Category: Laws

Robust waste management techniques coupled with innovation for eco-friendly alternatives will surely orchestrate a sustainable future.

Concurrent with technological innovation, legal action is critical for sustainable development. The Plastic Waste Management Rules, 2016 are playing a pivotal role in creating more accountability of producers, importers and brand owners (PIBOs) of goods in the end-of-life of their plastic products.

To this end, the “Extended Producer Responsibility” framework prescribes yearly targets to different classes of PIBOs, to ensure that they are focussing on recycling and reusing plastic.

  Robust waste management techniques coupled with innovation for eco-friendly alternatives will surely orchestrate a sustainable future.

On the other hand, Environmental, social, and corporate governance (ESG) ESG disclosure and transparency is becoming the new normal for businesses in India.

By reporting their environmental impact, social initiatives, and governance practices, organizations are fostering trust, accountability, and informed decision-making among investors, consumers, and stakeholders.

Saurav Kumar, Partner, INDUSLAW

Our environment, be it in India or across the globe needs our unwavering attention.

As the world celebrates the 50th World Environment Day with ‘beat plastic pollution’ as the focus, the kind of impact it should have had in 50 years on issues like wildlife, biodiversity, forests and water conservation is clearly missing. Be it plastic pollution, loss of vegetation and biodiversity, air and water pollution, climate change, perishing wildlife, there are so many critical environmental issues that a single day in the year will not suffice.

Every day needs to be treated as a day for the environment so that we could truly reach a stage where it is a matter of celebration for all of us. Our environment, be it in India or across the globe needs our unwavering attention.

The governments (states and centres), local authorities, industry owners, citizens, non-governmental organisations – every stakeholder across the globe needs to work in consonance with the other to ensure that we save our environment and this planet.

If only we succeed, we would have a reason to celebrate World Environment Day. Until then we need to treat it as a serious responsibility which needs to be discharged on a daily basis.

  Nawneet Vibhaw, Partner, Shardul Amarchand Mangaldas & Co

So far, sanction for prosecution has been accorded in 366 cases. Of these, 174 applications for compounding have been made.

About 174 applications of Corporate Social Responsibility (CSR)-related defaults are in the process of compounding, according to the data maintained by the Minsitry of Corporate Affairs.

Earlier, CSR related defaults were compoundable offences. So far, sanction for prosecution has been accorded in 366 cases. “Of these, 174 applications for compounding have been made and 121 cases have been compounded,” the data showed.

Now, the non-compliance of CSR provisions has been converted as a civil wrong with effect from January, 22 2021.

The penal provision related to violation of CSR provision with respect to CSR expenditure is provided under Section 135 (7) of the Act. As per the existing provision, penalty is prescribed against the company and every officer in default which is determined on the basis of unspent CSR amount of the company.

The broad framework for CSR has been provided under Section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. The CSR framework is disclosure-based and CSR mandated companies are required to file details of CSR activities annually in the MCA21 registry.

The government monitors the compliance of CSR provisions through the disclosures made by the companies in the MCA21 portal.

Whenever any violation of CSR provisions is reported, action against such non-compliant companies is initiated as per provisions of the act after due examination of records and following due process of law.

Minister of State for Petroleum and Natural Gas Rameswar Teli replied that CSR is a Board-driven process and the Board is empowered to plan, approve, execute and monitor the CSR activities based on the recommendations of its CSR committee.

DMK leader S Kalyanasundaram in the Rajya Sabha asked the government if it plans to utilise the CSR funds of the Oil and Natural Gas Corporation (ONGC) for the upcoming South Indian Kumbh Mela called as MAHAMAHAM, to be held in 2028.

He also asked if the funds will be utilised for the upgradation of basic civic amenities such as beautification of the areas around the temples, building of dharamshalas for the pilgrims, upgradation of railway stations, bus stands and other public transport and hospitals.

