TMC MP, Mahua Moitra
TMC MP, Mahua Moitra
Litigation News

Supreme Court allows Mahua Moitra to withdraw plea challenging new MCA circular excluding Chief Ministers' Relief Funds from CSR

Shruti Mahajan

The Supreme Court today 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).

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.

Learned senior counsel for the petitioner seeks permission to withdraw the writ petition. Permission granted.
Supreme Court said in its order

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."
Petition filed by Mahua Moitra

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 is 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.

Moitra therefore moved the Supreme Court seeking for the MCA ciruclar 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.

Moitra was represented by Senior Advocate Aryama Sundaram and Advocate Jai Dehadrai.

Read Order:

Mahua Moitra vs UOI - 05.05.2020.pdf
Bar and Bench - Indian Legal news