Authored By: Adriel Lawrence
Manav Rachna University
Case Name: Association for Democratic Reforms & Anr. V. Union of India & Ors (2024)
Case Citation: 2024 INSC 113
Case Number: writ petition (civil) No.880/2017
Name of the court: The Hon’ble Supreme Court of India
Bench type: Constitutional Bench
Name of the judges:
- Dr. Dhananjaya Y. Chandrachud, Chief Justice of India
- Hon’ble Mr. Justice Sanjiv Khanna
- Hon’ble Mr. Justice B. R. Gavai
- Hon’ble Mr. Justice J. B. Pardiwala
- Hon’ble Mr. Justice Manoj Misra
Bench Type: Constitutional Bench
Date of Judgment: February 15, 2024
Parties Involved:
Petitioner(s):
- Association for Democratic Reforms (ADR)
- Common Cause
- Communist Party of India (Marxist)
Respondent(s):
- Union of India
- Election commission of India
Facts of the case:
The case originated from a constitutional challenge to the Electoral Bond scheme, 2018 introduced through series of amendments in the Finance Act of 2017. Prior to these changes, corporate donations to political parties were regulated through a transparent framework that actually required the disclosure of donor and recipient details. Several amendments were made to statutes, like Companies act, Representation of the people’s Act, Income Tax Act, and Reserve bank of India Act. The 2017 Finance act amended section 182 of the companies act, deleting 7.5% cap on corporate donations, thereby permitting unlimited funding, section 137 of the 2017 act amended section 29C of RPA to exempt political parties to declare contributions received through electoral bonds, section 11 of the 2017 act amended section 13A of Income tax Act, exempting parties from maintain a record of donors, section 135 of the 2017 act amended section 31 of RBI act to create a special exception allowing the central government to authorize a scheduled bank ( State Bank of India) to issue electoral bonds. The Electoral bond scheme, notified on 2 January 2018, created a new channel for political funding marked by donor anonymity and limited public accountability.
Key Issues:
- Is the electoral bond scheme constitutional?
- Does the electoral bond scheme violate the voters’ right to information?
- Can the Scheme allow anonymity with the view to protect donors’ right to privacy?
- Does the electoral bond scheme threaten the democratic process, and free and fair elections?
Arguments of the parties:
Petitioners:
Violation of the Right to information: The petitioners argued that the scheme’s anonymity was a violation of the voter’s fundamental right to know the sources of political funding. They contended that this information is essential for making informed electoral choices, ensuring accountability, and was firmly established by the Hon’ble court’s own precedent in People’s union for civil liberties (2003).
Promotion of Quid pro quo corruption: The petitioners argued that this combination of anonymity and unlimited funding produced an opaque system ripe for quid pro quo arrangements, where corporations could surreptitiously fund political parties in exchange for favourable contracts, licenses, and policies.
Distortion of Electoral parity: The petitioners also contended that copious amount of corporate funding disproportionately benefits the party in power, thus generating a vicious cycle of financial superiority.
Respondents:
Curbing of Black money: The primary defence of union of India was that the scheme was designed to curb the usage of unaccounted cash in elections by encouraging donations through formal banking channels.
Protection of Donor privacy: The government asserted that donor anonymity was crucial to protect individuals and corporations from political retribution or victimization by the rival parties they did not fund.
Balancing of rights and judicial deference: The respondents argued that the voter’s right to know is not absolute and must be balanced against the donor’s right to privacy. The scheme, in their view, posited a reasonable balance.
Judgment:
The supreme court allowed the writ petitions and delivered a unanimous verdict, declaring the electoral bond scheme, 2018, and the associated legislative amendments unconstitutional.
The following specific provisions were struck down:
- The Electoral Bond scheme,2018, in its entirety;
- The proviso to Section 29C (1) of the Representation of the people Act, 1951 (which exempted bonds from disclosure);
- The amendment to Section 182(3) of the Companies Act, 2013 (which removed the requirement to name the recipient party);
- The amendment to Section 13A(b) of the Income Tax Act, 1961 (which exempted parties from keeping records of corporate funding);
- The deletion of the first proviso to Section 182(1) of the Companies Act, 2013 (which had removed the cap on corporate funding).
The supreme court issued the following operative directions to ensure the implementation of its judgment:
- The state bank of India was directed to cease the issuance of electoral bonds with immediate effect.
- The SBI was also directed to submit the details of each bond encashed by political parties
- The ECI was directed to publish all information received from the SBI on its official website by march 13, 2024.
Ratio Decidendi:
Infringement of Right to information under Article 19(1)(a): The court held that a voter’s right to information extends beyond a candidate’s details, since parties are pivotal to democracy, knowledge of their donors enables voters to make informed choices and detect potential quid pro quo influences. By ensuring donor anonymity, the electoral Bond Scheme unconstitutionally infringed this right.
The Proportionality Test: The state’s justification of curbing black money failed least restrictive means test. Black money is not a permissible restriction under the ambit of article 19(2), and even otherwise, less intrusive alternatives like pre-existing Electoral trust scheme or direct digital transfers with disclosure.
Donor Privacy Vs. Voter’s Right to Know: Applying the double proportionality standard, the court found that the scheme entirely sacrificed transparency in the name of privacy, amounting to an abrogation.
Corporate funding: The Hon’ble court invalidated the amendment that removed the cap on corporate donations by applying the doctrine of “manifest arbitrariness”. A law is manifestly arbitrary if it is capricious, irrational, and lacks an adequate determining principle. The court concluded that such unrestrained and opaque funding undermines political equality and the constitutional guarantee of free and fair elections.
Conclusion:
The Hon’ble supreme court’s verdict in Association for democratic reforms V. Union of India is a landmark decision in the history of India’s electoral jurisprudence. It decisively reaffirms that transparency in political financing is not a matter policy preference but a constitutional imperative, flowing directly from the citizen’s fundamental right to information. By striking down the Electoral Bond scheme, the court curtailed the influence of corporate money in politics and upheld the principle that governance must serve citizens, not private, individualistic interests. Through the application of doctrines such as Double proportionality and Manifest arbitrariness, the verdict underscores the judiciary’s role in protecting the integrity of democracy. Beyond the invalidation of this opaque mechanism, the judgment calls for comprehensive reforms to establish a transparent and accountable system of political finance in India.
Bibliography:
‘Article 145(3) in Constitution of India’ <https://indiankanoon.org/doc/244297/> accessed 31 October 2025
‘Electoral Bond Scheme, 2018’ (2018) <https://www.scobserver.in/wp-content/uploads/2021/10/Electoral-Bonds-Scheme-2018.pdf> accessed 31 October 2025
Association for Democratic Reforms & Anr V Union of India & Ors (2024) 1
Constitutionality of the Electoral Bond Scheme – Supreme Court Observer
People’S Union Of Civil Liberties Vs Union Of India & Anr 2003
The Companies Act, 2013 2013
The Finance Act, 2017 2017
THE INCOME-TAX ACT, 1961 1961 1
The Representation of the People Act, 1951 1951
THE RESERVE BANK OF INDIA ACT, 1934 1934 1
