited extent. But, it is equally trite that when consequences thereof are grave, it should be complied with in its entirety even stretching in a little further. Therefore, the words depicted in the Act 'reasonable opportunity of being heard' cannot be restricted to issuance of a show cause notice but a personal hearing in the peculiar facts of the case owing to the peculiarity of sub-section (3) of Section 14 of the Act must have been afforded to the petitioner.”

Centre for Wildlife Studies is registered with an objective of promoting and carrying on activities relating to scientific study and conservation of natural habitats of wildlife and promoting projects which involve rehabilitation of endangered animals, ecosystems and plants. The scientists in the Trust are internationally recognized and have been conferred several awards.

An application was made by it for a change of bank account in which funds of the trust were being operated which came to be allowed in 2021 and accordingly, the petitioner received funds from foreign contributors as well as from Indian contributors.

On 05-03-2021 the impugned suspension order came to be passed operating for a period of six months. On 11-04-2021, against the order of suspension, the petitioner sent a detailed reply. Following this on 03-12-2021, a show cause notice was issued to the petitioner to show cause as to why registration of the petitioner should not be cancelled in terms of sub-section (2) of Section 14 of the Act.

Again a detailed reply was sent by the Trust refuting each one of the allegations. Subsequently, on 04-09-2023 an order came to be passed cancelling the registration.

The primary contention of the trust was that the impugned order cancelling the registration does not contain any reasons and prior to cancellation of the certificate of registration the petitioner ought to have been afforded a personal hearing by the authorities.

The Union Government opposed the plea contending that Section 14(2) of the Act contemplates reasonable opportunity of being heard and being heard would not mean providing a personal hearing. Issuance of a show cause notice would suffice.

Findings:

The bench referred to Section 14 (2) of the Act and noted the cancellation of the certificate cannot be made without affording a reasonable opportunity to be heard. Sub-section (3) of Section 14 of the Act is penal as the cancellation of the certificate will lead to disability of any person whose certificate is cancelled for a period of three years. Therefore, it was stated that this has serious civil and economic consequences.

Following this it observed, “The words “reasonable opportunity of being heard” cannot be read in isolation. They have to be read along with sub-section (3) of Section 14 of the Act, the consequences of passing an order of cancellation.”

Relying on the judgment of the High Court of Madhya Pradesh in Samvad Society v Union of India, the court held “Sub-section (2) of Section 14 of the Act permits cancellation of registration. The consequence thereof is found in sub-section (3) which permits no registration under the Act for an entity which suffered cancellation for a period of three years. This is the dire civil and economic consequence that would ensue. Therefore, it cannot be said that sub-(2) of Section 14 of the Act is restricted only to hearing, hearing would mean only issuance of a show cause notice. Therefore, the contention of the learned Central Government Counsel is to be repelled and is accordingly repelled.”

Allowing the petition and quashing the impugned orders the court said that non-affording of personal hearing to the petitioner had rendered the order unsustainable. "Let there be no confusion that there can always be a fusion between hearing and personal hearing,” it concluded.

However, it granted liberty to the Union of India if it found it necessary, to act in accordance with law bearing in mind the observations made in the order.

Appearance: Senior Advocate a/w Advocate V Vinayak Kulkarni appearing for petitioner. CGC Madhukar Deshpande, for R 1 & R2.

ASPP B.N. Jagadeesh, for R3 & R4.

Citation No: 2024 LiveLaw (Kar) 289

Case Title: Centre for Wildlife Studies AND Union of India & Others

Case No: WRIT PETITION No.27301 OF 2023

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