ORDER
Y.K. Sabharwal, J.
1. The Petitioner – Netherlands Organisation for International Development Corporation (for short ‘NOVIB’ has filed this petition seeking investigation by a proper investigating Agency into the affairs of Respondent No. 3, namely, Action for Welfare and Awakening in Rural Environment (AWARE) and in particular, into its accounts and utilisation of funds of foreign and local grants for the previous years. NOVIB has further prayed that Union of India and Central Board of Direct Taxes be directed to take action against AWARE and its officials including Chairman for having committed various offences. According to NOVIB, briefly the facts are as noticed hereinafter.
2. NOVIB is a non-governmental organisation based in Netherlands and has been funding and supporting various non-governmental organisations (NGOs) in developing countries including India which are engaged in the task of development. The NOVIB is part of a four member Consortium which has been supporting and funding development organisations and activities in India for last more than a decade. From 1988 till 1993 NOVIB alongwith other donors in the Consortium have given to AWARE grants in excess of Rs. 50 crores which includes NOVIB’s contribution of approximately Rs. 25 crores. AWARE has been reporting to NOVIB that it has been utilising almost the entire grant and funds given to it in the previous years for the projects for which the funds are granted. NOVIB received complaints in 1993 against AWARE that it has been furnishing false statement of accounts to NOVIB. AWARE is guilty of having committed fraud, misappropriation of public funds, falsification of accounts and has committed various other offences under IPC, Foreign Contribution (Regulation) Act, 1976 (for short ‘FCRA’) and the Income Tax Act.
3. NOVIB says that AWARE by falsification of accounts has apparently siphoned out huge sums of money running into tens of crores and thereby defrauded the people of India and Netherland of public money meant for development of rural poor of this country. In January 1994 when Mr. Madhvan visited Netherlands NOVIB asked him to send a copy of the audited statement of accounts which AWARE had furnished to Government of India. In response the statement of account for the year 1992-93 certified by M/s. G. Ramakrishna & Associates, Chartered Accountants, Hyderabad, was sent. NOVIB also received a copy of the entirely different audited balance sheet for the same year 1992-93. It was audited by M/s. Natraja Iyer & Co. , Chartered Accountants, Hyderabad. The two balance sheets were entirely different. The statement of account certified by G. Ramakrishna & Co. , showed an accumulated balance of foreign contribution of only about Rs.82 lakhs and further showed the utilisation f foreign contribution for the year 1992-93 at about Rs.5.67 crores as compared to sum of about Rs.1.66 crores shown in the account audited by M/s. Natraja Iyer & Co. Both the balance sheets were at complete variance. On 18th April 1994 NOVIB received a faxed letter sent by several Directors of AWARE stating that the statement of account audited by M/s. Natraja Iyer & Co. was not an authentic document. On receipt of the letter dated 18th April 1994 Mr. Hans Pelgrom, Director of Projects of NOVIB spoke to Chairman of AWARE and intimated him of the intention of NOVIB to send an investigating team from Netherlands to enquire into the matter. In response to this Mr.Madhavan faxed letter dated 28th April, 1994 containing a veiled threat of violence against the investigating team which might be sent to look into the accounts of AWARE. The enquiry was conducted by Mr. Wim Jacobs, a Chartered Accountant from Netherlands and M/s. Thakur Vaidyanath Aiyar & Co., New Delhi. Enquiry took lace in May 1994 and report was submitted on 26th May 1994. The report confirmed that AWARE had indeed been maintaining two completely different sets of accounts, one which was submitted to the Government of India and another which was submitted to NOVIB. The Salient findings of the enquiry were as follows:-
“(i) AWARE has accumulated foreign contributions (as of 31.3.93) of Rs. 20.7 crores while reporting only Rs. 82 lakhs to the donors;
(ii) AWARE has employed two accountancy firms to produce different accounts regarding their income, expenditure, assets and balances;
(iii) AWARE has requested additional funds from the donors as recently as April 1994, claiming that they were facing a shortage of funds;
(iv) For the financial year 1990-91, AWARE has produced two different sets of accounts, both purporting to bear the signature of M/s. Nataraja Iyer & Co;
(v) AWARE has failed to cooperate with the inquiry set up by the donors under the terms of agreements with AWARE.”
