the Adjudicating Authorities as well as CESTAT are also guilty of failure to do something in these batches of cases. They are: (i) Failure to find out, in cases covered by Section 4(1) as it stood prior to 01.07.2000, whether there were sales in the course of wholesale trade, satisfying the 3 conditions 64 prescribed therein, falling under clause (a) of sub­section (1) or whether the sales in question fell under clause (b) of sub­section (1) of Section 4; (ii) Failure to find out, in cases covered by Section 4(1) as it stands amended by Act 10 of 2000 with effect from 01.07.2000, whether the sales in question fell under clause (a) or clause (b) of sub­section (1) of Section 4; (iii) Failure to find out, in the event of the sales in question falling under clause (b) of sub­section (1) of Section 4 (before or after the amendment), whether the valuation had to be done only in accordance with the Rules (1975 Rules or the 2000 Rules, as the case may be), and (iv) Failure to find out, in cases covered by Section 4(1)(b), the specific rule that is applicable among the 1975 or 2000 Rules, as there are different rules covering different contingencies, both in the 1975 Rules and in the 2000 Rules. 65 98. Since the Adjudicating Authorities as well as the CESTAT failed to make a determination as indicated above, we are of the view that the orders of remand passed by the Tribunal, though for completely different reasons, were justified. Hence the appeals are liable to be disposed of, confirming the orders of remand passed by CESTAT, with a clarification on the legal issues so that the Adjudicating Authorities know how to proceed. Conclusion

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.7240­7248 OF 2009
  THE COMMISSIONER OF CENTRAL
  EXCISE, CUSTOMS AND SERVICE TAX,
  CALICUT …Appellant
Versus
M/S. CERA BOARDS AND DOORS, KANNUR
KERALA ETC. ETC.  …Respondents
WITH
            CIVIL APPEAL Nos.8615­8620 OF 2009
            CIVIL APPEAL Nos.2236­2253 OF 2011
            CIVIL APPEAL Nos.3227­3230 OF 2011
            CIVIL APPEAL Nos.3231­3233 OF 2011
            CIVIL APPEAL Nos.6564­6567 OF 2011
             CIVIL APPEAL Nos.9988­9991 OF 2011
2
               J U D G M E N T
V. Ramasubramanian,J.
Introduction
1. All   the   appeals   on   hand   are   by   the   Commissioners   of
Central   Excise,   Customs   &   Service   Tax   of   different
Commissionerates, filed under Section 35L(1)(b) of the Central
Excise   Act,   1944   (hereinafter   referred   to   as   “the   Act”),
questioning the correctness of the orders passed by Customs,
Excise and Service Tax Appellate Tribunal, South Zonal Bench at
Bangalore   (CESTAT)   in   seven   different   batches   of   cases,   but
arising out of similar facts and raising identical questions.
2. For the purpose of convenience, the facts out of which the
first batch  of  cases  in  Civil  Appeal   Nos.  7240­7248  of  2009
(which we may call the lead case) arise, are recorded in detail.
The facts in the other batches of cases are brought on record in
brief   and   to   the   extent   that   they   have   some   distinguishing
3
features. As a matter of fact, the batch of cases relating to the
assessee   by   name,   M/s.   CERA   Boards   and   Doors   (the
respondents   in   Civil   Appeal   Nos.   7240­7248   of   2009),   was
decided first by CESTAT. Thereafter, CESTAT decided the other 6
batches of cases on the basis of the ratio laid down in CERA
Boards. This is why Civil Appeal Nos. 7240­7248 of 2009 are
taken as the lead case.
Facts in Civil Appeal Nos. 7240­7248 of 2009
3. M/s.   CERA   Boards   and   Doors,   Kannur,   which   is   the
assessee   concerned   in   this   batch   of   cases,   admittedly
manufactures plywood/block boards. Searches were conducted
by the Directorate General of Central Excise Intelligence (DGCEI)
at their factory premises at Kannur, Kerala and their depot at
Bangalore, on 17.10.2002 and on subsequent days. Searches
were also conducted at the residences of the partners of the firm,
the residences of some of their employees and the premises of
some of their dealers.
4
4. CERA Boards and Doors is a partnership firm comprising
of one Mr. K. S. Harris and Smt. K. P. Rashida as partners. Their
Bangalore   depot   was   managed   by   its   manager,   Sh.   T.   S.
Bhaskar.
5. The investigation that followed the searches revealed that
the assessee had undervalued the goods manufactured by them
and cleared the goods from their factory, resulting in the evasion
of Central Excise duty to the tune of Rs. 4,29,01,384 during the
period from 01.12.1998 to 05.12.2002.
6. After the search, CERA Boards made payment of a sum of
Rs.   12,50,000   towards   shortfall   in   duty   for   the   clearances
effected   during   the   relevant   period.   Thereafter,   show   cause
notices dated 07.04.2003 and 22.12.2003 were issued. The show
cause notice dated 07.04.2003 was for the proposed confiscation
of the goods seized from CERA Boards, M/s. Ply Home, M/s. Gee
Ply, M/s. Decowood Interiors, M/s. Arihant Marketing and M/s.
Krishna   Agencies,   respectively   valued   at   Rs.   12,80,926,   Rs.
5
27,961, Rs. 34,332, Rs. 2,88,585, Rs. 32,829 and Rs. 1,00,000.
This was under Rule 25 of the Central Excise Rules, 2002.
7. The   show   cause   notice   dated   22.12.2003   was   for
(i) payment of differential duty to the tune of Rs. 4,29,01,384
under Section 11A(1) of the Central Excise Act, 1944, (ii) interest
under Section 11AB of the Act, (iii) appropriation of the amount
of Rs. 12,50,000 voluntarily paid by them immediately after the
search, towards duty liability, (iv) penalty in terms of Section
11AC of the Act and also under Rule 173Q of the erstwhile
Central Excise Rules, 1944/ Rule 25 of the Central Excise Rules,
2002, and (v) imposition of penalty on the Managing Partner and
Manager of the firm under Rule 209A of the erstwhile Central
Excise Rules, 1944/ Rule 26 of the Central Excise Rules, 2002.
8. The material forming the basis of the aforesaid show cause
notices   were:   (i)   the   loose   sheets   recovered   from   a   Sales
Executive by name Mr. Dayanandan, (ii) computer print outs
containing   “overdue   bills”   statements,   (iii)   the   price   lists
containing   the   actual   rate   per   square   feet   of   plywood/block
6
boards of different thicknesses, (iv) certain slips containing the
details of the sales made during the relevant period, (v) copies of
statements of expenses, (vi) copies of periodical cash statements
and the statement of cash sent through one Mr. Xavier, (vii)
collection books, (viii) a red colour notebook containing partywise details of invoiced amounts and the amounts payable in
cash,   (ix)   a   notebook   containing   details   of   transactions   with
various dealers, (x) a green colour notebook and two receipt
books, (xi) the diary of the Sales Executive, Mr. Dayanandan,
and certain other items.
9. Apart   from   the   above   documents   seized   during   the
searches,   the   show   cause   notices   also   relied   upon   the
statements recorded from (i) Mr. Dayanandan (Sales Executive),
(ii) Mr. Cyril D’Souza (Sales Executive), (iii) Mr. M. P. Narayanan,
(iv) Mr. K. S. Harris (Managing Partner), (v) Mr. K. S. Mohammad
Ali (brother of K. S. Harris), (vi) Mr. Gajanan K. Kadolkar (one of
the purchasers), (vii) Mr. K. S. Abdul Basheer (a purchaser), (viii)
Mr. B. Narayan Rao (a purchaser), (ix) Mr. Riyas Mayalakkare
7
(purchaser), (x) Mr. Jagdish S. Patel (purchaser), (xi) Mr. G. M.
Aggarwal (purchaser), (xii) Mr. Sunny John (purchaser), (xiii) Mr.
Kailash Kumar (purchaser), (xiv) Mr. Arvind L. Patel (purchaser),
(xv)   Mr.   T.   V.   G.   Ganesan   (purchaser)   and   (xvi)   Mr.   Abdul
Khayoom (purchaser).
10. In   response   to   the   two   show   cause   notices   referred   to
above, the assessee sent two replies, one dated 09.08.2005 and
another dated 24.08.2005. Through these replies, the assessee
sought permission to cross­examine all those whose statements
were recorded by the DGCEI and took a stand that there was no
undervaluation.
11. The   assessee   contended   in   their  replies   that   they   were
effecting   supplies   not   only   to   the   dealers   and   consumers   in
Bangalore but also to dealers in Tamil Nadu and Kerala and that
based   upon   a   few   documents   seized   in   relation   to   the
transactions in Bangalore depot, an allegation of undervaluation
by 70% on all transactions, cannot be made.
8
12. It was also contended that though the Department sought
to rely upon private documents allegedly maintained by two of
their staff members at the Bangalore depot, by name Suresh and
Deepak   Dhiman,   they   were   not   examined.  According   to   the
assessee,   they  were   transacting   with   153   dealers   during   the
period 2001­2002 and 3 dealers during the period 2002­2003,
and that the Department was not entitled to reach a conclusion
on the basis of the statements recorded from just 2 of those
dealers in Karnataka and only one out of 56 dealers in Kerala.
13. It was also contended by the assessee that in so far as the
period prior to 01.07.2000 is concerned, what is relevant is the
normal price, namely the price at which the goods are sold at the
factory there. This was in terms of Section 4(1)(a) of the Act as it
stood prior to 01.07.2000. Hence they contended that even if
they had realised a higher price from certain buyers, the same
would be irrelevant, as regards the period before 01.07.2000.
14. In so far as the period post 01.07.2000 is concerned, it was
contended by the assessee in their replies that the transaction
9
value should be arrived at on the basis of the price indicated in
each invoice.
15. After   the   receipt   of   the   replies   from   the   assessee,   the
Commissioner   of   Central   Excise   and   Customs,   Calicut,   held
personal hearings, allowed the cross­examination of witnesses,
perused  the   case   law  relied  upon   by  the  assessee   and   then
passed an Order­in­Original No. 14/2006 dated 09.05.2006. By
this   Order­in­Original,   the   Commissioner   (i)   confirmed   the
demand of duty in a sum of Rs. 79,21,663 from the assessee
under the proviso to Section 11A(1) of the Act, (ii) levied interest
at the appropriate rate for the belated payment of the duty under
Section 11AB of the Act, (iii) imposed a penalty of Rs. 79,21,663
under   Section   11AC   read   with   Rule   25,   (iv)   directed   the
confiscation of goods seized from the assessee, valued at Rs.
12,80,926 with an option to redeem the same upon payment of
fine of Rs. 25,000, (v) directed the confiscation of goods seized
from five different dealers, however, with an option to redeem the
same upon payment of fine amounts ranging from Rs. 2,500 to
10
Rs. 15,000, (vi) imposed a penalty of Rs. 5,000 each, upon the
assessee and five of the dealers and (vii) imposed a penalty of Rs.
5,000 each on the Managing Partner of the assessee and its
Manager at the Bangalore depot.
16. It is relevant to note that the proposal as contained in the
show cause notice was for the imposition of differential Central
Excise duty to the tune of Rs. 4,29,01,384 for the period between
01.12.1998   and   05.12.2002.   But,   the   adjudicating   authority
confirmed the demand only to the extent of Rs. 79,21,663. The
findings recorded by the adjudicating authority, and the reasons
given therefor are as follows:­
I. That as per the statements recorded from the dealers, the
assessee   was   usually   showing   a   lesser   amount   in   the
invoices than the actual sale consideration and was in the
habit of collecting the differential amount by way of cash;
II. That   though   some   of   the   dealers   retracted   from   their
original statements, the retractions happened only during
11
cross­examination that happened after several years and
hence, the original statements could be taken into account;
III. That the documentary evidence such as the loose slips,
computer printouts, notebooks, diaries, receipt books, etc.
seized by the DGCEI together with the statements recorded
from   the   depot   Manager   and   Sales   Executives   clearly
showed under­invoicing;
IV. That   though   the   Department   had   demanded   differential
duty to the tune of Rs. 4,29,01,384 on the actual sales
turnover   for   the   period   in   question,   the   department
collected evidence only in respect of 11 customers and not
from   all   customers   whose   names   were   mentioned   in
Annexure D to the show cause notice;
V. That therefore, the calculation of differential duty had to be
confined   only   to   the   sales   turnover   relatable   to   the
aforesaid  11 customers  and the  turnover relatable  to  3
more   customers   whose   confession   statements   had   been
recorded; 
12
VI. That   in   view   of   the   law   laid   down   by   this   Court   in
Collector   of   Customs,   Madras vs. D.   Bhoormall,
1
the
Department could not plead its inability to examine all the
dealers to come to the conclusion of undervaluation in all
transactions;
VII. That in respect of those 14 dealers, a clear case was made
out by the Department about the gross undervaluation of
the sales price, and
VIII. That therefore, the differential duty co­relatable to the sales
turnover in respect of those 14 dealers could be demanded.
17. Aggrieved   by   the   Order­in­Original   No.   14/2006   dated
09.05.2006, one appeal was filed by the assessee, one appeal
was filed by its Managing Partner, one appeal was filed by the
Manager of the Bangalore depot of the assessee, one appeal each
was filed by five dealers from whom seizure of material was
effected and one appeal was filed by the Commissioner himself.
Thus, there were 9 appeals, 8 of which were at the instance of
assessee,   its   Managing   Partner,   its   Manager,   and   the   five
1 (1983) 13 ELT 1546 (SC)
13
dealers,   and   the   last   of   which   was   by   the   Commissioner   of
Central Excise.
18. While the 8 appeals filed at the instance of the assessee
and its coterie were directed against the demand for differential
duty,   interest,   penalty   and   confiscation,   with   an   option   of
redemption, the appeal filed by the Commissioner was on the
ground that as against the proposal for a differential duty of Rs.
4,29,01,384 made in the show cause notice, the adjudicating
authority   confirmed   the   demand   only   to   the   extent   of   Rs.
79,21,663.
19. By Final Order Nos. 245­253/2009 dated 24.03.2009, the
CESTAT (i) rejected all the five appeals filed by the five dealers
challenging the orders of confiscation of the seized goods with
the option for redemption and (ii) allowed the three appeals filed
respectively   by   the   assessee,   its   Managing   Partner   and   its
Manager, challenging the demand for differential duty, interest,
and penalty and remanded the matter for re­quantification of
duty   in   light   of   the   findings   given.   The   appeal   filed   by   the
14
Revenue also followed the fate of the three appeals filed by the
assessee, its Managing Partner and its Manager.
20. The effect of the Final Orders passed by CESTAT is (i) that
the appeals of the dealers against confiscation with the option of
redemption stood rejected and (ii) that the substantive appeals
arising   out   of   the   imposition   of   differential   duty,   interest,
penalty,   etc.   stood   allowed   and   remanded   back   to   the
adjudicating authority for a fresh consideration.
21. The findings recorded and the reasons therefor, as given by
CESTAT, are as follows:­
I. That   there   was   overwhelming   evidence   to   show   underinvoicing;
II. That in light of the statements made by depot officials as
well as dealers, the finding of the Adjudicating Authority
that 30% of the actual value alone was mentioned in the
invoice cannot be interfered with;
15
III. That as per Section 4(1)(a), as it stood before 01.07.2000,
duty was payable on the normal price, namely the price at
which such goods were ordinarily sold in the course of
wholesale trade; and hence the Commissioner was obliged
to find out what the normal price in the course of wholesale
trade was for the clearances made prior to 01.07.2000;
IV. That  in respect of the sales made prior to 01.07.2000, the
adjudicating   authority   should   adopt   the   normal  pricing
method;
V. That   for   the   clearances   made   after   01.07.2000,   the
transaction value had to be determined in respect of each
transaction and the differential duty confined only to the
evidence available on record;
VI. That the stand of the Revenue that 70% should be added to
the invoice value uniformly in respect of all clearances,
could not be accepted and,
VII. That therefore, the matter required re­adjudication.
16
22. Therefore, the Revenue has come up with this batch of
nine appeals, Civil Appeal Nos. 7240­7248 of 2009.
Facts in Civil Appeal Nos. 8615­8620 of 2009
23. The facts of this batch of appeals are similar to those in
Civil Appeal Nos. 7240­7248 of 2009. M/s. Prestige Boards Pvt.
Ltd., Kannur which is the assessee concerned in this batch of
cases,   also   manufactures   plywood/block   boards.   Similar
searches conducted at their premises revealed that the assessee
had grossly undervalued the goods cleared by them from their
factory, resulting in evasion of Central Excise duty to the tune of
Rs.   2,72,03,232   during   the   period   between   01.12.1998   and
17.10.2002.
24. Show cause notices (i) dated 08.04.2003, for confiscation of
the material and cash, imposition of penalty, etc., and (ii) dated
22.12.2003,   demanding   differential   duty   of   Rs.   2,72,03,232
under   Section   11A(1)   of   the   Act,   interest,   penalty,   etc.   were
issued.
