Madras High Court ruled that NGOs receiving foreign donations shouldn’t be treated with suspicion without proof of misuse. The Court backed Ellen Sharma Memorial Trust, saying hyper-technicalities shouldn’t block genuine charity work.
The Madras High Court has strongly told the Indian government that it should not look at charitable organisations with doubt just because they receive foreign donations.
The Court said this while passing a judgment in the case Ellen Sharma Memorial Trust v. Union of India and another. The case was about a charitable trust whose application to renew its FCRA (Foreign Contribution Regulation Act) registration had been denied by authorities.
Justice N Anand Venkatesh, who heard the case, clearly stated that there were no serious complaints or misuse of funds by the Ellen Sharma Memorial Trust or its related organisations.
ALSO READ: [Marital Rape] “Potential Misuse of Laws”: NGO Files Plea in SC Against Criminalization
He noted that such a refusal to renew registration was unfair in the absence of solid proof against the trust.
The Court made it clear by saying:
“In the case in hand, the foreign contributions were not diverted, misused and utilized for any other purpose against national interest or for any personal gain or for undesirable purposes.”
Justice Venkatesh also said that unless there are clear and serious accusations that a charitable trust is using foreign donations for anti-national or illegal activities, the government must not treat such organisations with suspicion.
He remarked:
“Just because some institutions run with the aid of foreign contribution, it is not necessary to look at the institutions like that of the petitioners with suspicion unless there are materials to show that such foreign contribution is being misused and it is being used against public interest/national interest. This is more so where persons of Indian origin, settled in foreign countries, earn money and want to give something back to their country by contributing funds. In such cases, unless there are serious violations of misuse of foreign contribution, the Authorities must deal with it with an open mind. The case in hand is one where such contributions were made by persons of Indian origin settled in foreign countries and they wanted to contribute in terms of providing education to women and work for their welfare.”
The Ellen Sharma Memorial Trust began its work in the early 1980s. Its aim was to improve education and well-being of children in India.
It set up schools like Ellen Sharma Primary School at Karaipakkam and Ellen Sharma Memorial Matriculation School at Sholinganallur, which also served orphaned and refugee children from Tibet. It also opened health centres and clinics at both locations.
The trust depended on foreign funds, mainly from a family of Indian origin living abroad. It had a valid FCRA registration that allowed it to receive such donations.
But in 2021, after waiting and sending many queries, the trust received an email stating that its FCRA renewal application had been rejected. No detailed reason was given.
The trust, along with its sister NGO – the Sharma Centre for Heritage Education – then moved the High Court. They argued that not only was the rejection unjust, but also no explanation was provided.
In court, the government said the reason for rejection was that the Ellen Sharma Memorial Trust had shared part of the foreign donations with its sister NGO without getting prior permission.
ALSO READ: NGO to Release Environmental Law Enforcement Manual to Strengthen Crime Prosecution
This was a violation of Section 7 of the FCRA, which had been amended in 2020.
But Justice Venkatesh observed that this rule change only applied from October 2020 onwards. Before this amendment, there was no need for prior approval to share funds among related NGOs.
The Court accepted that the trust may have made a genuine mistake due to lack of awareness about the legal change.
He explained:
“The amendment that came into effect from October 2020 was a happen-stance and it is impossible for a layman to take note of such procedural changes brought in by the amendment. Therefore, just because the procedural formality was not followed for that short period, it should not be completely put against both the petitioner trust as well as the appellant.”
He also emphasised that minor mistakes or technicalities should not stop good charitable work, especially when it’s for children’s education.
The Court said:
“One family is involved in sending the foreign contribution to provide education to children in India and such an objective should not be shot down by hyper technicalities.”
The government had also argued that they were not required to give reasons for rejecting the application. But the judge disagreed, making it clear that the authorities were wrong in this view.
He said:
“The contention of the respondents that they need not communicate the reasons for refusal to grant the certificate by bringing the case within the Proviso to Sub-Section (5) of Section 12 of the Act, is unsustainable.”
Finally, the Court ordered the authorities to renew the trust’s FCRA registration within four weeks from the date of receiving the order.
Appearing for the Ellen Sharma Memorial Trust was Senior Advocate Satish Parasaran, assisted by Advocate Rahul Balaji.
The Sharma Centre for Heritage Education was represented by Advocate S Ramamurthy, with Advocates E Ann Priscilla Swarna Kumari and Saitanya Kesan.
The Union of India (Ministry of Home Affairs – FCRA Wing) and the Director of the FCRA Wing were represented by Additional Solicitor General ARL Sundaresan, assisted by Advocate KS Jeyaganeshan.
Case Title:
Ellen Sharma Memorial Trust v. Union of India and anr
Read Judgement:
Click Here to Read More Reports On NGOs
