SC to decide on Tuesday if PM CARES Fund violates Disaster Management law

The Supreme Court will pronounce its judgment on Tuesday on a plea that all contributions made to the PM CARES Fund till date should be transferred to the National Disaster Response Fund (NDRF), a statutory fund created under section 46 of the Disaster Management Act of 2005 (DM Act).

The verdict, which will be pronounced by a three-judge bench headed by justice Ashok Bhushan, will also decide whether the PM Cares Fund violates the legal provisions contained in the DM Act.

The petitioner NGO, Centre for Public Interest Litigation (CPIL) had claimed that PM CARES Fund was set up in violation of the legal mandate under the DM Act as per which any grant made by any person or institution for the purpose of disaster management should be compulsorily credited to NDRF.

The PM Cares Fund was set up by the central government on March 28 as a public charitable trust with the primary objective of dealing with any kind of emergency or distress situation such as that posed by Covid-19 pandemic.

“Even though there is a provision for NDRF under Section 46 of the Disaster Management Act, the central government has come up with a PM CARES Fund. All the contributions being made by individuals and institutions in relation to Covid-19 crisis are being credited into the PM CARES Fund and not to the NDRF, in clear violation of Section 46 of the DM Act,” the petitioner submitted.

The central government had rebutted this argument stating in its affidavit before the top court on July 8 that the PM CARES is a fund established to carry out relief work and there are several such funds established on similar lines in the past.

“Mere existence of a statutory fund (NDRF) would not prohibit creation of a different fund like PM CARES Fund which provides for voluntary donations,” the affidavit said.

During the hearing before the apex court, the central government through solicitor general Tushar Mehta, had defended the PM Cares fund saying that it was not intended to circumvent the NDRF as alleged by the petitioners.

“Whatever amount that has to go to NDRF under the law will go (to NDRF). PM Cares is a public charitable trust. If private individuals want to donate, they can do so. There are several public charitable trusts getting donations,” Mehta argued.

The petitioner through their counsel, senior advocate Dushyant Dave had pointed out that PM Cares was not being audited by the Comptroller and Auditor General (CAG) but by private auditors.

“This government believes in transparency. Why should private auditors audit it (PM Cares)? NDRF under the DM Act is audited by CAG,” Dave had said.

The bench, which also comprised justices R Subhash Reddy and MR Shah, had reserved its judgment in the case on July 27.

Another petition against the PM CARES Fund filed by Rajasthan government in June, is also pending before the Supreme Court. The Rajasthan government has challenged exclusion of contributions made towards Chief Minister’s Relief Fund (CMRF) meant for Covid-19 mitigation from the purview of corporate social responsibility (CSR) activities while allowing contributions made to PM CARES Fund as CSR, stating that it is irrational and violates Article 14. That petition will be heard separately.

The Companies Act of 2013 mandates that corporates having net worth of at least Rs. 500 crore or turnover of Rs. 1,000 crore or more or a net profit of at least Rs. 5 crore during the immediately preceding financial year have to spend at least 2 per cent of their profits towards activities listed as CSR activities under schedule VII of the Act.

“To allow the PM CARES Fund for Covid-19 as CSR but to exclude the CMRF for the very same purposes is creating a distinction without a difference. This is gross infraction of Art. 14 of Constitution of India,” the Rajasthan government had told the apex court.

This argument was also raised by senior counsel Kapil Sibal, who was appearing for an intervener, in the CPIL petition. Sibal had pointed out that contributions made towards PM Cares come within the purview of CSR and corporates would, therefore, prefer making donations to PM Cares.

“There are CSR benefits attached to this fund. Why will any person contribute to NDRF when they get so much relief under PM Cares?” Sibal had asked.

Leave a Reply