By Anubhav Jaiswal and Harshvardhan, pursuing B.A. L.L.B from Christ University, Bangalore.
The Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES) was launched by Prime Minister Narendra Modi. Taking to the social media platform ‘Twitter’, PM Modi urged the citizens to donate in their respective capacity to battle COVID-19.[i]
PM CARES was created in the wake of the COVID-19 pandemic, also, to tackle ‘other distressing situations if they occur in the times ahead’. The PM himself serves as the ex-officio chairman of the PM CARES, the Minister of Defence, Home Affairs, and Finance are the trustees of the fund. According to the PM CARES website portal, the donations made to the fund would qualify for 80G benefits and 100% exemptions under the Income-tax Act 1961.[ii]
The government in a bid to encourage donations from corporate houses announced that the donations would also qualify to be counted as Corporate Social Responsibility (CSR) expenditure under the Companies Act 2013.[iii]
The fund was established with the rationale of tackling an ‘emergency’ situation like COVID-19, but very conveniently, turned its back on transparency and accountability. The Prime Minister Office (PMO) in the recent past, denied several RTIs that sought disclosure of information and documents on PM CARES. This has embarked a series of controversies regarding the use, inflow and outflow of the fund.
According to the fund’s website, Rs 3,076.62 crore were collected within the first five days of its launch.[iv] However, the website does not provide any information on the contributions made from April onwards.
Many have argued that since there already existed a fund similar to the PM CARES, that is the Prime Minister’s National Relief Fund (PMNRF), there wasn’t a need to create the former. On the contrary, several supporting the government have justified the cause of PM CARES. Stating that while PM CARES is a national fund for any kind of emergency, PMNRF was established to provide relief to the family of victims during natural calamities.
Moreover, there is a noticeable drift in the way both these funds function. The PMNRF discloses the information regarding the collection and disbursals of funds, including foreign contributions yearly. On the other hand, PM CARES has created suspicion by denying to disclose information and dodging RTI requests, leading to unnecessary secrecy around the fund. Moving forward, the lack of accountability and transparency around PM CARES can adversely affect public confidence in government-owned funds.
The PMO refused to furnish information citing the reason that the Fund is not a public authority within the meaning of Section2(h) of the RTI Act. It has claimed itself to be a public charitable trust making it beyond the ambit of the RTI Act 2005.[v]
The following section attempts to dispute this assertion and will try to reason as to why PM CARES is a public authority under Section 2(h) of the RTI Act.
PM CARES is a Public Authority
‘Public Authority’ is defined under Section 2(h) as
“any authority or body or institution of self-government established or constituted by or under the Constitution; by any other law made by Parliament; by any other law made by State Legislature; by a notification issued or order made by the appropriate Government.”
Further, Section 2(h)(d)(i) states that the ‘body owned, controlled, and substantially financed’ by the funds provided by the government (directly or indirectly) will also fall under the definition of ‘public authority’.
The Delhi High Court in National Stock Exchange India Ltd v. CIC[vi] held that if any one of the three conditions that are owned, controlled and, substantially financed is fulfilled the body comes under the ambit of Section 2(h) of the RTI Act and therefore, is a public authority.
Even the set of guidelines under the PM CARES Fund prove that the Fund is ‘controlled’ by the government of India. The arguments informed hereunder reassert this in detail,
- The Fund is managed by the PMO which is a constitutional functionary. Thus, giving an impression of public office.
- The Prime Minister has the power to nominate three trustees to the Board of Trustees. They can be individuals who are eminent persons in the field of research, health, science, social work, law, public administration and philanthropy.
- The PM along with other ministers constituting the Board of Trustees are constitutional functionaries. The management including the disbursement of the fund is vested on their own discretion.
- The government has made certain budgetary allocation for the advertisement of the PM CARES Fund.
- The Prime Minister himself has been the face of the advertisements appealing to the public to contribute to pmcares.gov.in which is the official domain of the PM Cares website. The Ministry of Electronics and Information Technology regulates the domain ‘gov.in’ and the same can only be used by public authority.
- The PM CARES Fund on its website has used the State emblem and the same can only be exercised by the government under the State Emblem Act 2005. The use of the State emblem of India indicates that it is managed by a public office.
The aforementioned points ascertain that the Indian Government has a substantial amount of control over the PM CARES Fund.
The Supreme Court in Thalappalam Service Corp Bank v. State of Kerala[vii] the court enunciated the meaning of ‘controlled’ used in Section 2(h)(d)(i)
“When we test the meaning of the expression ‘controlled’ which figures in between the words ‘owned’ and ‘substantially financed’, the control by the appropriate government must be a control of a substantial nature.”
