CSR Funds Scam: Plea in Kerala High Court seeks action under BUDS Act

The Kerala High Court on Monday sought the State's response to a plea by seven Non-Governmental Organisations (NGOs) seeking action under the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act) against those accused in the CSR funds scam case [Gramasree Mission & ors v State of Kerala & ors]..The invocation of this Act would enable the authorities to provisionally attach the misappropriate funds/ deposits and prevent further loss of money, the petitioners have argued. In addition to the ongoing police probe in the CSR fund scam case, an immediate detailed investigation under the BUDS Act is also imperative for an effective and fool-proof prosecution of the accused, the petitioners added. Justice Kauser Edappagath on Monday gave the State's counsel time to get instructions and posted the matter for further hearing on March 27..The multi-crore Corporate Social Responsibility (CSR) fund scam involves allegations that one Ananthu Krishnan defrauded several people and charitable societies by promising to deliver two-wheelers, laptops, sewing machines and household appliances at half the market price. Krishnan would allegedly claim that he was procuring these items using CSR funds of several private firms.Krisnan, who claimed to be the coordinator of the "National NGO Confederation", allegedly approached several charitable organisations with his fraudulent offer. These organisations in turn helped him to identify beneficiaries and pooled funds with him as well.Police stations across Kerala have been flooded with complaints from those who were defrauded by Krishnan..Now, seven NGOs have approached the Kerala High Court seeking directions so that action is also taken against Krishnan and others accused under the BUDS Act as well.They contend that although several representations were made to the Additional Chief Secretary (the competent authority under the BUDS Act) on this issue, no investigation or action has been initiated under the BUDS Act. .The petitioner-NGOs have submitted that since they unwittingly acted as implementing agencies in the CSR fund schemes that are presently being probed by the police, their reputation and years of hard work have also been affected. "The reputation of the Petitioners, earned over decades through hard work and selfless service, has been tarnished gravely," the plea said.The petitioner-NGOs further highlight that the fraudulent schemes floated by the accused squarely fell within the purview of the BUDS Act, since they involved the collection of funds from the public with a promise of goods or returns without necessary regulatory approvals.Notably, the NGOs pointed out that Section 7(3) of the BUDS Act allows the provisional attachment of deposits held by the deposit-taker, thereby preventing any loss of the publicly pooled funds. However, the authorities are yet to take any such action under the BUDS Act in the CSR fund scam case, the petitioners pointed out. Such action under Section 7(3) of the BUDS Act is necessary to prevent further misappropriate of funds, the petitioners say. Therefore, the petitioner-NGOs have urged the High Court to direct the Additional Chief Secretary (competent authority) to take appropriate action under the BUDS Act against the accused in the CSR funds case.The plea has been moved through advocates K Dhruv Kumar, Shakthi Prakash, and Harikrishnan MS..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.