New Delhi, Jan 11: In an effort to regulate the unorganised NGO ecosystem in the country, the Supreme Court on Tuesday issued a direction the central government to audit the accounts of over 32 lakh NGOs functioning in the country and receiving funds from various sources, including the government funds and foreign donations.
The Supreme Court also asked the government to submit the report to the Court regarding the same. The SC Bench also directed the Centre to frame guidelines with respect to accreditation of NGOs, maintenance of their accounts and auditing the same.
A bench led by Chief Justice JS Khehar set the March 31 deadline to carry out the directive and asked the government to submit the Action Taken Report (ATR) on April 5.
These directions were issued to the government by the SC Bench presided by Chief Justice J S Khehar and comprising Justice N V Ramana and Justice D Y Chandrachud while hearing a public interest litigation filed by advocate M L Sharma.
The Court heard the parties at length today and also placed reliance on the report submitted by Amicus Curiae Rakesh Dwivedi before issuing the order.
In its order, the Court noted that substantial funding is allowed for NGOs and voluntary organisations. Further, Rules 210-212 of the General Financial Rules, 2005 provide for a regulation mechanism for NGOs, though the respondents are not aware of the same. The court noted:
“There are 32 lakh NGOs out of which nearly 3 lakh are filing balance sheets. The respondents are not aware of the responsibility of audit in the General Financial Rules…There can be no doubt that the funds disbursed by CAPART [to NGOs] is public money and needs to be accounted.”
It, therefore, directed the Centre to complete the exercise of audit and submit a report by March 31 this year.
The Supreme Court also directed the government to initiate civil and criminal action immediately in case of non-compliance after the completion of the exercise.
Most importantly, the Court also directed the Centre to lay down guidelines/rules for accreditation of NGOs, the manner in which they shall maintain accounts and auditing of the same. The guidelines have to be placed before the Court on the next date of hearing.
“You have to set the procedure right. If it hasn’t been done in the past, then do it for the future. You cannot allow misuse of public funds in such a way,” the bench told additional solicitor general, Tushar Mehta.
“What have you been doing for so many years? Why haven’t you taken action? You can’t let the public money go waste like this,” the bench noted, making it clear that the government can take both civil and criminal recourse against firms found guilty.
The court said on next date of hearing on April 5, it expected the Centre to place before it the guidelines and rules for accreditation of voluntary organisation and detailing the manner in which they shall maintain their accounts, conduct the audit, the process of recovery and methodology of recovery of the amount in case of misappropriation and criminal proceedings.
The court order came on a PIL that had originally sought a probe against an NGO run by Gandhian Anna Hazare.
According to The Hindustan Times, the Supreme Court had expanded the scope of the PIL and asked the CBI to ascertain how many NGOs had submitted utilisation certificates with the agencies they are registered with.
Between 2002 and 2008, the Centre had granted Rs 4,756 crore to NGOs and states had given out Rs 6,654 crore.
Mehta claimed there was no statutory provision to act against such NGOs. However, the CJI was not ready to accept the argument. “It is your money why don’t you act? It is public money. How can you say that? Tell us how do you want to regulate them?” the CJI asked the government counsel.