SC directs Centre to consider law to regulate NGOs

Also check disbursal of funds, audit of such organisations

The Supreme Court on Wednesday asked the Centre to examine and consider the “desirability” of passing a law to regulate the NGOs receiving government funds.

A three-judge bench headed by Chief Justice J  S Khehar said the guidelines prepared by the Union government may not truly systematise the process. It said the guidelines may not be sufficient for the entire process of accreditation, the manner of utilisation of funds and audit of the NGOs.

The Centre had earlier submitted guidelines, saying it appointed Niti Aayog as the nodal agency for the registration of NGOs. The guidelines included the procedure for execution of the bond, termination of grant-in-aid, blacklisting of NGOs, recovery of the money by civil suit and subsequent criminal action in case of diversion or misappropriation of funds, among others.

The court, however, said Niti Aayog might be preoccupied with several other important works.
Relying upon Entry 76 of the Union List and Entry 1 and 2 of the Concurrent List given in the Seventh Schedule of the Constitution, the bench, also comprising Justices D Y Chandrachud and Sanjay Kishan Kaul, said if the government decided to give statutory status to the entire process, the consequences for civil and criminal action against the defaulting NGOs would follow.

“We, therefore, would like the Union government to examine and consider desirability of giving statutory status to the entire process,” the bench said. The court gave eight weeks to the government to say whether it would like to regulate the NGOs by finalising guidelines or adopting legislative measures in this regard.

The court also clarified that its order would not be considered as a restraint on the government from initiating civil and criminal actions on the 703 defaulting NGOs, as claimed by the Council for Advancement of People’s Action and Rural Technology (CAPART) of the rural development ministry.

The CAPART stated before the court that it initially had blacklisted 718 NGOs, but 15 of them responded to the notice and their response was found satisfactory.

It also said the order for FIRs was issued against 159 NGOs.

On a petition filed by advocate M L Sharma, the CBI had earlier filed a report with the court, stating that of 30 lakh NGOs, less than 10% filed their financial statements.

Responding to the government’s guidelines, senior advocate Rakesh Dwivedi, who is the amicus curiae, sought directions to bring the NGOs under the ambit of the Prevention of Corruption Act, if there was misappropriation or diversion of funds.