The Comptroller and Auditor General (CAG) brought attention to a serious illegality committed by Andhra Pradesh, and the Supreme Court ruled on Monday that money intended for disaster relief cannot be diverted by states to other accounts.


The Supreme Court noted on Monday that money from the State Disaster Response Fund (SDRF) cannot be diverted or used for any other purpose and that it would be appropriate to return the diverted amount to the SDRF while hearing a petition alleging that the State of Andhra Pradesh had transferred funds from the SDRF, from which ex-gratia compensation is being paid to the kin of those who have lost their lives to COVID-19, to its personal deposit (PD) account.


The bench, which was made up of Justices M.R. Shah and B.V. Nagarathna, was first informed by the Additional Solicitor General, Ms. Aishwarya Bhati, that although there was no diversion, there was some rule violation for which a penalty would be imposed.

The State of Andhra Pradesh was represented by senior attorney Mr. R. Basant, who informed the bench that no deviations had been made besides the one in 2018 for drought relief. He continued, “However, the same was not utilized, and the money is lying in the Commissioner of Agriculture’s Personal Deposit account.” Mr. Basant gave consent.

“The money that was diverted was intended to be a subsidy for the drought-affected areas. That was not a given… It was temporarily moved.”

Justice Shah stated that:

It is essential that the said utilised fund be returned to the SDRF in light of the foregoing.

“You cannot divert any funds intended for the SDRF. As a result, SDRF must be involved again. Make sure of that. It’s not applicable to other uses… Restore it to SDRF if it isn’t being used.”

In response to Mr. Basant’s request for some time to receive instructions regarding the matter, the bench stated that in that situation, it would be forced to pass directions.

According to Justice Shah, allowing the State to keep the transferred funds in the PD account would set a poor example for the other States to follow.

“It needs to go back to SDRF. The money should return if it isn’t used for drought relief. If not, each State would transfer money for a specific purpose and then not use it; the money would not then be returned and used for the SDRF fund.”

The purpose of the detour, Mr. Basant emphasized, was to alleviate the drought. However, Justice Shah remarked: “You must change. As of right now, we won’t think about it unless you claim that the money is needed because of the drought.”

According to Justice Nagarathna, the State needs to make sure that the COVID compensation is not shortchanged. If the diverted funds are returned, they can be used for compensation.

There is no deficiency in that area, Mr. Basant assured the Bench.

“At the moment there is no shortfall, but what if it is today,” Justice Shah observed.

But after much persuasion, the Bench decided to give the Senior Counsel time to submit a response. On July 13, the matter will be reviewed once more.

Case Name: Gaurav Kumar Bansal V. Union of India And Ors. MA 647/2021 in W.P.(C) No. 539/2022.

Author- Bhagyashri Vijaykumar Neware


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