Mandatory Corporate Social Responsibility And Structural Social Inequality In India: A Doctrinal And Critical Analysis Of Section 135 Of The Companies Act, 2013
- IJLLR Journal
- 2 hours ago
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Harinarayanan. P, LLB, Vels Institute of Science, Technology and Advanced Studies
Under the Guidance of Prof. N. Megavannan, School of Law, Vels Institute of Science Technology and Advanced Studies
ABSTRACT
The mandatory Corporate Social Responsibility (CSR) regime introduced by Section 135 of the Companies Act, 2013, represents one of the most distinctive experiments in obligatory corporate philanthropy globally. Requiring qualifying companies to allocate a minimum of two per cent of average net profits to prescribed social activities, the framework was animated, at least in part, by a legislative aspiration to engage corporate resources in mitigating the structural social inequality that continues to characterise Indian society despite decades of sustained economic growth. This article subjects that aspiration to critical doctrinal scrutiny. Drawing on a systematic analysis of Section 135 and the Companies (CSR Policy) Rules, 2014 as amended, the interpretive jurisprudence of the Gujarat High Court and the National Company Law Tribunal, the audit findings of the Comptroller and Auditor General, and the normative frameworks offered by the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, the article argues that mandatory CSR has succeeded in institutionalising corporate participation in social development and improving transparency in social spending, but has not produced a proportionate or demonstrable reduction in structural social inequality. The framework is predominantly compliance-oriented, evaluating corporate performance through expenditure thresholds and disclosure requirements rather than measurable social outcomes. Judicial and regulatory enforcement similarly privileges procedural fidelity over substantive impact. Regional and sectoral imbalances, governance deficits in CSR Committees, and the absence of outcome-based accountability mechanisms collectively undermine the redistributive potential of mandatory CSR. The article concludes by proposing five targeted reforms: the introduction of mandatory social impact assessment anchored in capability and SDG indicators; a tiered Schedule VII that allocates enhanced weight to aspirational districts; mandatory alignment of CSR strategy with state welfare priorities; strengthened CSR Committee governance; and the elevation of the National Guidelines on Responsible Business Conduct into binding regulatory requirements. Together, these reforms would reorient the mandatory CSR regime from a compliance exercise into a genuine instrument of social justice grounded in the constitutional values of Articles 38 and 39.
Keywords: Corporate Social Responsibility; Section 135; Companies Act 2013; Social Inequality; Mandatory CSR; Doctrinal Analysis; Schedule VII; Outcome Accountability; UN Guiding Principles; Comparative Corporate Law.