Replying to the written question, Minister of State for Petroleum and Natural Gas Rameswar Teli said Corporate Social Responsibility (CSR) is a Board-driven process and the Board of the company is empowered to plan, approve, execute and monitor the CSR activities based on the recommendations of its CSR Committee.

Oil and Gas Public Sector Undertakings undertake CSR activities under the heads identified under Schedule VII of the Companies Act, 2013 with special focus on Health (Nutrition, Sanitation, and Drinking Water), Education, Skill Development, Rural Development, Women Empowerment, Environment Oriented Initiatives and Care for the Elderly and Differently-abled Persons, he responded.

Mass scale production and supply of the national flag, outreach and amplification efforts and other related activities are eligible CSR activities under this campaign.

Companies can spend their CSR funds for activities related to the ‘Har Ghar Tiranga’ campaign, according to the government.

The campaign is being organised by the government as part of the Azadi Ka Amrit Mahotsav to encourage people to bring home the national flag and hoist it to mark the 75th year of India’s independence.

Under the Companies Act, 2013, certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities.

In a circular on Tuesday, the corporate affairs ministry said the campaign is aimed to invoke the feeling of patriotism in the hearts of people and to promote awareness about the Indian national flag.

“Spending of CSR funds for the activities related to this campaign such as mass scale production and supply of the national flag, outreach and amplification efforts and other related activities are eligible CSR activities,” the circular said.

The activities are eligible for CSR funds under the provisions of Schedule VII of the Companies Act pertaining to promotion of education relating to culture.

Schedule VII pertains to CSR activities.

The circular also noted that companies can undertake these activities subject to fulfilling the Companies (CSR Policy) Rules, 2014 and related circulars/ clarifications issued by the ministry.

The Companies Act, 2013 is implemented by the ministry.

Eminent CSR leaders discussed and reviewed the changes in the CSR Law under the chairmanship of Mr Sumant Chadha and after that came to a consensus that Corporate Social Responsibility (CSR) had gone a long way in instituting strategic programs to contribute toward causes

Eminent CSR leaders discussed and reviewed the changes in the CSR Law under the chairmanship of Mr Sumant Chadha and after that came to a consensus that Corporate Social Responsibility (CSR) had gone a long way in instituting strategic programs to contribute toward causes that enable the welfare of the society.

The amendments to the Companies Act, 2013 have defined organisations’ scope, helping strengthen the country socially and economically. Chadha said CSR had played a crucial role in supporting COVID-19 relief initiatives through contributions at multiple levels.

Others who attended included members of the Corporate Affairs Committee, including PK Rustagi, Ranjana Agarwal and Mr Sanjay Khanna, CS Devendra and V Deshpande.

Mr P K Rustagi highlighted in his address that there was a growing need for CSR after the coronavirus hit the world. He talked about the latest amendments in CSR. He said that COVID-19-related activity in the ordinary course of business can now be included as CSR along with the acquisition or creation of a capital asset provided that the company does not own it. He also said that any unspent CSR funds remaining at the end of a financial year should be transferred to an Unspent CSR Account or Transfer to a Schedule VII fund.

The value of a company is determined not only by its profits but also by sustainability, and CSR determines sustainability. Companies should not take CSR as a burden, CS Devendra and V Deshpande highlighted.

In his presentation, Mr Inder Mohan Singh gave a brief background and significant changes under the new CSR regime. He talked about the new CSR definition and said that constitution of the CSR committee has now been made optional. He also spoke about the concept of an ongoing project which is a new concept and was introduced on 22 January 2021.

Mr Sudhakar Saraswatula talked about the nuances and practical applications of CSR law. He said that the philosophy of giving back to society had been an integral part of the Indian culture and ethos, which has also been imbibed in traditional Indian businesses. He further said that the intent of CSR obligations is not merely to generate funds that additional taxes could have achieved and to involve companies to use their innovative ideas and management skills towards social development.

