CORPORATE GOVERNANCE FAILURES AND THEIR IMPACT ON SUSTAINABLE DEVELOPMENT: LESSONS FROM INDIAN CORPORATE SCANDAL

AUTHOR – JUMANA HUSSAIN, LL.M (BUSINESS LAW) AT AMITY UNIVERSITY, NOIDA

BEST CITATION – JUMANA HUSSAIN, CORPORATE GOVERNANCE FAILURES AND THEIR IMPACT ON SUSTAINABLE DEVELOPMENT: LESSONS FROM INDIAN CORPORATE SCANDAL, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (6) OF 2026, PG. 595-606, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/IJLRV6I6462

ABSTRACT

                        
Corporate governance is the set of rules that modern businesses follow to make sure they are accountable, open, fair, and make decisions that are moral. In a world where economies are becoming more interconnected and globalised, good corporate governance is no longer only about how a company runs its own business. It is now a key factor in economic stability and long-term growth. Corporate governance in India has changed a lot in the last few decades, especially after the economy opened up in the 1990s. The Companies Act of 2013 and the Securities and Exchange Board of India (SEBI) are two examples of laws and regulations that have tried to improve governance standards and bring them in line with best practices around the world. Even with these improvements, ongoing corporate scandals have shown that governance systems still have problems, which makes people worry about how well they work in real life.

Failures in corporate governance in India have shown time and time again how systemic problems such as a lack of transparency, poor board monitoring, regulatory failures, and unethical behaviour may cause big financial problems and institutional breakdowns. These mistakes go beyond just losing money right away; they also have a big effect on long-term development. When businesses do things that are dishonest or irresponsible, it hurts sustainable development, which is the balanced combination of economic growth, environmental protection, and social fairness. Corporate scandals undermine investor confidence, disrupt financial markets, diminish public faith in institutions, and frequently lead to detrimental societal outcomes, including unemployment, loss of public funds, and economic instability.

This article conducts an extensive socio-legal examination of corporate governance problems in India, emphasising their effects on sustainable development. It critically analyses significant corporate scandals, such as the Satyam Computer Services fraud, the Infrastructure Leasing & Financial Services (IL&FS) crisis, and the Punjab National Bank (PNB) fraud, using them as case studies to expose structural and regulatory deficiencies. The report delineates persistent patterns of governance failure, encompassing the manipulation of financial statements, inadequate internal controls, regulatory arbitrage, and the collapse of independent oversight systems.

The research employs a doctrinal methodology, depending on a comprehensive examination of statutory provisions, regulatory frameworks, court decisions, and policy documents. It also uses secondary sources like academic papers, committee reports, and expert analyses to put the concerns in a bigger conversation about governance and sustainability. The paper aims to connect corporate governance theory with its real-world effects by combining legal analysis with socio-economic factors.

The study finds that India’s legal and regulatory framework for corporate governance is rather strong, but these systems don’t always perform well because of inadequate enforcement, a lack of accountability, and a culture of unethical behaviour in businesses. The ongoing failures in governance show how important it is to take a more proactive and integrated strategy that goes beyond just following the rules. In this regard, the paper stresses the need to improve institutional monitoring, give boards and auditors more power and independence, and create a culture of ethical responsibility in businesses. It also stresses the importance of including Environmental, Social, and Governance (ESG) principles in corporate decision-making so that business practices help long-term sustainable development in a meaningful way.

KEYWORDS: Corporate Governance; Sustainable Development; Corporate Fraud; Accountability; Transparency; India; CSR; ESG; Regulatory Framework; Corporate Ethics.