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Meridian Steel Ltd failed to spend Rs 80 lakh of its CSR obligation in a year, and none of it relates to any ongoing project. It also did not transfer the amount. Which consequence follows under section 135?

The Board must give reasons in its report and transfer the unspent amount to a Schedule VII Fund within six months of the year end, since no ongoing project is involved. On default, the company's penalty is twice the amount or Rs 1 crore, whichever is less.

  1. ABoard must state reasons in its report, transfer the amount to a Schedule VII Fund within six months of year end; default attracts company penalty of twice the amount or Rs 1 crore, whichever is lessCorrect
  2. BThe amount must be moved to an Unspent CSR Account within thirty days and spent within three years
  3. CNo transfer is needed if the Board gives reasons in its report
  4. DCompany penalty is Rs 1 crore regardless of the amount, with officers liable to Rs 2 lakh each

Explanation

For unspent amounts not relating to an ongoing project, the Board specifies reasons in its report and transfers the amount to a Schedule VII Fund within six months of the expiry of the financial year. Default draws a penalty on the company of twice the amount to be transferred or Rs 1 crore, whichever is less; here twice Rs 80 lakh is Rs 1.6 crore, so Rs 1 crore applies. Option B applies only to ongoing projects.

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