4. According to accounts for 1992-93 audited by M/s. Nataraja Iyer & Co. and sent to Ministry, AWARE had cash, bank deposits and other investment accumulations of approximately Rs. 43 crores as on 31st March, 1993. According to accounts sent to the donors, which AWARE claims also to have been sent to Home Ministry, certified by M/s. G. & Associates, the cash and bank deposit accumulations were approximately Rs. 7.08 crores. The variations in the figures of foreign contribution ( utilised, unutilised, brought forward and received ) between the accounts sent by M/s. G. Ramakrishna & Associates and M/s. Nataraja Iyer & Co. relating to foreign contribution are as under :-
Description and period Nataraja Iyer G. Ramakrishna & Co. accounts & Associates Accounts
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Brought forward foreign 18,72,74,997 2,87,67,214
contributions (1.4.1992)
Foreign contributions
received (1.4.92 to
31.3.1993) 3,64,28,147 3,62,38,147
Unutilised foreign
contributions as at
31.3.1993 20,70,25,718 82,86,336
Utilisation of foreign
contributions
(1.4.1992 to
31.3.1993) 1,66,77,426 5,67,19,026
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5. The further allegation is that soon after NOVIB began its enquiries into the matter of dual and completely different set of accounts being maintained by AWARE, it seems AWARE began to take action of withdrawing/transferring huge sums running into tens of crores of rupees from its accounts to various other accounts in order to prevent NOVIB from recovering the unutilised amounts of grants regarding which AWARE had been falsely representing that they had utilised them. With this end in mind, AWARE and its Chairman in particular, issued letters to their bankers dated March 1994 asking the bank to transfer huge amounts of money amounting to more than Rs.10 crores from the account of AWARE to various other accounts. NOVIB subsequently learnt that AWARE had transferred an amount of Rs.13.76 crores in May 1994. Out of this amount Rs. 9 crores were transferred to various accounts in the name of Chairman, AWARE. Based on the letters dated 21st March, 1994 (acknowledged ad acted upon by bankers on 21st May, 1994) accounting entries have been made during the year ending 31st March, 1994 treating the demand drafts/pay orders issued in May 1994 as advance for expenses which amount to Rs.13.76 crores.
6. The loan of Rs.12 lakhs was taken against fixed deposit receipt of Rs.16 lakhs held in Andhra Bank, Saifabad, Hyderabad and the entire loan amount with interest thereupon totalling over Rs.14 lakhs was paid to the bank in cash and the Loan account was closed on 29th January 1995. Reliance has been placed on the letter dated 24th March, 1994 written by Mr.Madhvan to the bank to show that he was aware of the pledge of the FDR against the loans which had been availed and it was incorrect for him to state that he had neither authorised nor was he aware of the loan transaction.
7. On application (I.A. 7465/98) of NOVIB, AWARE INDIA FOUNDATION (AIF) was imp leaded as a respondent in this matter. It was submitted in the application that from the reply to the writ petition filed by AWARE and, in particular from the report of KPMG relied upon by AWARE, NOVIB had learnt that a large part of the funds amounting to approximately Rs.12.13 crores which had been given by it to AWARE for rural development had been misappropriated and diverted to another company under Section 25 of the Companies Act which had been formed and controlled by AWARE and its Chairman. According to the report of KPMG, it was alleged, that the manner in which the funds given by NOVIB to AWARE had been diverted to AIF was as follows:-
(A) The funds given by the Petitioner to respondent No. 3 were shown as loans to Tribal and Harijans by Respondent No. 3 and their repayments to Respondent No. 3 were placed in a fund known as “Revolving Fund”(See Para 9.5.1 of the KPMG report).
(B) AIF was incorporated in November, 1994 as a Company (Para 9.5.11 of KPMG).
(C) AIF is not independent of AWARE as its operations are “ultimately controlled by AWARE” (Para 9.5.14 – Page 95 of the report). In Para 1.12.3 of page 8 of the executive summary, KPMG says that three of AIF’s five directors are common to AWAGE. Thus, AIF according to KPMG is a related party to AWARE.
(D) The bank balances in the Revolving Fund accounts of AWARE have been progressively transferred to AIF mainly in Decem-ber, 1995.
(E) As at 31.12.96 AIF’s investment amount to Rs.12.30 crores.
(F) AIF has opened peoples banks in 16 towns and operations are similar to commercial banks.
G) As per figure 9.18 (Para 9.5.23 of page 99 of the report). AWARE has transferred out of its revolving funds a sum of Rs. 97416000 in the year ended 31.3.96 and Rs. 18177000 in the year ended 31.3.97.”
