SC dismisses plea challenging exclusion of Chief Minister's Relief Fund from CSR

New Delhi, 11 August 2020: On Monday, the Supreme Court of India dismissed plea of Mahua Moitra, Member of Parliament from Trinmool Congress which challenged central government’s circular excluding Chief Minister’s Relief Fund from the purview of Corporate Social Responsibility (CSR) activities under Section 135 of the Companies Act.

In her plea, Moitra had stated that to exclude the fund(s) from purview of CSR was in direct contravention of Constitutional tenets of federalism and article 14 of the Companies Act, reported Livelaw.

The petitioner has argued that it is disparity between PM CARES Fund and CM Relief Funds, if corporate donations are allowed to the former only.

After hearing the matter, a Bench comprising of Justice Ashok Bhushan, R.Subhash Reddy and BR Gavai noted that petitioner Moitra had filed a similar plea which was dismissed on May 5. The Bench dismissed Moitra’s new plea as well.

The bench dismissed the plea observing that Mahua Moitra had withdrawn a similar petition in May this year. "You shouldn’t have filed it again after you withdrew a similar petition in May. In view of the fact that the matter was dismissed on May 5, we are not inclined to hear this plea. Dismissed," the bench said.

The CSR has become an integral part of business philosophy after its introduction as a statutory obligation under Section 135 of the Companies Act, 2013. The provisions in Section 135 of Companies Act, 2013, makes is mandatory for companies to spend part of their profit on national development priorities, including community development initiatives as part of their CSR activities. After the arrival of pandemic, government has been appealing to corporate to donate.

In last week of March, Ministry of Corporate Affairs (MCA) issued a memorandum and confirmed that any contribution made to PM CARES will be considered under CSR expenditure. As per it, the Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID 19 pandemic. However, MCA through an order in April directed that any donations made to the Chief Ministers’ Relief Fund will not qualify under the CSR expenditure of a company.