After the Central government, the Supreme Court has shifted its attention to NGOs in India and asked the Centre to audit more than 32 lakh NGOs and voluntary organisations to check if they have misappropriated funds. The Central government cancelled the Foreign Contribution Regulation Act (FCRA) license of more than 20,000 NGOs in 2016.

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The Chief Justice JS Khehar-led bench was hearing a PIL filed by advocate Manoharlal Sharma who sought investigation into funds allocated to NGOs by Council for Advancement of People's Action & Rural Technology (CAPART), an autonomous body under the Ministry of Rural Development, two trusts run by Anna Hazare.

CJI Khekar said: "This is government money. Don't squander it. There must be a mechanism to deal with this." He also said that "It seems as if public funds were sanctioned for political reasons."

The apex court gave the Centre time till March 31 to conduct the audit and directed them to submit action taken report on April 5. The bench also directed the government to form a mechanism to accredit NGOs and to audit them regularly.

For the first time, NGOs could face criminal prosecution if they have embezzled public funds.

"You have to set the procedure right. If it hasn't been done in the past, then do it for the future. You cannot allow misuse of public funds in such a way," the bench told additional solicitor general Tushar Mehta.

"What have you been doing for so many years? Why haven't you taken action? You can't let public money go waste like this," the bench noted. The bench said that the government can take both civil and criminal recourse against NGOs found guilty.

The apex court expanded the ambit of the PIL and asked the CBI to find out how many NGOs had submitted certificates with agencies they are registered with. The CBI said that of 32 lakh NGOs, only 3 lakh filed audited accounts.

NGOs have been facing crackdown from the government in the past year. In December 2016, the Central government had cancelled licences of 20,000 NGOs for not filing their FCRA application.