Kerala HC quashes refusal to renew FCRA certificates of 2 NGOs over Vizhinjam protest funding claims

The Kerala High Court has set aside the Central government's refusal to renew the Foreign Contribution (Regulation) Act, 2010 (FCRA) registrations of two NGOs over claims that they financially supported protests against the Vizhinjam Port project [Kerala Social Service Forum v Union of India & anr and connected case].

Justice Bechu Kurian Thomas delivered the judgement in two petitions filed by the NGOs, Kerala Social Service Forum and Save a Family Plan India.

The Court found that there was no material to show that the organisations had funded the protesters.

The Court added that even if financial support had been provided to the peaceful protesters, such support could not by itself be treated as use of foreign funds for an undesirable purpose or against public interest under the FCRA. The right to peacefully protest is constitutionally protected, the Court explained. 

"When the right to protest is constitutionally guaranteed, exercise of such right cannot be labelled as ‘an undesirable purpose’ or against public interest. The term ‘undesirable purpose’ in Section 12(4)(a)(vi) of the FCRA cannot be interpreted to mean undesirable to the Government or undesirable to the political will," the Court said. 

The Court added that the government's distaste for dissent cannot transform support for peaceful protests into the use of funds for an 'undesirable purpose.'

"Executive or administrative distaste for protests or dissents, cannot convert the exercise of a constitutionally protected right into an ‘undesirable purpose’ or as against ‘public interest’. Thus, even if it is assumed that some financial support was provided to the protestors, it cannot be treated as diversion of foreign contribution for an undesirable purpose or against public interest, tantamounting to violation of any provision in the FCRA," the Court held.

The two petitioners before the Court were charitable organisations. One of them, the Kerala Social Service Forum, was engaged in coordinating social action initiatives of 32 Catholic Diocesan Social Service Societies in Kerala. It had held an FCRA registration since 1985.

However, in October 2023, its 2021 application for the renewal of its FCRA registration was rejected by citing Sections 12(4)(a)(vi) and 12(4)(f)(iii) of the FCRA.

These provisions allow the denial of FCRA registration in cases where it is found that permitting the organisation to get foreign funding is likely to adversely affect India's sovereignty, its integrity, security, etc. and is likely to result in the violation of the FCRA or rules made under it.

Revision petitions filed subsequently by the Kerala Social Service Forum were also dismissed by the authorities.

The authorities relied on a central security agency report, which claimed that the forum had financially supported agitators at the Vizhinjam protests.

The other petitioner, Save a Family Plan India, had held an FCRA registration since 1985.

Its 2021 application for FCRA renewal was rejected as well after the authorities sought clarification regarding the transfer of its funds to other FCRA-registered NGOs, including Trivandrum Social Service Society (TSSS).

It was alleged that TSSS had diverted the funds to organisations named SAKHI and SEWA to provide financial support to Vizhinjam protestors.

Save a Family Plan India, however, clarified that the amount transferred to TSSS were for welfare programs involving aged widows, poor families, for vocational training, housing, etc. It added that all the financial transactions were supported by audited records and vouchers.

Both organisations eventually approached the High Court challenging the Centre's refusal to renew their FCRA registrations.

The Centre argued that the authorities could refuse FCRA renewal where foreign funds were used or likely to be diverted for undesirable purposes, such as funding protests.

However, the Court found that the authorities had failed to furnish reasons for the rejection orders. It emphasised that under Section 16(3) of the FCRA, it is essential to specify the reason even while rejecting an FCRA renewal application.

"In a democratic country, governed by the rule of law, for rejecting an application, even if it is a renewal application for permission to receive foreign contribution, reasons are essential. An order without reason is an action born of whim and not of law. The right to be furnished with reasons is, undoubtedly, an indispensable part of a sound judicial system," the Court stated.

The Centre claimed that the reasons for denying the renewal could not be disclosed on grounds of national security.

The Court, however, found that an Intelligence Bureau (IB) report tied to the matter was largely in favour of the petitioners. The only adverse reference appeared in the recommendation column.

In Kerala Social Service Forum's case, the report noted that the NGO belonged to the Kerala Catholic community and that the Kerala Catholic Bishops Council had financially supported the Vizhinjam agitation.

In Save a Family Plan India's case, the report said that the NGO had transferred funds to TSSS, which in turn were allegedly diverted to organisations supporting the protest.

The Court was not persuaded to hold that these were good reasons for denying FCRA renewal to the petitioners.

"Viewed from another angle, even if it is assumed that the petitioner had funded the peaceful protests, still, can it be held to be a reason to deny renewal of the certificate? The answer has to be in the negative. The right to protest is an integral part of a democracy. Every citizen has the right to demonstrate or to protest in a peaceful manner," said the Court.

Finding no serious violation or misuse of the foreign contributions, the Court held that the refusal of FCRA renewal by the authorities was arbitrary and illegal.

It, therefore, set aside the orders refusing FCRA renewal in both cases and directed the competent authority to pass fresh orders within three months.

Senior counsel Santosh Mathew, along with advocates Karthika Maria, Anjaly Elias, Ambika Sankar, Navya Seby, Arun Thomas, Anil Sebastian Pulickel, Veena Raveendran, Leah Rachel Ninan, Mathew Nevin Thomas, Shinto Mathew Abraham and Kurian Antony Mathew represented the petitioners.

Deputy Solicitor General of India OM Shalina appeared for the Union of India.

[Read Judgments]