To put simply the apex court states that the body can only be substantially financed by the government if ‘the control over the body is of such a degree which amounts to substantial control over the management and affairs of the body’.
Therefore, the PM CARES Fund is owned, controlled and substantially financed by the government.
PM CARES is ‘SUBSTANTIALLY FINANCED’
Hours after PM Modi called for donations for PM CARES, a large number of celebrities, industrialists and affluent people pledged to donate. Not only that, donations came in from various government departments including Railways Ministry which donated around 151 crores. The Army, Navy, Air force and employees of the Defence Ministry collectively donated around 500 crores.[viii] Besides, even government employees were compelled to donate a day’s salary each month, annually.[ix] Donations made by these government departments are in fact the taxpayers’ money. Therefore, the public has the right to know its whereabouts.
Moreover, the government’s decision to get it audited by independent auditors rather than Comptroller and Auditor General of India (CAG) is generating even more scepticism. It is pertinent to note that a fund that operates at a national level with the Prime Minister and other members of the cabinet at its helm, it essentially acquires the colour of public authority.
The same was iterated by the Delhi High court in Prime Ministers National Relief Fund v. Aseem Takyar. The Court extensively scrutinised the standing of PMNRF vis-à-vis the scope of the RTI Act. However, there was a split verdict by the division bench. Justice Ravindra Bhat declared that the PMNRF is a public authority and falls under the ambit of the Act and the Fund is therefore obliged to a disclosure of information. On the question of exemptions under the RTI Act, the court opined,
“citizens have a right to know about the management of a fund which is used for benign purposes, inter alia, like providing relief in times of natural disasters. A disclosure of such information will ensure that the voluntary donations made by the citizen body is not appropriated by any government officials.”
PM CARES Fund has received huge amounts of donations from the government departments running in hundreds of Crores. This is a very large amount of money which the government has been donating through the Public Sector Units (PSUs) and has also compelled public employees to donate to the Fund. Therefore, from the aforesaid arguments, it can be concluded that PM CARES Fund is being substantially financed by the central government. In fact, the government has eyed on funds from schemes like Members of Parliament Local Area Development Scheme (MPLADS) to be directed towards PM CARES.
In D.A.V. College trust & Management society v. Director of Public Instructions,[x] the court was of the view that ‘substantial’ does not necessarily have to be more than 50%. It means a large portion. In that sense, given the number of contributions made by the government itself, it is fitting to say that these donations are ‘substantial’.
Therefore, it is unequivocally clear that the PM CARES Fund is financed by the central government and its subsidiaries (PSUs) and falls under Section 2(h)(d)(ii) of the RTI Act.
The Secrecy of PM CARES: Defeating the RTI Act
The RTI Act is a bastion of democracy and checks corruption and ensures transparency and accountability of the actions of the government. In the case of New India Assurance Company Ltd v. Nushi Neville Wadia and Anr,[xi] it was held that a statute should be interpreted reasonably and while interpreting it, the court should place itself in the chair of the reasonable legislator to see the object of the Act is fulfilled.
The PM CARES Fund lacks accountability and transparency which are considered as the main objectives of the RTI Act. The government has refused to provide any information regarding the trust deeds, income and expenditure of the Fund. The government should disclose information regarding the inflow and outflow of the Fund for the sake of public interest. Evading the secrecy around PM CARES will ensure that uniform rational criteria are followed in the distribution of funds. Additionally, it will also warrant that there is no personal bias concerning the beneficiaries of the fund.
In 2002, the Gujarat high court issued certain directions in Bipinchandra j. divan v. State of Gujarat[xii] concerning the funds created by the government to deal with disasters. In the case, the court issued directions for the periodic (and not merely annual) audit by the nominee of the CAG. It also held that these audited accounts would be open to the public for inspection. The court held that the provisions of Indian penal code (IPC) and anti-corruption laws would be applicable if it is found that the funds have been misused by public servants.
Under these circumstances, it is important to pay heed to the Preamble of the RTI Act which states that the Act is being brought into enactment with the legislative intent to enforce the RTI Act by providing all relevant information to the public.
The Preamble of the RTI Act outlines the objective of transparency and accountability, essential in the functioning of every public authority. Constituted by the Government of India, the PM-CARES Fund is no different, and therefore, must fall within the ambit of RTI.
India is a democratic country. Transparency and accountability are facets of democracy. The government should ensure that there is a proper structure, maintain mechanisms and account for the transactions of the Fund.
