The Madras High Court has ruled that NGOs receiving foreign contributions should not be viewed with suspicion unless there is clear evidence of misuse of funds. Justice Anand Venkatesh emphasized that authorities must have an open mind. While dealing with such institutions, especially when funds are contributed by Indians settled abroad aiming to support social welfare. The judgment came in response to petitions filed by Sharma Centre for Heritage Education and Ellen Sharma Memorial Trust. Whose FCRA renewal applications were rejected by the Union Government. The government cited a violation of Section 7 of the Foreign Contribution (Regulation) Act, 2010, regarding fund transfers without prior approval. However, the court noted that the rejection lacked specific reasoning and procedural fairness.
It observed that the 2020 amendment mandates prior permission for fund transfers. The trust should have been given a chance to clarify. Finding no evidence of fund misuse, the court held that procedural lapses alone cannot justify denial of renewal. Especially when it affects educational and health services. The court quashed the rejection and directed the Centre to process the renewal within four weeks.
