NEW DELHI: The Supreme Court of India on Tuesday, 11 Nov, 2021 said NGOs should not be allowed to receive foreign funds if the donor did not declare the purpose for which the money is to be spent. The top court said the Centre has diluted the intent of Foreign Contribution Regulation Act (FCRA) by not insisting on such a provision.
A bench of Justices A M Khanwilkar, Dinesh Maheshwari and C T Ravikumar said as per Section 8 of the Act, disclosure has to be made at the outset regarding the purpose for which a contribution has been made and asked the Centre to make its stand clear on the issue.
Section 8 says every person who is registered and granted a certificate or given prior permission under the Act and receives any foreign contribution, shall utilise such contribution for the purposes for which the contribution has been received.
Purpose first
Referring to the section, the bench said the purpose of the contribution has to be disclosed and only then would inflow of funds be allowed. Solicitor general Tushar Mehta contended that an NGO can use the fund for activities for which they are registered which could be social, cultural, religious purposes.
Also Read: Supreme Court asks – Why is the Home Ministry tasked to monitor foreign funds for NGOs
Spend with purpose
But the bench said that even in cases where an NGO is registered to carry out various activities, the organisation is bound to spend foreign contributions only for the purpose for which money was transferred. It said that in such cases an NGO has to maintain separate accounts for carrying out different activities.
“You are diluting the whole proceedings and intent of the Act. Disclosure has to be made by the donor at the outset regarding for what purpose the contribution is being made. Purpose of the contribution has to be disclosed only then inflow should be allowed. It is another matter that you are not following it. We need a clear stand of the governemnt on the issue,” the bench told the solicitor general.
NGOs misusing the funds
While justifying Centre’s decision to amend the Act to regulate foreign contribution to NGOs, Mehta contended this was to stop NGOs from making chain-transfers of foreign funds a business. He said that there are Intelligence Bureau inputs on NGOs misusing the funds and and they cannot claim to have a fundamental right to receive funds from abroad. However, while the Centre too sought higher accountability of funds, the court called for the donor to also state purpose.
Also Read: Indian NGOs misusing foreign funds, support changes to FCRA: NCPCR – India CSR Network
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