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SC Orders Auditing Of All NGOs; Directs Action Against Defaulters [Read Order]

LiveLaw News Network
10 Jan 2017 11:53 AM GMT
SC Orders Auditing Of All NGOs; Directs Action Against Defaulters [Read Order]
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Questioning the transparency in their functioning, the Supreme Court today ordered compulsory audit by March 31, 2017 of nearly 30 lakh NGOs, most of them who receive funds worth crores of rupees from the government and abroad.

Passing detailed orders on a Public Interest Litigation filed by Advocate M L Sharma in 2011 seeking a tab on functioning of NGOs,  a bench headed by Chief Justice J S Khehar said mere blacklisting of NGOs who do not file annual statements will not suffice but also action must be inititated like criminal proceedings for missappropriation and civil action for recovery of given funds.

Sharma had argued that NGOs are given crores worth funds but government had no mechanism as to monitor what they did with it.


"It seems the respondents ( government and its various ministries and wings) are not aware of the responsibility of audit despite General Financial Rules 2005 meant for such organisations. Keeping this in view we direct to complete the process of audit of all NGOs by 31-3-2017 and submit the report to this court".

"There can be no doubt about the fact that amount disbursed is public money and needs to be accounted for".

The bench also asked Centre to lay down guidelines for accreditation of NGOs and devise a proper accounting system.

The SC order came after Amicus Curiae Senior Advocate Rakesh Dwivedi cited a  CBI report that only 10 per cent of NGOs filed annual income and expenditure statements.

Raising the issue of transparency regarding their functioning, the CBI report filed in the court said that out of 22,39,971 NGOs in 20 states (information from nine states is awaited), only 2,23,428 have filed their balance sheet, a paltry ten per cent.

A CBI report filed in the Supreme Court said only 10 per cent of NGOs have filed annual income and expenditure statements

Between 2002 and 2009 the Union and state governments released Rs 6654 crore to various NGOs, averaging almost Rs 950 crore per year, according to information received through RTI queries by Asian Centre for Human Rights, Dwivedi said.

Read the order here.

This article has been made possible because of financial support from Independent and Public-Spirited Media Foundation.

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