17
25. After the receipt of the replies from the assessee to the two
show cause notices, the Commissioner of Central Excise and
Customs,   Calicut,   held   an   enquiry   and   passed   an   Order­inOriginal   No.   10/2006   dated   27.03.2006,   by   which,   he   (i)
confirmed the demand of duty to the extent of Rs. 1,50,23,911
from the assessee under the proviso to Section 11A(1) of the Act,
(ii) levied interest at the appropriate rate for the belated payment
of duty under Section 11AB of the Act, (iii) imposed a penalty of
Rs.   1,50,23,911   under  Section  11AC  read  with  Rule   25,  (iv)
directed   the   confiscation   of   goods   seized   from   the   assessee,
valued at Rs. 14,24,286 with an option to redeem the same upon
payment of fine of Rs. 1,50,000, (v) directed the confiscation of
goods seized from M/s. Prestige Traders, valued at Rs. 5,49,176,
with an option to redeem the same upon payment of fine of Rs.
50,000, (vi) directed the confiscation of goods seized from M/s.
Ply Home, valued at Rs. 29,270, with an option to redeem the
same   upon   payment   of   fine   of   Rs.   3000,   (vii)   directed   the
18
confiscation of goods seized from M/s. Gee Ply, valued at Rs.
38,268, with an option to redeem the same upon payment of fine
of Rs. 3500, (viii) ordered outright release of Rs. 2,50,000 seized
from Sh. P. K. Shakeer, (ix) imposed a penalty of Rs. 5,000 each
on M/s. Prestige Traders, M/s. Ply Home and M/s. Gee Ply, and
(x)   imposed   a   penalty   of   Rs.   50,000   each   on   Sh.   K.   S.
Mohammad   Ali   (Managing   Director)   and   Sh.   Kunjuraman
(Manager, Bangalore depot).
26. The Commissioner held that there was evidence to prove
undervaluation, but the demand had to be confined only to the
transactions   that   the   assessee   had   with   20   customers   from
whom   alone   evidence   had   been   collected.   Like   the   Order­inOriginal passed in the case of CERA Boards, the Commissioner
ruled in this case also that (i) with respect to the period prior to
01.07.2000, the normal price should include the price indicated
in the invoice plus the amount collected by way of cash, and (ii)
19
for   the   period   post   01.07.2000,   the   transaction   value   was
nothing but the invoice value plus the amount collected in cash.
27. Aggrieved   by   the   Order­in­Original   No.   10/2006   dated
27.03.2006,   the   assessee,   its   Managing   Director   (Sh.   K.   S.
Mohammad   Ali),   its   Sales   Manager   (Sh.   Kunjuraman),   M/s.
Prestige   Traders   and   the   two   dealers   from   whom   seizure   of
material was effected, filed six appeals before the CESTAT.
28. By Final Order Nos. 414­419/2009 dated 21.04.2009, the
CESTAT (i) allowed the three appeals filed by the assessee, its
Managing Director and Sales Manager challenging the demand
for differential duty, interest and penalty, and remanded the
matter for re­quantification of duty in light of the findings given,
and (ii) rejected the appeals filed by M/s. Prestige Traders and
the two dealers challenging the orders of confiscation.
20
29. The findings recorded and the reasons therefor, as given by
CESTAT, are as follows:­
I. That   there   was   overwhelming   evidence   to   show   underinvoicing;
II. That in respect of the sales made prior to 01.07.2000, the
Adjudicating  Authority  should   have   adopted  the   normal
pricing method;
III. That   for   the   clearances   made   after   01.07.2000,   the
transaction value has to be determined in respect of each
transaction and the differential duty confined only to the
evidences available on record;
IV. That the stand of the Revenue that 70% should be added to
the invoice value uniformly in respect of all clearances,
cannot be accepted.
30. Aggrieved by the said order, the Revenue has come up with
this batch of six appeals, Civil Appeal Nos. 8615­8620 of 2009.
21
Facts in Civil Appeal Nos. 2236­2253 of 2011
31. Searches were conducted by the officers of the Directorate
General   of   Anti­Evasion   (Central   Excise)   on   23.09.1997,
simultaneously at the premises of eleven plywood manufacturing
units   located   at   Kumbla,   Kasargod   District,   on   the   basis   of
intelligence reports that they were indulging in undervaluation
and evading payment of central excise duty.
32. After recovering incriminating evidence and recording the
statements of proprietors/partners, employees and dealers of the
units in question, two show cause notices, one dated 23.03.1998
and another dated 02.08.1999 were issued. The first show cause
notice was against M/s. Universal Wood Crafts, Kumbla, M/s.
Wood Crafts, Kumbla, M/s. Uniwoods, Kumbla, M/s. National
Boards,   Kumbla,   M/s.   Darvesh   Plywoods,   Kumbla,   Sri   K.
Mohammed Arabi, Kumbla, Sri Khaleel Rahiman, Kayarkulam
and   Sri   Mansoorul   Huck,   Kayarkulam,   proposing   the
confiscation   of   the   seized   plywood   and   the   seized   Indian
currency, demand drafts and cheques.
22
33. The second show cause notice   quantified the duty short
paid by the seven plywood units, namely M/s. National Boards,
M/s.   Darvesh   Plywoods,   M/s.   Uniwoods,   M/s.,   Wood   Crafts,
M/s. Universal Wood Craft Co., M/s. Mailatty Wood Industries
and M/s. National Wood Products, at Rs. 7,59,24,737 and the
duty short paid by the chemical unit by name M/s. Bharath
Chemicals, at Rs. 9,12,375, for the period from 1994­1995 to
1999­2000 (up to June 1999). The notice also proposed the levy
of interest and penalty, apart from confiscation.
34. Subsequently, twelve periodical show cause notices were
issued to the plywood manufacturing/dealing units for different
periods of time.
35. After the receipt of the replies from the assessees and their
proprietors/partners   to   the   two   show   cause   notices,   the
Commissioner of Central Excise, Calicut, held an enquiry and
passed   an   Order­in­Original   No.   10/2005   dated   30.06.2005,
wherein   he  confirmed   the   duty  demanded   from  the   units   in
question, named in column 1 of the table below, to the extent
23
indicated in column 2 thereof. The Adjudicating Authority also
imposed penalties on each of them, to the extent indicated in
column 3 of the table:
Name Duty Demanded Penalty
M/s. National Boards Rs 28,95,584/­ Rs 28,95,584/­
M/s. Darvesh Plywoods Rs. 86,01,648/­  Rs. 86,01,648/­
M/s. Uniwoods Rs. 72,15,522/­ Rs. 72,15,522/­
M/s. Wood Crafts Rs. 73,59,665/­ Rs. 73,59,665/­
M/s.   Universal   Wood
Crafts Co.
Rs. 26,73,758/­ Rs. 26,73,758/­
M/s.   Mailatty   Wood
Industries
Rs. 23,24,056/­ Rs. 23,24,056/­
M/s.   National   Wood
Products
Rs. 61,14,236/­ Rs. 61,14,236/­
M/s.   Bharath
Chemicals
Rs. 5,52,839/­ Rs. 5,52,839/­
36. In   addition   to   the   above,   the   Adjudicating   Authority
confirmed the demand of interest under Section 11AB, ordered
24
the confiscation of material with an option to redeem the same
on   payment   of   fine   and   imposed   penalties.   However,   (1)   the
currency of Rs. 20,66,940 and the demand drafts and cheques
seized from Sh. Mohammed Arabi was directed to be released
and   (2)   the   proceedings   envisaged   in   the   twelve   show  cause
notices on account of clubbing the value of clearances of all the
units, were dropped.
37. The Adjudicating Authority ruled that there was sufficient
evidence to prove undervaluation. However, he took the view that
since the units were registered separately with the Departments
of Industries, Sales Tax and the Income Tax, their clearances
could not be clubbed to deny them the benefit of Small Scale
Industries exemption under Notification No. 1/93. 
38. As   against   the   aforesaid   Order­in­Original   dated
30.06.2005, 17 appeals were filed by the eight units and their
partners and proprietors. These 17 appeals in Central Excise
Appeals Nos. E/1145­1161/2005 were disposed of by CESTAT,
by a common order dated 01.04.2010.
25
39. In and by the said order, the CESTAT came to the following
conclusions:
I. That   the   finding   of   the   Adjudicating   Authority   about
undervaluation   and   clandestine   clearance   of   goods
resulting in evasion of duty, was unassailable;
II. That the units in question operated secret price lists for
sale of their finished products and paid duty on a much
lower  value   and   also   resorted   to   innovative   methods   of
accounting;
III. That the previous decisions of the Tribunal in the case of
CERA Boards, Noble Ply and Prestige Boards, with regard
to the fixation of normal price in respect of the clearances
made   prior   to   01.07.2000,   should   be   followed   and   the
matter remanded back;
IV. That   as   regards   Bharat   Chemicals,   the   demand   of
differential duty of Rs. 9,12,375 together with other penal
liabilities, was liable to be confirmed and their appeal liable
to be dismissed;
26
V. That as regards the clandestine clearances made by M/s.
Wood Crafts, M/s. Uniwoods, M/s. Darvesh Plywood, M/s.
National   Boards,   M/s.   National   Wood   Products,   M/s.
Mailatty Wood Industries and M/s. Universal Wood Crafts
Co.,   the   matter   had   to   be   remanded   back   to   the
Commissioner, for the purpose of adjudicating whether the
turnover reckoned by the Adjudicating Authority included
proceeds of sale of non­excisable goods;
VI. That   as   a   consequence   of   the   remand,   the   penalties
imposed on the seven units (whose names are indicated in
the preceding point) should also be re­adjudicated after the
re­quantification of the liability;
VII. That the appeals filed against the confiscation of plywood
valued   at   Rs.   2,86,389.20   seized   from   Khaleel   Rehman
Glass Centre, the appeals filed against the confiscation of
plywood   sheets   valued   at   Rs.15,056.20   seized   from
Mansarool Huck, with an option to redeem upon payment
of   fine,   and   the   appeals   filed   against   the   individual
27
penalties imposed upon Khaleel Rehman and Mansarool
Huck were also liable to be rejected, and
VIII. That all the other appeals are to be allowed, and the matter
remanded for re­adjudication on the terms indicated above.
40. Aggrieved by the said order, the Revenue has come up with
this batch of appeals, Civil Appeal Nos. 2236­2253 of 2011.
Facts in Civil Appeal Nos. 3227­3230 of 2011
41. Similar to the preceding cases, M/s. Mysore Chipboards
Ltd., which is the assessee concerned in this batch of cases, also
manufactures plywood/block boards/particle boards. Searches
conducted by the DGCEI at their premises revealed that the
assessee had undervalued the goods manufactured by them and
cleared   them   from   their   factory,   resulting   in   the   evasion   of
Central Excise duty to the tune of Rs. 7,51,53,570 during the
period from 01.07.2000 to 28.08.2003.
28
42. A   show   cause   notice   dated   21.07.2005   was   issued,
demanding differential duty of Rs. 7,51,53,570 under Section
11A(1) of the Central Excise Act, 1944, interest, penalty, etc.
43. After   the   receipt   of   the   reply   from   the   assessee,   the
Commissioner of Central Excise, Mysore held an enquiry and
passed   an   Order­in­Original   No.   06/CCE/2006   dated
05.10.2006.   By   this   Order­in­Original,   the   Commissioner   (i)
confirmed the demand of duty in a sum of Rs. 81,01,637 from
the assessee under the proviso to Section 11A(1) of the Act, (ii)
directed appropriation of Rs. 16,00,000 voluntarily paid by the
assessee,   (iii)   levied   interest   at   the   appropriate   rate   for   the
belated payment of the duty under Section 11AB of the Act, (iv)
imposed a penalty of Rs. 81,01,637 under Section 11AC read
with Rule 25 and (v) imposed a penalty of Rs. 10,00,000 on Sh.
Shyam Daga, the Resident Director of the assessee.
44. The adjudicating authority held that undervaluation was
established only (i) to the extent of Rs. 3,79,452 in respect of the
invoices raised by the factory at Mysore, (ii) to the extent of Rs.
29
29,677 relating to the six slips from the Lucknow office and (iii)
to the extent of Rs. 5,02,26,106 with respect to sales through
assessee’s   consignment   agent,   M/s.   Kela   Brothers.   The
Adjudicating Authority further ruled that the evidence in respect
of   undervaluation   in   sales   through   M/s.   Umiya   Enterprises,
M/s.   Balaji   Glass   &   Plywoods,   M/s.   Rohini   Plywood   &
Laminates, and the Ludhiana and Delhi office of the assessee
was insufficient. 
45. Aggrieved   by   the   Order­in­Original   No.   06/CCE/2006
dated 05.10.2006, three appeals were filed, one by the assessee,
another   by   its   Resident   Director   and   the   third   by   the
Commissioner of Central Excise, Mysore, before the CESTAT.
46. The assessee challenged the maintainability of the appeal
filed by the Commissioner of Central Excise, Mysore, on the
ground   that   as   per   the   decision   of   the   Committee   of   Chief
Commissioners, it was only the Mangalore Commissioner and
not the Mysore Commissioner who was entitled to file an appeal.
30
47. In  response  to   the  said  objection,  the  Commissioner of
Central Excise, Mysore then filed a Miscellaneous Application in
its appeal before the CESTAT, placing on record, a corrigendum
to the order of the Committee of Commissioners authorising the
Mysore Commissioner to file the appeal.
48. By a Final Order passed in the three regular appeals and
one miscellaneous application, namely Final Order Nos. 985­
987/2010   dated   07.07.2010   and   Miscellaneous   Order   No.
300/2010 dated 07.07.2010, the CESTAT (i) allowed the appeals
filed by the assessee and its Resident Director challenging the
demand for differential duty, interest and penalty and remanded
the matter to the Adjudicating Authority for re­quantification of
duty; (ii) allowed the appeal filed by the Revenue and remanded
the   matter   for   fresh   adjudication   (except   on   the   clearances
relating to Umiya enterprises and sales from the Delhi branch)
and (iii) allowed the Miscellaneous Application relating to the
maintainability of the appeal filed by the Mysore Commissioner.
31
49. The findings recorded and the reasons therefor, as given by
CESTAT, are as follows:­
I. That the demand of Rs. 60,712 for the differential value of
Rs. 3,79,452 in respect of the clearances reflected in the
Inter­Office   memo   was   rightly   confirmed   by   the
Adjudicating Authority, by rejecting the retractions of the
statements of Sh. K. Sridhar and Sh. Umeedmal Jain who
had admitted to undervaluation and collecting differential
amounts in cash;
II. That the demand of duty of Rs. 4748 on the differential
value of Rs. 29,677 with respect to clearances from the
Lucknow branch was liable to be sustained;
III. That the demand of Rs. 80,36,177 on the differential value
of Rs. 5,02,26,106 for the clearances made to M/s. Kela
Brothers   was   to   be   confirmed   on   the   principle   of
preponderance of probability regarding undervaluation by
the assessee;
32
IV. That since the demand was towards differential duty, the
same should have been correlated to particular invoices
covering such clearances, which the Adjudicating Authority
had not done;
V. That   the   Adjudicating   Authority   rightly   dropped   the
demand relating to M/s. Umiya Enterprises;
VI. That the Adjudicating Authority was correct in not applying
the charge and level of undervaluation in respect of all the
clearances, and
VII. That   differential   duty   could   be   demanded   only   where
undervaluation   was   established   and   in   the   light   of
transaction   value   introduced   w.e.f.   01.07.2000,   such
evidence had to be available in respect of each removal.
50. Aggrieved by the said order, the Revenue has come up with
this batch of 4 appeals, Civil Appeal Nos. 3227­3230 of 2011.
33
Facts in Civil Appeal Nos. 3231­3233/2011
51. M/s.   Plama   Boards   Pvt.   Ltd.,   Mangalore,   which   is   the
assessee   concerned   in   this   batch   of   cases,   manufactures
plywood/ block boards. Searches conducted by the DGCEI at
their premises revealed, according to the Revenue, that (i) the
assessee had fraudulently undervalued the goods manufactured
and cleared, (ii) that the actual value of clearances had crossed
the Small Scale Industries exemption limit of Rs. 1,00,00,000
and (iii) that the assessee had thus, evaded Central Excise duty
to   the   tune   of   Rs.   2,13,70,618   during   the   period   from
01.10.2000 to 28.04.2004.
52. A   show   cause   notice   dated   22.11.2005   was   issued
demanding differential duty of Rs. 2,13,70,618 under Section
11A(1) of the Central Excise Act, 1944, interest, penalty, etc.