8. It has also been submitted that Chairman of AIF was same Mr. G. Ramakrishna who had certified fraudulent accounts of AWARE which were sent to NOVIB. It was pointed out that report of KPMG relied upon by AWARE itself opines that operations of AIF were ultimately controlled by AWARE and that it was not independent of AWARE.
9. In substance the grievance of NOVIB against AWARE are that for the period ending 31st March, 1993, AWARE submitted two different sets of accounts to NOVIB and to Income Tax Department: the AWARE in accounts sent to NOVIB reported only Rs. 82 lakhs as unutilised foreign contribution whereas in the accounts submitted to Income Tax Department the accumulated foreign contribution as on 31st March, 1993 was to the tune of Rs. 20.07 crores: an amount of Rs. 13.76 crores was shown to have been withdrawn from the account of AWARE during the period ending 31st March 1993 although the said amount in fact had not been withdrawn: the repayment of the loans given to Tribals and Harijans was used as source of the revolving fund and the repaid loan amount was not considered by AWARE as part of foreign contribution; interest earned on foreign contribution was not considered by AWARE as part of foreign contribution and loan of Rs.12 lakhs had been taken against fixed deposit receipts of Rs.16 lakhs held in Andhra Bank, Hyderabad.
10. Further grievance of NOVIB is that AWARE, its Chairman Sh. P.K.S. Madhvan and its other office bearers instead of cooperating with an inde-pendent enquiry into its financial affairs, began to take action of withdrawing/transferring huge funds running into crores of rupees from its accounts to various other accounts in order to prevent NOVIB from recovering unutilised amounts of grants regarding which AWARE had been falsely representing that they had utilised the same.
11. The NOVIB has prayed that registration of AWARE under FCRA should be cancelled, audit of AWARE accounts be ordered under Section 15A of FCRA and action should be initiated under Section 25 of the said Act. Further submission is that action shall also be taken against AWARE for prosecution under the provisions of Income Tax Act and under IPC for various offences i.e. cheating, fraud, criminal breach of trust etc. NOVIB says tat full investigation into the affairs of AWARE and its officers including Chairman deserves to be conducted by a proper and independent investigating agency. Reference has been made to documents placed on record in support of the plea that it is a fit case where independent investigation deserves to be ordered. It has also been submitted that pending such investigation, the registration of AWARE under FCRA deserves to be cancelled as also its exemption granted under the provisions of the Income Tax Act.
12. The petition has been strenously opposed by AWARE. AWARE has also placed on record certain documents in support of the contention that the prayer for investigation or prosecution deserves to be rejected and the petition merits summary dismissal. It has also pleaded that the allegations made by AWARE were examined by M/s. KPMG, an internationally known and reputed firm of Chartered Accountants and after detailed examination of accounts and enquiries, M/s. KPMG submitted its report categorically stating that in the course of enquiry nothing has come to their attention that the AWARE has misappropriated or misutilised the funds provided to it. KPMG report has been placed on record by AWARE.
13. AWARE has inter alia submitted in its reply affidavit that the writ petition has been filed maliciously with a view to defaming it. The fund flow system in AWARE has been explained. It has also been submitted that statement of account prepared by M/s. G. Ramakrishna & Co. deals only with foreign contributions received in respect of only IRDP projects during the year 1992-93 while the balance sheet prepared by M/s. Nataraja Iyer & Co. deals with the foreign as well as Indian contributions in respect of all the projects. In fact, the statement of account prepared by M/s. G. Ramakrishna & Co. consists of only a part of account contained in the balance sheet of M/s. Nataraja Iyer & Co. An attempt has been made to explain that in the end of 1993 and beginning of 1994, AWARE decided to take up a new project entitled “Tribals March Towards 21st Century” for the preparation of which NOVIB and ICCO had provided technical assistance of their representatives to AWARE. AWARE submitted the project report in January 1994 for approval of NOVIB and ICCO so as to obtain funding from them for the proposed project. They wanted balance sheet of AWARE for two years in order to sanction the funding for the project. AWARE felt that it might be difficult to obtain funding for the new project ( 1994-2001 First Phase ) since a part of the grant received from NOVIB and ICCO was still lying with AWARE for current projects which were in the process of implementation. The AWARE was anxious to go ahead with the new projects since it would benefit millions of Tribals to whom promise had been made by AWARE alongwith the representatives of NOVIB and ICCO. It was under these circumstances that AWARE acting through its employee, one Mr. Vimal Kumar, who was subsequently dismissed on account of corruption, got statements of accounts for the year 1991-92 and 1992-93 prepared by M/s.G. Ramakrishna & Co. who were also selected and appointed by Mr.Vimal Kumar. These statements of accounts were prepared on the basis that the amounts were earmarked for the projects which were in the process of implementation may be treated as deemed expenditure and taken into account as such in preparing the statement of account since these amounts were reserved for the projects and were to be spent in implementation of those projects only. These two statements of accounts prepared by M/s. G. Ramakrishna & Co., therefore, showed deemed expenditure as expenditure and that is how the balance of unutilised foreign grant as on 31st March 1993 showed a figure of approximately Rs. 82 lakhs instead of actual balance of about Rs. 20 