SC: Audit govt money given to NGOs

The Supreme Court on Tuesday grilled the government over its failure to work out a mechanism to monitor the public money that it gives to the 32 lakh NGOs, societies and voluntary organisations in the country.

  • Published 10.01.17

New Delhi, Jan. 10 (Agencies): The Supreme Court on Tuesday grilled the government over its failure to work out a mechanism to monitor the public money that it gives to the 32 lakh NGOs, societies and voluntary organisations in the country.

A bench of Chief Justice J.S. Khehar and justices N.V. Ramana and D.Y. Chandrachud, upset that no regulatory mechanism has been worked out even six years after a public interest litigation was filed in the matter, pointed out that the government is doling out public money without any audit.

The court was told that the Union government and states have disbursed around Rs 9,000 crore to these societies in the period between 2002 and 2009, and that the government merely blacklists an NGO or non-governmental organisation if it does not come back with audited accounts.

The bench said “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.

It directed the competent authority to come out with guidelines and rules for a regulatory mechanism by March end “under any circumstances”.

The bench noted that such action must be taken by the Centre and CAPART, which comes under the Ministry of Rural Development, which has been instrumental in granting the funds.

”We consider it appropriate to direct the Centre and CAPART to complete the exercise of auditing and submit the report by March 31, under all circumstances,” the bench said.

”There can be no doubt about the fact that the amount disbursed by CAPART/ other government departments is public money and must be accounted for,” it said, adding that so far, the only exercise or action carried out in case of non- submission of balance sheet/ returns is “merely blacklisting”.

In case of non-compliance of auditing and other rules, necessary civil and criminal action has to be initiated where public fund is received from CAPART or government departments and misappropriated, it said.

The apex court said that, on next date of hearing, April 5, it expected the Centre to place before it the guidelines and rules for accreditation of voluntary organisations 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. 

Additional Solicitor General Tushar Mehta said there are three sources of funds for NGOs: donors abroad (for which there are regulations), from local bodies/ societies/ trusts (for which there is no auditing) and local people (for which also there are no regulations).

To this, the bench asked: ”When you yourself are saying there are no regulations, then why have you not come out with the mechanism.”

“Till now, there is no mechanism. Let a mechanism come and thereafter amicus curiae and you (ASG) will assist. We will see what can be done and what progress has been made in terms of regulation,” the bench said.

”When government fund is disbursed, why don't you see what has happened to your money? It is public money. How can you do this with public money,” the court asked.

Amicus curiae Rakesh Dwivedi said the Central Bureau of Investigation has filed a status report showing how many NGOs have not filed the audit report and how many of them have not filed utilisation certificates.

”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”, Dwivedi said.

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

”Union of India has disbursed Rs 4,756 crore. States have disbursed Rs 6,654 crore... Rs 950 crore on an average has been disbursed per year”, the amicus curiae said.

He referred to a report of Asian Center for Human Rights and said that several projects did not achieve the target and there was no pre-funding appraisal by CAPART or the Council for Advancement of People's Action and Rural Technology (CAPART). 

(This report was updated at 8pm.)