NGO audit ultimatum to Centre

TT, New Delhi, Jan. 10: The Supreme Court today gave the Centre an ultimatum to finish by March 31 the audit of over 32.97 lakh NGOs receiving central funds and start civil and criminal proceedings against those found involved in misappropriating over Rs 6,654 crore between 2002-03 and 2008-09.

A three-judge bench, headed by Chief Justice of India J.S. Khehar, also directed the Centre to come out with guidelines by April 1 for a mechanism to prevent misappropriation of public money by NGOs and voluntary organisations.

The bench, also comprising Justices N.V. Ramana and D.Y. Chandrachud, passed the direction after additional solicitor-general Tushar Mehta told the top court that the Centre had not taken any action against the organisations other than blacklisting them.

The court was hearing a PIL filed by an advocate, M.L. Sharma, seeking a probe into alleged irregularities committed by a Maharashtra-based NGO run by social activist Anna Hazare.

In 2014, the court had enlarged the scope of the petition by deciding to examine the conduct of all NGOs registered under the Societies Registration Act.

In a report, senior advocate and amicus curiae Rakesh Dwivedi told the court that despite a 2015 CBI probe finding irregularities in the functioning of NGOs, the Centre had not taken any action.

Additional solicitor general Mehta said there was no statutory provision under which action could be taken against NGOs or voluntary organisations but the CJI was not inclined 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.

Mehta only said the Centre "has to apply its mind" on evolving a statutory framework for action.

However, Dwivedi disputed his submission. He said under the General Finance Rules, 2005, the Centre had the power to take action against erring organisations.

He told the court that a 2015 CBI probe had revealed that only 3.7 lakh of nearly 33 lakh NGOs or voluntary organisations regularly filed annual returns and balance sheets. Besides, most NGOs disappeared after taking their first instalments.

Between 2002-03 and 2008-09, a total of Rs 6,654 crore was disbursed to NGOs or voluntary organisations, roughly amounting to Rs 950 crore a year. But despite such huge allocation, the government had not bothered to audit these organisations, he said.

The court then asked the Centre "to complete the exercise of auditing and submit a report to this court by 31-3-2017 under all circumstances. There can be no doubt that the amount disbursed is public money and needs to be accounted for".