Administrative law and CSR regulation
🔹 I. Understanding Administrative Law and CSR Regulation
📘 Administrative Law
Administrative law is a branch of public law that governs the activities of administrative agencies of the government. It deals with:
Rule-making (legislative powers of agencies)
Adjudication (quasi-judicial powers)
Enforcement of regulatory agendas
Judicial review of agency actions
It ensures transparency, accountability, fairness, and reasonableness in the decision-making process of governmental bodies.
📘 Corporate Social Responsibility (CSR) Regulation
CSR refers to the responsibility of corporations towards society and the environment in which they operate. CSR regulation involves government-imposed mandates requiring companies (usually above a certain size or profit level) to spend a part of their profits on socially responsible initiatives.
In countries like India, CSR is mandatory under Section 135 of the Companies Act, 2013 (amended over time). Failure to comply can invoke administrative penalties, making it a part of administrative regulation.
🔹 II. Relationship Between Administrative Law and CSR Regulation
Delegated Legislation: CSR rules are often formed by delegated legislation, administered by regulatory authorities like the Ministry of Corporate Affairs (MCA).
Administrative Oversight: Authorities monitor, inspect, and penalize for CSR non-compliance under administrative law principles.
Judicial Review: Courts can review administrative actions relating to CSR enforcement.
🔹 III. Important Case Laws (Explained in Detail)
1. Tech Mahindra Ltd. v. Registrar of Companies, Maharashtra (2021)
📌 Facts:
Tech Mahindra was issued a notice for failing to spend the mandated 2% of its net profits on CSR activities for a specific financial year.
The company argued that it had planned projects, but due to implementation delays, the spending was postponed.
⚖️ Judgment:
The MCA imposed a penalty under Section 135(7) of the Companies Act.
The adjudicating officer observed that "planning" CSR does not equate to "spending" or implementing it.
📝 Legal Principle:
CSR obligations are not merely aspirational but carry the force of law.
Delays in execution are not acceptable unless justified under Rule 4(1) of the CSR Rules.
💡 Importance:
Reinforces that CSR compliance is a statutory requirement, enforceable through administrative action.
2. Hindustan Zinc Ltd. v. Union of India (Rajasthan High Court, 2015)
📌 Facts:
Petitioners challenged the constitutional validity of mandatory CSR under Section 135.
Claimed it was an unreasonable restriction on corporate freedom and amounted to "compulsory charity."
⚖️ Judgment:
The High Court upheld the validity of CSR provisions.
Stated that businesses derive benefits from society and hence have obligations towards it.
📝 Legal Principle:
CSR regulation falls under the reasonable restrictions permissible under the Constitution.
It is part of the Directive Principles of State Policy (DPSP) being operationalized through legislation.
💡 Importance:
Validated the government's power to impose CSR obligations using administrative law mechanisms.
3. National Green Tribunal (NGT) Order in Sterlite Copper Plant Case (2018)
📌 Facts:
Vedanta-owned Sterlite Copper was shut down by the Tamil Nadu Pollution Control Board for alleged environmental violations.
The company claimed it had contributed significantly through CSR initiatives.
⚖️ Judgment:
The NGT held that CSR contributions cannot compensate for environmental damage caused by regulatory violations.
The plant remained closed due to non-compliance with environmental norms.
📝 Legal Principle:
CSR activities do not grant immunity from regulatory compliance.
Administrative agencies can take action regardless of CSR spending.
💡 Importance:
Shows the independence of administrative actions and how CSR is not a shield against enforcement.
4. Institute of Chartered Accountants of India (ICAI) v. Union of India (2020)
📌 Facts:
The ICAI challenged the authority of the Ministry of Corporate Affairs in prescribing reporting formats for CSR disclosures.
⚖️ Judgment:
The court held that the MCA has the authority to prescribe such formats under its delegated legislative powers.
📝 Legal Principle:
The government's administrative wing can issue binding rules and formats for CSR reporting under the Companies Act.
💡 Importance:
Highlights delegated legislation as part of administrative law in CSR regulation.
5. Union of India v. Sanjeev Bhushan (Delhi HC, 2022)
📌 Facts:
A PIL sought to enforce better utilization of CSR funds during the COVID-19 crisis.
Claimed that many companies misused or underutilized CSR allocations.
⚖️ Judgment:
The court directed the MCA to strengthen monitoring and reporting mechanisms.
Also emphasized real-time audits and penal actions under Section 135(7).
📝 Legal Principle:
Judicial intervention can guide administrative implementation of CSR law.
Reinforces transparency and accountability.
💡 Importance:
Example of judicial oversight over administrative implementation of CSR norms.
6. Infosys Ltd. CSR Compliance Issue (Adjudication Order, 2021)
📌 Facts:
Infosys was found to have a shortfall in CSR spending for the financial year.
It had disclosed the shortfall and provided valid reasons, including pandemic-related delays.
⚖️ Judgment:
The Registrar of Companies issued a warning instead of a penalty, citing the company’s transparency and detailed disclosures.
📝 Legal Principle:
Administrative discretion can be exercised judiciously, based on facts and disclosure.
💡 Importance:
Shows how administrative law principles like natural justice and proportionality are used in CSR adjudication.
🔹 IV. Key Legal Provisions Involved
| Legal Provision | Summary |
|---|---|
| Section 135, Companies Act, 2013 | Mandates CSR spending for companies meeting certain financial thresholds |
| CSR Rules (Companies CSR Policy Rules, 2014) | Operational framework for CSR planning, execution, and reporting |
| Section 450, Companies Act | General penalty for non-compliance with company law |
| Section 469 | Empowers the Central Government to make rules |
🔹 V. Conclusion
CSR regulation is no longer a soft obligation. Under administrative law, the state has clear powers to:
Create rules through delegated legislation,
Monitor CSR activities,
Impose penalties for non-compliance, and
Subject administrative actions to judicial scrutiny.
The combination of mandatory CSR norms and administrative enforcement mechanisms ensures that companies actively contribute to social and environmental development while remaining under legal oversight.
RELATED Blog
0 comments