Libertatem Magazine

Kerala HC to State Govt: Control Crowd Funding; Everyone Cannot Be Permitted to Raise Funds

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The High Court issued directions to State Government to frame a policy to regulate crowdfunding to prevent the misuse of the funds being collected.

Crowdfunding for Life Saving Drugs

A petition was filed by a father for importing a life-saving drug for his five-month-old who is suffering from a rare disease called Spinal Muscular Atrophy. Thereafter, the Kerala High court directed the State Government to set up a Medical Board to monitor the child and the effectiveness of the drug. The matter was then listed to be heard on July 10th and the Board was directed to file a report within the stipulated time.

Subsequently, during the hearing of the case on July 10th 2021, the Court questioned the State regarding crowdfunding and why it was not controlled.

Arguments before the Court

In response to the query of the court regarding controlling crowdfunding, the counsel appearing for the State submitted that media firms, YouTubers and social media activists are raising funds and hence the intervention of the State’s Police Chief would be necessary to find the source of the funds and the operator of the accounts. The Counsel also submitted that an initiative called ‘We Care’ had been started for providing financial aid to the needy.

The Counsel appearing for the petitioner had stated though they had received the permission to import the life-saving drug, funds for the same were not available.

Kerala HC’s Observations

Justice P. B. Suresh Kumar, while referring to unrestricted crowd funding observed that,

“Every Tom, Dick and Harry cannot be permitted to raise funds.” The Court stated that people were raising funds without any restrictions and questioned the Government’s control over the money that was being collected by individuals. The Court stated that “it did not want to interdict crowdfunding, but it wants the funds to go to the Government instead into the account of private individuals who may or may not give it to those who require the money.

Order to Control Crowdfunding

The Court emphasized the need to control crowdfunding, hence the Court directed the State Government to frame a policy to regulate crowdfunding through private bank accounts for charity purposes.

The Court held that “there should be a proper framework for the process and the government should act as a watchdog to examine the sources of all the money pouring in through crowdfunding,” as it was necessary to ensure that the funds raised for charity purposes were not being exploited.

Accordingly, the matter was listed to be heard on July 19th 2021.

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