SC directs Union Government to submit NGOs’ audit report by March 2017

The Supreme Court (SC) on 10 January 2017 directed the Union Government and the Council for Advancement of People’s Action and Rural Technology (CAPART) to complete auditing of NGOs (Non-Governmental Organisation) and voluntary organisations and submit its report by 31 March 2017.

The ruling was made by a bench of Chief Justice JS Khehar and justices NV Ramana and DY Chandrachud. The court rebuked the government over its failure to work out a regulatory mechanism to monitor the public money that is given to the 32 lakh NGOs, societies and voluntary organisations in the country.

The bench ruled that 'mere blacklisting' of these organisations cannot be sufficient. Moreover, civil and criminal action should be initiated against these organisations for misappropriation of public money received by them from the centre.

The government was also directed to explain the manner in which it will maintain the accounts, conduct the audit, the process of recovery and methodology of recovery of the amount in case of misappropriation and criminal proceedings.

It directed the competent authority to come out with guidelines for a regulatory mechanism by March 2017. The bench also asked whether General Financial Rules 2005 were complied with or not as the Rules 210-212 provide for a regulation mechanism for NGOs.

Background
The ruling was made by bench while hearing a petition filed by advocate M L Sharma, seeking for monitoring of funds given to NGOs and their utilisation by them.

The court was informed that the Union government and states have disbursed around Rs 9000 crore to these societies in the period between 2002 and 2009. Moreover, it was also informed that the government merely blacklists an NGO, if it does not come back with audited accounts.