53. After   the   receipt   of   the   replies   from   the   assessee,   the
Commissioner of Central Excise, Mangalore, held an enquiry and
passed an Order­in­Original No. 10/2006 dated 29.05.2006, in
and by which, he (i) confirmed the demand of duty in a sum of
34
Rs. 1,37,81,152 from the assessee under the proviso to Section
11A(1)   of   the   Act,   (ii)   directed   appropriation   of   Rs.   5,00,000
voluntarily   paid   by   the   assessee,   (iii)   levied   interest   at   the
appropriate   rate   for   the   belated   payment   of   the   duty   under
Section   11AB   of   the   Act,   (iv)   imposed   a   penalty   of   Rs.
1,37,81,152 under Section 11AC read with Rule 25, (v) imposed
a penalty of Rs. 1,00,000 under Rule 173Q/ Rule 25 (vi) imposed
a penalty of Rs. 10,00,000 under Rule 2019/ Rule 26, and (v)
imposed a penalty of Rs. 10,00,000 on Sh. P. M. A. Razak, the
Managing Director of the assessee.
54. The Commissioner recorded a finding that the evidence on
record proved that the assessee had undervalued the goods sold
through Shree Shyam Plywoods by about 75% and those sold
through other dealers by about 70%.
55. Aggrieved   by   the   Order­in­Original   No.   10/2006   dated
29.05.2006,   the   assessee,   its   Managing   Director   and   the
Commissioner of Central Excise, Mangalore filed three appeals
before the CESTAT.
35
56. By Final Order Nos. 1145­1147/2010 dated 26.08.2010,
the CESTAT allowed all the three appeals and remanded the
matter for re­quantification of duty in the light of the findings
given.
57. The findings recorded and the reasons therefor, as given by
CESTAT, are as follows:­
I. That the statements given by third parties in the course of
investigation stood in contrast to the statements given by
the employees of the assessee and that once retracted, the
statements   of   third   parties   would   lose   their   evidentiary
value;
II. That the pocket planner recovered from Sh. Ashraf was not
an official record of the assessee but a private diary;
III. That the prices written on the letterhead of M/s. Shree
Shyam Plywoods were not corroborated by the dealers and
even the statement of the proprietor could not be taken as
corroboration, as the said statement was retracted;
36
IV. That the price lists recovered from M/s. Plydeal could not
be relied upon as M/s. Plydeal did not purchase plywood
from the assessee;
V. That   the   Adjudicating   Authority’s   decision   to   confirm
undervaluation to the extent of 75% to M/s. Shree Shyam
Plywoods and 70% to the other dealers was not appropriate
and that undervaluation could not be presumed in respect
of   all   the   clearances   made   by   the   assessee   during   the
material period, by just examining clearances of only a few
dealers;
VI. That no concrete evidence of undervaluation and evasion
with reference to any particular clearance had been found
by the Adjudicating Authority;
VII. That as seen from the statement of the Managing Director,
there was no doubt about undervaluation and payment of
lesser duty than what was due, and
37
VIII. That since the dispute was for clearances after 01.07.2000,
the value had to be determined based on each transaction.
58. Aggrieved by the said order, the Revenue has come up with
this batch of 3 appeals, Civil Appeal Nos. 3231­3233 of 2011.
Facts in Civil Appeal Nos. 6564­6567/2011
59. M/s. Thumbay Holdings Pvt. Ltd., Mangalore, which is the
assessee   concerned   in   this   batch   of   cases,   admittedly
manufactures   plywood/block   boards   and   is   also   engaged   in
construction and sale of immovable properties. Searches similar
to the ones in the previous batches of appeals were conducted by
the DGCEI at their premises, which revealed that the assessee
had undervalued the goods manufactured by them and cleared
them   from   their   factory,   resulting   in   the   evasion   of   Central
Excise duty to the tune of Rs. 8,37,019 during the period from
01.04.2003 to 31.03.2004.
38
60. Thereafter,   a   show   cause   notice   dated   11.10.2006   was
issued, demanding differential  duty of Rs. 8,37,019, interest,
penalty, etc.
61. Unlike   in   the   other   batches   of   cases,   the   Joint
Commissioner   of   Central   Excise,   Mangalore,   was   the
Adjudicating Authority in this batch, in view of the monetary
value of the demand. After receipt of the assessee’s reply to the
show cause notice, he held an enquiry and passed an Order­inOriginal   No.   20/2007   dated   29.06.2007.   By   this   Order­inOriginal, the Joint Commissioner (i) confirmed the demand of
duty in a sum of Rs. 7,21,568 from the assessee under the
proviso to Section 11A(1) of the Act, (ii) levied interest at the
appropriate   rate   for   the   belated   payment   of   the   duty   under
Section 11AB of the Act, (iii) imposed a penalty of Rs. 7,21,568
under Section 11AC, (iv) imposed a penalty of Rs. 50,000 under
Rule 25 and (v) imposed a penalty of Rs. 50,000 each on Sh. B.
Abdul Salam, Sh. J. M. Ashraf and Sh. Manoj Kumar Amin
under Rule 26.
39
62. The   Adjudicating   Authority   held   that   there   was
undervaluation on assessee’s part and that therefore, Section
4(1)(a) was not applicable to the assessee’s transactions and that
the assessable value had to be ascertained in terms of Rule 11 of
the Central Excise Valuation (Determination of Price of Excisable
Goods) Rules, 2000.
63. Aggrieved   by   the   Order­in­Original   No.   20/2007   dated
29.06.2007, the assessee, Sh. B. Abdul Salam, Sh. J. M. Ashraf
and Sh. Manoj Kumar Amin filed four separate appeals before
the Commissioner of Central Excise (Appeals).
64. The Commissioner of Central Excise (Appeals) dismissed
the appeals.
65. Aggrieved by the Orders­in­Appeal dated 18.09.2008, the
assessee, Sh. B. Abdul Salam (Managing Director), Sh. J. M.
Ashraf   (Chief   Executive   Officer)   and   Sh.   Manoj   Kumar   Amin
(Marketing Executive), filed four appeals before the CESTAT.
40
66. By   Final   Order   Nos.   1505­1508   dated   07.12.2010,   the
CESTAT allowed all the four appeals and remanded the matter
for re­quantification of duty liability and penal liability in light of
the findings given.
67. The findings recorded and the reasons therefor, as given by
CESTAT, are as follows:­
I. That retraction by the witnesses of their statements at a
belated stage was not acceptable;
II. That the  entries  in the  slips  had been  corroborated by
statements of the witnesses and hence evasion of Central
Excise duty to an extent of 67% stood proved;
III. That since only 3 out of 25 dealers had recorded their
statements and only one of those clearly incriminated the
assessee, which had also been later retracted, the total
evidence available may not be adequate to quantify evasion
by the assessee for a whole year;
41
IV. That an analysis of the provisions of the Bankers’ Book
Evidence Act, 1891 showed that the Adjudicating Authority
was not barred from requisitioning the bank statement;
V. That the Adjudicating Authority rightly held that the show
cause notice was not barred by limitation;
VI. That however, the finding of evasion of duty could not be
applied to all the clearances by the assessee, and that if the
standard of preponderance of probability was applied in
that respect, it would contain an element of arbitrariness,
and
VII. That   the   Adjudicating   Authority’s   quantification   of   duty
due based on a formula worked out on the basis of the
slips and a few invoices, was not permissible, and that
transaction value had to be calculated with respect to each
removal, in terms Section 4 of the Act.
68. Aggrieved by the said order, the Revenue has come up with
this batch of 4 appeals, Civil Appeal Nos. 6564­6567 of 2011.
Facts in Civil Appeal Nos. 9988­9991 of 2011
42
69. The facts of this last batch of appeals are also similar to
the preceding cases. M/s. Hajee Timber Complex, Mangalore,
which   is   the   assessee   concerned   in   this   batch   of   cases,
manufactures plywood/block boards. Searches conducted by the
DGCEI   at   their   premises   revealed   that   the   assessee   had
undervalued   the   goods   manufactured   and   cleared   by   them,
resulting in the evasion of Central Excise duty to the tune of Rs.
50,42,761 during the period between 01.07.2001 to 31.03.2004.
70. A   show   cause   notice   dated   10.10.2006   was   issued
demanding   differential   duty   of   Rs.   50,42,761   under   Section
11A(1) of the Central Excise Act, 1944, interest, penalty, etc.
71. After   the   receipt   of   the   reply   from   the   assessee,   the
Commissioner of Central Excise, Mangalore, held an enquiry and
passed   an   Order­in­Original   No.   08/2007   dated   29.03.2007,
wherein he (i) confirmed the demand of duty in a sum of Rs.
40,46,923 from the assessee under the proviso to Section 11A(1)
43
of the Act, (ii) directed appropriation of Rs. 2,00,000 voluntarily
paid by the assessee, (iii) levied interest at the appropriate rate
for the belated payment of the duty under Section 11AB of the
Act, (iv) imposed a penalty of Rs.  40,46,923 on the assessee
under Section 11AC, (v) imposed a penalty of Rs. 2,00,000 on
the assessee under Rule 25 of the 2002 Rules and (vi) imposed a
penalty of Rs. 2,00,000 each on Sh. B. Abdul Salam, Sh. J. M.
Ashraf and Sh. Manoj Kumar Amin under Rule 26 of the 2002
Rules.
72. The   Adjudicating   Authority   held   that   the   documentary
evidence   and   witness   statements   clearly   showed   that   the
assessee had grossly undervalued their products.
73. Aggrieved   by   the   Order­in­Original   No.   08/2007   dated
29.03.2007, the assessee, Sh. B. Abdul Salam, Sh. J. M. Ashraf
and   Sh.   Manoj   Kumar   Amin   filed   four   appeals   before   the
CESTAT.
44
74. By Final Order Nos. 1509­1512/2010 dated 08.12.2010,
the   CESTAT   allowed   all   the   four   appeals   and   remanded   the
matter for re­quantification of duty liability and penal liability in
the light of the findings given.
75. The findings recorded and the reasons therefor, as given by
CESTAT, are as follows:­
I. That the slips and price lists recovered from one of the
dealers,   the   price   list   recovered   from   the   BA   group   of
companies and the statements obtained from the dealers
and   employees   of   the   BA   group,   revealed   the   modus
operandi   followed   by   the   assessee  in   undervaluation   of
excisable goods;
II. That the initial statements of the witnesses were voluntary
and hence, valid evidence;
III. That the test of preponderance of probability could not be
applied to judicially quantify the duty short paid during the
entire period of the dispute relying upon one slip showing
actual price in respect of few transactions;
45
IV. That the proviso to Section 11A(1) was applicable to the
present case and the show cause notice was not barred by
limitation, and
V. That each impugned clearance was assessable to duty on
the particular price (transaction value) charged for each
removal.
76. Aggrieved by the said order, the Revenue has come up with
this batch of 4 appeals, Civil Appeal Nos. 9988­9991 of 2011.
Common Issues arising in these appeals
77. It may be seen from the facts involved in these batches of
cases that there is a common thread that runs along the fabric
of these cases. This common thread is that the assessees in
these cases allegedly undervalued the goods, sold them for a
much higher price than what was reflected in the invoices and
thereby they evaded the excise duty actually payable. Though
the assessees uniformly denied the said allegation, the CESTAT
has recorded a categorical finding in all the cases that there was
46
undervaluation and evasion of excise duty. The said finding has
not been challenged by the assessees and hence it has attained
finality.   Therefore,   what   arises   for   adjudication   is   only   the
manner of determining the value of the goods removed by the
assessees for sale to or through dealers.
78. In other words, the entire dispute now revolves around the
question of valuation of excisable goods, for the purposes of
charging of duty. But for finding an answer to the said question,
it is necessary for us to take note of the period of assessment. In
some of these cases, the period of assessment was both prior to
and after 01.07.2000 and in other cases, the period was after
01.07.2000.   According   to   the   respondents,   the   method   of
determination of value before 01.07.2000 was different from the
method of valuation after 01.07.2000, since Section 4 of the
Central   Excise   Act,   1944   was   amended   with   effect   from
01.07.2000 under Act 10 of 2000. The amended Section 4 also
underwent some changes in the years 2003 and 2012. We are
not concerned with the changes brought forth in 2012.
47
79. Therefore,   let   us   first   take   note   of   how   the   statutory
prescription stood before 01.07.2000 and after the said date. The
relevant portion of Section 4 as it stood before 01.07.2000 and
as it stands after 01.07.2000 is presented in a tabular column as
follows:
Section   4   as   it   stood   before
01.07.2000
Section   4   as   it   stands   after
01.07.2000,   including   the
amendment   in   2003   but   not
including   the   amendment   in
2012
4. Valuation   of   excisable   goods
for purposes of charging of duty
of excise.—
(1)  Where   under   this   Act,   the
duty of excise is chargeable on
any   excisable   goods   with
reference   to   value,   such   value,
shall,   subject   to   the   other
provisions   of   this   section   be
deemed to be—
(a)  the   normal   price   thereof,
that   is   to   say,   the   price   at
which   such   goods   are
ordinarily sold by the assessee
to   a   buyer   in   the   course   of
wholesale trade for delivery at
4. Valuation of excisable goods for
purposes   of   charging   of   duty   of
excise. —
(1) Where under this Act, the duty
of   excise   is   chargeable   on   any
excisable goods with reference to
their value, then, on each removal
of the goods, such value shall—
(a)  in a case where the goods
are   sold   by   the   assessee,   for
delivery at the time and place
of   the   removal,   the   assessee
and the buyer of goods are not
related and the price is the sole
consideration   for   the   sale,   be
48
the time and place of removal,
where   the   buyer   is   not   a
related person and the price is
the sole consideration for the
sale:
Provided that—
(i)   where   in   accordance   with
the  normal  practice  of  the
wholesale   trade   in   such
goods, such goods are sold
by the assessee at different
prices to different classes of
buyers   (not   being   related
persons)   each   such   price
shall,   subject   to   the
existence   of   the   other
circumstances   specified   in
clause (a), be deemed to be
the   normal   price   of   such
goods   in   relation   to   each
such class of buyers;
(ia) where the price at which
such   goods   are   ordinarily
sold   by   the   assessee   is
different for different places
of removal, each such price
shall,   subject   to   the
existence   of   other
circumstances   specified   in
clause (a), be deemed to be
the   normal   price   of   such
the transaction value;
(b) in any other case, including
the case where the goods are
not   sold,   be   the   value
determined in such manner as
may be prescribed.
Explanation.— For the removal of
doubts, it is hereby declared that
the   price­cum­duty   of   the
excisable   goods   sold   by   the
assessee   shall   be   the   price
actually paid to him for the goods
sold and the money value of the
additional   consideration,   if   any,
flowing directly or indirectly from
the   buyer   to   the   assessee   in
connection with the sale of such
goods, and such price­cum­duty,
excluding   sales   tax   and   other
taxes, if any, actually paid, shall
be   deemed   to   include   the   duty
payable on such goods.
(2) The provisions of this section
shall not apply in respect of any
excisable goods for which a tariff
value has been fixed under subsection (2) of Section 3.
(3) For the purpose of this section
—
49
goods   in   relation   to   each
such place of removal;
(ii) where such goods are sold
by   the   assessee   in   the
course   of   wholesale   trade
for delivery at the time and
place of removal at a price
fixed under any law for the
time being in force, or at a
price, being the maximum,
fixed  under  any such  law,
then,   notwithstanding
anything   contained   in
clause   (iii)   of   this   proviso,
the price or the maximum
price, as the case may be,
so fixed, shall, in relation to
the   goods   so   sold,   be
deemed   to   be   the   normal
price thereof;
(iii)   where   the   assessee   so
arranges that the goods are
generally not sold by him in
the   course   of   wholesale
trade except to or through a
related person, the normal
price of the goods sold by
the assessee to or through
such related person shall be
deemed  to  be  the  price  at
which   they   are   ordinarily
sold by the related  person
in  the course  of  wholesale
     (a) “assessee” means [...];
(b) persons shall be deemed to
be “related” if— [...]
(c) “place of removal” means—
(i)  a   factory   or   any   other
place   or   premises   of
production   or   manufacture
of the excisable goods;
(ii)   a   warehouse   or   any
other   place   or   premises
wherein the excisable goods
have been permitted to be
deposited without payment
of duty,
(iii)  a depot, premises of a
consignment   agent   or   any
other   place   or   premises
from   where   the   excisable
goods are to be sold after
their   clearance   from   the
factory;
from where such goods are
removed;
50
trade at the time of removal,
to dealers (not being related
persons)   or   where   such
goods are not sold to such
dealers,   to   dealers   (being
related   persons)   who   sell
such goods in retail;
(b)  where the normal price of
such   goods   is   not
ascertainable   for   the   reason
that such goods are not sold
or   for   any   other   reason,   the
nearest   ascertainable
equivalent thereof determined
in   such   manner   as   may   be
prescribed.
