High Court Busts Open a Can of Worms Over CSR Funds, Flags Massive ₹100-Crore Shortfall. CSR funding under court lense
SHIMLA: The Himachal Pradesh High Court has busted open a can of worms over Corporate Social Responsibility (CSR) funds in the State, taking serious note of a massive shortfall of over ₹100 crore in CSR obligations and actual expenditure in 2024-25 alone and questioning whether companies operating in Himachal Pradesh are fulfilling their statutory responsibilities.
The Court’s observations have assumed enormous significance for a State struggling with repeated natural disasters and a huge financial burden for reconstruction.
At a time when Himachal needs money for drinking water, hospitals, schools, roads, disaster-resilient infrastructure, environment protection, afforestation and restoration of damaged public facilities, the Court’s intervention raises the uncomfortable question: Where is the CSR money actually going?
The High Court, hearing CWPIL No. 90 of 2025, Court on its own motion v. Union of India & Others, has made it clear that merely placing aggregate CSR figures before the Court will not suffice. It has demanded company-wise details of CSR obligations, actual expenditure, unspent amounts, statutory filings and action against companies failing to comply with Section 135 of the Companies Act.
The Court has particularly focused on the statutory requirement that companies “shall give preference to the local area and areas around it where it operates” while spending CSR funds.
The Bench has prima facie questioned the Union Government’s interpretation that such local-area preference is not mandatory, observing that the statutory language cannot simply be rendered meaningless.
The State’s own figures reveal the scale of the problem. CSR obligations were shown at ₹210.86 crore in 2023-24, ₹249.52 crore in 2024-25 and ₹270.94 crore in 2025-26, while CSR expenditure was ₹218.91 crore, ₹253.44 crore and ₹285.94 crore respectively.
Yet the amount actually spent inside Himachal Pradesh was only ₹78.38 crore, ₹85.46 crore and ₹64.55 crore in these three years.
The Court has found the information supplied to it inadequate and noted that 81 companies had failed to furnish requisite information regarding the amount payable.
It also noticed discrepancies between figures submitted by the State and the Union Government, raising further questions over the reliability and completeness of the CSR data being placed before the Court.
The financial backdrop makes the issue even more serious. The Chief Secretary’s affidavit placed the estimated damage suffered by Himachal Pradesh during the previous three financial years at around ₹17,428 crore, against expenditure of approximately ₹4,427.68 crore on relief, repair and restoration, leaving a staggering ₹13,001-crore gap.
The Court has also brought major Central public-sector and infrastructure entities under scrutiny, including NTPC, NHPC, SJVN, POWERGRID, PFC, REC, THDC, NEEPCO, GRID-India and NHAI, several of which have substantial projects and operations in Himachal Pradesh.
The NTPC figures cited by the Court are particularly revealing. NTPC’s CSR expenditure in Himachal Pradesh was around ₹1.58 crore in 2022-23 and ₹2.22 crore in 2023-24, while its spending in other States included ₹38.91 crore in Uttar Pradesh, ₹37.48 crore in Bihar, ₹30.50 crore in Chhattisgarh and ₹20.32 crore in Odisha during 2022-23. The Court has prima facie questioned whether the statutory local-area preference is actually being followed.
The real loss from inadequate CSR mobilisation is ultimately borne by the public. Every legitimate rupee of CSR funding could help improve water supply, government hospitals, schools, sanitation, forest regeneration, afforestation, watershed management, environmental protection and disaster-damaged infrastructure. In a fragile Himalayan State repeatedly hit by floods, landslides and cloudbursts, these are not cosmetic requirements but basic necessities.
The Court had earlier directed the State to study CSR models adopted by Uttarakhand and Odisha and develop a structured mechanism involving the State Disaster Management Authority. It also wanted specific projects identified so that eligible companies could be approached for funding.
The proceedings also bring an uncomfortable political perception into the public debate. Chief Ministers, ministers and local MLAs routinely visit industrial belts and corporate establishments, while political parties seek substantial financial resources during elections.
There are allegations and public perceptions that corporate money can sometimes find its way into political funding, although the High Court has not held that CSR funds are being diverted for political purposes in this case. Such allegations must be established through evidence, not speculation.
But that is precisely why complete transparency is now essential. The public deserves to know which companies are required to spend CSR money in Himachal Pradesh, how much they are required to spend, where they actually spend it, how much goes outside the State, how much remains unspent and what action is taken against those who do not comply.
The High Court has effectively shifted the CSR debate from corporate bookkeeping to public accountability.
If companies operating in Himachal Pradesh are not spending their CSR obligations locally, the State government must explain why.
If they are spending it, the government must show where. And if companies are defaulting, the public deserves to know why enforcement has not been effective.
For a State staring at a ₹13,001-crore reconstruction gap, the failure to fully mobilise legitimate CSR resources cannot be treated as a minor administrative discrepancy.
The High Court has opened the can of worms. Now the State government, the Union government and the companies have to answer the bigger question: Where is Himachal Pradesh’s CSR money going?
The matter is next listed for September 22, 2026.
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