About the handling and implementation of various CSR projects and their impacts from the corporate point of view, Mr Ajay Holani said that the company should believe in integrating socio-economic development interventions within its core strategic business planning through its Corporate Social Responsibility.

The government has amended rules governing corporate social responsibility (CSR), including decriminalizing non-compliance with CSR provisions, allowing corporates to undertake multi-year projects and making registration compulsory for agencies

The government has amended rules governing corporate social responsibility (CSR), including decriminalizing non-compliance with CSR provisions, allowing corporates to undertake multi-year projects and making registration compulsory for agencies implementing CSR activities on behalf of companies.

Besides, companies have been permitted to set off the excess amount spent under CSR up to three succeeding financial years and they have also been allowed to create or acquire capital assets through CSR in the name of beneficiaries or a public authority or registered trust, among others.

These amended rules called The Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 have come into effect from January 22.

As per the amended rules, non-compliance with CSR provisions has been decriminalized by shifting such offences to penalty regime, while companies having CSR obligation below Rs 50 lakhs have been exempted from constituting a CSR Committee.

Under the Companies Act, 2013 — being implemented by the corporate affairs ministry — certain class of profitable companies are required to shell out at least two per cent of their three-year annual net profit towards CSR activities in a financial year.

To make the CSR framework more transparent, the amended rules specify that agencies implementing CSR projects for companies should get registered with the corporate affairs ministry’s MCA 21 portal and the system will automatically generate a unique CSR registration number.

The registration requirement will be effective from April 1, 2021.

To bring in the best international practices in the field of CSR and capacity building, the amend rules allow international organizations to carry out designing, monitoring and evaluation of the CSR projects or programmes. However, they cannot act as implementing agencies.

Besides, disclosure requirements have been enhanced with respect to CSR projects.

As per the amended rules, there will be impact assessment of CSR projects that will help companies to plan and allocate resources in a better manner. The assessment will be applicable subject to various conditions.

The CSR provisions came into force from April 1, 2014. The CSR expenditure has increased from Rs 10,066 crore in 2014-15 financial year to Rs 18,655 crore in 2018-19 and a cumulative total of Rs 79,000 crore has been spent throughout the country, as per the official data.

In a major relief to the Tata Education and Development Trust, the Income Tax Appellate Tribunal (ITAT) in Mumbai ordered that over Rs 220 crore of the Trust’s income exempted from tax in a case related to the assessment years 2011-12 and 2012-13

In a major relief to the Tata Education and Development Trust, the Income Tax Appellate Tribunal (ITAT) in Mumbai ordered that over Rs 220 crore of the Trust’s income exempted from tax in a case related to the assessment years 2011-12 and 2012-13.

The ITAT’s Mumbai bench gave a ruling on July 24 in favour of the Trust in their appeal against commissioner income tax (CIT) order wherein a demand of more than Rs 220 crore was levied by the tax department.

ITAT also stayed the matter of that demand without any minimum pay, the government said in statement.

The case pertains to assessment years 2011-12 and 2012-13 on money spent by the Trust for creating an endowment fund at the US-based Cornell University to provide scholarships to Indian students, and granting financial assistance to the Harvard Business School for constructing an executive building to be named Tata Hall.

The Trust had donated Rs 197.79 crore in 2011-12 and Rs 25.37 crore in 2012-13.

In the order, itat said: “…this wholly avoidable litigation which does not only clog the serious litigation before the judicial forums but also diverts scarce resources of the philanthropic bodies, like the assessee before us, to the areas which do no good to the society at large.”

The Tribunal hoped that the admirable work being done by the Government of India, in pursuing such forward looking policies at the macro level, is not allowed to be overshadowed by the isolated situations like this, at the field level, which must be minimized by sensitising the authorities concerned.

“An effort should be made to create a taxpayer friendly atmosphere by adopting just and fair approach at every level of the tax administration,” it observed.

