The Nagpur bench of the Bombay High Court has recently made a significant ruling, rejecting the collector’s request to utilise Rs 1.04 crore from the Corporate Social Responsibility (CSR) funds collected for handling the Covid pandemic to implement the Jalyukt Shivar phase-II scheme. The court emphasised that the primary intent behind the CSR funds’ collection was to address the Covid situation, and therefore, diverting them for other purposes was not justifiable. In this article, we delve into the details of the court’s decision and explore the significance of CSR funds in times of crisis.
CSR Funds: Their Purpose and Importance during the Pandemic
The outbreak of the Covid pandemic brought unprecedented challenges to communities worldwide, requiring swift and collaborative efforts from both governments and corporations. Recognising the dire need for resources, various corporate sectors came forward to contribute funds for Covid relief through the CSR initiative. The CSR funds, typically mandated under the Companies Act, are intended to be used for projects that positively impact society, such as healthcare, education, poverty alleviation, and disaster relief.
During the pandemic, these funds played a crucial role in supporting various relief measures, including procuring medical equipment, establishing healthcare facilities, and providing aid to vulnerable communities. Corporations responded generously to the call, contributing to a significant corpus of Rs 23.57 crore, demonstrating the power of collective action in times of crisis.
Utilizing CSR Funds for Jalyukt Shivar
The utilization of CSR funds for the Jalyukt Shivar phase-II scheme became a contentious issue as the Covid pandemic situation showed signs of improvement. The district collector’s proposal to redirect a portion of the funds towards implementing the water conservation initiative faced resistance from various stakeholders and prompted a legal battle before the esteemed Nagpur bench of the Bombay High Court.
Jalyukt Shivar, a flagship water conservation program in Maharashtra, had garnered significant attention and support due to its potential to alleviate water scarcity and improve groundwater levels in drought-prone regions. As the district faced challenges related to water availability and quality, the collector viewed this as an opportunity to address a long-standing issue that directly impacted the lives of the people residing in the affected areas. The Jalyukt Shivar phase-II scheme sought to build upon the success of its predecessor and implement more comprehensive water management practices, including watershed development, soil and moisture conservation, afforestation, and rejuvenation of traditional water bodies. It aimed to enhance the district’s resilience to water-related challenges and promote sustainable agricultural practices, ensuring the well-being of both rural and urban communities.
However, despite the noble intentions behind the Jalyukt Shivar initiative, the opposition to utilizing CSR funds for this purpose stemmed from the primary purpose for which these funds were collected – addressing the Covid pandemic. Various corporate sectors had generously contributed funds with the specific intent to combat the health crisis, support medical infrastructure, and provide relief to those adversely affected by the pandemic’s economic repercussions. The CSR initiative has been an integral part of corporate social responsibility, ensuring that businesses contribute to society’s welfare beyond their commercial interests. The mandate to allocate a percentage of their profits towards social development initiatives has led to transformative projects and significant positive impact across various sectors. During the Covid pandemic, CSR funds played a crucial role in supporting healthcare infrastructure, providing medical supplies, and assisting vulnerable communities affected by the virus.
The opposing argument emphasized the sanctity of CSR funds’ original purpose and the need to ensure accountability and transparency in their allocation. Diverting the funds towards a different initiative, no matter how laudable its objectives, raised concerns about straying from the core principles of CSR. It could set a precedent that might lead to the misuse or misdirection of CSR funds in the future, compromising their efficacy in times of urgent need.
Upholding the Purpose of CSR Funds
The division bench, comprising justices Valmiki Menezes and Vinay Joshi, thoroughly analyzed the case and deliberated on the intentions behind the CSR funds’ collection. The court emphasized that the very basis for these funds was to combat the Covid pandemic and provide relief to those affected by the crisis. Therefore, allocating the funds for a purpose unrelated to the pandemic was deemed inappropriate and against the core principles of CSR.
The court further highlighted the generosity of various corporate houses that contributed to the CSR funds with the specific intent to address the pandemic situation. It noted that the High Court had previously allowed the use of these funds for various Covid-related remedial measures. However, the present demand to allocate the funds for the Jalyukt Shivar phase-II scheme crossed the boundaries of the funds’ primary purpose.
In its verdict, the court stated that high court permission is required to utilize CSR funds collected for the pandemic for any other purpose. As the pandemic situation had improved, the need for future funds to address the crisis had diminished. Consequently, the bench rejected the collector’s plea to divert the funds, upholding the sanctity of the CSR initiative’s purpose.
Conclusion
The Nagpur bench of the Bombay High Court’s decision to reject the collector’s plea to use CSR funds for the Jalyukt Shivar phase-II scheme reaffirms the importance of staying true to the original intent behind such funds’ collection. CSR funds proved to be a lifeline during the Covid pandemic, providing essential resources to support relief efforts and help communities cope with the crisis.
While addressing other pressing issues, such as water scarcity, is undoubtedly essential, the court’s ruling emphasizes the need to maintain transparency and accountability in utilizing CSR funds. Going forward, it is imperative for corporations and authorities to ensure that CSR funds are directed towards initiatives aligned with their original purpose, maximizing their positive impact on society and communities in need.
