The Leaflet

| @theleaflet_in | May 5,2020

THE Supreme Court on Tuesday declined to entertain a Public Interest Litigation (PIL) filed by Mahua Moitra, a Member of Parliament (MP) belonging to Trinamool Congress (TMC), challenging the validity of a circular issued by the Ministry of Corporate Affairs (MCA) in so far as it excludes the Chief Ministers’ Relief funds from the purview of Corporate Social Responsibility (CSR).

A three-judge bench comprising Justices Ashok Bhushan, Sanjay Kishan Kaul and B R Gavai remarked that the aggrieved party is not before the court, and the petitioner being an MP can raise the issue in the Parliament.

The petitioner, therefore, chose to withdraw the petition, which was allowed, by the court.

In her plea, Moitra inter-alia asserted that “… the unfair treatment of identical contributions to the State Relief Funds is against public interest and public policy, in so far as it disincentivizes corporate contributions which the State Governments would have otherwise received, under a hitherto permissible head of payment under the same statute.”  This unfair treatment, according to the petitioner, was in violation of Article 14 and as well as the federalism.

As per Section 135 of the Companies Act 2013, every company with a net worth of Rs. 500 crore or more, or a turnover of over Rs. 1,000 crores or more, or a net profit exceeding Rs. 5 crore during the immediately preceding financial year is required to spend at least 2% of its average net profits (made during the three immediately preceding financial years) in pursuance of its CSR.

On 10 April, the MCA issued a set of FAQs clarifying the eligibility of CSR expenditure related to COVID-19 activities. This document stated that contributions made by companies to the PM CARES Fund should qualify as CSR expenditure under item no. (viii) of Schedule VII of the Companies Act.

However, contributions made to the ‘Chief Minister’s Relief Fund’ or the ‘State Relief Fund for COVID-19’ (run by several states) shall not qualify as admissible CSR expenditure.

 

Read the order here

 

Also read: Diluting federalism in the fight against the COVID-19 pandemic

 

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