IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE SEVENTEENTH DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE C.V.RAMULU WRIT PETITION NO : 19820 of 2007 Between: Church of South India Rayalaseema Diocese Arogyavaram Medical Centre, formerly known as Union Mission Tuberculosis Sanatorium, a charitable Institution registered under the provisions of Act XXI of 1960, under Certificate of Incorporation No. 9/1913-14, Arogyavaram, Chittoor District, rep. by Director Dr.B.Wesle. ..... PETITIONER AND 1 The State of Andhra Pradesh, rep. by the Principal Secretary to Government, Home (General-B) Department, Secretariat, Hyderabad. 2 The District Collector, Chittoor. 3 The Sub Collector, Madanapalle, Chittoor District. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a Writ, in the nature of a Writ of Mandamus, or any other appropriate writ, direction or order declaring G.O.Rt.No.1118, Home (General.B) Department dated 09.08.2007, served on the petitioner on 05.09.2007, as illegal and void and direct the 1st respondent to pass orders notifying the petitioner under Sec. 11 (d) of the price Chits and Money Circulations Schemes (Banning) Act, 1978; and pass such further or other orders. Counsel for the Petitioner:MR.B.SIVA RAMA KRISHNAIAH Counsel for the Respondent No.: GP FOR HOME The Court made the following : THE HON'BLE MR JUSTICE C.V.RAMULU WRIT PETITION NO : 19820 of 2007 ORDER: This writ petition is filed seeking a Mandamus, to declare G.O.Rt.No.1118, Home (General.B) Department, dated 09.08.2007 issued by the Government of Andhra Pradesh as arbitrary and illegal and further to direct the 1st respondent to pass orders notifying the petitioner under Section 11(d) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (for short ‘the Act’). According to the petitioner, it is a charitable institution running Tuberculosis Sanitorium, Cancer Hospital etc., for the benefit of the general public. The expenditure is met from the donations received from the donors within and outside the country. It is also exempted under Sections 80G and 35AC of the Income Tax Act, 1961 for the financial years 2004-05 to 2006-07, for construction of the hospital building etc. According to the petitioner, it floated a scheme called “ACT AMC FUND RAISING PROJECT”, for the welfare of Aids, Cancer and Tuberculosis patients in the Arogyavaram Medical Center, for collecting donations. Though the said scheme is not money circulation scheme as defined under Section 2(c) of the Central Act 43 of 1978, as a measure of abundant caution, the petitioner filed an application dated 23.09.2005 to the Government under Section 11(d) of the said Act, which provides that nothing contained in the Act shall apply to prize chit or money circulation scheme promoted by any charitable or educational institutions notified in this behalf by the State Government in consultation with the Reserve Bank. The petitioner also submitted such applications to the Sub-Collector, Madanapalle and the District Collector, Chittoor, respondents 2 and 3 herein respectively on 01.12.2005. The Government forwarded the application submitted by the petitioner to the District Collector and at his instance, the Sub- Collector, Madanapalle conducted enquiry into the matter and sent detailed report in Roc.C1/4066/92, dated 07.12.2005 stating that the object of the petitioner is to raise funds through voluntary donors from different parts of the country and it is also exempted under Sections 80G and 35AC of Income Tax Act and the donors will get benefit of this exemption. It is also stated that the activities of the petitioner cover 14 areas and that it has started a fund raising programme for the welfare of Aids, Cancer and Tuberculosis patients through the scheme and that the request of the petitioner is genuine and therefore, a notification may be issued by exempting the institution from the application of the Act and also to permit it to run the scheme. The Collector, in turn, recommended the matter to the Government for granting such an exemption. However, the Government by an order, dated 29.11.2006 informed the petitioner that the request was under consideration; and ultimately, the same was rejected vide impugned proceedings, dated 09.08.2007. It is the case of the petitioner that the National Federation of the Blind, New Delhi, which started such a similar scheme was granted exemption under Section 11(d) of the Act. It is also stated that the ground, on which the exemption was denied, was not correct. It is further stated that under Sections 80G as well as 35AC of the Income Tax Act, exemption was already granted by the Income Tax Department and the case of the petitioner was not considered as required under law read with Section 11(d) of the 1978 Act. The learned Senior Counsel appearing for the petitioner contended that the petitioner is an organization working for eradication of Aids, Cancer and Tuberculosis in the State of Andhra Pradesh and the respondents have not considered the exemption sought for by it in the proper perspective. The very rejection of the respondents stating that there will be break in chain in the schemes of this nature will indicate that they have not applied their mind. The institution is doing human service in the fields of Aids, Cancer and Tuberculosis and unless exemption is granted, the institution may not be able to do justice to the cause undertaken by it. Therefore, the Government needs to reconsider the case of the petitioner. Though no counter affidavit is filed, learned Government Pleader for Home appearing for the respondents strenuously contended that it is purely the discretion of the Government to grant or reject the exemption as contemplated under Section 11(d) of the Act and the Government has accordingly furnished the reasons therefor. The very object of the Act is to ban prize chits and money circulation schemes. Under the given circumstances, the respondents have considered the case and found that there is every possibility of break in chain and as such, collecting donations in the guise of the prize chits and money circulation schemes is not permissible. Be that as it may, Section 11(d) of the Act provides that nothing contained in the Act shall apply to any prize chit or money circulation scheme promoted by any charitable or educational institution notified in this behalf by the State Government in consultation with the Reserve Bank. Though it appears that the Government has consulted the Reserve Bank in this regard, the reasons furnished appear to be not genuine. The Certificates issued under Sections 80G and 34AC of the Income Tax act are available on record and further, the cause appears to be very genuine. Under those circumstances, without expressing any opinion on merits, the respondents are directed to reconsider the case of the petitioner for granting exemption under Section 11(d) of the Act, after getting a detailed report from the authorities concerned again and pass appropriate orders as per law. This exercise shall be completed within a period of three (3) months from the date of receipt of a copy of this order and communicate the same to the petitioner. In the process of consideration, the petitioner shall be put on notice and he may be heard, if necessary, personally in this regard. The writ petition is disposed of with the above direction. There shall be no order as to costs. _________ 17.12.2008 Note: Issue C.C in one week. (B/o) JSU ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{KURR} THE HON'BLE MR JUSTICE C.V.RAMULU WRIT PETITION NO : 19820 of 2007 Date: 17.12.2008 JSU