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2015 Supreme(Mad) 1309
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
V.M. VELUMANI, J.
Community Action For Rural Development (CARD), Rep. by its Program Director & Chief Functionary – Appellant
Versus
The Secretary, Ministry of Women & Child Development & Chairman of Rashtriya Kosh & Others – Respondent
W.P.(MD)No. 15328 of 2012 & M.P.(MD) No. 1 of 2012
Decided on: 12-03-2015
Advocate Appeared
For the Petitioner:S. Natarajan, Advocate.
For the Respondents:C. Ramachandran, Advocate.
Headnote:
Income Tax Act - Section 80-G - Tamil Nadu Societies Registration Act 27 of 1975 - Foreign Contribution Regulation Act, 1976 - Constitution of India, 1950 - Article 226 – Quash of order - Socio economic development of poor downtrodden and weaker sections - Charitable projects for benefit of Women Self Help Groups - Petitioner is a Non-Governmental Organization registered under Tamil Nadu Societies Registration Act 27 of 1975 - Petitioner is registered with Commissioner of Income Tax under Section 12-A and exempted under Section 80-G of Income Tax Act - Petitioner also registered with Ministry of Home Affairs Government of India under Foreign Contribution Regulation Act, 1976 - Aim and object of petitioner is to undertake Rural Development Activities for socio economic development of poor downtrodden and weaker sections of Society and to implement various charitable projects for benefit of Women Self Help Groups - Petitioner is implementing various projects for past - Petitioner availed grant-in-aid schemes evolved by Government Departments under which various programmers are being funded - It is an Apex Micro Credit Organization under Government of India to give micro loans to poor women in un-organized sectors for their social and economic development - Loans to beneficiaries are being distributed through various Non-Government Organizations like petitioner – Held, That in case of default of payment of interest installments continuing for more than six months without any sufficient and cogent reasons - Reserves its right to initiate action including blacklisting NGO and for recovery of its dues by filing necessary legal proceedings - As per Clause 25 respondents 2 and 3 have power to blacklist borrowing organizations Non-Government Organizations if default of payment of interest installments continuing for more than six months without any sufficient and cogent reasons - In present case petitioner has paid a total sum of Out of this amount petitioner has paid a sum - Respondents 2 and 3 did not deny these averments - It is seen that within fifteen days of receipt by Demand Drafts respondents 2 and 3 have blacklisted petitioner by impugned communication - This action of respondents 2 and 3 is contrary to Clause 25 of Agreement and hence it is invalid – Secondly counsel for petitioner contended that respondents 2 and 3 passed impugned order without notice to petitioner - This is in violation of principles of natural justice - Blacklisting a person is a serious matter and it involves civil consequences - Without subjective satisfaction authority cannot blacklist a person - Even if rules do not provide notice to be given to a party it is an elementary principle of natural justice that party affected must be given an opportunity of being heard and making representations against order - In case of petitioner respondents 2 and 3 did not give any opportunity to put forth their case - In these circumstances following Judgments relied on by counsel for petitioner are squarely applicable to facts of present case and relevant of portions of Judgments had already been extracted - This Court has jurisdiction to entertain present writ petition as part of cause of action has arisen within territorial jurisdiction of this Court - In facts and circumstances of case Arbitration Clause is not applicable to relief sought for by petitioner and even if Arbitration remedy is available it is not a bar in facts and circumstances of case to invoke writ jurisdiction of this Court and impugned order blacklisting petitioner is invalid and illegal in view of contravention of Clause 25 of Agreement and violation of principles of natural justice - Writ Petition is allowed
This Writ Petition has been filed to quash the order of the third respondent herein in RMK/Blacklisting/2010/1128, dated 24.04.2010.
2. The petitioner is a Non-Governmental Organization, registered under the Tamil Nadu Societies Registration Act 27 of 1975 in the year 1982. The petitioner is registered with the Commissioner of Income Tax under Section 12-A and exempted under Section 80-G of the Income Tax Act. The petitioner also registered with the Ministry of Home Affairs, Government of India under the Foreign Contribution Regulation Act, 1976. The aim and object of the petitioner is to undertake Rural Development Activities for the socio economic development of poor downtrodden and weaker sections of the Society and to implement the various charitable projects for the benefit of Women Self Help Groups (SHG). The petitioner is implementing various projects for the past 30 years. The petitioner availed grant-in-aid schemes evolved by Government Departments under which various programmes are being funded.
3. During March 1993, Rashtriya Mahila Kosh (RMK) was established by the Government of India. It is an Apex Micro Credit Organization under the Government of India to give micro loans to the poor women in un-organized sectors for their social and economic development. The loans to the beneficiaries are being distributed through various Non-Government Organizations, like the petitioner.
4. The petitioner and the respondents 2 and 3 entered into an agreement, dated 21.09.2006. The petitioner has been sanctioned with the amount for distribution to the various beneficiaries. A sum of Rs.60,00,000/- was granted under revolving fund scheme to be distributed to the Women Self Help Group and under the house loan scheme Rs.45,00,000/- was sanctioned, in which Rs.22,50,000/- was granted to the petitioner. The petitioner has also availed similar loans from RMK and the same has been repaid regularly.
5. The Income Tax Department advised the petitioner that they would not get exemption under Section 80-G of the Income Tax Act, if they carry on the lending activities. The petitioner was finding very difficult to collect the loans distributed to Women Self Help Groups, as they were very poor and downtrodden women. Therefore, the petitioner decided to close the lending activities.
6. In spite of these difficulties, the petitioner paid a sum of Rs.70,34,574/-. During the period of nine months, i.e., from 15.04.2009 to 21.12.2009, the petitioner has re-paid a sum of Rs.23,75,159/- and Rs.4,00,000/- on 09.04.2010. In spite of these payments, the third respondent, by his communication, dated 24.04.2010 informed the petitioner that they have been blacklisted the petitioner for default in payment and debarred from availing any future financial assistance from the Government Departments. According to the petitioner, the said order has been passed without notice to them. The petitioner has stated that the agreement between the petitioner and the respondents 2 and 3 stipulates that if default in payment continues for more than six months without any sufficient or cogent reasons then only the respondents 2 and 3 can blacklist the petitioner. In the present case, the respondents 2 and 3 receive payment of Rs.4,00,000/- on 09.04.2010 and hence, blacklisting the petitioner by the communication, dated 24.04.2010, without notice is invalid and illegal.
7. The Rashtriya Mahila Kosh also informed the same to other Government Organizations. In view of such information, other Organizations have stopped granting funds to the petitioner. Therefore, the petitioner could not implement the projects and is unable to recover the monies from the Women Self Help Groups due to the act of blacklisting the petitioner.
8. Respondents 2 and 3 have acted in an arbitrary manner and contrary to the terms of agreement, dated 24.04.2010 and hence, the order is ex facie illegal.
9. Respondents 2 and 3 filed counter affidavit. In the counter affidavit, they have taken the followi