(2)  Where,   in   relation   to   any
excisable goods the price thereof
for   delivery   at   the   place   of
removal   is   not   known   and   the
value thereof is determined with
reference to the price for delivery
at a place other than the place of
removal,   the   cost   of
transportation from the place of
removal to the place of delivery
shall   be   excluded   from   such
price.
(3) [...]
(cc)  “time   of   removal”,   in
respect of the excisable goods
removed   from   the   place   of
removal   referred   to   in   subclause (iii) of clause (c), shall be
deemed to be the time at which
such   goods   are   cleared   from
the factory;
(d)   “transaction   value”   means
the   price   actually   paid   or
payable   for   the   goods,   when
sold, and includes in addition to
the   amount   charged   as   price,
any   amount   that   the   buyer   is
liable to pay to, or on behalf of,
the assessee, by reason of, or in
connection   with   the   sale,
whether payable at the time of
the   sale   or   at   any   other   time,
including, but not limited to, any
amount charged for, or to make
provision   for,   advertising   or
publicity, marketing and selling
organisation   expenses,   storage,
outward   handling,   servicing,
warranty,  commission   or   any
other   matter;   but   does   not
include   the   amount   of   duty   of
excise, sales tax and other taxes,
if any, actually paid or actually
payable on such goods.
51
(4)  For   the   purposes   of   this
section—
(a) “assessee” means [...];
(b) “place of removal” means—
(i)   a   factory   or   any   other
place   or   premises   of
production or manufacture
of the excisable goods;
(ii)   a   warehouse   or   any
other   place   or   premises
wherein   the   excisable
goods have been permitted
to   be   deposited   without
payment of duty;
(iii) A depot, premises of a
consignment agent or any
other   place   or   premises
from   the   excisable   goods
are  to  be  sold  after  their
clearances from the factory
and,
from where such goods are
removed;
(ba)  “time   of   removal”,   in
52
respect   of   goods   removed
from   the   place   of   removal
referred to in sub­clause (iii)
of clause (b), shall be deemed
to be the time at which such
goods   are   cleared   from   the
factory;
(c) “related person” means [...]
(d) “value”, in relation to any
excisable goods—
(i)   where   the   goods   are
delivered   at   the   time   of
removal   in   a   packed
condition,   includes   the
cost   of   such   packing
except   the   cost   of   the
packing   which   is   of   a
durable   nature   and   is
returnable by the buyer to
the assessee.
Explanation.—[...]
(ii)   does   not   include   the
amount   of   the   duty   of
excise, sales tax and other
taxes,   if   any,   payable   on
such goods and, subject to
such   rules   as   may   be
53
made,   the   trade   discount
(such   discount   not   being
refundable on any account
whatsoever)   allowed   in
accordance   with   the
normal   practice   of   the
wholesale trade at the time
of   removal   in   respect   of
such   goods   sold   or
contracted for sale.
Explanation.—[...]
(e)   “wholesale   trade”   means
sales   to   dealers,   industrial
consumers,   Government,
local   authorities   and   other
buyers,   who   or   which
purchase   their
requirements/otherwise than
in retail.
80. In   simple   terms,   2   different  methods   of   valuation   were
prescribed in Section 4 as it stood prior to 01.07.2000:
(i) one covered by clause (a) of sub­section (1) of Section 4,
where   the   emphasis   was   on   normal   price,   the
determination of which co­related to ordinary sale in the
54
course of wholesale trade (satisfying certain conditions),
and
(ii) another covered by clause (b) of sub­section (1) of Section
4, which related to cases where there were no sales, and
cases where normal price could not be ascertained for any
other reason.
81. The prescriptions contained in clause (a) of sub­section (1)
of Section 4, before amendment in 2000, are summarized as
follows:
I. As a first rule, the normal price, namely the price at which
such goods are ordinarily sold in the course of wholesale
trade  shall be taken as the value, if the buyer is not a
related person and the price is the sole consideration for
the same.
II. But in cases where different prices are charged to different
classes of buyers, each such price should be taken to be
the normal price in relation to each such class of buyers.
55
III. Similarly, if different prices are charged at different places
of removal, the normal price shall be the price charged in
relation to each such place of removal.
IV. Where the goods are generally not sold in the course of
wholesale trade, except to or through a related person, the
normal price shall be the price at which the goods are
ordinarily   sold   by   the   related   person,   in   the   course   of
wholesale trade to other dealers.
82. Thus it is clear that under Section 4(1)(a), as it stood before
01.07.2000, the method of valuation prescribed therein was
directly   linked  to  the  normal  price   for  an  ordinary  sale   in
the course of wholesale trade. But in cases where normal price
was not ascertainable, the same would fall under Section 4(1)(b)
and the valuation in such cases had to be done in terms of the
Valuation   Rules   of   the   year   1975.   Clause   (b)   identifies   one
situation, namely where goods are not sold, in which, the normal
price   may   not   be   ascertainable.   In   addition,   clause   (b)   also
recognises the fact that there may be cases where normal price
56
is not ascertainable  for   any   other   reason. These cases may
perhaps   include  sales   otherwise   than   in   the   course   of
wholesale trade.
83. Though the words “normal price” were used in Section 4(1)
(a), the proviso to clause (a) recognised the fact that the normal
price need not be the same universally, but could vary from one
class   of   buyers   to   another   or   from   one   place   of   removal   to
another.
84. By the amendment under Act 10 of 2000, with effect from
01.07.2000, the words “normal price” and the words “in the
course of wholesale trade” were removed. Instead, the words
“transaction value” were inserted in Section 4(1)(a).
85. As rightly pointed out by the learned Additional Solicitor
General, the third question referred to the Constitution bench in
CCE  vs.  Grasim   Industries  Limited2
  was whether or not the
concept  of  “transaction  value”   makes   any  material   departure
from the deemed normal price concept of the erstwhile Section
2 (2018) 7 SCC 233
57
4(1)(a) of the Act. In the penultimate paragraph of its decision,
the Constitution bench answered this question in the following
manner:
“Further, we hold that “transaction value” as defined in
Section 4(3)(d) brought into force by the Amendment Act,
2000, statutorily engrafts the additions to the “normal
price” under the old Section 4 as held to be permissible
in Bombay Tyre International Ltd. (supra) besides giving
effect to the changed description of the levy of excise
introduced in Section 3 of the Act by the Amendment of
2000.   In   fact,   we   are   of   the   view   that   there   is   no
discernible   difference   in   the   statutory   concept   of
“transaction value” and the judicially evolved meaning
of “normal price”.”
86. Though   the   Constitution   Bench   in  Grasim   Industries
noted the shift, at least in the language, of Section 4(1), from
“normal price” to “transaction value”, the Constitution Bench did
not take note of one major area of difference, namely that  the
focus  of Section  4(1)(a)  prior  to  01.07.2000  was  on finding
out the normal price in respect of sales made ordinarily in
the   course   of   wholesale   trade.   The   method   of   valuation,
58
wherever there was no sale, was to be on the basis of the Rules,
in view of Section 4(1)(b). Even in cases where there was a sale—
(i) in   the   course   of   wholesale   trade   but   the   conditions
stipulated in clause (a) were not satisfied or
(ii) the normal price could not be ascertained for any other
reason,
the method of valuation was left under clause (b) of sub­section
(1) of Section 4 to the rule making authority to stipulate. The
implication flowing out of the words  “for  any   other   reason”
found in clause (b) before amendment is of significance in this
regard. After the amendment under Act 10 of 2000, the normal
pricing method was gone, as the focus shifted from sale in the
course of wholesale trade.
87. While clause (a) of sub­section (1) of Section 4, as it stood
before amendment, laid emphasis on normal price, clause (a) of
sub­section   (1)   of   Section   4,   as   it   stands   after   amendment,
speaks about  transaction  value. Clause (b) of sub­section (1),
both before and after the amendment, leaves it to the delegated
59
legislation to prescribe the method of valuation, for cases not
covered by clause (a).
88. For   the   valuation   under   Section   4(1)   to   follow   the
“transaction   value”,   (after   amendment)   the   three   conditions
stipulated in clause (a), namely (i) that the goods are sold for
delivery at the time and place of removal, (ii) that the assessee
and buyer are not related and (iii) that the price is the sole
consideration for the sale, should be satisfied.
89. If the three conditions, enumerated in clause (a), (indicated
above) are not satisfied, then the case would fall under clause (b)
of sub­section (1) of Section 4, which starts with the words “in
any other case”. In other words, in cases not covered by clause
(a), the value can be determined in such manner as may be
prescribed.
90. After the amendment under Act 10 of 2000, the Central
Government issued a new set of rules called the Central Excise
Valuation   (Determination   of   Price   of   Excisable   Goods)   Rules,
60
2000. These rules were issued in exercise of the power conferred
by Section 37, in supersession of the 1975 Valuation Rules.
91. Rule 3 of the aforesaid 2000 Rules makes it clear that the
value of excisable goods, for the purposes of clause (b) of subsection (1) of Section 4, should be determined in accordance with
the said Rules. Therefore, it is clear that the valuation as per the
Rules is permissible only in cases covered by Section 4(1)(b) and
not by Section 4(1)(a). For the purpose of the issues on hand, it
may not be necessary for us to dwell deep into the aforesaid
rules.
92. Suffice it to say, that if a sale is covered by clause (a) of
sub­section   (1)   of   Section   4   (after   amendment),   the   value   of
excisable goods shall be the ‘transaction value’. This expression
‘transaction value’ is defined in clause (d) of sub­section (3) of
Section 4. But if a case is not covered by clause (a) of subsection (1) of Section 4, then the value of the excisable goods
should be determined in accordance with the 2000 Rules.
61
93. Therefore, in essence, an adjudicating authority is obliged
to do the following, in respect of transactions that took place
after 01.07.2000:
(i) first, he must see whether there is a sale and
(ii) next, he must see if such sale satisfies the three conditions
stipulated in clause (a) of sub­section (1) of Section 4.
94. In cases where there is a sale and the three conditions
stipulated   in   clause   (a)   of   sub­section   (1)   of   Section   4   are
satisfied, the adjudicating authority should determine the value
based upon the transaction value. But (i) in cases where there is
no sale and (ii) in cases where there is a sale but the three
conditions stipulated in clause (a) are not satisfied, then the
adjudicating authority should fall back upon the Central Excise
Valuation   (Determination   of   Price   of   Excisable   Goods)   Rules,
2000.
What  the  Adjudicating  Authority  and  the  Tribunal  had  and  had
not done in these cases
62
95. First, let us see what they did, before looking at what they
did not. Broadly, in the batches of cases on hand (with one or
two   exceptions),   the   Adjudicating   Authorities   came   to   the
following conclusions:
(i) that there was undervaluation and evasion of duty;
(ii) that   in   respect   of   sales   effected   both   before   and   after
01.07.2000, the invoice value, together with the cash paid
over   and   above   the   invoice   value,   would   represent   the
normal price or the transaction value, as the case may be,
and
(iii) that in cases where there was evidence to show that a
dealer had paid more than the invoice value, the amount
found to have been paid by such a dealer, though relatable
only to a few out of the several transactions that he had
with the assessee, should be taken to be the normal price
or the transaction value, as the case may be, applicable to
all the transactions that the particular dealer had with the
assessee.
63
96. Similarly, what the CESTAT did in all these cases is:
(i) to  uphold  the  finding of  undervaluation   and  evasion  of
duty;
(ii) to hold that invoice price need not be taken as the normal
price   in   respect   of   cases   prior   to   01.07.2000   and   that
wherever a particular amount is actually found to have
been paid by a dealer, the same could be taken to be the
transaction value, for cases after 01.07.02000; and
(iii) to hold that the determination of the normal price or the
transaction value, as the case may be, should be confined
only to the evidence available on record, but not to all the
transactions across the board.
97. But the Adjudicating Authorities as well as CESTAT are
also guilty of failure to do something in these batches of cases.
They are:
(i) Failure to find out, in cases covered by Section 4(1) as it
stood prior to 01.07.2000, whether there were sales in the
course   of   wholesale   trade,   satisfying   the   3   conditions
64
prescribed therein, falling under clause (a) of sub­section
(1) or whether the sales in question fell under clause (b) of
sub­section (1) of Section 4;
(ii) Failure to find out, in cases covered by Section 4(1) as it
stands   amended   by   Act   10   of   2000   with   effect   from
01.07.2000, whether the sales in question fell under clause
(a) or clause (b) of sub­section (1) of Section 4;
(iii) Failure to find out, in the event of the sales in question
falling   under   clause   (b)   of   sub­section   (1)   of   Section   4
(before or after the amendment), whether the valuation had
to be done only in accordance with the Rules (1975 Rules
or the 2000 Rules, as the case may be), and
(iv) Failure to find out, in cases covered by Section 4(1)(b), the
specific rule that is applicable among the 1975 or 2000
Rules,   as   there   are   different   rules   covering   different
contingencies, both in the 1975 Rules and in the 2000
Rules.
65
98. Since the Adjudicating Authorities as well as the CESTAT
failed to make a determination as indicated above, we are of the
view that the orders of remand passed by the Tribunal, though
for   completely   different   reasons,   were   justified.   Hence   the
appeals are liable to be disposed of, confirming the orders of
remand   passed   by  CESTAT,  with  a  clarification   on  the   legal
issues so that the Adjudicating Authorities know how to proceed.
Conclusion
99. In   fine,   these   appeals   are   disposed   of,   confirming   the
impugned orders of CESTAT setting aside the Orders­in­Original
passed   by   the   Adjudicating   Authorities   and   remanding   the
matters back for re­adjudication. However, while carrying out
the   exercise   of   re­adjudication,   the   Adjudicating   Authorities
should keep in mind the principles enumerated hereunder:
A. Cases where the period of assessment is prior to 01.07.2000
66
I. First ascertain the price at which such goods are ordinarily
sold by the assessee to a buyer who is not related to him,
in the course of wholesale trade, at the time and place of
removal and also find out whether the price is the sole
consideration for the sale. If the Adjudicating Authority is
able to find this out, he may take such price as the normal
price   and   treat   the   case   as   covered   by   Section   4(1)(a),
applying, wherever permissible, the prescriptions contained
in the proviso to clause (a) of sub­section (1) of Section 4.
II. If   the   normal   price   is   not   ascertainable,   either   for   the
reason that the goods are not sold or for any other reason,
then he may take it that the case would fall under Section
4(1)(b) and take recourse in such cases, to the Central
Excise (Valuation) Rules, 1975.
III. The phrase “for any other reason” appearing in Section 4(1)
(b) would include cases where the price charged in the
course of wholesale trade is not discernible or where the
same, though discernible, cannot be linked to delivery at
67
the time and place of removal or where the price is not the
sole   consideration   for   the   sale,   even   though   the   price
charged in the course of wholesale trade for delivery at the
time and place of removal are available.
IV. If the case falls under Section 4(1)(b) and the Adjudicating
Authority   takes   recourse   to   the   method   of   valuation
prescribed   in   the   1975   Rules,   he   shall   find   out   which
among the relevant rules would apply to the cases on hand
before proceeding with the valuation.
B. Cases where the period of assessment is after 01.07.2000
I. First   ascertain   the   “transaction   value”,   with   particular
reference to the definition of the said expression contained
in Section 4(3)(d).
II. Apply the transaction value so ascertained, to cases where
three conditions, namely (i) the goods are sold for delivery
at the time and place of removal, (ii) the assessee and
buyer   are   not   related   and   (iii)   the   price   is   the   sole
68
consideration, are satisfied. This is because such cases will
fall under Section 4(1)(a).
III. In   cases   where   one   or   more   of   the   aforesaid   three
conditions are not satisfied, and also in cases where there
is   no   sale,   the   Adjudicating   Authority   should   treat   the
cases   as   falling   under   Section   4(1)(b)   and   hence   take
recourse to the Central Excise Valuation (Determination of
Price of Excisable Goods) Rules, 2000.
IV. If a case falls under Section 4(1)(b) and the Adjudicating
Authority   takes   recourse   to   the   method   of   valuation
prescribed   in   the   2000   Rules,   he   shall   find   out   which
among the relevant rules would apply to the case on hand
before proceeding with the valuation.
Principles applicable in common (both pre and post amendment)
C. The Adjudicating Authority may treat any amount received
either in cash or otherwise, over and above the invoice value,
as the value of excisable goods even in cases falling under
Section 4(1)(a)  (after the amendment), as the definition of
69
“transaction   value”   under   Section   4(3)(d)   means   the   price
actually paid or payable.
D. The Adjudicating Authority shall keep in mind the fact that
while   the   expression   “normal   price”   was   not   defined   in
Section 4(1) before amendment, the expression “transaction
value” is defined very exhaustively in Section 4(3)(d) and this
definition is both inclusive as well as exhaustive.
