The High Court of Himachal Pradesh has taken a stringent view on the ineffective utilization and monitoring of Corporate Social Responsibility (CSR) funds, particularly in the context of post-disaster rehabilitation in the State. The Court was hearing a suo motu public interest matter concerning compliance with CSR obligations by companies operating in Himachal Pradesh.
During the proceedings, the Court examined an affidavit filed by the Special Secretary (Industries), which revealed a significant shortfall of approximately ₹10,017.47 lakhs in CSR spending for the financial year 2025–26 when compared to the mandated obligations of companies.
The Court noted that while certain steps had been taken by the State, including issuance of notices to companies for non-submission of CSR data, there remained a lack of comprehensive and verified information regarding compliance. It was also acknowledged that enforcement of penalties under Section 135 of the Companies Act, 2013 falls within the administrative domain of the Ministry of Corporate Affairs, Government of India.
Relying on submissions made by the Amicus Curiae, the Court emphasized the necessity of a structured and transparent framework for CSR utilization, particularly by channeling such funds through the State Disaster Management Authority, headed by the Chief Secretary. The Court took note of models adopted in other States such as Uttarakhand and Odisha and found merit in adopting a similar institutional approach. In line with the interim prayers made by the amicus at page 85, the Court directed that comprehensive data be placed on record by Union of India, including:
- the complete list of companies covered under Section 135 for the past three financial years;
- company-wise CSR obligation, actual expenditure, and unspent CSR;
- status of CSR-2 statutory filings; and
- details regarding initiation of penalty proceedings for non-compliance.
Further, the Court directed the Chief Secretary of Himachal Pradesh to file a detailed affidavit disclosing:
- whether any uniform policy or circular has been issued to mobilize CSR funds for post-disaster rehabilitation;
- whether a district-wise assessment of disaster-related infrastructure needs has been undertaken by the State Disaster Management Authority; and
- the steps taken to ensure coordinated and structured mobilization of CSR funds in collaboration with various departments.
The order also reflects the need to identify and prioritize key infrastructure works—such as roads, bridges, drinking water schemes, hospitals, schools, and protective infrastructure—that may be funded through CSR contributions, along with institutional coordination under the supervision of the State Disaster Management Authority.
Importantly, the Court expressed concern that despite Himachal Pradesh having suffered repeated disasters between 2023 and 2025, there appeared to be a lack of reliable data, institutional coordination, and meaningful compliance with CSR obligations, indicating systemic lapses at multiple levels.
In a firm direction, the High Court ordered that action be initiated against defaulting companies before the next date of hearing in accordance with the prescribed legal framework. It further cautioned that failure to take such steps may result in the imposition of exemplary costs on both the Union of India and the State Government.
The matter is now listed for further hearing on 24 June 2026.
LawUmbrella 