crores which naturally appeared in the closing balance in the balance sheet prepared by M/s. Nataraja Iyer & Co. It was, therefore, submitted that the second statement of account was not prepared with a view to siphon off the funds as alleged. Regarding the transfer of amounts lying at central office it was submitted that the amoun so lying to the credit of Vyasa Bank Ltd were held in the name of Chairman, AWARE, which is the official account and the said amounts were debited to the said account and pay orders obtained in the name of Chairman, AWARE or Zonal / Regional Coordinator as Project Coordinator for onward submission to various project accounts all of which are the official accounts of AWARE and not the personal account of the Chairman. It was submitted that alleged amount of over Rs.13 crores was only transferred from the central account of Chairman, AWARE to the regional account of Chairman, AWARE and accounts of Zonal / Regional Project Coordinator. This was done as a process of earmarking the amount for the particular project as the account maintained in the Zonal / Regional headquarters and Project headquarters are for specific projects. Regarding Wim Jacob it has been submitted that he had requested the AWARE to appoint him as Auditor of AWARE and the same was refused and, therefore, Mr. Jacob bore a grudge against AWARE and thus he submitted a biased report without any basis. Thus in the aforesaid manner, the AWARE has tried to explain the allegations of its having submitted two sets of accounts, one to NOVIB and other to Income Tax Department and having accumulated foreign contributions of over Rs. 20 crores as on 31st March 1993 while reporting only about Rs. 82 lakhs to NOVIB and the transfer of over Rs. 13 crores.
14. Mr. Chidambaram submitted that AWARE may have been ill advised to say
that it had utilised the foreign contributions but as is evident from the aforesaid facts, it had no guilty intention and its intentions were to have grant for the new projects referred to above.
15. Regarding the achievements of Mr. Madhvan and AWARE, on which some stress was laid by Mr. Chidambaram, may be, AWARE has undertaken the rural development programmes, served the poor, oppressed, Tribals, Harijans and socio-economically depressed groups in Indian society and its Chairman Mr. Madhvan besides others may have devoted and have been responsible for the upliftment of these classes. All the same it has to be understood that these achievements and services to the society, either by the organisation or by an individual do not give anyone a licence to indulge in falsification of accounts or to commit offences and act contrary to law. There cannot be any doubt that many NGO’s are doing commendable work and serving the society with complete dedication, devotion and sincerity. But unfortunately, in every field there are some black sheep. There are few NGO’s which may fall in that category. In case appropriate action against such black sheeps are not taken, then those NGO’s who are doing commendable job may also suffer a bad name and reputation. Therefore, a close look on the activities of such NGO’s would be in public interest. On the other hand, if the complaint is found to be false and motivated appropriate stern action can also be taken against complainant.
16. Reverting now to the facts of the present case, from the material on record, there does not seem to be any doubt that two different set of accounts for the same period were sent by AWARE, one to NOVIB and the other to the Income Tax Department. The difference in the amount of unutilised foreign grant as shown in the two accounts is of crores of rupees. In the accounts sent to NOVIB, it is submitted on behalf of AWARE that deemed expenditure was shown as expedicure and that is how the balance of unutilised foreign contribution as on 31st March 1993 was shown as about Rs. 82 lakhs instead of actual balance of about Rs. 20 crores. It has been further claimed that the two statements of accounts were prepared by two different firm of Chartered Accountants. The fact that two separate firm of Chartered Accountants prepared two statement of accounts by itself deserves to be looked into in depth. The purpose and object behind this state of affairs deserve to be thoroughly enquired nto. During the enquiry it may have to be considered as to why two different firms of Chartered Accountants were engaged and while so doing the explanation of AWARE in this regard can be examined. It will also have to be examined whether the object of AWARE was only to get further grant from NOVIB or there was any other object. It has to be borne in mind that Rs.13.76 crores were shown to have been spent in the month of March, 1993 although the amount had not even been withdrawn from the Bank. The argument that Rs.13.76 crores during the period ending 31st March, 1993 was in fact shown as Advance also deserve to be thoroughly probed as it is not disputed that in reality this amount had not been withdrawn from the Bank. This amount has been later shown to have been utilised during the period ending 31st March, 1995 to 31st March, 1997. The effect of Chairman allegedly writing letters to the banks on 21st March, 1993 to prepare the drafts of about Rs.13 crores will also have to e thoroughly enquired keeping in view the fact that in fact all drafts were prepared during the next financial year i.e. on 23rd May, 1994. The explanation that the fixed deposit receipts were maturing in April and May 1993 and, therefore, the drafts were prepared on 23rd May, 1993 would also have to be examined in depth by examination of accounts etc. From the charts placed before us during the course of hearing by Mr. Chiddambaram, learned counsel for AWARE, it appears that the fixed deposit receipts of substantial amounts had matured about more than a month before the date of issue of the drafts. According to the petitioner the AWARE got these drafts prepared after NOVIB had started making enquiries and AWARE thought that the NOVIB may lay claim to recover amounts of unutilised grant.
