"Genuine NGOs need not shy away from any regulatory compliance," the government has said.
The Centre's efforts to regulate the movement of foreign funds for non-profits is "discouraging NGO activities", the Supreme Court said today while hearing petitions challenging an amendment to the Foreign Contribution (Regulation) Act. The court also raised questions on the amendment, which restricts transfer of foreign contributions received by one NGO to another.
One of the petitions challenged the amendments, saying they have imposed harsh and excessive restrictions on the NGOs in utilising foreign funds. Another challenged the time Union Home Ministry has allowed non-profits to comply with the new rules.
The Centre had earlier told top court that the amendments have been made only for better regulation and monitoring of inflow and outflow of foreign funds. There is no question of violation of fundamental rights in this. The organisations or individuals in question are open to operating with locally secured funds, the government had argued.
"Genuine NGOs need not shy away from any regulatory compliance," the government told the court.
Additional Solicitor General Sanjay Jain, who was representing the Centre, told the court today that transfer of (money from) one organisation to another will lead to a "perverted situation".
"Money is passed to another NGO over whom they have no control," he added, arguing that similarity in ideology or work process is "not good for regulation purposes".
When the bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar questioned how the donor will see it, Mr Jain said, "After making a donation, the donor has no interest in it. Once it is done, we will take care of it. We just don't want intermediaries".
"You are discouraging NGO activities in this process. The result is this," the bench said.
The case will be heard next on November 9.
NGOs and lobby groups have been on the government's radar since 2014 after an Intelligence Bureau report said they prevented economic growth by campaigning against power and mining projects.
The next year, the government took action against various non-profits, cancelling the registration of more than 10,000 organisations, including two run by social activist Teesta Setalvad and Greenpeace.
In 2016, the home ministry changed the rules governing foreign contribution to bring transparency to the funding process and allow the ministry to monitor usage of funds.