PM CARES Fund a “Public Charitable Trust” hence no need to audit by CAG: SC

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In the matter of Centre for Public Interest Litigation V. Union of India dated by a judgment 18.08.2020, a bench led by Justice Ashok Bhushan of the Supreme Court dismissed the PIL filed by Centre for Public Interest Litigation by holding that PM CARES Fund a “public charitable trust” and “there is no occasion for the Comptroller and Auditor General (CAG) to audit a public charitable trust independent of budgetary support or government money.” The Public Interest Litigation sought directions to evolve a new national plan under Section 11 of NDMA, Act to deal with COVID-19 emergencies, and to transfer the funds from PM CARES to National Disaster Response Fund constituted under National Disaster Management Act, 2005.

No exception can be taken for creation of a public charitable trust

The Court said that it is “not open” for a PIL petitioner to question the “wisdom” that created the fund in an hour of need. At this need of the hour no exception can be taken to the constitution of a public charitable trust, namely, PM CARES Fund, the bench observed in a 75 page judgment.

Is PM CARES “constituted” to circumvent the National Disaster Response Fund?

One of the contentions of the petitioner was the funds collected in National Disaster Response Fund is subject to audit by CAG whereas the funds collected under PM CARES is audited by a private Chartered Accountant. So, the plea was taken that the fund was created to circumvent the National Disaster Response Fund.

The Court dismissed the ground that PM CARES was constituted to “circumvent” the National Disaster Response Fund (NDRF). The Court said contributions to National Disaster Response Fund are open to everyone by virtue of Section 46 of the National Disaster Management Act, 2005.  “The funds collected in the PM CARES Fund are entirely different funds, which are funds of public charitable trust. Besides, who is stopping potential donors fro contributing to the NDRF, the court asked. Justice Bhushan noted, “Any contribution of any individual or institution is not prohibited to be credited into the NDRF and it is still open for any person or institution to make contribution to the NDRF in terms of Section 46(1)(b) of the Act, 2005.”

Rejected the need for a fresh national disaster management plan

The court rejected the need for a fresh national disaster management plan and observed, ” National plan and guidelines is by its very nature prior to the occurrence of any disaster. It is a measure of preparedness. It is not conceivable that a national plan would be framed after the disaster has occurred.” It said there was already a plan uploaded on the government website since November 2019. The authorities have been supplementing it with various orders and measures, leaving no occasion for a new plan.

Answers to legal issues

Dismissing the petition, the Supreme Court answered the legal issues raised by CPIL as follows:

  • The Union of India can very well utilize the NDRF for providing assistance in the fight of COVID-19 pandemic by way of releasing

    fund on the request of the States as per new guidelines.

  • Any contribution, grant of any individual or institution is not prohibited to be credited into the NDRF and it is still open for any person or institution to make contribution to the NDRF in terms of Section 46(1)(b) of the Act, 2005. The contribution by any person or by any institution in PM CARES Fund is voluntary and it is open for any person or institution to make contribution to the PM CARES Fund.
  • The funds collected in the PM CARES Fund are entirely different funds which are funds of a public charitable trust and there is no occasion for issuing any direction to transfer the said funds to the NDRF
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