17. The question as to whether the facts pointed out by NOVIB have the element of criminality or not or the same only shows irregularities in the working of AWARE as sought to be contended on its behalf, can be properly examined and considered only after thorough examination of accounts and records. Similarly, the status of the amount of loan repaid by those who are given interest free loan out of foreign contribution amount also deserves to be examined, keeping in view the provisions of FCRA, after thorough study of accounts and the end use of the amounts.
18. The matter relating to pledge of FDR by the AWARE for loan by Bank to an individual will also have to be thoroughly probed bearing in mind as well the manner of return and deposit of the loan amount with interest total amounting to Rs.14 lakhs in cash. It may be over simplification at this stage to term all these aspects as irregularities. Many of these aspects are attributed by AWARE to their ex-employees Vimal Kumar or even to one of the Chartered Accountant and Babu Reddy. At this stage it is difficult to accept such an explanation without further in depth enquiry if the AWARE is innoent and victim of complaints made by Vimal Kumar and others and had no ulterior motive, it may be in their own interest to get their name cleared which is possible only after thorough independent enquiry.
19. The Income Tax Department has reopened the assessments and is conducting enquiries. It is also stated to have initiated action and issued a show cause notice for withdrawal of approval given under Section 12A and 80(G)
of the Income Tax Act, on the basis of the complaints received. As per the affidavit filed on behalf of the Respondent No. 2, AWARE has prepared two sets of statements. However, it is submitting only one set of statement to the Department consistently maintaining continuity. According to the affidavit of the Department, AWARE had submitted different sets of statements and during the enquiries it was submitted by its Chairman that it was so done for obtaining more funds. Further the accounts filed by AWARE with the Income Tax Department, as per the affidavit filed on behalf of Respondent No. 2 show that as compared to the figures for the year 1991-92 and 1992-93, the utilisation for the years 1993-94 and 1994-95 was quite substantial. In 1991-92 and 1992-93 the utilisation of foreign contributions was to the tune of approximately Rs.1.60 crores whereas in 1993-94 and 1994-95 the utilisation amounts increased to about Rs.13.5 crores and Rs.16 crores respectively. At this stage all these aspects cannot be glossed over as irregularities without further detailed examination of accounts by an independent person.
20. The Union of India while denying that the complaint dated 6th June, 1994 made by NOVIB to it was not examined by FCRA Division in the Ministry of Home affairs has filed a vague affidavit stating that the matter was thoroughly examined and submitted to the competent authority but considering the explanation regarding the reported discrepancies in the accounts furnished on behalf of AWARE the competent authority decided that the case may be closed.
21. At this stage we may notice provisions of FCRA defining ‘Foreign contribution’ [Section 2(c)]. Its explanation provides that a donation, delivered or transferred by any legal currency or foreign security by any person who has received it from any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution. The authorities may have to examine the real import of the explanation in relation to return of a loan granted out of a foreign contribution. The question to be examined would be that when the loan is returned would it be foreign contribution or not or would it depend on the facts of each case. For example, in some cases the return of the loan may be just after couple of days. Would such an amount received back cease to be a foreign contribution ? Likewise the status of the interest earned on foreign contributions and that of the Revolving Fund wuld have to be examined. It may be useful to notice that AIF has no independent existence. That is also the report of KPMG. The answer to some of these legal questions can be properly given after atleast prima facie knowing factual matters by getting accounts examined by an independent person.