The government said that the controversy began after the Public Account Committee (PAC) of the Lok Sabha in 2018 sought an enquiry in the matter as it believed that exemption granted by the direct tax body was in violation of the Income Tax Act.

Concluding the matter, ITAT said that all other grounds of appeals will be “rendered, academic and infructuous”.

“We have decided this issue in favour of the assessee and thus allowed this ground of appeal. We, therefore, uphold the plea of the assessee, and delete the resultant disallowance of claim of exemption,” it added.

The detailed ruling of Appellate Tribunal may be accessed by clicking on link.

FAQs on eligibility of CSR expenditure related to COVID-19 activities
In a set of FAQs issued by the Ministry of Corporate Affairs clarified that which COVID-19 related expenditures would qualify under the ‘corporate social responsibility’ (CSR) guidelines. As you may be aware, CSR has been made mandatory

In a set of FAQs issued by the Ministry of Corporate Affairs clarified that which COVID-19 related expenditures would qualify under the ‘corporate social responsibility’ (CSR) guidelines.

As you may be aware, CSR has been made mandatory, following an amendment to the Companies Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance. Large companies are required to spend 2 per cent of their net profit on CSR activities.

A set of FAQs along with clarifications are provided below for better understanding of the stakeholders.

S. No.	Frequently Asked Questions (FAQs)	Reply
1.	Whether contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure?	Contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013 and it has been further clarified vide Office memorandum F. No. CSR-05/1/2020-CSR-MCA dated 28th March, 2020.
2.	Whether contribution made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund for COVID-19’ shall qualify as CSR expenditure?	Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’ is not included in Schedule VII of the Companies Act, 2013 and therefore any contribution to such funds shall not qualify as admissible CSR expenditure.
3.	Whether contribution made to State Disaster Management Authority shall qualify as CSR expenditure?	Contribution made to State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII of the 2013 and clarified vide general circular No. 10/2020 dated 23rd March, 2020.
4.	Whether spending of CSR funds for COVID-19 related activities shall qualify as CSR expenditure?	Ministry vide general circular No. 10/2020 dated 23rd March, 2020 has clarified that spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure. It is further clarified that funds may be spent for various activities related to COVID-19 under items nos. (i) and (xii) of Schedule VII relating to promotion of health care including preventive health care and sanitation, and disaster management. Further, as per general circular No. 21/2014 dated 18.06.2014, items in Schedule VII are broad based and may be interpreted liberally for this purpose.
5.	Whether payment of salary/wages to employees and workers, including contract labour, during the lockdown period can be adjusted against the CSR expenditure of the companies?	Payment of salary/ wages in normal circumstances is a contractual and statutory obligation of the company. Similarly, payment of salary/ wages to employees and workers even during the lockdown period is a moral obligation of the employers, as they have no alternative source of employment or livelihood during this period. Thus, payment of salary/ wages to employees and workers during the lockdown period (including imposition of other social distancing requirements) shall not qualify as admissible CSR expenditure.
6.	Whether payment of wages made to casual /daily wage workers during the lockdown period can be adjusted against the CSR expenditure of the companies?	Payment of wages to temporary or casual or daily wage workers during the lockdown period is part of the moral/ humanitarian/ contractual obligations of the company and is applicable to all companies irrespective of whether they have any legal obligation for CSR contribution under section 135 of the Companies Act 2013. Hence, payment of wages to temporary or casual or daily wage workers during the lockdown period shall not count towards CSR expenditure.
7.	Whether payment of ex-gratia to temporary /casual /daily wage workers shall qualify as CSR expenditure?	If any ex-gratia payment is made to temporary / casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19, the same shall be admissible towards CSR expenditure as a onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor

The World Bank defines NGOs as private organisations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development

The World Bank defines NGOs as private organisations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development.

NGOs are legally constituted organisations which operate independently from government and are generally considered to be non-state, non-profit oriented groups who pursue purposes of public interest.