E. Wherever there is a finding that a particular dealer/ customer
has paid a consideration over and above what is reflected in
the invoice, the additional payment made by him together
with the invoice value shall be taken to be the transaction
value,   for   all   the   transactions   that   the   particular
dealer/customer had with the assessee. In simple terms, if a
dealer/customer has made 10 purchases during the period in
question,  for a particular value  stated  in  the invoice,  the
transaction   value   determined   on   the   basis   of   material
relatable to a few out of those transactions, can be applied to
all the transactions of that customer/dealer across the board
70
for that period. However, the same value cannot be applied to
the other dealers/ customers. This principle shall be followed
in respect of cases arising after the amendment.
F. Since   the   matters   are   more   than   a   decade   old,   the
Adjudicating   Authorities   may   conduct   hearings,   afford
adequate   opportunities   to   the   parties   and   pass   orders   in
original as early as possible.
       The appeals are disposed of accordingly.   There will be no
order as to costs.
[
…………....................CJI.
    (S. A. Bobde)
..…………....................J.
    (A. S. Bopanna)
…..………......................J.
(V. Ramasubramanian)
AUGUST  19,  2020
NEW DELHI

The NDRF and PM CARES Fund are two entirely different funds with different object and purpose. In view of the foregoing discussions, we answer question Nos.3, 4 and 5 in following manner: Answer 3. The Union of India can very well utilize the NDRF for providing assistance in the fight of COVID-19 pandemic by way of releasing fund on the request of the States as per new guidelines. Answer 4. Any contribution, grant of any individual or institution is not prohibited to be credited into the NDRF and it is still open for any person or institution to make contribution to the NDRF in terms of Section 46(1)(b) of the Act, 2005. The contribution by any person or by any 74 institution in PM CARES Fund is voluntary and it is open for any person or institution to make contribution to the PM CARES Fund. Answer 5. The funds collected in the PM CARES Fund are entirely different funds which are funds of a public charitable trust and there is no occasion for issuing any direction to transfer the said funds to the NDRF. 73. In view of the foregoing discussions, the prayer ‘a’ and ‘b’ made in the writ petition are refused. With respect to prayer ‘c’, we make it clear (i) that there is no statutory prohibition for the Union of India utilizing the NDRF for providing assistance in the fight of COVID-19 in accordance with the guidelines issued for administration of NDRF; (ii) there is no statutory prohibition in making any contribution by any person or institution in the NDRF as per Section 46(1)(b)of the Act, 2005. 75 74. The prayer of the petitioner to direct all the funds collected in the PM CARES Fund till date to be transferred to the NDRF is refused. 75. Subject to clarification of law as made above, the writ petition is dismissed.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO.546 OF 2020
CENTRE FOR PUBLIC
INTEREST LITIGATION ...PETITIONER(S)
VERSUS
UNION OF INDIA ...RESPONDENT(S)
J U D G M E N T
ASHOK BHUSHAN, J.
From the beginning of this year, 2020, the world
including our country is in the grip of a pandemic
known as Novel Coronavirus (COVID-19). On
31.12.2019, a cluster of cases of pneumonia of
unknown cause in the city of Wuhan, Hubei Province in
China was reported to the World Health Organisation
(WHO). This was subsequently identified as a new
virus in January, 2020 and over the following months,
the number of cases continued to rise but were not
2
contained to China and showed exponential growth
worldwide. Due to the global rise in cases, this was
declared a pandemic on 11.03.2020 by the WHO. The
number of affected persons is increasing worldwide.
Although, substantial population is also recovering
from it but India witnessed exponential growth in
number of cases in the last month.
2. The world is familiar with several kinds of
disasters from time immemorial. Every country has
faced one or other disaster in recent memory.
Disasters disturb lives, societies and livelihood
around the world. The impact of disaster is to
strike hard earned economy, development and material
gains. Many of the destructive hazards are natural
in origin and some man made also. The whole world
having faced adverse effect of different kinds of
disasters is now well aware of its ill effect and
steps internationally as well as nationally are being
taken for last several decades to combat different
3
kinds of disasters. U.N. General Assembly
recognizing the importance of reducing the impact of
natural disaster for all people including developing
countries designated 1990 as the international decade
of natural disaster reduction. The International
Strategy for Disaster Reduction (UNISDR) was
established following IDNDR of the 1990s. The UN/GA
convened the second World Conference on Disaster Risk
Reduction (DRR) in Kobe, Hyogo, Japan 2005, which
concluded the review of the Yokohama Strategy and its
Plan of Action and the adoption of the Hyogo
Framework for Action 2005–2015: Building the
Resilience of Nations and Communities to Disasters
(HFA) (UNISDR 2005) by 168 countries. The HFA
outlined five priorities for action:
“(1) Ensure that DRR is a national and a
local priority with a strong
institutional basis for
implementation;
(2) Identify, assess, and monitor disaster
risks and enhance early warning;
4
(3) Use knowledge, innovation, and
education to build a culture of safety
and resilience at all levels;
(4) Reduce the underlying risk factors;
(5) Strengthen disaster preparedness for
effective response at all levels.”
3. On 23.12.2005, both the Houses of Indian Parliament
passed a Disaster Management Bill. The Introduction
and the Statement of Objects and Reasons of the Bill
mentions: -
“INTRODUCTION
For prevention and mitigation effects
of disasters and for undertaking a
holistic, coordinated and prompt response
to any disaster situation it has been
decided by the Government to enact a law
on disaster management to provide for
requisite institutional mechanisms for
drawing up and monitoring the
implementation of the disaster management
plans, ensuring measures by various wings
of Government. To achieve this objective
the Disaster Management Bill was
introduced in the Parliament.
STATEMENT OF OBJECTS AND REASONS
The Government have decided to enact a
law on disaster management to provide for
requisite institutional mechanisms for
drawing up and monitoring the
5
implementation of the disaster management
plans, ensuring measures by various wings
of Government for prevention and
mitigating effects of disasters and for
undertaking a holistic, coordinated and
prompt response to any disaster
situation.”
4. The Disaster Management Act, 2005 (hereinafter
referred to as “Act, 2005”) was enacted to provide
for the effective management of disasters and
matters connected therewith or incidental thereto.
The enactment of Disaster Management Act, 2005 was
to bring in place requisite institutional
mechanisms for drawing up and monitoring the
implementation of the Disaster Management Plans
and other measures by various wings of the
Government for preventing and mitigating effects
of disasters. We shall notice the relevant
provisions of the Act a little later.
5. In accord with Disaster Management Act, 2005, Union
Cabinet approved a “National Policy on Disaster
6
Management, 2009”. Paragraph 1.1.1, 1.2.1 and 1.3.1
of the policy reads as under: -
“1.1.1 Disasters disrupt progress and
destroy the hard-earned fruits of
painstaking developmental efforts, often
pushing nations, in quest for progress,
back by several decades. Thus, efficient
management of disasters, rather than mere
response to their occurrence, has in
recent times, received increased attention
both within India and abroad. This is as
much a result of the recognition of the
increasing frequency and intensity of
disasters, as it is an acknowledgement
that good governance in a caring and
civilised society, needs to deal
effectively with the devastating impact of
disasters.
1.2.1 India is vulnerable, in varying
degrees, to a large number of natural as
well as man-made disasters. 58.6 per cent
of the landmass is prone to earthquakes of
moderate to very high intensity; over 40
million hectares (12 per cent of land) is
prone to floods and river erosion; of the
7,516 km long coastline, close to 5,700 km
is prone to cyclones and tsunamis; 68 per
cent of the cultivable area is vulnerable
to drought and hilly areas are at risk
from landslides and avalanches.
Vulnerability to disasters/emergencies of
Chemical, Biological, Radiological and
Nuclear (CBRN) origin also exists.
Heightened vulnerabilities to disaster
risks can be related to expanding
population, urbanisation and
industrialisation, development within
7
high-risk zones, environmental degradation
and climate change (Maps 1–4).
1.3.1 On 23 December 2005, the Government
of India (GoI) took a defining step by
enacting the Disaster Management Act,
2005, (hereinafter referred to as the Act)
which envisaged the creation of the
National Disaster Management Authority
(NDMA), headed by the Prime Minister,
State Disaster Management Authorities
(SDMAs) headed by the Chief Ministers, and
District Disaster Management Authorities
(DDMAs) headed by the District Collector
or District Magistrate or Deputy
Commissioner as the case may be, to
spearhead and adopt a holistic and
integrated approach to DM. There will be a
paradigm shift, from the erstwhile reliefcentric response to a proactive
prevention, mitigation and preparednessdriven approach for conserving
developmental gains and to minimise loss
of life, livelihood and property.”
The policy noticed institutional framework under
the Act, dealt with financial arrangement, disaster
prevention, mitigation and preparedness.
6. Third U.N. World Conference on Disaster Risk
Reduction was held in March, 2015 at Sendai, Japan.
One of the declarations made in the conference was: -
8
“We, the Heads of State and Government,
ministers and delegates participating in
the Third United Nations World Conference
on Disaster Risk Reduction, have gathered
from 14 to 18 March 2015 in Sendai City of
Miyagi Prefecture in Japan, which has
demonstrated a vibrant recovery from the
Great East Japan Earthquake in March 2011.
Recognizing the increasing impact of
disasters and their complexity in many
parts of the world, we declare our
determination to enhance our efforts to
strengthen disaster risk reduction to
reduce disaster losses of lives and assets
from disasters worldwide.”
7. The Sendai declaration dealing with priorities for
action emphasized following in paragraph 33(a):-
”33(a) To prepare or review and
periodically update disaster
preparedness and contingency
policies, plans and programmes with
the involvement of the relevant
institutions, considering climate
change scenarios and their impact
on disaster risk, and facilitating,
as appropriate, the participation
of all sectors and relevant
stakeholders;”
8. Although Section 11 of Act, 2005 contemplated
preparation of a National Plan, however, the National
Plan was not prepared till the year 2016 as was
9
noticed by this Court in a judgment of this Court in
Swaraj Abhiyan Vs. Union of India & Ors., (2016) 7
SCC 498. In the year 2016, National Disaster
Management Plan was prepared as required by Section
11 of the Act, 2005. The preparation of the
National Plan under Section 11 was noticed by this
Court in Gaurav Kumar Bansal Vs. Union of India and
Ors., (2017) 6 SCC 730. In the same judgment, this
Court noticed that State Plan under Section 23 of the
Act (except by two States) and District Plan have
also been prepared. The preparation of National
Plan, State Plan and District Plan were noticed in
paragraphs 7, 11 and 12 of the above judgment, which
are to the following effect:-
“7. It was further pointed out that a
National Plan has been approved and placed
on the website of the NDMA in terms of
Section 11 of the Act and the guidelines
for minimum standards of relief Under
Section 12 of the Act have also been
placed on the website of the NDMA.
11. As far as the preparation of the State
Plan Under Section 23 of the Act is
concerned, we have been informed by the
learned Counsel for NDMA that all States
10
except Andhra Pradesh and Telangana have
prepared a State Disaster Management Plan
which is very much in place.
12. As far as the districts are concerned,
it is stated that the District Disaster
Management Authority has been constituted
in every district Under Section 25 of the
Act and out of 684 districts in the
country, a District Disaster Management
Plan is in place in 615 districts while it
is under process in the remaining
districts.”
9. The revision of the existing National Disaster
Management Plan, 2016 began in April, 2017 and
completed in November, 2019. The National Disaster
Management Plan approved by National Disaster
Management Authority was notified in November, 2019.
10. This writ petition filed as a public interest
litigation has been filed in the wake of Covid-19
pandemic, seeking direction to the Union of India to
prepare, notify and implement a National Plan under
Section 11 read with Section 10 of the Act, 2005 to
deal with current pandemic (Covid-19) and to lay down
11
minimum standards of relief under Section 12 of the
Act, 2005 to be provided to persons affected with
COVID-19. Petitioners have also sought for
directions to utilize National Disaster Response Fund
(NDRF) for the purposes of providing assistance in
the fight against COVID-19 and all the
contributions/grants from individuals/institutions be
credited in NDRF and not to PM CARES Fund and all
funds collected in PM CARES Fund till date should be
directed to be transferred to NDRF. It is useful to
note the specific prayers (a) to (c) made in the writ
petition: -
“a. Issue a writ, order or direction to
the Union of India to prepare, notify
and implement a National Plan under
Section 11 read with Section 10 of the
Disaster Management Act, 2005 to deal
with the ongoing COVID-19 pandemic;
b. Issue a writ, order or direction to
the Union of India to lay down minimum
standards of relief, under Section 12
of the Disaster Management Act, 2005,
to be provided to persons affected by
the COVID-19 virus, as well as by the
resultant national lockdown;
12
c. Issue a writ, order or direction to
the Union of India to utilize NDRF for
the purpose of providing assistance in
the fight against GOVID-19 pandemic in
compliance with Section 46 of the DM
Act, all the contributions/grants from
individuals and institutions shall be
credited to the NDRF in terms of
Section 46(1)(b) rather than to PM
CARES Fund and all the fund collected
in the PM CARES Fund till date may be
directed to be transferred to the
NDRF;”
11. We have heard Shri Dushyant Dave, learned senior
counsel for the petitioner. Shri Kapil Sibal has
also made his submissions in support of the prayers
and issues raised in the writ petition while
addressing his submissions in Suo Moto Writ Petition
No. 6 of 2020. We have also heard Shri Tushar Mehta,
learned Solicitor General appearing for the Union of
India.
12. Petitioner’s case in the writ petition is that
the National Plan uploaded on the website of National
Disaster Management Authority of the year 2019 does
not deal with situations arising out of the current
13
pandemic and has no mention of measures like
lockdown, containment zones, social distancing etc.
The Central Government has notified COVID-19 as a
“disaster” under Act, 2005 and has issued series of
notifications to contain the instant pandemic.
Petitioner pleads that Centre need to prepare a welldrawn National Plan to deal with instant pandemic and
the same need to be prepared after due consultation
with the State Government and experts. Petitioner
further pleads that Centre should come up with
detailed guidelines recommending the minimum
standards of relief to be provided in the relief
camps in relation to shelter, food, drinking water,
medical cover and sanitation, in absence of which,
shelter homes and relief camps are susceptible of
becoming hotbeds for the spread of COVID-19
infection. Petitioner pleads that Centre should come
up with detailed guidelines under Section 12(ii) and
(iii) of the Act, 2005 recommending special
provisions to be made for widows and orphans and ex
14
gratia to be provided to the kith and kin of those
losing life not just because of COVID-19 infection
but also due to harsh lockdown restrictions.
13. The petitioner’s case further is that the
grants/contributions by individuals and institutions
should be credited into the National Disaster
Response Fund (NDRF) under Section 46 of the Act,
2005 and NDRF should be utilized for meeting the
ongoing COVID-19 crisis. All the contributions made
by the individuals and institutions in relation to
COVID-19 are being credited into the PM CARES Fund
and not in NDRF, which is clear violation of Section
46 of the Act, 2005. The NDRF is subject to CAG
Audit and PM CARES Fund is not subject to CAG Audit.
Petitioner’s case further is that the Centre may be
directed to utilize NDRF for the purpose of drawing
assistance to fight against COVID-19 and all the
contributions/grants from individuals and
institutions be credited to the NDRF in terms of
15
Section 46(1)(b) rather than to PM CARES Fund and all
the Fund Collected in the PM CARES Fund till date may
be directed to be transferred to the NDRF.
14. A preliminary counter affidavit has been filed on
behalf of the Union of India. In the counter
affidavit, the respondents have questioned the locus
of the petitioner to file this public interest
litigation. Counter affidavit questions as to
whether there can be a permanent body set up only to
file litigation on issues, which the said body
subjectively considers to be of “public interest”.
Counter affidavit pleads that National Disaster
Management Plan as per Section 11 is already in place
and relevant portion of National Disaster Management
Plan – November, 2019 has been annexed as Annexure R1 to the counter affidavit. Counter affidavit pleads
that Act, 2005 provides for a broad framework in
terms of the response to be provided in pursuance to
a National Plan in case of any disaster. Counter
affidavit pleads that National Plan does not and
16
cannot contain step by step instructions or specific
instructions for the day to day management by
Government agencies in the situation of any
particular and unforeseen disaster. National Plan is
not a document that contains the microscopic details
as to the day to day management of the issues arising
out of different disasters. National Disaster
Management Authority has issued various orders from
time to time to take effective measures found
required at the relevant point of time to contain the
spread of COVID-19 in the country. The Chairperson
of National Executive Committee has issued several
guidelines from time to time. National Disaster
Management Authority has, in order to create
preparedness with regard to any contingent biological
disaster, has framed the “National Disaster
Management Guidelines Management of Biological
Disasters”. National Disaster Management Authority
has framed broad template for State level and
District level for contingency plan for COVID-19.
