MISUSE AND MANIPULATION OF CSR FUNDS: LEGAL GAPS AND ENFORCEMENT CHALLENGES

AUTHOR – RAVI RANJAN, STUDENT AT AMITY LAW SCHOOL, PATNA

BEST CITATION – RAVI RANJAN, MISUSE AND MANIPULATION OF CSR FUNDS: LEGAL GAPS AND ENFORCEMENT CHALLENGES, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (13) OF 2025, PG. 207-217, APIS – 3920 – 0001 & ISSN – 2583-2344.

ABSTRACT

Corporate Social Responsibility (CSR) in India was conceived as a mechanism for translating corporate success into real social good. Ever since it was made obligatory in a statutory form under Section 135 of the Companies Act in 2013, it has mandated some companies to set aside a proportion of their profits for socially beneficial initiatives. While the intent was praiseworthy, the results have been, on the whole, disappointing. Untoward incidents relating to the misuse of CSR funds, politicization of initiatives, and opaque practices have been commonplace, and raise serious issues about accountability and the adequacy of the legal framework. This article addresses these issues in the context of practices in private and public sectors and illustrates how weak enforcement and self-reporting create a social responsibility deficit. Other than self-reporting, the author addresses the potential of compliance audits, judicial activism, and policy reforms to improve the direction of funds and social profitability. Through a review of literature, statutory analysis and study of compliance frameworks, the paper highlights the pernicious gap between genuine CSR and mere financial outlay.The objective is to develop a governance model that fosters real social accountability, enhances openness, and propels CSR in India from a mere compliance-focused activity to a catalyst for enduring social change.

Keywords:

Corporate Social Responsibility, CSR fund diversion, India, Section 135 Companies Act 2013, accountability, transparency, audit mechanisms, political influence, legal enforcement