In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd,[xiii] the court observed,
“Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual.”
In the present context, especially regarding the PM CARES fund, the term ‘public authority’ in the RTI Act must be subjected to a liberal interpretation. Thus, to realise the objective of the RTI Act entirely the governed needs to hold the government accountable.
Public Charitable Trusts Fall Under the RTI Act
The Prime Minister’s office has consistently refused to provide any information on the PM CARES Fund on the ground that it is not a public authority under the RTI Act 2005. However, it is pertinent to note that file notings accessed by the RTI Activists show that the Ministry of Corporate Affairs had declared that the fund was set up by the Central government, thus making it fall under the ambit of Section 2(h) of the RTI Act 2005.
Moreover, the day on which PM CARES was set up, the Ministry of Corporate Affair file- ‘Clarification on contribution to PM CARES Fund as eligible CSR activity under item no. (viii) of the Schedule VII of Companies Act, 2013’- stated that contribution made to the PM CARES by the Indian companies would qualify as CSR since the fund was set up by the Central government.[xiv]
However, two months later on May 26, the government itself retrospectively amended the Companies Act which ruled out that CSR activity will not be dependent on whether the fund was set up by the Central Government or not.[xv] By doing so, the government not only ensured that PM CARES does not fall under the RTI but also nullified the Ministry of Corporate Affairs’ notification which appropriated that the fund was set up by the central government.
Even if the PM CARES Fund is a public charitable trust and is ‘private’ in nature, the access to information still cannot be denied because of Section 19 of the Indian Trusts Act 1882. That states,
“A trustee is bound (a) to keep clear and accurate accounts of the trust-property, and (b), at all reasonable times, at the request of the beneficiary, to furnish him with full and accurate information as to the amount and state of the trust-property.”
Hence, the citizens of India being the beneficiary of these funds can ask for information related to the fund.
An Infringement of Article 19 (1) (a)
The fundamental right to freedom of speech and expression is spelt out under Article 19. It is the basic element of a democratic country like India, as it allows the citizens to participate in the functioning of the country socially and politically.
In the light of the dictum in PUCL V. Union of India,[xvi] the right to information has been recognised as a fundamental right and it is derived from Article 19(1)(a). Therefore, even if PM CARES excuses itself for not being a public authority under Section 2(h) of the RTI Act, the citizens of this country have a fundamental right to know about the sources of the Fund and details of the expenditure.
PM CARES is unconstitutional
In June, a Public Interest Litigation (PIL) was filed before the Allahabad High Court challenging the constitutional validity of both the PM CARES and PMNRF. The PIL called out the ‘opaque nature’ of the PM CARES Fund. It questioned the need for the said funds since statutory funds like the National Disaster Response Fund (NDRF) were already in place. It was argued that Section 72 of the Disaster Management Act will have an overriding effect and NDRF will prevail over PM CARES. Since the former is audited by CAG and comes under the ambit of RTI, it is more transparent than PM CARES.
The decision to create PM CARES in the presence of a similar fund which is more accountable and transparent is itself arbitrary.[xvii] As questioned by the PIL and given its arbitrary nature, it isn’t hard to say that the PM CARES Fund is unconstitutional.
PM CARES Fund: Prone to Misuse?
The Ministry of Home Affairs Declared COVID-19 pandemic as a ‘notified disaster’ in its March 14 order. While PM CARES was projected as a noble initiative to battle COVID, its opacity makes it arbitrary.
Despite the presence of PMNRF that is meant to tackle situations of emergency or natural disaster, the PM CARES was created to tackle just that, only more arbitrary. It is pertinent to note that the website of PMNRF shows that the fund has a balance of 3800 crores. Unlike PM CARES fund the PMNRF website is open and clearly shows the inflow and outflow and the current balance.
The lack of transparency can lead to the embezzlement or wrongdoings by government servants and people associated with the Fund. It will be very naive to believe in the government’s narrative that no wrongdoing or embezzlement of funds has happened as yet. Especially when there are no records available in the public domain to corroborate this assertion.
The government has claimed that funds from PM CARES were allocated to migrant labourers, vaccine development and purchase of ventilators. However, the claim of the purchase of ventilators has sparked a new controversy, with many questioning the amount allocated and details of such allocation.
The PM CARES Fund is deeply problematic because of the discriminatory provisions. It deprives the state government or the Chief Minister’s Relief Fund of the CSR contributions. Since it offers various perks like 100% Income tax exemptions and CSR donations.[xviii] Thus contributors are now lured by PM CARES instead of states’ funds.