NGOs and Development: History and Role in India
NGOs are voluntary organisations (VOs). These are popularly known as NGOs because they are free from governmental control in their functioning. They are democratic and open to all those wishing to become member of the organisation voluntarily and serve the society.

Therefore, they have assumed a significant space in civil society, which is fast emerging today due to the weakening of the state.

NGO is a popular term, which has gained currency at global level and commands respect in society due to its welfare services in society. The organization does seek financial assistance from the government but it operates, at least theoretically, on its own principles and programmes.

NGOs are, in principle, open to voluntary membership.Any one may become member by choice and resign from the organization at one’s own will.

History of NGOs in India:
NGO have along history in India. In the past, people in this country have been found to have provided help to others in trouble. Since centuries there exists the tradition of voluntary service to the needy and helpless in the country. In the beginning, these services were rendered by people motivated by their religious feelings.

They believed that service to people would be the service to God and, therefore, would be a means to attain spiritual salvation and sometimes to atonement for any sinful act. Spirit of charity and altruism guided the voluntary action in the past, which had found expression in diverse forms even outside the formal established religious channels. Many people including rulers have trod the path of service to their fellow beings and adopted it as their life mission.

Floods, fires, earthquakes, epidemic outbreaks and other kinds of calamities were the occasions which motivated people to voluntary help those who were trapped in disastrous situations. Community life was very strong and people were guided by the ‘we’ feeling and selflessness in extending their individual support.

The help and support used to be individual, spontaneous and transitory.

It is around the late 18th and early 19th century that associations and organisations were being formed to render such activities in a more organised and permanent profile.

The reform movements of the 19th century were perhaps the first organised forms of voluntary action in the service of society. This was the period when the caste rigidities were strong, untouchability was in practice, and other social evils like child marriage, cursed status of widows were prevalent in the Indian society against which voluntary organizations came forward to launch reform movements.

NGOs have gained importance now and are increasing in number very fast. Enhancement of their importance is the result of weakening of the role of state in upholding the welfare and well-being of its citizens and consequent development of the assertive role of civil society to ascertain social welfare and integration. More than half a million voluntary organisations would perhaps be working in the country.

Role of NGOs in development:
NGOs have immense role in bringing about social change and development and it is being experienced from different parts of the country. Development, as we have read earlier, is a multi-faceted process, which essentially involves the aggressive participation of the people that would not be possible unless they are educated, awakened and motivated.

NGOs are taking up this job sportingly and successfully.

The areas in which we witness active and appreciative role of NGOs are as follows:

1. The NGOs are active to promote education, particularly among that section of population, which has remained un-benefited or less benefited by the measures adopted by the government.The education of girls, and other deprived people, particularly the SCs and STs, has been their target objective.
2. Women are the other vulnerable section of society. Gender discrimination is a ubiquitous cultural reality. Girls are discriminated in the upbringing pattern in the family. Larger numbers of the undernourished are from amongst the girls. Retention of girls in schools is much less as compared to boys.
3. Since the second half of the preceding century started the change in the status of women with their active participation in political,social and economic activities, which gained acceleration since the last quarter of the preceding century. Important in this process has been the role of academicians and NGOs.
4. The threat to the human life developed due to environmental pollution and imbalance and the depletion of natural resources as a consequence of the nature of development. Here, the role of NGOs is really noticeable and praiseworthy. Thousands of voluntary organisations are at work to awaken people and governments against environmental degradation and depletion of resources.
5. The NGOs have a major role to play towards the cause of people’s resettlement and are also performing commendable job in this direction. The projects like the construction of dams, road highways and railways have often made some sections of people, particularly in rural areas, vulnerable and are displaced without being properly compensated.
6. NGOs are also rendering great service in restoring dignity to the deprived and discriminated sections of the people in the society like women suffering from gender discrimination, lower caste people suffering from caste segregation and the status of untouchable, racial and religious discrimination.