A bench comprising Chief Justice JS Khehar and Justice DY Chandrachud considered the statement of Additional Solicitor General Tushar Mehta, appearing for Centre, and adjourned the matter for further hearing on August 21.
The bench said that in all probabality, the Centre was going to come out with a legislation on the issue.
The Additional Solicitor General sought some more time to apprise the court about the possible step to be taken by the government to regulate activities of the NGOs.
The court was hearing a PIL filed by lawyer ML Sharma, in his personal capacity, seeking to regulate activities of the NGOs including financial ones.
Earlier, the Supreme Court had asked central government body CAPART to apprise it about the steps taken in pursuance to its direction to consider making a law to regulate the NGOs, disbursal of funds and consequential proceedings against them.
It had sought an affidavit from the Council for Advancement of People's Action and Rural Technology (CAPART) on action taken on its April 26 order, suggesting that the Centre should consider prosecuting NGOs or voluntary organisations if they were found misusing public funds.
The Supreme Court had in its April 26 order asked the Centre to examine enacting a law to regulate disbursal of public funds to over 32 lakh NGOs and voluntary organisations (VOs) and prosecute them in case of misuse or misappropriation.
The court had suggested to the Centre that it can legislate under Entry 97 of the Seventh Schedule of the Constitution which provides the list of issues on which the Centre or states or both can make laws to regulate NGOs.
Favouring a fresh all-encompassing law, the court had said if the government "desires to extend statutory status to regulations, then they would not only provide for enforceable consequences, but also envisage civil and criminal action as may be considered by the legislation".
The CAPART, which works under the Ministry of Rural Development and disburses funds to voluntary organisations (VOs) working in rural areas, had earlier apprised the top court that it has recommended lodging of 159 FIRs against various NGOs for alleged misappropriation or misuse of funds.
It had initially said it had blacklisted 718 NGOs for not following the due process and not submitting their accounting details, but had later removed 15 NGOs from the black-list after they complied with the accounting norms.
While hearing the PIL filed by Sharma, the court had said the Centre and its departments were doling out crores of rupees but were not aware of the repercussion of non-auditing.
Referring to details provided by senior advocate Rakesh Dwivedi, assisting the court as an amicus curiae, the court had said that a phenomenal amount of Rs 950 crore every year was being given by the Centre and state governments to NGOs.
The bench had also said that "mere blacklisting" of these organisations would not suffice and civil and criminal action should be initiated for misappropriation of public money received by them from various government departments.
The CBI had in September 2015 informed the Supreme Court that less than ten per cent of over 30 lakh NGOs functioning in the country had submitted their returns or balance sheets and other financial details to the authorities.