PM CARES: A trust which is legally unsound

Updated: Jan 21

India’s newly established coronavirus relief fund, PM CARES, has gathered contributions from celebrities, tycoons, middle-class professionals, and corporates. According to some digital media outlets, around 6500 crores were raised within the span of a week from its launch. Even PMNRF, an old fund created way back in 1948 has never got such huge contributions till now. So what’s so intriguing for business tycoons, celebraties etc who have contributed to this fund. The only reason we find is that the contributions can be legally counted as part of a company’s annual corporate social responsibility (CSR).

CSR implies a concept where corporates voluntarily contribute to a better society and a cleaner environment. In short, contributions made for the betterment of its stake holders and society in general. Under this concept, Businesses can invest certain percentage of profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance. India is one of the few countries which made CSR mandatory under Section 135 of Companies Act, 2013. Non-compliance of CSR rules may lead to heavy penalties and imprisonment of company officials. 

Framework of PM CARES

PM CARES stated objective is to undertake and support relief measures concerning public health emergencies, calamity, or distress, including to create or upgrade of healthcare or any other relevant infrastructure. The fund also provides financial assistance to affected people in the form of grants or concessions. These objectives are similar to the framework of PMNRF. The PMNRF is intended for all types of natural tragedies.

PM CARES does not fall under the ambit of any legislation or Act of Parliament, nor is it part of the consolidated fund of India. It exists merely as a quasi-private fund. The prime minister helms PM CARES as its ex-officio chairman with the defence, home, and finance ministers acting as its ex-officio trustees. It is like a mere quasi private fund. 

PM CARES fund is proposed to be audited by “independent auditors,” who are to be appointed by its chairman and trustees, similar to that of PMNRF. However, PMNRF, being a fund attributed to the prime minister’s office, is also subject to observations by the comptroller and auditor general of India (CAG), and the subsequent report is often made available in the public domain.

The framework of PM CARES is questionable on part of the central government’s decision because there are no independent members to oversee it. Below, we have tried to explain to the reader the provisions under the relevant laws so that they can understand the fragile nature of trust.

  1. As per Section 19 of Indian Trust Act, the trustees mandatorily should present full and accurate information of the amount and state of the trust property to the beneficiaries. PM CARES is a trust created for the benefit of the public at large and every citizen is assumed to be a beneficiary. So the nature of the trust changes from a private trust to a public charity as per the provisions of Code of Civil Procedure.

  2. The Consolidated Fund of India [Article 266(1)], The Contingency Fund of India [Article 267], and Public accounts [Article 266(2)] are three heads expressed under Article 283 of the Constitution. Central Government cannot raise monies under any other heads except these three. The Consolidated Fund of India is the account of the revenue the Government of India receives – via income tax, Customs, central excise and the non-tax revenue – and the expenses it makes, excluding exceptional items. The Contingency fund of India is used at a time when there is a crisis in the nation. Public Account are those funds that are received on behalf of the Government of India. Public Account funds do not belong to the government and have to be finally paid back to the persons and authorities that deposited them. In case of The Consolidated Fund of India and The Contingency Fund of India, voting of parliament is mandatory for withdrawal of such funds. But public accounts have no such legislative restriction. So government in crisis period can use monies in public accounts. 

  3. Shreenath A. Khemka, who practices law at the Punjab & Haryana High Court wrote an article in “The Wire” where he stated three broad principles of these private funds. 

  4. First- such trusts established by public officials, funds invited on the basis of public notice and subject to the ex officio control of public office, gain a conspicuous public character. Additionally, their very nomenclature – a “Prime Minister’s” fund gives an impression of being governmental creatures. Therefore, the very nature of these private trusts become public. 

  5. Second- appointing cabinet members as trustees to administer the funds expands the scope of ministerial office in excess of the mandate determined by the constitution. Such positions are held ex officio, being attached to the public office, and therefore not of a private character. 

  6. Third- the exemptions granted under fiscal laws and public expenditure on advertisements to incentivise collection is suggestive of a conflict of interest, if done for a ‘private trust’. Such conflict allows public officials to raise private funds, through inducement of public office – which may invite claims of moral perversion or lapse of integrity.

Going by these provisions, there are serious concerns on PM CARES funds and the legal framework it has. Although many opposition party leaders, experts have questioned the creation of this fund and also a case was filed in Supreme Court which was later dismissed for lack of merit. There seems no end of questions on its legally unsound nature.

At last, we can just hope that the government will address the questions surrounding the framework and administration of the funds and will stand transparent and accountable for the sake of its integrity.


(Opinion expressed by the author is his personal. The Generalist Insights take no responsibility of the opinion expressed.)