'Companies Expected To Use CSR Funds For COVID Relief' : Bombay High Court Upset Over Poor Response From Vidarbha Companies

The Bombay High Court(Nagpur Bench) has recorded unhappiness at the poor response shown by private companies in Vidarbha region to the appeal made by it to use CSR funds for COVID-19 relief.

The Court had made an attempt to get detailed information about availability of CSR funds with different private sector companies operating in Vidarbha Region through Vidarbha Industries Association, Nagpur.

"But, the response that this Court has received so far from different companies is not encouraging", observed a division bench comprising Justices Sunil Shukre and Avinash G Gharote.

The Court said it the attempt was made with a view to strengthen the health care system in Vidarbha Region,especially in view of Covid -19 pandemic. Therefore,  it said it expected not only from the State Government, but also from the public sector companies and also private sector companies to make their contributions to the noble cause.

"While response from some of the public sector companies like WCl / CIL and MOIL has been so far extremely good, the same is not with the private sector companies. We have also not received any response from such public sector companies like NTPC,MAHAGENCO (Power Generation), MAHAGENCO(Power Transmission) and MSEDCL. There are also big companies like Tirora Thermal Power Station,Gondia and various cement manufacturing plants at Chandrapur", the bench observed.

The Court observed that when the companies are under a statutory obligation to maintain Corporate Social Responsibility(CSR) funds as per Section 135 of the Companies Act, they are expected to utilize the same when they are called upon to do so.  It opined that there is no better opportunity than the present pandemic to discharge such obligations.

"When these corporate entities are enjoined with a statutory duty (See section 135 of the Companies Act, 2013), it is expected that these companies discharge their duties whenever they are called upon to do so and in our opinion, there could have been no better opportunity than the present time and present cause to discharge such duty", the Court said.

It warned that if these companies do not respond to the appeals made by the Court, it will issue necessary directions "for making these companies wake up and answer the call of their duty".

In this backdrop, the bench passed the following order :

"Accordingly, we direct the Divisional Commissioner,Nagpur and the Divisional Commissioner, Amravati to obtain the entire information as regards the availability of CSR funds with all the companies operating in their respective divisions. The Divisional Commissioner shall call for this information through the concerned Joint Director, District Industries Centre and verify through the Joint Director the correctness of the information so provided by these companies to him. We further direct the Divisional Commissioner, Nagpur and the Divisional Commissioner, Amravati to make a request for release of CSR funds which may be found to be available upon such verification with such companies. The whole exercise be completed and result of the samebe placed before this Court on or before the next date".

The bench passed the order in the suo moto case taken to deal with COVID-19 issues in Vidarbha region. The matter will be next considered on May 27.

Click here to read/download the order