Recent SC Order of Audit of 30 Lakh NGOS and Issues with CAPART
On 10 January 2017, the Supreme Court had asked the government to audit and identify the accounts of around 30 Lakh NGOs which receive public funds every year for their work, but continuously fail to give proper balance sheet or account of how they had used that money.
Origin of The Case
The petition was filed by a lawyer Manohar Lal Sharma in 2011 in which he prayed the Supreme Court to check into the funds allocated to NGOs, raising a question about their transparency. His particular allegation was towards the funds allocated by CAPART to two of the trusts run by Anna Hazare. The petition had following major points:
- Funds were disbursed in absurd manner and the government or ministries did not bother to carry out their duty of audit despite that fact that General Financial Rules, 2005 mandate them to do so.
- Government should start with civil recovery proceedings against such ill practicing organisations.
The SC Order
A bench of Chief Justice J.S Khehar and judges N.V. Ramana and D.Y. Chandrachud was hearing the writ petition. It has asked the government to audit and identify the accounts of around 30 Lakh NGOs and that the government should file a compliance report by 31st March 2017. The three key points in this judgement are as follows:
- Prosecution – Government should start with civil recovery proceedings against such ill practicing organisations.
- Frame Guidelines – the Supreme court ordered that by next hearing, the government should produce already framed guidelines for their accreditation, stating the way in which these organisations should maintain their accounts and the process of recovery in case they fail to submit their balance sheets.
- Compliance Report – government should submit a compliance report by 31st March 2017 after doing a proper audit.
Questions & Answers
Following questions arise from the above judgement.
- What has been government’s position regarding defaulter NGOs so far?
- What is CAPART? Why it has been so much controversial?
What has been government’s position regarding defaulter NGOs so far?
The government has blacklisted NGOs. However, mere blacklisting means nothing. This is what Supreme Court Said in this context: “There is no doubt that the amounts given by CAPART is public money and needs to have account for all its expense., the only action taken against those who have failed to file their balance sheets so far is blacklisting. It is therefore essential to start criminal and civil proceedings by the Central government and CAPART. The ministries only blacklisted those NGOs but did not press for fund recovery or prosecute errant NGOs. According to CBI reports, some of the blacklisted NGOs are still succeeding to get funds from other ministries and it is happening due to absence of any regulatory mechanisms. It was also brought to light that there are rules that allow the government to audit the accounts of those organizations who are receiving such fund but it is never done in reality.
Pulling up the failure of government in placing a regulatory mechanism to keep a watch on the financial activities of NGOs and voluntary organisations, the Supreme court ordered that by next hearing, the government should produce already framed guidelines for their accreditation, stating the way in which these organisations should maintain their accounts and the process of recovery in case they fail to submit their balance sheets.
Though public funds of crores are spent on NGOs and voluntary organisations every year, the CBI reported that only three lakh among 32 lakh NGOs could file their balance sheets.
What is CAPART? Why it has been so much controversial?
Council for Advancement of People’s Action and Rural Technology (CAPART) was launched in 1986 to work as a nodal agency for catalyzing and coordinating Government-NGO partnership. It was dogged by controversies over corruption, lack of transparency etc. Its functioning has been opaque and it funded many NGOs which did not even exist. The UPA Government had decided to disband it, but then the current NDA government decided to revive it with alternative model. So far, no progress has been made over it.
