Shimla, Dec 27 (UNI) Himachal Pradesh High court has come down heavily on both the Narendra Modi-led union Government and the Sukhvinder Singh Sukhu-led Himachal Pradesh government for failing to discharge their statutory duties under Section 135 of the Companies Act, 2013, holding them negligent in mobilising Corporate Social Responsibility (CSR) funds for relief and rehabilitation following the devastating excess rainfall of 2025 in the state of Himachal.
Taking suo motu cognisance of the large-scale destruction caused by unprecedented rainfall, the Division Bench comprising Chief Justice G S Sandhawalia and Justice Jiya Lal Bhardwaj observed that despite a clear legal framework, neither the Centre nor the State took effective steps to ensure utilisation of CSR funds for disaster management and restoration of crippled infrastructure.
Referring to the affidavit dated December 1, 2025, the Court noted that the State Government had not issued any directions to companies under CSR provisions specifically for addressing the damage caused by the 2025 rains.
Passing an order on December 17 Bench remarked that the inaction persisted even though the calamity had severely impacted public infrastructure across the State.
During the hearing, it emerged that as many as 80 companies operating in Himachal Pradesh fall within the ambit of Section 135 of the Companies Act. However, during the financial year 2025–26, only Rs 4,752.39 lakh was contributed towards CSR activities, including disaster-related work.
The Court observed that several companies had not even disclosed their CSR contributions, while others made meagre contributions despite having substantial financial capacity.
The State sought to justify its inaction by citing advisories issued by the Ministry of Corporate Affairs, which cautioned States and union Territories against issuing directions that could interfere with the independent decision-making powers of CSR Committees.
The High Court, however, rejected this explanation, holding that both the union of India and the State Government had failed to appreciate the scope and intent of Section 135 and the public benefit embedded in the statute.
The Bench pointed out that the law mandates companies to spend at least two per cent of their average net profits on CSR activities, with a preference for local areas where they operate, and explicitly includes disaster management, relief, rehabilitation and reconstruction under Schedule VII of the Act.
Terming the conduct of both governments as “remiss,” the Court directed the State Government to file a fresh affidavit detailing the proactive steps it proposes to take against industries for ineffective CSR contributions and to ensure strict enforcement of the Companies Act.
The case, titled Court on its own motion vs union of India & others, has been listed for further hearing on March 5, 2026.
The ruling is significant as it underscores that CSR obligations are not voluntary gestures but enforceable statutory duties, particularly during times of humanitarian crisis.