17
The Nodal Ministry, i.e., Ministry of Health and
Family Welfare has issued a “Cluster Containment Plan
for COVID-19” on 02.03.2020, which was further
updated on 16.05.2020. Further instructions have
been issued from time to time including the guidance
documents. The Ministry of Health and Family Welfare
has approved the India COVID-19 Emergency Response
and Health Systems Preparedness Package of Rs.15000
crores, which seeks to support States/Union
Territories in various aspects of management of the
COVID Pandemic and provides support for establishment
of COVID dedicated facilities for treatment of COVID19 cases including for critical care, enhancement in
testing capacities, engagement and training of
necessary human resources and procurement of
essential equipment and protective gear for the
health care personnel engaged in COVID-19 duties etc.
With regard to minimum standards of relief, the
counter affidavit refers and relies on guidelines on
Minimum Standards of Relief under Section 12, which
18
has been brought on record as Annexure R-7. The
Counter affidavit also outlines various steps taken
by Health Ministry as well as the Government of
India.
15. Replying the averments in the writ petition
regarding PM CARES Fund and NDRF, the counter
affidavit pleads that there are several funds which
are either established earlier or now for carrying
out various relief works. PM CARES Fund is one of
such funds with voluntary donations. Affidavit
further states that there exist a NDRF which would
not prohibit creation of a different fund like PM
CARES fund which provides for voluntary donations.
The directions prayed in the writ petition for
transfer of funds received in PM CARES Fund in the
NDRF are non-maintainable.
16. Shri Dushyant Dave, learned senior counsel
appearing for the petitioner referring to the
pleadings of the petitioner made in the writ petition
19
contends that Centre was obliged to prepare a
National Plan for Disaster Management specifically
for COVID-19. Shri Dave does not dispute that
National Plan under Section 11 has been framed in
November, 2019 but he submits that said Plan is
neither comprehensive nor covers management of
pandemic, i.e., COVID-19. Shri Dave submits that
power given in a Statute is to be exercised in the
same manner. Shri Dave further submits that there is
a serious problem in implementing the National Plan,
2019. Shri Dave has taken us to certain portion of
Plan of November, 2019, which has been filed as
Annexure – P-2 to the writ petition. Shri Dave
submits that only paragraph 7.15 deals with
biological and public health emergencies but Plan
does not contemplate giving any financial relief.
Shri Dave submits that unless there is a National
Plan for COVID-19, effective measures cannot be taken
to contain COVID-19. Referring to Section 46 of the
Act, 2005, Shri Dave submits that NDRF having been
20
constituted by Central Government, all amount given
by individuals and organisations for disaster should
have been credited in NDRF. He submits that PM CARES
Fund should not have been constituted when NDRF is
already in place to take care of disasters. Shri
Dave submits that there is no provision in 2019 Plan
to give fund to NDRF. Referring to Operational
Guidelines for Constitution and Administration of the
National Disaster Response Fund at page 129 of the
writ petition, Shri Dave submits that paragraph 5.5
provides that contribution made by the persons or
institutions for the purpose of disaster management
to be credited in the NDRF, which clause 5.5 has been
omitted in the subsequent Operational Guidelines for
Constitution and Administration of the National
Disaster Response Fund filed at page 154, which is
recent guidelines. By deletion of clause 5.5 now
contribution by any person or institution for the
purpose of disaster management to the NDRF is not
permissible. Shri Dave submits that petitioners have
21
no reason to doubt the bonafide of PM CARES Fund but
by creating PM CARES Fund the NDRF is being
circumvented. What cannot be done directly cannot be
done indirectly. Although, NDRF is audited by CAG,
the PM CARES Fund is audited by only private
auditors.
17. Shri Tushar Mehta, learned Solicitor General
refuting the submissions of the counsel for the
petitioners submits that reliefs (i) and (ii) made in
the writ petition has become infructuous since
National Plan has already been prepared under Section
11, which has been referred to in the counter
affidavit and relevant extract of the Plan has
already been brought on record as Annexure R-1 along
with counter affidavit. He submits that insofar as
the guidelines for minimum standards of reliefs are
concerned, there are guidelines in existence, which
has been brought on record by the counter affidavit,
which covers all disasters including COVID-19. Shri
22
Mehta submits that Plan – November, 2019 along with
the powers given in the Act, 2005 contains several
measures to contain the spread of COVID-19 and no
separate National Plan is required for COVID-19.
18. Shri Tushar Mehta submits that a National
Disaster Response Fund has been created as stipulated
under Section 46 of Act, 2005, which consist of fund
in the form of budgetary provisions made by the
Central Government in National Disaster Response
Fund. He submits that the existence of National
Disaster Response Fund, which is a statutory fund,
neither prevents creation of any public charitable
trust receiving voluntary donation nor can remotely
mean that the amount received in all such voluntary
funds should go in the statutory fund created under
Section 46. National Disaster Response Fund and PM
CARES Fund being distinct and separate, there is no
occasion for any direction to transfer the amount of
PM CARES Fund to the National Disaster Response Fund.
23
19. We have heard the learned counsel for the parties
and perused the record. Applications for intervention
are rejected.
20. The respondent in its affidavit has raised
contention/objection regarding the locus standi of
the petitioner. It is, inter alia, contended that
there cannot be a permanent body existing only for
filing public interest litigations. Shri Tushar
Mehta, learned Solicitor General, however, pointed
out that at the outset, in the facts of the present
case, he would rather like to assist the Hon’ble
court on merits and requested that the question of
locus standi of the petitioner which, according to
him is a very serious question, be left open to be
raised and decided in other proceedings. We have,
therefore, heard the parties on merits, keeping the
aforesaid question open, to be heard and decided in
an appropriate proceeding.
24
21. From the submissions of the learned counsel for
the parties and the pleadings on record, following
questions arise for consideration in this writ
petition: -
I) Whether the Union of India under Section 11 of
Act, 2005, is obliged to prepare, notify and
implement a National Disaster Management Plan
specifically for pandemic COVID-19
irrespective of National Disaster Management
Plan notified in November, 2019?
II) Whether the Union of India is obliged to lay
down the minimum standards of relief under
Section 12 of Act, 2005, for COVID-19
irrespective of earlier guidelines issued
under Section 12 of the Act, 2005 laying down
the minimum standards of relief?
III) Whether Union of India is obliged to utilise
National Disaster Response Fund created under
25
Section 46 of the Act for the purpose of
providing assistance in the fight of COVID-19?
IV) Whether all the contributions/grants from
individuals and institutions should be
credited to the NDRF in terms of Section 46(1)
(b) of the Act rather than to PM CARES Fund?
V) Whether all the funds collected in the PM CARES
Fund till date be directed to be transferred to
the NDRF?
QUESTION NO.I
I) Whether the Union of India under Section 11 of
Act, 2005, is obliged to prepare, notify and
implement a National Disaster Management Plan
specifically for pandemic COVID-19 irrespective
of National Disaster Management Plan notified in
November, 2019?
22. The Act, 2005, has been enacted for the effective
management of Disasters and for matters connected
therewith or incidental thereto. Section 3 of the
Act constitutes National Disaster Management
Authority with the Prime Minister of India as the
26
Chairperson, ex-officio. Section 6 enumerates the
powers and functions of National Authority. As per
Section 6 sub-Section (2)(b), National Disaster
Management Authority (hereinafter referred to as
National Authority) is to approve the National Plan.
Under Section 7, the National Authority may
constitute an advisory Committee consisting of
experts in the field of Disaster Management to make
recommendations on different aspects of Disaster
Management. Under Section 8, the Central Government
is to constitute a National Executive Committee to
assist the National Authority in the performance of
its functions under the Act. Section 11 of the Act
deals with National Plan, which provision is to the
following effect: -
 “11. National Plan –(1) There shall be
drawn up a plan for disaster management
for the whole of the country to be called
the National Plan.
(2) The National Plan shall be
prepared by the National Executive
Committee having regard to the National
Policy and in consultation with the State
Governments and expert bodies or
27
organizations in the field of disaster
management to be approved by the National
Authority.
(3) The National Plan shall include –
(a) measures to be taken for
the prevention of disasters,
or the mitigation of their
effects;
(b) measures to be taken for
the integration of mitigation
measures in the development
plans;
(c) measures to be taken for
preparedness and capacity
building to effectively
respond to any threatening
disaster situations or
disaster;
(d) roles and responsibilities
of different Ministries or
Departments of the Government
of India in respect of
measures specified in clauses
(a), (b) and (c).
(4) The National Plan shall be
reviewed and updated annually.
(5) Appropriate provisions shall be
made by the Central Government for
financing the measures to be carried out
under the National Plan.
(6) Copies of the National Plan
referred to in sub-sections (2) and (4)
shall be made available to the Ministries
or Departments of the Government of India
28
and such Ministries or Departments shall
draw up their own plans in accordance with
National Plan.”

23. As noted above, the first National Plan under
Section 11 was framed in the year 2016, which was
revised and the National Plan was prepared and
notified in November, 2019. Extract of National
Disaster Management Plan of November, 2019 has been
brought on record both by the petitioner as
Annexure-P2 to the writ petition as well as by the
respondent as Annexure-R1 to the preliminary counter
affidavit.
24. We may notice certain relevant portions of the
Plan, 2019 to answer the question which is up for
consideration. The Plan, 2019 under heading
‘Executive Summary’ states: -
“...The National Disaster Management
Plan (NDMP) provides a framework and
direction to the government agencies for
all phases of disaster management cycle.
The NDMP is a “dynamic document” in the
sense that it will be periodically
improved keeping up with the emerging
global best practices and knowledge base
29
in disaster management. It is in
accordance with the provisions of the DM
Act, 2005, the guidance given in the
National Policy on Disaster Management
(NPDM) 2009, and the established national
practices...”
25. In the Executive summary itself, while noticing
the changes introduced, the Plan states that new
sections have been added relating to several hazards
including “Biological and Public Health
Emergencies”. The Plan, 2019 provides a framework
and directions to the Government Agencies for all
phases of Disaster Management. The Plan is a dynamic
document in the sense that it was to be periodically
improved, keeping up with the best practices and
knowledge based in Disaster Management. The Plan
provides a framework covering all aspects of
Disaster Management. It covers Disaster Risk
Reduction, mitigation, preparedness, response,
recovery and building back better. It recognizes
that effective Disaster Management necessitates a
comprehensive framework encompassing multiple
30
hazards. Paragraph 1.4 of the Plan under the heading
‘Legal Mandate’ states: -
“1.4. Legal Mandate
Section 11 of the DM Act 2005 mandates
that there shall be a National Disaster
Management Plan (NDMP) for the whole of
India. The NDMP complies with the National
Policy on Disaster Management (NPDM) of
2009 and conforms to the provisions of the
DM Act making it mandatory for the various
central ministries and departments to have
adequate DM plans. While the NDMP will
pertain to the disaster management for the
whole of the country, the hazard-specific
nodal ministries and departments notified
by the Government of India will prepare
detailed DM plans specific to the disaster
assigned. As per Section 37 of the DM Act,
every ministry and department of the
Government of India, be it hazard-specific
nodal ministries or not, shall prepare
comprehensive DM plans detailing how each
of them will contribute to the national
efforts in the domains of disaster
prevention, preparedness, response, and
recovery.
As per the mandate of the DM Act, the
NDMP assigns specific and general
responsibilities to all ministries and
departments for disaster management. The
DM Act enjoins the NDMP to assign
necessary responsibilities to various
ministries to support and implement the
plan. Therefore, it is incumbent on all
ministries to accept all the implicit and
explicit responsibilities mentioned in the
31
NDMP even if they are beyond what are
explicitly mentioned in the normal rules
of business. Disaster management requires
assumption of responsibilities beyond the
normal functioning. The NDMP will be
complemented by separate contingency
plans, SOPs, manuals, and guidelines at
all levels of the multi-tiered governance
system.”
26. The above part of the Plan categorically states
that the Plan will be complemented by several
contingency plans, Standard Operating Procedures
(SOPs), Manuals and Guidelines at all levels of the
multi-tiered governance system. Paragraph 1.13 deals
with ‘types of Disasters’. Paragraph 1.13.1,
‘Natural Hazards’ have been enumerated in five major
categories. Sub-category (5) is to the following
effect:-
“1.13.1 Natural Hazards
1)...
5)Biological Process or phenomenon
or organic origin or conveyed by
biological vectors, including exposure
to pathogenic micro-organisms, toxins
and bioactive substances that may cause
loss of life, injury, illness or other
health impacts, property damage, loss
of livelihoods and services, social and
32
economic disruption or environmental
damage.”
27. Under Table 1-1, ‘Categories of Natural Hazards’
have been detailed. Item (5) of the Table 1-1 is to
the following effect: -
“Table 1-1: Categories of Natural Hazards
Family Main
Event
Short
Description/
Secondary
Disaster
1 Geophysical
2 Hydrological
3 Meteorological
4 Climatological
5 Biological Exposure to
germs and
toxic
substances
 Epidemics:
Viral,
bacterial
parasitic,
fungal, or
prion
infections
 Insect
infestatio
ns
 Animal
stampedes
28. Table 1-3, provides for ‘Nodal Ministry for
Management/Mitigation of Different Disasters’ with
regard to Biological Emergencies, Nodal Ministry is
33
notified as Ministry of Health and Family
Welfare(MoHFW). Under paragraph 2.2.3.3, Biological
and Public Health Emergencies have been dealt with.
The First paragraph of the above is as follows:-
“...Disasters related to this subgroup are biological emergencies and
epidemics, pest attacks, cattle epidemics
and food poisoning. Biological emergency
is one caused due to natural outbreaks of
epidemics or intentional use of biological
agents (viruses and microorganisms) or
toxins through dissemination of such
agents in ways to harm human population,
food crops and livestock to cause
outbreaks of diseases. This may happen
through natural, accidental, or deliberate
dispersal of such harmful agents into
food, water, air, soil or into plants,
crops, or livestock. Apart from the
natural transnational movement of the
pathogenic organisms, their potential use
as weapons of biological warfare and
bioterrorism has become far more important
now than ever before. Along with nuclear
and chemical agents, many biological
agents are now considered as capable of
causing large-scale mortality and
morbidity...”
29. Paragraphs 6 and 7 deals with “Building Disaster
Resilience - Responsibility Framework, Part A and B”.
Dealing with Biological and Public Health Emergencies
34
in paragraph 7.15, following are the sub-heads under
the paragraph: -
“7.15 Biological and Public Health
Emergencies (BPHE)
7.15.1 Understanding Risk
7.15.2 Inter-Agency Coordination
7.15.3 Investing in DRR–Structural
Measures
7.15.4 Investing in DRR- Non-structural
Measures
7.15.5 Capacity Development
7.15.6 Climate Change Risk Management”
30. A detailed chart has been prepared under
paragraph 7.15 in five parts and it shall be useful
to notice the only first portion of paragraph 7.15.1,
item 1, which is to the following effect: -
“7.15.1 Understanding Risk
Biological & Public Health Emergencies (BPHE)
Sub-Thematic
Area for DRR
Central/State Agencies and their Responsibilities
Centre# Responsibility
- Centre
State# Responsibility
-State
35
1.
Observation
Networks,
Information
Systems,
Monitoring,
Research,
Forecasting,
Early Warning
and
Zoning/Mapping
MHFW*
(NCDC),
MAFW, MHA,
MOD, MOES,
MOEFCC, MOR,
MLBE, MEITY,
NDMA
Recurring/
Regular(RR)
 Support for
training
 Extend
technical
support
Medium Term(T2)
 Establishment
of Early
Warning System
 Strengthening
IDSP and early
warning systems
at regional
levels
 Epidemiological
disease mapping
 Health
facilities
mapping
HFWD*,
DMD$,
SDMA, RD,
DRD, UDD,
DWSD,
EDD, PD,
EFD, AHD,
WCD,
PRI/ULB,
SLRTI,
DDMA
Recurring/
Regular(RR)
Maintaining
preventive
measures as per
norms
Short Term(T1)
Strengthening
integrated health
surveillance
systems
Medium Term(T2)
 Establishing and
maintain
community-based
network for
sharing alerts
 Strengthening
IDSP
Long Term(T3)
States should,
modify or adapt
IMD’s warning
system according
to thresholds
applicable in each
state
31. The other items apart from item (1) as noticed
above in paragraph 7, which are relevant is as
follows:-
Biological & Public Health Emergencies (BPHE)
Sub-Thematic
Area for DRR
Central/State Agencies and their Responsibilities
Centre# Responsibility -
Centre
State# Responsibility
-State
36
2. Hazard Risk
Vulnerability
and Capacity
Assessment
(HRVCA)
MHFW*,
MAFW*, MHA,
MOD, MOES,
MOEFCC,
MSJE, NDMA
Recurring/
Regular (RR)
• Promote studies,
documentation
and research
• Provide Training
& Technical
support
• Studies on
vulnerabilities
and capacities
covering
social,
physical,
economic,
ecological,
gender, social
inclusion and
equity aspects
Short-Term (T1)
Develop guidelines
HFWD,
DMD$,
SDMA,
DRD,
UDD,
DWSD,
EFD,
AHD,
WCD,
DSJE,
PRI,
ULB,
SLRTI,
DDMA
Recurring/
Regular (RR)
 Updating HRVCA
 Identifying
the vulnerable
population/
communities/
settlements
 Identification
of groups
requiring
special
attention
 Conduct audit
of equipment
and hu man
resource
requirements
Short term(T1)
Constitute/
strengthen the
mechanisms for
consultation with
experts and
stakeholders
3 Dissemination
of warnings,
data &
information
MHFW, MHA,
MOD, MOES,
MAFW,
MOEFCC,
NDMA
Recurring/
Regular (RR)
 Support for
organising
training
 Extend technical
support
HFWD*,
DMD$,
SDMA,
DRD,
UDD,
DWSD,
EDD,
PD,
EFD,
AHD,
WCD,
PRI,
ULB,
SLRTI,
DDMA
Short Term (T1)
 Create
awareness
preventive
measures
 Extensive IEC
campaigns to
create
awareness
through print,
electronic and
social media
Medium Term (T2)
Specific messages
for highly
vulnerable groups
such as elderly,
young children,
outdoor workers
and slum
37
residents
4 Disaster Data
Collection
and
Management
MHA* ,
MOSPI, all
ministries/
depts.
