Make a Law to Regulate Disbursal of Funds to NGOs: SC to Centre

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The Supreme Court on Wednesday asked the Centre to examine enacting a law to regulate disbursal of public funds to over 32 lakhs NGOs and voluntary organisations and prosecute them in case of misuse or misappropriation.

The apex court, referring to the Centre's recent guidelines on regulating NGOs and voluntary organisations, said they may not "truly systematise the entire process" of regulating such NGOs since their registration, disbursal of funds, their use, audit and consequential proceedings in the event of defaults.

A bench headed by Chief Justice J S Khehar referred to an office memorandum (OM) of the Centre and said:

The guidelines, which have been proposed by the government, may not truly systematise the entire process commencing from accredition (of NGOs) and encompassing the manner of utilisation of funds and then eventual audit. We would therefore like the Government of India to examine and consider giving statutory status to the entire process.

Favouring a fresh all-encompassing law, it said if the government "desires to extend statutory status to regulations, then they would not only provide for enforceable consequences, but also envisage civil and criminal action as may be considered by the legislation".

The bench, however, made it clear that its order asking the Centre to consider enacting a law, will not be considered as "any restraint" in the way of ongoing civil and criminal actions against defaulting parties, pursued by the government body, Council for Advancement of People's Action and Rural Technology (CAPART).

The CAPART apprised the top court that it has recommended registration of 159 FIRs against various NGOs for alleged misappropriation or misuse of funds disbursed to them.

The CAPART, which works under the Ministry of Rural Development and disburses funds to voluntary organisations working in rural areas, also said initially it had blacklisted 718 NGOs for not following the due process and not submitting their accounting details.

Subsequently it had removed 15 NGOs from the black-list after they complied with the accounting norms, it said.

Lawyer P K Dey, appearing for the Centre, informed the court that the guidelines, before being put in force, have been sent to all 76 ministries and departments for their comments and suggestions.

The bench had also said that "mere blacklisting" of these organisations would not suffice and civil and criminal action should be initiated for misappropriation of public money received by them from various government departments.

“Huge amounts running into thousands of crores are doled out to these societies. There has been a case that many of them, after getting the grant, do not come back and they are merely blacklisted”, the amicus curiae had said.

He said around Rs 9,000 crore has been disbursed to NGOs, societies, voluntary organisations from 2002-03 to 2008-09.