SC declines to hear plea challenging exclusion of CM relief funds from purview of CSR

The Supreme Court on Tuesday refused to entertain the petition filed by TMC MP Mahua Moitra challenging the validity of the circular issued by the Ministry of Corporate Affairs (MCA) excluding Chief Ministers' Relief funds from the purview of Corporate Social Responsibility (CSR), reports legal news website BarandBench.com.

Mahua Moitra's plea challenging the validity of the MCA circular, which excludes contributions made towards Chief Ministers Relief Funds from CSR, was taken up for hearing via video conferencing today.

The Bench of Justices Ashok Bhushan, Sanjay Kishan Kaul, and BR Gavai heard the matter.

The Bench noted that the petitioner before the court is a Member of Parliament and that there is no aggrieved party before the Court. The issue raised by the petitioner can be raised before Parliament, the Bench observed, while saying that it finds no merit in the plea. Moitra subsequently withdrew her petition given the court's refusal to entertain the same.

Moitra claimed in her petition that the MCA circular is not only in violation of Article 14 of the Constitution of India, but is also ulta vires the provisions of the Companies Act of 2013. Section 135 of the Companies Act deals with CSR and Schedule VII pursuant to this Section includes CM Relief Funds as eligible recipients for fulfillment of CSR.

Despite the express provisions in law, the MCA circular, during this time when the country is battling the COVID-19 pandemic, issued a general circular ousting CM Relief Funds and State Relief funds set up for COVID-19 relief from the purview of being eligible activities to qualify for CSR. The circular states that only donations made towards the PM CARES fund will attract CSR.

“... 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," said the petition.

This "unfair treatment", Moitra says, is in violation of Article 14 of the Constitution of India and also goes against one of the basic founding principles, that is federalism.

It also averred that their circular seeks to give no justification for making the distinction between the relief funds for the purpose of CSR and is in contradiction to the Ministry's previous general circular issued in 2014 which had called for entries under Schedule VII to be interpreted liberally, says the report published by BarandBench.com.

Moitra therefore moved the Supreme Court seeking for the MCA circular of to be set aside for being violative of Article 14, ultra vires provisions of the Companies Act, as well as for being arbitrary and discriminatory.