Recurring/
Regular (RR)
Systematic data
management of data
on disaster damage
and loss
assessments
Short Term (T1)
Disaster Damage and
Losses 2005-2015
baseline
DMD$,
SDMA,
all
depts.
Recurring/
Regular (RR)
Systematic data
management of
data on disaster
damage and loss
assessments
Short Term (T1)
Disaster Damage
and Losses 2005-
2015 baseline
Notes: (#) Every ministry, department or agency of
the government – central and state – not specifically
mentioned will also have both direct and indirect
supporting role depending on the disaster, location
and context. (*) The ministry, department or agency
with this symbol has or is deemed to have a nodal or
lead role, while others mentioned have a direct or
explicit supporting role. ($) DMD —Disaster
Management Department: The state government
department acting as the nodal department for
disaster management, which is not the same in every
state/UT.
32. Paragraph 7.15.2 deals with inter-agency
coordination in these items. Paragraph 7.15.3 deals
with investing in DRR – Structural measures.
Paragraph 7.15.4 deals with investing in DRR – Nonstructural measures. Paragraph 7.15.5 deals with
capacity development. Paragraph 7.15.6 deals with
climate change risk management. The plan, thus,
38
contains detailed treatment of Biological and Public
Health Emergencies as noticed above, which have been
detailed at pages 117 to 130 of the Annexure-R1 of
the counter affidavit. All aspects of Biological and
Public Health Emergencies have been, thus, dealt in
systematic and planned manner. The Plan of 2019 in
different paragraphs deals with entire framework.
33. The submission which has been pressed by
petitioner is that despite existence of Plan, 2019,
there has to be specific Plan dealing with COVID-19,
hence, Union of India may be directed to prepare a
National Plan under Section 11 for COVID-19. Section
11 of the Act provides that there shall be a plan for
Disaster Management for the whole of the Country.
Sub-Section (3) of Section 11 requires that the
National Plan shall include: -
“11.(3) The National Plan shall include-
(a) measures to be taken for the
prevention of disasters, or the
mitigation of their effects;
39
(b) measures to be taken for the
integration of mitigation measures
in the development plans;
(c) measures to be taken for
preparedness and capacity building
to effectively respond to any
threatening disaster situations or
disaster;
(d) roles and responsibilities of
different Ministries or Departments
of the Government of India in
respect of measures specified in
clauses (a), (b) and (c). ”
34. The object and purpose of preparing a National
Plan is to cope up and tackle with all conceivable
disasters which the country may face. When the
measures have to be taken for preparedness and
capacity building to effectively respond to any
threatening disaster situation, the section does not
contemplate preparation of Plan after a disaster has
occurred.
35. National Plan and guidelines as contemplated by
the statute for Disaster Management is by its very
nature prior to the occurrence of any disaster and as
40
a measure of preparedness. It is not conceivable that
a National Plan would be framed after the disaster
has occurred. A National Plan encompasses and
contemplate all kinds of disasters.
36. As noticed above, Biological and Public Health
Emergencies has already been contemplated in the
National Plan, 2019, which as noticed in table 1-1
under paragraph 1.13.1 specifically includes
epidemics: Viral, Bacterial, Parasitic, Fungal and
prion infections. Novel Coronavirus is an epidemic
which has become a pandemic. Epidemics of different
nature and extent have taken place in this country as
well as other countries of the world. A pandemic is
an epidemic, i.e., spread over multiple countries/
continents. An epidemic, as a disaster has been known
and recognized throughout the world with which most
of the countries are infected time and again. As
noticed above, Plan-2019 is complemented by several
41
plans, Standard Operating Procedures (SOPs), Manuals,
Guidelines at all levels of the Government.
37. The National Disaster Management Authority,
Government of India, had issued National Disaster
Management Guidelines in July, 2008 on subject
“Management of Biological Disasters”. The guideline
specifically notices that “Biological Disasters”
might be caused by epidemics, the guidelines states:-
“Biological disasters might be caused by
epidemics, accidental release of virulent
microorganism(s) or Bioterrorism (BT) with
the use of biological agents such as
anthrax, smallpox, etc. The existence of
infectious diseases has been known among
human communities and civilisations since
the dawn of the history. The Classical
literature of nearly all civilisations
record the ability of major infections to
decimate populations, thwart military
campaigns and unsettle nations. Social
upheavals caused by epidemics have
contributed in shaping history over the
ages...”
38. Thus, the National Disaster Management Authority
was well aware of the epidemics and had issued
42
guidelines in the year 2008 itself which has been
further detailed in Plan-2019. All aspects of the
epidemics, all measures to contain an epidemic,
preparedness, response, mitigation have been
elaborately dealt in Plan, 2019. Unless the National
Plan as contemplated under Section 11 contains all
aspects of disaster including the Biological and
Public Health Emergencies, it will not be possible
for the Governments to immediately respond and
contain an epidemic.
39. The Disaster Management Act, 2005 contain ample
powers and measures, which can be taken by the
National Disaster Management Authority, National
Executive Committee and Central Government to prepare
further plans, guidelines and Standard Operating
Procedure (SOPs), which in respect to COVID-19 have
been done from time to time. Containment Plan for
Novel Coronavirus, 2019 has been issued by Ministry
of Health and Family Welfare, Government of India,
43
copy of which updated up to 16.05.2020 has been
brought on record as Annexure-R4. There are no lack
of guidelines, SOPs and Plan to contain COVID-19, by
Nodal Ministry and Annexure R-6 has been brought on
record issued by Ministry of Health and Family
Welfare, Government of India, i.e., Updated
Containment Plan for Large Outbreaks Novel
Coronavirus Disease, 2019 (COVID-19).
40. National Executive Committee as well as Nodal
Ministry has issued guidelines and orders from time
to time to regulate all measures to contain COVID-19.
The petitioners are not right in their submissions
that there is no sufficient plan to deal with COVID19 pandemic. COVID-19 being a Biological and Public
Health Emergency, which has been specifically covered
by National Plan, 2019, which is supplemented by
various plans, guidelines and measures, there is no
lack or dearth of plans and procedures to deal with
COVID-19.
44
41. We may also notice that this Court in Gaurav
Kumar Bansal Vs. Union of India and Others, (2017) 6
SCC 730, has noticed that National Plan under Section
11 has already been approved by National Disaster
Management Authority. In paragraph 7 of the judgment,
following was laid down: -
“7. It was further pointed out that a
National plan has been approved and placed
on the website of NDMA in terms of Section
11 of the Act and the guidelines for
minimum standards of relief under Section
12 of the Act have also been placed on the
website of NDMA.”
42. In view of above discussion, we do not find any
merit in the claim of the petitioner that Union of
India be directed to prepare a National Plan under
Section 11 for COVID-19. National Plan, 2019 have
already been there in place supplemented by various
orders and measures taken by competent authorities
under Disaster Management Act, 2005, there is no
occasion or need to issue any direction to Union of
45
India to prepare a fresh National Plan for COVID-19.
We, thus, hold that Union of India is not obliged to
prepare, notify and implement a fresh National
Disaster Management Plan for COVID-19.
QUESTION NO.II
II) Whether the Union of India was obliged to lay
down the minimum standards of relief under
Section 12 of Act, 2005, for COVID-19
irrespective of earlier guidelines issued under
Section 12 of the Act laying down the minimum
standards of relief?
43. Section 12 of the Act, deals with guidelines for
Minimum Standards of Relief. Section 12 is as
follows:-
“12. Guidelines for minimum standards of
relief. —The National Authority shall
recommend guidelines for the minimum
standards of relief to be provided to
persons affected by disaster, which shall
include, —
(i) the minimum requirements to
be provided in the relief
camps in relation to
shelter, food, drinking
water, medical cover and
sanitation;
46
(ii) the special provisions to
be made for widows and
orphans;
(iii) ex gratia assistance on
account of loss of life as
also assistance on account
of damage to houses and for
restoration of means of
livelihood;
(iv) such other relief as may be
necessary.”
44. The petitioner’s case as noticed above is that
the Centre should come up with detailed guidelines
under Section 12(ii) and (iii) of Disaster Management
Act, 2005, recommending special provisions to be made
for widows and orphans and ex-gratia assistance to be
provided to the kith and kin of those losing life
because of COVID-19 infections but also as a result
of harsh lockdown restrictions. It is submitted that
there are no guidelines providing for minimum
standards for COVID-19. The above claim of the
petitioner is refuted by the respondents. The
respondents have brought on record the guidelines of
minimum standards of relief under Section 12 as
47
existing prior to COVID-19, which has been filed as
Annexure-R7 to the counter affidavit. The guidelines
filed as Annexure-R7 deals with
(i) definition of Relief and Rehabilitation
Camp,
(ii) Minimum standards in respect of Shelter in
relief camps,
(iii) Minimum Standards in respect of Food in
relief camps,
(iv) Minimum Standards in respect of Water in
relief camps,
(v) Minimum Standards in respect of Sanitation
in relief camps,
(vi) Minimum Standards in respect of medical
cover in relief camps and
(vii) Minimum Standards of Relief for Widows and
Orphans.
45. The guidelines brought on record under AnnexureR7, which were in existence since before declaration
48
of COVID-19 pandemic, covers all statutory
requirement as enumerated in Section 12. Section 12
contemplates minimum standards of relief to be
provided to persons affected by disaster. The word
‘disaster’ mentioned in Section 12 encompasses all
the disasters including the present disaster. Section
12 does not contemplate that there shall be different
guidelines for minimum standards of relief for
different disasters.
46. The uniform guidelines are contemplated so that
persons affected by disaster are provided with
minimum requirement in the relief camps in respect of
shelter, food, drinking water, medical cover and
sanitation and other reliefs as contemplated in the
section. There being already guidelines for minimum
standards in place even before COVID-19, the said
guidelines for minimum standards holds good even for
those who are affected by COVID-19. Section 12 does
not contemplate that afresh guidelines for the
49
minimum standards of relief be issued with regard to
COVID-19. The prayer of the petitioner to direct the
Union of India to issue fresh guidelines under
Section 12 to be provided to persons infected with
COVID-19 is misconceived.
47. The Government of India vide order dated
14.03.2020 has decided to treat COVID-19, the
pandemic, as a notified disaster for the purpose of
providing assistance under State Disaster Response
Fund, norms of assistance for ex-gratia payment to
families of deceased persons, norms of assistance for
COVID-19 positive persons requiring hospitalization
and some other assistance to be provided from State
Disaster Response Fund have been notified by the
Government of India.
48. In view of the foregoing discussions, we hold
that Union of India is not obliged to lay down
minimum standards of relief under Section 12 of the
50
Act, 2005 for COVID-19 and the guidelines issued
under Section 12 providing for minimum standards of
relief holds good for pandemic COVID-19 also.
QUESTION NOS. 3, 4 AND 5
III) Whether Union of India is obliged to utilise
National Disaster Response Fund created under
Section 46 of the Act for the purpose of
providing assistance in the fight of COVID-19?
IV) Whether all the contributions/grants from
individuals and institutions should be
credited to the NDRF in terms of Section 46(1)
(b) of the Act rather than PM CARES Fund?
V) Whether all the funds collected in the PM
CARES Fund till date be directed to be
transferred to the NDRF?
49. All the three questions being inter-related are
taken together. The submissions of the petitioner
centre around National Disaster Response Fund (NDRF)
and PM CARES Fund. We need to notice the nature and
character of these funds for appreciating the
submissions made by the learned counsel for the
parties. Chapter IX of the Disaster Management Act,
2005 deals with Finance, Accounts and Audit. Section
51
46 provides for National Disaster Response Fund.
Section 46 reads:
“46. National Disaster Response Fund.—(1)
The Central Government may, by
notification in the Official Gazette,
constitute a fund to be called the
National Disaster Response Fund for
meeting any threatening disaster situation
or disaster and there shall be credited
thereto—
(a) an amount which the Central
Government may, after due
appropriation made by
Parliament by law in this
behalf provide;
(b) any grants that may be made by
any person or institution for
the purpose of disaster
management.
(2) The National Disaster Response
Fund shall be made available to the
National Executive Committee to be applied
towards meeting the expenses for emergency
response, relief and rehabilitation in
accordance with the guidelines laid down
by the Central Government in consultation
with the National Authority.”
50. The Central Government by notification dated
27.09.2010 which was published in Gazette
Extraordinary on 28.09.2010 issued under sub-Section
52
(1) of Section 46 of Act, 2005 constituted “National
Disaster Response Fund”. The notification dated
27.09.2010 reads:
“MINISTRY OF HOME AFFAIRS
NOTIFICATION
New Delhi, the 27th September, 2010
s.O.2346(E).- In exercise of the
powers conferred by sub-section (1) of
Section 46 of the Disaster Management Act,
2005 (53 of 2005), the Central Government
hereby constitutes the National Disaster
Response Fund (hereinafter NDRF) for
meeting any threatening disaster situation
or disaster.
[F.No.32-3/2010-NDM-I]
R.K.SRIVASTAVA, Jr. Secy.”
51. Ministry of Home Affairs (Disaster Management
Division) has issued guidelines on Constitution and
Administration of the National Disaster Response Fund
(NDRF). Section 46(1) as noted above contemplates
crediting of two kind of amounts, i.e., (a) an amount
which the Central Government may, after due
appropriation made by Parliament by law in this
53
behalf provide; and (b)any grants that may be made by
any person or institution for the purpose of disaster
management.
52. The guidelines for constitution and
administration of NDRF have been brought on record by
the petitioner at page 129 of the writ petition. The
guidelines came into force with effect from financial
year 2010-11. Paragraph 3.1 enumerated the calamities
covered under NDRF. Paragraph 3.1 is as follows:
“3.1 Natural calamities of cyclone,
drought, earthquake, fire, flood, tsunami,
hailstorm, landslide, avalanche, cloud
burst and pest attack considered to be of
severe nature by Government of India and
requiring expenditure by a State
Government in excess of the balances
available in its own State Disaster
Response Fund (SDRF), will qualify for
immediate relief assistance from NDRF.”
53. Paragraph 5 of the guidelines deals with
contribution to the NDRF. Paragraphs 5.1 to 5.5 are
as follows:
“5.1 The closing balance of the NCCF at
the end of financial year 2009-10 shall be
54
the opening balance of the NDRF in the
year 2010-11.
5.2 Funds will be credited into the NDRF
in accordance with the provisions of the
Disaster Management Act, 2005.
5.3 The budget provision for transferring
funds to the NDRF as mentioned in para 5.2
above shall be made in the Demand for
grants no. 35- “Transfers to State and UT
Governments” (under non-plan provision).
Releases to State Governments will be made
by the Ministry of Finance from this
provision.
5.4 During the years 2010-15 transfers to
the NDRF established in the Public Account
of India will be made by operating the
following heads of account: Major Head
“2245-Relief on account of Natural
Calamities – 80- General-797-Transfers to
Reserve Funds and Deposit Account’-
Transfer to National Disaster Response
Fund.
5.5 Contributions made by any person or
institution for the purpose of disaster
management will also be credited to the
NDRF. Modalities covering such
contributions will be prescribed in due
course.”
55
54. Paragraph 7.1 of the guidelines deals with
assessment of relief assistance from the NDRF.
Paragraph 7.1 is as follows:
“7.1 Upon a request made by a State not
having adequate balance in its State
Disaster Response Fund (SDRF), Ministry of
Home Affairs or the Ministry of
Agriculture, as the case may be, will
assess whether a case for additional
assistance from NDRF is made out under
these guidelines and the approved items
and norms of assistance under NDRF/SDRF.