The Ministry of Corporate Affairs has clarified that donations by the companies to the Chief Minister Relief Fund or State Relief Fund for COVID-19 will not qualify as CSR as per the existing law.[xix] Schedule VII of the Companies Act 2013 does not include contributions to these funds as CSR. Although there have been demands to amend Schedule VII of the Companies Act to permit the State government to access these funds, there is yet to be any development regarding such requests.
Instead of pushing for a new fund, the Government could have easily promoted state funds. As the state governments can enforce relief measures on the ground level, making them more accessible and accountable.
The apex court in State of Uttar Pradesh v. Union of India[xx] iterated that the people have the ‘right to know’ about everything and every public transaction made by public functionaries in its entirety. The court advanced,
“The right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary, when secrecy is claimed for transactions which can, at any rate, have no repercussion on public security…The responsibility of officials to explain and to justify their acts is the chief safeguard against oppression and corruption.”
Every citizen has the ‘right to know’ about the transactions by any fund which is a public authority and where the government is directly or indirectly involved. Especially since various ministries and PSUs have actively donated for PM CARES, the stakes are too high to maintain secrecy in the public domain about the public’s money.
By hiding, relevant information about PM CARES that is a ‘public authority’ by all means, the government is trampling democratic ideals and the trust of taxpayers. To prevent the embezzlement of funds and to ensure that every penny of the fund is strictly being used for public welfare, the PM CARES Fund needs to be audited by the CAG.
[i] The Hindustan Times, PM CARES fund launched in the fight against Covid-19, India asked to donate, 07/12/2020, 19:12, PM CARES fund launched in fight against Covid-19, India asked to donate – india news – Hindustan Times
[ii] News 18, Explained: What is the PM-Cares Fund for Fighting Coronavirus Pandemic, 07/12/2020, 19:12, Explained: What is the PM-Cares Fund for Fighting Coronavirus Pandemic (news18.com)
[iii] Shishir Sinha, The Hindu Business line, Contributions to PM CARES Fund will be considered as CSR: Centre, 07/12/2020, 19:16, Contributions to PM CARES Fund will be considered as CSR: Centre – The Hindu BusinessLine
[iv] India Today, PM Cares Fund received Rs 3,076 crore in donations in just 5 days, shows audit report, 07/12/2020, 19:30, PM Cares Fund received Rs 3,076 crore in donations in just 5 days, shows audit report – India News (indiatoday.in)[v] Priscilla Jebraj, Coronavirus | PM CARES is not a public authority under RTI Act: PMO, 07/12/2020, 19:30, Coronavirus | PM CARES is not a public authority under RTI Act: PMO – The Hindu
[vi] National Stock Exchange of India Ltd. v. Central Information Commission, 2010 (100) SCL 464 (Del.)
[vii] Thalappalam Service Corp Bank v. State of Kerala, 2013 16 SCC 82
[viii] Shama Mohammed, The Indian Express, “There must be more transparency in use of PM CARES fund created to deal with pandemic”, 07/12/2020, 19:36, There must be more transparency in use of PM CARES fund created to deal with pandemic | The Indian Express
[ix] Priscilla Jebaraj, Vijaita Singh, Manojit Saha, Coronavirus | PM-CARES donations cut from government staff salaries, 07/12/2020, 19:36, Coronavirus | PM-CARES donations cut from government staff salaries – The Hindu
[x] D.A.V. College Trust & Management Society v. Director of Public Instructions, (2019) 9 SCC 185
[xi] New India Assurance Company Ltd. v. Nushi Neville Wadia and Anr 2008 SCC 3 279
[xii] Bipinchandra j. divan v. State of Gujarat, AIR 2002 Guj. 99
[xiii] Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd, (1987) 1 SCC 424
[xiv] The Wire, Ministry of Corporate Affairs’ Document Shows PM-CARES Fund Should Fall Under RTI, 07/12/2020, 19:46, Ministry of Corporate Affairs’ Document Shows PM-CARES Fund Should Fall Under RTI (thewire.in)
[xvi] PUCL V. Union of India, (2004) 2 SCC 476
[xvii] The Hindu, Need For transparency: On PM CARES Fund, Need for transparency: The Hindu Editorial on PM CARES Fund – The Hindu
[xviii] The Wire,” Donations to CM Relief Fund Cannot Be Counted as CSR: Corporate Affairs Ministry”, 07/12/2020, 19:51, Donations to CM Relief Fund Cannot Be Counted as CSR: Corporate Affairs Ministry (thewire.in)
[xx] State of Uttar Pradesh v. Raj Narain, (1975) 4 SCC 428