Punish swindling NGOs, SC tells govt

The Supreme Court on Tuesday directed the Union government to take stringent action against voluntary and non-governmental organisations which fail to furnish their annual financial statements.

The court told the government that mere blacklisting of such errant NGOs was not enough, but criminal and civil action should be initiated against them for misappropriation and recovery of funds, respectively.

There are 32.97 lakh registered NGOs in the country.A three-judge bench presided over by Chief Justice J S Khehar asked the Centre to place before the court within three months guidelines for accreditation of voluntary as well as non-governmental organisations and the process of their accounting procedure in order to make them accountable.

“The government has to regulate it. You have to bring in a mechanism if the Comptroller and Auditor General suggests that there is no regulation,” the bench, also comprising Justices N V Ramana and D Y Chandrachud, told Additional Solicitor General Tushar Mehta.

Of late, NGOs have been facing intense scrutiny as several of them have lost their mandate to collect funds for violating the Foreign Contribution (Regulation) Act.

As amicus curiae, senior advocate Rakesh Dwivedi submitted that funds worth about Rs 950 crore were disbursed annually to NGOs as per a report by Asian Centre for Human Rights, the bench said, “We can’t allow everything to be in flux. It can’t remain stagnant year after year...the government is obligated to keep records.” “It is not your (government’s) money but it is public money,” the bench added.

Hearing a PIL filed by advocate Manohar Lal Sharma, the bench directed for the appearance of the Director of CAPART, to ascertain the mechanism for disbursal of funds to voluntary organisations.

Mehta, along with senior advocate S K Rungta, submitted that there was a mechanism in place in the form of the General Financial Rules 2005 for these voluntary organisations.

“It seems the government is not aware of the system of audit mandated under the General Financial Rules, 2005. Keeping in mind this misconception, we consider it appropriate to direct the government to complete the exercise and submit a report by March 31, 2017,” the bench said.