4.2 CSR Under Companies Act 2013 Presentation

Corporate Social
Responsibility
(CSR) under the
Companies Act,
2013
Detailed Overview
and Provisions
1. Introduction to Corporate Social
Responsibility (CSR)
• CSR refers to a business model where
companies are held accountable for their
impact on the environment, consumers,
employees, communities, and stakeholders.
CSR activities go beyond regulatory
requirements, focusing on societal welfare.
2. Evolution of CSR in India
• Initially voluntary, CSR became mandatory
under the Companies Act, 2013. The
government aimed to align business activities
with social and economic development,
improving the welfare of underprivileged
communities.
3. Applicability of CSR under the Companies
Act, 2013
• CSR applies to companies with:
• - Net worth of ₹500 crore or more
• - Turnover of ₹1,000 crore or more
• - Net profit of ₹5 crore or more
• Such companies must:
• - Form a CSR Committee
• - Spend at least 2% of their average net profits
on CSR activities.
4. CSR Committee & Policy
• The CSR Committee:
- Formulates the CSR Policy
- Recommends expenditure
- Monitors CSR activities
• The Board ensures compliance and discloses

the CSR Policy in the Annual Report.
5. CSR Activities
• As per Schedule VII, CSR activities include:
• - Eradicating hunger and poverty
• - Promoting education and healthcare
• - Ensuring environmental sustainability
• - Promoting gender equality
• - Protection of national heritage and arts
• CSR excludes activities benefiting only
employees or contributions to political parties.
6. Spending and Reporting of CSR
• If a company fails to spend the prescribed 2%
of profits, the Board must specify reasons in
the Report. Unspent amounts may be
transferred to funds like the PM National
Relief Fund or a special CSR account for
ongoing projects.
7. Amendments and Updates
• Key amendments include:
• - 2019: Provisions for transfer of unspent CSR
funds
• - 2021: Clarification on CSR Policy,
documentation, and monitoring requirements.
Corporate Social Responsibility (CSR) has been an evolving concept in India, especially post
the enactment of Section 135 of the Companies Act, 2013. Here are some key case laws
related to CSR in India:
1. Tech Mahindra Limited vs. National Stock Exchange of India Ltd. & Others, 2022 SCC
Online SAT 74
- Citation: 2022 SCC Online SAT 74
- Court: Securities Appellate Tribunal
- Key Issue: This case discussed the non-compliance with CSR reporting obligations and
penalties under the Companies Act, 2013. The court reinforced that CSR obligations are
statutory under Section 135 of the Companies Act, and non-compliance attracts penalties.
- Significance: It highlighted the accountability companies have in ensuring adherence to
CSR requirements, not just as a voluntary commitment but as a legal mandate.
2. Bharat Petroleum Corporation Limited vs. Maharashtra Pollution Control Board, (2021) 9
SCC 193
- Citation: (2021) 9 SCC 193
- Court: Supreme Court of India
- Key Issue: The case revolved around environmental obligations, part of CSR, where
Bharat Petroleum was held responsible for environmental damages, a domain covered
under CSR activities such as environmental sustainability.
- Significance: Reinforced the concept that CSR activities include compliance with
environmental regulations, and non-compliance can attract both penalties and judicial
scrutiny.
3. Vedanta Ltd. v. Bombay High Court, AIR 2021 Bom 42
- Citation: AIR 2021 Bom 42
- Court: Bombay High Court
- Key Issue: Vedanta’s compliance with CSR norms was challenged, particularly focusing on
the company's allocation of funds for community development and sustainability initiatives.
- Significance: This case emphasized that CSR funds should be directed towards genuine
social development initiatives and not for profit-making purposes disguised under CSR.
4. M/S Sterlite Industries India Limited vs Union of India, (2013) 4 SCC 575
- Citation: (2013) 4 SCC 575
- Key Issue: This case involved environmental and social impacts due to industrial
operations. Although this was prior to the 2013 Companies Act, the court's emphasis on
corporate accountability laid the groundwork for future CSR regulations.
- Significance: It emphasized that corporations have a duty not just to shareholders but to
society at large, which later dovetailed into CSR regulations under the Companies Act.
5. Tata Power Co. Ltd. v. Maharashtra Electricity Regulatory Commission, 2017 SCC Online
APTEL 54
- Citation: 2017 SCC Online APTEL 54
- Court: Appellate Tribunal for Electricity
- Key Issue: The case involved the company's expenditure towards CSR activities, particularly
in terms of energy conservation and sustainable development, which is a key area under
Schedule VII of the Companies Act, 2013.
- Significance: This case highlighted the importance of CSR in energy and environmental
sustainability efforts, reflecting the broader scope of CSR obligations.
6. Rural Litigation and Entitlement Kendra v. State of Uttar Pradesh, 1985 AIR 652
- Citation: 1985 AIR 652
- Key Issue: This case addressed corporate responsibility in terms of environmental
degradation caused by mining operations.
- Significance: Though this predates the Companies Act, 2013, it served as an early marker
for the social responsibilities of corporations towards the environment and local
communities, which are now formalized under CSR.
These cases reflect how Indian jurisprudence has gradually evolved from recognizing
voluntary social responsibility to enforcing mandatory CSR obligations under the law.
8. Benefits of CSR for Companies
• - Improves reputation
• - Enhances employee engagement
• - Helps in risk management by improving
relationships with local communities.
9. Challenges in CSR Implementation
• - Lack of clarity on eligible CSR activities
• - Ineffective implementation due to lack of
expertise
• - Monitoring and accountability of CSR funds
remain concerns.
10. Conclusion
• CSR under the Companies Act, 2013 ensures
that businesses contribute to social
development while maintaining transparency.
It serves as a tool for societal upliftment and
enhances company reputation.

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Corporate Social

• The Board ensures compliance and discloses

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