MANDATORY CORPORATE SOCIAL RESPONSIBILITY AND STRUCTURAL SOCIAL INEQUALITY IN INDIA: A DOCTRINAL AND CRITICAL ANALYSIS OF SECTION 135 OF THE COMPANIES ACT, 2013

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
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Indian Journal of Law and Legal Research
Volume VIII Issue II | ISSN: 2582-8878
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.