In 2011, the Supreme Court delivered a landmark ruling on the law of adverse possession, in State of Haryana vs Mukesh Kumar. The Haryana government forcibly acquired eight biswas of land which was in the name of one Mukesh Kumar. The State filed a suit claiming it had adverse possession of the land.
The Supreme Court ruled that Haryana could not acquire it under the principle of adverse possession, and that the procedure for sale and transfer of registration has to be followed. It said that the law of adverse possession was archaic, irrational and harsh. The suit was based on Article 300A of the Constitution which talks about right to property. Justice Dalveer Bhandari earned a lot of praise for this judgment.
FCRA amendment
One is reminded of this judgment in the aftermath of the protests against the proposed amendments to the Foreign Contribution (Regulation) Act. Section 16A of this Act proposes that upon the cancellation, surrender, or cessation of an FCRA certificate, all foreign contributions and assets created therefrom shall provisionally vest in the designated authority. This vesting is automatic and instantaneous, requiring no judicial determination or adjudicatory process. The mere administrative act of cancellation triggers a complete loss of control over assets. This is a disproportionate consequence for what could be minor procedural infractions leading to cancellation.
Section 14 delineates five reasons for cancellation of FCRA certificate: (i) certificate was obtained with incorrect statement in the application; (ii) violation of terms of certificate; (iii) the Central government reckons the certificate of any association is to be cancelled in public interest; (iv) violation of any provisions of the Act; and (v) if the association has not been engaged in any activity for the benefit of society in its chosen field for two consecutive years. Cancellation of certificate for any of these reasons will attract Section 16A, and assets of the association concerned will vest with the designated authority.
Section 16A(5) provides that if the organisation fails to have its certificate restored within a prescribed period, these assets shall “permanently vest” in the designated authority. Subsequently, under Section 16A(6), these assets can be transferred to any government department or sold, with the proceeds being credited to the Consolidated Fund of India. It allows the Central government to seize the assets of a private entity, built over years of charitable work, based on an administrative decision. Such a provision appears to be in direct conflict with the spirit of Article 300A, which mandates that no person shall be deprived of his property save by authority of law. A law that permits such deprivation without a fair, just, and reasonable procedure is itself arbitrary and liable to be challenged.
Non-profit organisations with foreign funding have been under the radar for the past decade or so. Per the data in the Ministry of Home Affairs portal, about 15,000 organisations have valid FCRA at present, registration of about 22,000 organisations has been cancelled, and registration of about 15,000 organisations has ceased to be valid on non-renewal by the Central government.
Applications for renewal of registrations are being rejected without details on the reasons for rejection. Creation of a super-regulator in the form of the “designated authority”, armed with sweeping powers, is one of the proposals. Section 16A(3) empowers this authority not only to take possession of assets but also manage the activities of the person whose assets are vested. Acquiring assets and running the operations provide no options to the organisation to continue as a going concern.
Much has changed economically and politically since the Mukesh Kumar case. If the Bill is passed without amendments and assets are acquired, it will only be a matter of time before the matter reaches the Supreme Court again under Article 300A.
The writer is a chartered accountant
Published on April 7, 2026