22. We have perused the file of Foreign Contributions Division of Ministry of Home which speaks volumes as to the main reasons for closing the case. For the present, we say no more till such time we receive the report on examination of accounts in terms of this order. However, it deserves to be emphasised that the public interest demands that the working of such NGO’s inspires the public confidence. The examination of the accounts of such organisations has to be critical. A duty is cast on the authorities under FCRA to ensure that the violators are punished according to law though not permitting witch hunting by donor or anyone elso. During the enquiry it may also become necessary to examine how the amounts were spent by AIF. The AIF is not registered under FCRA. The President of AIF was Mr. G. Ramakrishna, Chartered Accountant. It is claimed that he is no more the President. That may be so but the question would be whether Mr. G. Ramakrishna was used by AWARE or he was responsible for what is being attributed to AWARE. These matters can be properly examined by this court only on receipt of report on accounts.
23. While we refrain from commenting on the proceedings initiated by Income Tax Department for reopening of assessments lest it may cause prejudice either to AWARE or to the Department but it deserves to be noticed that despite approval for conducting special audit having been granted by Commissioner of Income Tax on 5th March, 1998, no action seems to have been taken for a period of nearly 6 months. Mr. Jolly attributes it to inadvertence. Assuming it is so, we hope such inadvertence will not take place now.
24. Mr. Chiddambaram submitted that in the organisation of such large magnitude having various activities, the mistakes and irregularities are likely to occur and that is what has happened in the present case. It may be so but the facts are too serious to deserve closing the case at this stage by terming the aspects in respect of accounts as noticed hereinbefore, as mistakes or irregularities without further probe. The facts noticed in this order are only illustrative. All detailed facts requiring examination have not been noticed in this order. We have only noticed some of the material facts. In any case if it is found to be a case of mistake or irregularity, after close examination by an expert on accounts, the matter can then be directed to be closed or further necessary directions on the facts of the case can be issued.
25. We also refrain from commenting upon report submitted by M/s. KPMG. Both NOVIB and AWARE had their own versions about that report. AWARE relied upon the report to press home the point that it has not found that AWARE had misappropriated or misutilised any funds. NOVIB challenges even the appointment of M/s. KPMG and Mr. Bhushan contended that no value can be attached to such a report. NOVIB did not join in the examination of accounts by KPMG. Mr. Bhushan also referred to some parts of the report in support of the case of NOVIB. The question whether AWARE was ill advised to inform NOVIB that it had utilised the foreign contribution which it had not and whether it had no guilty intention as sought to be made out on its behalf, is an aspect which will have to be considered by the court on examination of the report regarding accounts. The question as to whether it is a case of siphoning off the funds, cheating and fraudulent transactions and whether prima facie offences of cheating etc were committed or not can also be appropriately gone into on detailed examination of the accounts. We feel that it is only thereafter it would be appropriate for this court to consider whether direction for registration of a case for commission of various offences deserves to be issued and investigation conducted by an investigating agency – Crime Branch or CBI or any other similar agency.
26. We have no doubt that an independent indepth enquiry into the accounts of AWARE and AIF in the facts and circumstances of the case, would be necessary. Thus, having considered the matter and rival submissions, we refrain from referring the matter, at this stage, for registration of the case and investigation by CBI or any other investigating agency. Further, we are of the view that pending receipt of the report on accounts it is not presently necessary to issue directions for cancellation of registration of AWARE under FCRA or cancellation of exemption under the provisions of Income Tax Act. We, however, direct the Income Tax Authorities to expeditiously conclude the special audit in accordance with law.
27. In view of the above, we appoint M/s. S.R. Batliboi & Co., Chartered Accountants to conduct an independent indepth enquiry into the financial affairs of AWARE and AIF in terms of the observations made hereinbefore in this judgment. The Chartered Accountants will also keep in view the allegations and counter allegations made by the parties in the writ petition and replies etc. On examination of accounts they would report whether there has been any misappropriation and misutilisation of funds by AWARE and AIF. The Registry alongwith copy of the judgment should also send forthwith a copy of all papers on the file of this writ petition to the Chartered Accountants. All concerned are directed to render necessary cooperation. The payments of fee and expenses of M/s. S.R. Batliboi & Co. will be made by NOVIB who at first instance shall place at their disposal a sum of Rs.1 lakh in account. Any observations made in this judgement shall have no effect on any other proceedings.
28. For report put up the matter on 25th February, 1999.