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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Contribution Regulation

Hope Foundation, which held an FCRA certificate and built a school building and bought equipment from foreign contribution, has become defunct. It was registered as a society under a State law that has a provision on disposal of assets on winding up. How are its assets to be disposed of under section 22?

The assets are disposed of in accordance with the law under which the society was registered or incorporated. Only where no such law exists can the Central Government notify an authority and prescribe the manner. Since a State law applies here, it governs rather than the Centre.

  1. AAutomatically vested in the Central Government
  2. BIn accordance with the law under which the society was registered or incorporated; only in the absence of such a law may the Central Government specify the disposing authorityCorrect
  3. CBy the State Bank of India branch at New Delhi holding its FCRA account
  4. DDistributed equally among the former members

Explanation

Section 22 first directs disposal according to the law under which the person was registered or incorporated. Only when no such law exists may the Central Government, by notification, specify the authority and manner. Since the State law exists here, it governs, so automatic vesting in the Centre is wrong.

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