The following procedure will be adopted
for making such assessment:
(i) The memorandum of the State
Government will be examined to
assess the likely requirement
of funds as per items and
norms of expenditure under
SDRF/NDRF. If the preliminary
examination reveals that there
are adequate funds in SDRF
with the State for providing
relief as per norms, the State
would be advised accordingly.
(ii) If the preliminary examination
reveals that the State is in
need of assistance, a Central
Team will be deputed for
making an on the spot
assessment.
56
(iii) The report of the Central Team
shall be examined by the
National Executive Committee
(NEC) constituted under
section 8 of the DM Act, 2005.
The NEC will assess the extent
of assistance and expenditure
which can be funded from the
NDRF, as per the norms of
NDRF/SDRF, and make
recommendations.
(iv) Based on the recommendations
of NEC, a High Level Committee
(HLC) will approve the quantum
of immediate relief to be
released from NDRF.”
55. The guidelines for administration of the NDRF
have been revised with effect from financial year
2015-16 which have been brought on record at page 154
of the writ petition. Paragraph 3.1 of the guidelines
is same as under guidelines for the financial year
2010-11. Paragraph 4.1 provides:
“4.1 The NDRF will be operated by the
Government of India for the purpose of
providing immediate relief to people
affected by the above mentioned calamities
which are assessed as being of ‘severe
nature’, following the procedure described
in para 7 of these guidelines. NDRF is
classified in the Public Account in the
57
sub-section (b) 'Reserve Funds not bearing
Interest' of the Government of India under
the major head 8235- ‘General and other
Reserve Funds' – 119- National Disaster
Response Fund”.
56. Paragraph 5 deals with contribution to the NDRF
and there are some changes in the guidelines in
paragraph 5. Paragraphs 5.1 to 5.4 of the new
guidelines are as follows:
“5.1 The closing balance of the NDRF at
the end of financial year 2014-15
shall be the opening balance of the
NDRF in the year 2015-16.
5.2 Funds will be credited into the NDRF
in accordance with the provisions of
the section 46 (a) & (b) of Disaster
Management Act, 2005.
5.3 The budget provision for transferring
funds to the NDRF as mentioned in para
5.2 above shall be made in the Demand
for grants no. 35- “Transfers to State
and UT Governments” (under non-plan
provision). Releases to State
Governments will be made by the
Ministry of Finance from this
provision.
58
5.4 During the years 2015-20 transfers to
the NDRF established in the Public
Account of India will be made by
operating the following heads of
account: Major Head “2245-Relief on
account of Natural Calamities – 80-
General-797-Transfers to Reserve Funds
and Deposit Account’-Transfer to
National Disaster Response Fund.”
57. The above is the scheme. As per paragraph 10 of
the new guidelines, expenditure from NDRF is meant to
assist a State to provide immediate relief in those
cases of severe calamity, where the expenditure
required is in excess of the balance in the State’s
SDRF. The NDRF is a statutory fund required to be
audited by the Comptroller & Auditor General of
India, which was constituted under Act, 2005 and is
still in existence for the purposes as enumerated in
the statute as well as in the guidelines issued under
Act, 2005.
58. We may now notice the PM CARES Fund. Petitioner
has brought on record certain details of PM CARES
Fund as Annexure-P13. The details about the PM CARES
59
Fund as brought on record as Annexure-P13 of the writ
petition are as follows:
“Keeping in mind the need for having a
dedicated national fund with the primary
objective of dealing with any kind of
emergency or distress situation, like
posed by the COVID-19 pandemic, and to
provide relief to the affected, a public
charitable trust under the name of ‘Prime
Minister’s Citizen Assistance and Relief
in Emergency Situations Fund’ (PM CARES
Fund)’ has been set up.
Click here to Donate Online.
Objectives :
• To undertake and support relief or
assistance of any kind relating to a
public health emergency or any other kind
of emergency, calamity or distress, either
man-made or natural, including the
creation or upgradation of healthcare or
pharmaceutical facilities, other necessary
infrastructure, funding relevant research
or any other type of support.
• To render financial assistance, provide
grants of payments of money or take such
other steps as may be deemed necessary by
the Board of Trustees to the affected
population.
• To undertake any other activity, which
is not inconsistent with the above
Objects.
60
Constitution of the Trust :
• Prime Minister is the ex-officio
Chairman of the PM CARES Fund and Minister
of Defence, Minister of Home Affairs and
Minister of Finance, Government of India
are ex-officio Trustees of the Fund.
• The Chairperson of the Board of Trustees
(Prime Minister) shall have the power to
nominate three trustees to the Board of
Trustees who shall be eminent persons in
the field of research, health, science,
social work, law, public administration
and philanthropy.
• Any person appointed a Trustee shall act
in a pro bono capacity.
Other details :
• The fund consists entirely of voluntary
contributions from individuals/
organizations and does not get any
budgetary support. The fund will be
utilised in meeting the objectives as
stated above.
• Donations to PM CARES Fund would qualify
for 80G benefits for 100% exemption under
the Income Tax Act, 1961. Donations to PM
CARES Fund will also qualify to be counted
as Corporate Social Responsibility (CSR)
expenditure under the Companies Act, 2013
• PM CARES Fund has also got exemption
under the FCRA and a separate account for
receiving foreign donations has been
opened. This enables PM CARES Fund to
61
accept donations and contributions from
individuals and organizations based in
foreign countries. This is consistent with
respect to Prime Minister’s National
Relief Fund (PMNRF). PMNRF has also
received foreign contributions as a public
trust since 2011.
CLICK HERE TO DONATE ONLINE”
59. From the above details, it is clear that PM CARES
Fund has been constituted as a public charitable
trust. After outbreak of pandemic COVID-19, need of
having a dedicated national fund with objective of
dealing with any kind of emergency or distress
situation, like posed by the COVID-19 pandemic, and
to provide relief to the affected, a fund was created
by constituting a trust with Prime Minister as an exofficio Chairman of PM CARES Fund, with other exofficio and nominated Trustees of the Fund. The PM
CARES Fund consists entirely of voluntary
contributions from individuals/organisations and does
not get any Budgetary support. No Government money is
credited in the PM CARES Fund.
62
60. After noticing constitution of NDRF as well as PM
CARES Fund now we may notice the contentions raised
by Shri Dave. The submission of Shri Dave is that the
earlier guidelines for administration of NDRF which
came into force with effect from financial year 2010-
11 have been modified by new guidelines with effect
from financial year 2015-16, and now it is not
possible for any person or institution to make
contribution to the NDRF. Shri Dave submits that
paragraph 5.5 of earlier guidelines has been deleted
to benefit the PM CARES Fund so that all
contributions by any person or institution should go
in the PM CARES Fund. Shri Dave submits that deletion
of paragraph 5.5 of earlier guidelines (at page 130)
in the new guidelines (at page 154-155) makes it
clear that now it is not possible for any person or
institution to make any contribution to NDRF.
61. There are two reasons for not accepting the above
submission. Firstly, paragraph 5.5 of earlier
guidelines which contemplated contributions by any
63
person or institution for the purpose of disaster
management to the NDRF are very much still there in
the new guidelines, which have come into force with
effect from financial year 2015-16. New guidelines
contain the same heading, i.e., “Contribution to the
NDRF” and guideline 5.2 provides “Funds will be
credited into the NDRF in accordance with the
provisions of the Section 46(1)(a) & (b) of the
Disaster Management Act, 2005.” The above guideline
5.2 specifically referred to Section 46(1)(a) & (b)
and Section 46(1)(b) expressly provides that any
grants that may be made by any person or institution
for the purpose of disaster management shall be
credited into the NDRF. The submission that after the
new guidelines, it is not possible for any person or
institution to make any contribution to the NDRF is,
thus, misconceived and incorrect. According to the
statutory provisions of Section 46 as well as new
guidelines enforced with effect from financial year
64
2015-16 any person or institution can still make
contribution to the NDRF.
62. Secondly, the PM CARES Fund has been constituted
in the year 2020 after outbreak of pandemic COVID-19
whereas the new guidelines came into force with
effect from 2015-16, on which date the PM CARES Fund
was not in existence, hence, the submission that new
guidelines were amended to benefit the PM CARES Fund
is wholly misconceived.
63. Another limb of submission of Shri Dave is that
although the Government of India vide its letter
dated 14.03.2020 has decided to treat COVID-19 as a
notified disaster for the purpose of providing
assistance under SDRF but no similar notification has
been issued for the purpose of providing assistance
for COVID-19 under NDRF. The notification dated
14.03.2020 has been brought on record as Annexure-P10
of the writ petition which reads as follows:
65
 “No.33-4/2020-NDM-I
Government of India
Ministry of Home Affairs
(Disaster Management Division)
C-Wing, 3rd Floor, NDCC-II
Jai Singh Road, New Delhi -110001
Dated 14.03.2020
To
The Chief Secretaries
 (All States)
Subject: Items and Norms of assistance
from the State Disaster Response
Fund (SDRF) in wake of COVID-19
Virus Outbreak
Sir/Madam
I am directed to refer this Ministry’s
letter No.32-7/2014 dated 8th April, 2015
on the above mentioned subject.
2. The Central Government, keeping in
view the spread of COVID-19 virus in India
and the declaration of COVID-19 as
pandemic by the World Health Organisation
(WHO), by way of a special one time
dispensation, has decided to treat it as a
notified disaster for the purpose of
providing assistance under SDRF. A list
of items and norms of assistance for
containment of COVID-19 Virus in India
eligible from SDRF is annexed.
Yours faithfully,
66
(Sanjeev Kumar Jindal)
Joint Secretary to Government of India
Tel: 23438096
Copy to AS(UT), MHA for making similar
provisions for utilization of UT Disaster
Response Funds by the Union Territories.
CC for information: PS to HM/MOS(N)/HS”
64. After issuance of the above notification, the
Government of India, Ministry of Home Affairs
(Disaster Management Division) issued order of
03.04.2020 on the subject: “Advance release of
Central share from State Disaster Risk Management
Fund (SDRMF) for the year 2020-21”. By the said order
the Central Government has released first instalment
of Rs. 11,092/- crores out of Rs.22,184/- crores
which was the Central Share of SDRMF. All States
have been allocated different amounts for the purpose
of providing assistance under SDRMF. Annexure to the
said notification is at page 161, which indicates
that maximum grant allocated was to the State of
Maharashtra as Rs.1,611/- crores as first instalment
67
and minimum amount to State of Goa, i.e., Rs.6/-
crores by the Centre. The notification dated
14.03.2020 clearly permits providing the assistance
under SDRMF for COVID-19. In event, any State
expenditure is in excess of the balance in the
State’s SDRMF, the State is entitled for the release
of fund from NDRF as it is clear from new guidelines
filed at pages 154 to 158 of the writ petition. The
submission of the petitioner that NDRF cannot be used
for any assistance for COVID-19, thus, cannot be
accepted.
65. There is one more aspect of the matter which
needs to be noted. When the Centre is providing
financial assistance to the State to take measures to
contain COVID-19, as we have noticed above that by
order dated 03.04.2020 first instalment of Rs.
11,092/- crores which is the Central Share to the
SDRMF has been given and there is nothing on record
that any State has exceeded the expenditure in excess
68
of the balance in the State’s SDRMF, there is no
occasion of asking more fund by the State from NDRF.
When the Central Government is providing financial
assistance to the States to contain COVID-19 it is
not for any PIL petitioner to say that Centre should
give amount from this fund or that fund. The
financial planning is in the domain of the Central
Government, which financial planning is made after
due deliberation and consideration. We, thus, do not
find any substance in the submission of the
petitioner that there is any statutory
restriction/prohibition in utilization of NDRF for
COVID-19. More so when sub-section (2) of Section 46
specifically provides that NDRF shall be made
available to the National Executive Committee to be
applied towards meeting the expenses for emergency
response, relief and rehabilitation in accordance
with the guidelines laid down by the Central
Government, the NDRF can be used for containment of
COVID-19.
69
66. Further as observed above, it is for the Central
Government to take the decision as from which fund
what financial measures are to be taken and it is
neither for PIL petitioner to claim that any
financial assistance be made from particular fund nor
this Court to sit in judgment over the financial
decisions of the Central Government.
67. The PM CARES Fund is a public charitable trust
and is not a Government fund. The charitable trusts
are public trusts. Black’s Law Dictionary, Tenth
Edition defines charitable trust in following words:
“charitable trust. A trust created to
benefit a specific charity, specific
charities, or the general public rather
than a private individual or entity.
Charitable trusts are often eligible for
favorable tax treatment.”
68. The mere fact that administration of the Trust is
vested in trustees, i.e., a group of people, will not
70
itself take away the public character of the Trust as
has been laid down in Mulla Gulam Ali & Safiabai D.
Trust Vs. Deelip Kumar & Co., (2003) 11 SCC 772. In
paragraph 4, this Court laid down:
“4. The mere fact that the control in
respect of the administration of the Trust
vested in a group of people will not
itself take away the public character of
the Trust……………………………..”
69. The contributions made by individuals and
institutions in the PM CARES Fund are to be released
for public purpose to fulfill the objective of the
trust. The PM CARES Fund is a charitable trust
registered under the Registration Act, 1908 at New
Delhi on 27.03.2020. The trust does not receive any
Budgetary support or any Government money. It is not
open for the petitioner to question the wisdom of
trustees to create PM CARES fund which was
constituted with an objective to extend assistance in
the wake of public health emergency that is pandemic
COVID-19.
71
70. Shri Dave during submissions has fairly submitted
that he is not questioning the bona fide of
constitution of PM CARES Fund. His submission is
that NDRF is audited by CAG but PM CARES Fund is not
audited by CAG rather by a private Chartered
Accountant. The nature of NDRF and PM CARES Fund are
entirely different. The guidelines issued under Act,
2005 with regard to NDRF specifically provides for
audit of the NDRF by the Comptroller & Auditor
General of India whereas for public charitable trust
there is no occasion for audit by the Comptroller &
Auditor General of India.
71. We may notice one more aspect with regard to
COVID-19. We have noticed above that guidelines which
were issued for constitution and administration of
NDRF and State’s SDRMF, the guidelines provided
utilization of fund for limited calamities, which did
not include any biological and public health
emergency. We have already noticed Clause 3.1 of
72
guidelines for administration of NDRF, which did not
provide for the calamities which cover the biological
and public health emergency. Thus, under the
guidelines which were in existence with effect from
financial year 2015-16 neither NDRF nor SDRF covered
the biological and public health emergencies. It was
only by notification dated 14.03.2020 that COVID-19
was treated as notified disaster for the purpose of
providing assistance under SDRF. Obviously prior to
this notification dated 14.03.2020 no contribution by
any person or institution in the NDRF could have been
made with respect to specified disaster, namely,
biological and public health emergency like COVID-19,
Outbreak of COVID-19 in India as well as other
countries of the World required immediate enhancement
in the infrastructure of medical health and creation
of fund to contain COVID-19. At this need of the hour
no exception can be taken to the constitution of a
public charitable trust, namely, PM CARES Fund to
73
have necessary financial resources to meet the
emergent situation.
72. The NDRF and PM CARES Fund are two entirely
different funds with different object and purpose. In
view of the foregoing discussions, we answer question
Nos.3, 4 and 5 in following manner:
Answer 3. The Union of India can very well
utilize the NDRF for providing assistance in the
fight of COVID-19 pandemic by way of releasing
fund on the request of the States as per new
guidelines.
Answer 4. Any contribution, grant of any
individual or institution is not prohibited to be
credited into the NDRF and it is still open for
any person or institution to make contribution to
the NDRF in terms of Section 46(1)(b) of the Act,
2005. The contribution by any person or by any
74
institution in PM CARES Fund is voluntary and it
is open for any person or institution to make
contribution to the PM CARES Fund.
Answer 5. The funds collected in the PM CARES
Fund are entirely different funds which are funds
of a public charitable trust and there is no
occasion for issuing any direction to transfer
the said funds to the NDRF.
73. In view of the foregoing discussions, the prayer
‘a’ and ‘b’ made in the writ petition are refused.
With respect to prayer ‘c’, we make it clear (i) that
there is no statutory prohibition for the Union of
India utilizing the NDRF for providing assistance in
the fight of COVID-19 in accordance with the
guidelines issued for administration of NDRF; (ii)
there is no statutory prohibition in making any
contribution by any person or institution in the NDRF
as per Section 46(1)(b)of the Act, 2005.
75
74. The prayer of the petitioner to direct all the
funds collected in the PM CARES Fund till date to be
transferred to the NDRF is refused.
75. Subject to clarification of law as made above,
the writ petition is dismissed.
......................J.
 ( ASHOK BHUSHAN )
......................J.
 ( R. SUBHASH REDDY )
......................J.
 ( M.R. SHAH )
New Delhi,
August 18, 2020.