Enact a law to regulate NGOs, Supreme Court tells Centre

New Delhi: Observing that a strict statutory framework is necessary to regulate government funding to NGOs, the Supreme Court on Wednesday asked the Centre to consider enacting a law to ensure regulation and accountability of over 30 lakh NGOs.

A three-judge bench of Chief Justice J.S. Khehar and Justices D.Y. Chandrachud and Sanjay Kishan Kaul told the counsel for the Centre that the existing regulations were not sufficient to regulate the NGOs across the country not only for effective disbursal of funds but also to take action for non-compliance of law.

In a brief order, the bench said, “The petition relates to money given to NGOs but there is no law to regulate them. The guidelines proposed by the Centre are not enough. We would like the govt to consider and examine in eight weeks the desirability of giving statutory status to the entire process.”

The CJI pointed out that each year, government departments disburse funds to the tune of '950crore to the NGOs and this has been going on for years. There seems to be no assessment of what happens to these funds — whether they are properly being utilised or not. Since this is government money, we want to know how many NGOs have been blacklisted and how many NGOs have been prosecuted. If the guidelines suggested by the government is given statutory status it will have some effect.”

Amicus curiae Rakesh Diwedi informed the court that during 2002 to 2009, the Centre through Council for Advancement of People’s Action and Rural Technology (Capart) had disbursed Rs 4,756 crore to the NGOs and voluntary organisations. During the same period, states had given Rs 1,897 crore to NGOs. And, on an average Rs 950 crore are given to NGOs by the Centre and states each year. He said recommendations have been made for de-listing 15 voluntary organisations and criminal prosecution have been initiated against 159 voluntary organisations for defaults or misappropriation.

In the guidelines, the Centre said it has proposed stringent guidelines for the NGOs, requiring them to register afresh online with Niti Aayog. They  will be provided a unique ID and subjected to the Income Tax Act and Foreign Contribution Regulations act. The NGOs must give details of the audited account, I-T returns, area of operation and names of key personnel, the guidelines says.

The NGOs will only be granted accreditation after evaluating their internal governance and ethical standards. The past record of the NGOs too will be put under scrutiny before accreditation. The accredited NGOs will be subject to three-tier scrutiny to evaluate the funds utilised.

The scrutiny would also include the quality of work, the guidelines also state the NGOs and VOs getting govt funds are required to execute a bond to refund the amount with 10% interest if work not done. Misappropriation of funds would warrant registration of criminal case against NGOs/VOs and signatories will be jointly and severally responsible to refund the amount.

If the government is not satisfiecd with the progress of the projects or considers that the guidelines have been vioalted, it reserves the right to termiante the grant in aid with immediate effect. The grant will be blacklisted if it was found that funds were received by suppressing facts and giving misleading information.   

While Haryana had more than one lakh (1,00,611) NGOs, Punjab accounted for 84,752 such organisations. CBI has filed the report in response to an apex court order asking the agency to conduct a survey on the total number of NGOs in the country and go into their functioning to ascertain their financial irregularities. The states that had more than one lakh NGOs were Maharashtra (5.18), Uttar Pradesh (5.48), Kerala (3.69), West Bengal (2.34), Tamil Nadu (1.55), Andhra Pradesh (2.92) and Madhya Pradesh (1.36).