Authored By: GOKUL. B
Vellore Institute of Technology, School of Law.
CASE TITLE & CITATION
Association for Democratic Reforms & Anr. V. Union of India & Ors. (2024). 2024 INSC 113.[1]
COURT NAME AND BENCH
Supreme Court of India. Justice D.Y. Chandrachud (CJI), Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala and Justice Manoj Misra.
DATE OF JUDGMENT
15th February 2024
PARTIES INVOLVED
The petitioners in this case include Association of Democratic Reforms (ADR), a well-known non-governmental organization which is generally associated with the advocacy of electoral reforms and transparency in public life. The Union of India, and related statutory entities, such as the Election Commission of India and the Reserve Bank of India were the respondents. The petitioners argued that the Electoral Bond Scheme was unconstitutional whereas the government argued in their support that it is legal and it has some goals to achieve.
FACTS
This case is rooted in the fact that the Finance Act, 2017 introduced the Electoral Bond Scheme in 2018.[2] The scheme was brought into force with the given aim of purifying the political funding process; and the scheme was devised in such a way that people and business entities could contribute to political parties anonymously by means of the electoral bonds that could be bought at the State Bank of India (SBI).
In order to bring this scheme to life, several amendments were brought into the previous legislations: the Representation of the People Act, 1951[3], the Companies Act, 2013[4], the Income Tax Act, 1961[5], and the Foreign Contribution (Regulation) Act, 2010.[6] It is important to note that such changes were enacted under Money Bill and hence did not undergo scrutiny by the Rajya Sabha.
The petitioners argued that these amendments violated the right to information of the citizens, which is a fundamental right enshrined in Article 19(1)(a) of the Constitution.[7] Anonymous gifts were claimed to have threatened the democratic process by obscuring funders of the political campaigns in Indian elections and allowing unquestionable corporate and potentially foreign control of the Indian election process.
ISSUES
The case also posed some important constitutional questions that were brought before the court:
- Whether the Electoral Bond Scheme contravenes the right to freedom of speech and expression as contained in the provisions of Article 19(1)(a) of Constitution by impairing right of the citizens to get information about political funding.
- Whether such amendments of several different laws via Finance Act, 2017 passed as a Money Bill, is constitutionally valid?
- Whether the scheme allowed excessive corporate and foreign money to have undue influence on the integrity of free and fair elections, which is the fundamental characteristic of Indian Constitution.
ARGUMENTS OF THE PARTIES
The petitioners argued that the Electoral Bond Scheme goes against democratic accountability of voters by depriving them of key information. They gave precedents like PUCL v. Union of India, where the Supreme Court ruled that the right to information as an inherent part of Article 19(1)(a).[8] They contended that the plan was a retrograde step in elections transparency as it allowed even ghostly institutions to contribute as much money as funded without publicity. Such secretive nature creates a harmful culture of trade-offs between political politician parties and business contributions.
The petitioners further argued that those amendments could not have been made as a Money Bill and it was a premeditated mischief to defy the parliamentary procedure and breach the Article 110 of the Constitution.[9]
Conversely, the respondents headed by the Union Government defended the scheme as a reformative option to curb black money in Elections. They state that the transition towards donating using banks would decrease the number of illegal transactions. They further claimed that the revealing of identities of donors exposed them to potential politicking or victimization, hence deterred proper contributions. Furthermore, they claimed that no right was infringed by the scheme and the application of Money Bill was appropriate under the then legal process.
JUDGMENT
A unanimous decision was made by the Supreme Court that Electoral Bond Scheme was unconstitutional. The court ruled that the scheme contravened the right under Article 19(1)(a) as it hindered this right of voters to information about the sources of financial support of political parties which is essential in a representative democracy.
The Court also struck down any amendments made to the Companies Act as well as any other legislations and noted that these amendments had been carried out in a Money Bill process in a manner other than the one allowed under the Constitution, thus contravening the spirit of the bicameral legislative process contained in the Constitution.
Key directives:
- A stop in the issuance of the electoral bonds with immediate effect.
- A Direction to SBI to reveal all the information about donations received by the use of electoral bonds, their donors, and political parties.
- An inspection of the electoral transparency as a need of the constitution.
LEGAL REASONING
The legal grounds that the Court considered are strongly based on the constitutional morality, electoral purity and informed choice. Based on its previous decisions like State of Up v. Raj Narain[10] and PUCL v. Union of India[11], the Court has reaffirmed the right of citizens to know who the political donors are since this data is crucial in making informed electoral decisions.
In the case of corporate contributions, the Court denounced the abolishing of the 7.5 percent limitation on corporate contributions because it established a political imbalance. It noted that companies do not vote and to give them the privilege of giving whatever sum of money they choose without telling anyone would mean the distortion of democracy equality.
In the question of Money Bill, the Court cited Rojer Mathew v. South Indian Bank[12] and K.S. Puttaswamy v. Union of India[13], held that the Finance Act, 2017, failed to satisfy the constitutional conditions regarding Money Bill under Article 110. The decision reiterated that, the legislative process forms part of the fundamental structure of the constitution and it cannot be bypassed to circumvent parliamentary review of Agreements.
The Court also touched upon the issue of foreign funding and that foreign funding of political parties through their Indian subsidiaries had a serious national security implication and trespasses on the sovereignty.
CONCLUSION
The Supreme Court ruling in Association for Democratic Reforms v. Union of India[14] forms a turning point in Indian constitutional legal sphere and democratic government. The decision reinstates the role of the judiciary as the custodian of constitutional responsibility and guarantees integrity and fairness of elections being representative.
The ruling is a judicial response to the overreach of legislation, in particular, with regard to misuse of the Money Bill route. What is more important is that it puts the citizen at the centre of a democracy by acknowledging the fact that electoral transparency is not voluntary but it is a constitutional duty.
To conclude with, such ruling is a strong confirmation of the democratic principles and refers to the idea of the political finance being under the watchful eye of the society. In the era of financial power that is threatening the integrity of the elections more seriously, the judgment is a welcome balm to restore the halo of the democratic system of India.
Reference(S):
[1] Association for Democratic Reforms & Anr. V. Union of India & Ors. [2024] INSC 113 (SC).
[2] Finance Act 2017.
[3] Representation of the People Act 1951.
[4] Companies Act 2013.
[5] Income Tax Act 1961.
[6] Foreign Contribution (Regulation) Act 2010.
[7] Constitution of India, art 19(1)(a).
[8] People’s Union for Civil Liberties v. Union of India (2003) 4 SCC 399.
[9] Constitution of India, art 110.
[10] State of UP v. Raj Narian (1975) 4 SCC 428.
[11] Supra 8
[12] Rojer Mathew v. South Indian Bank Ltd (2020) 6 SCC 1.
[13] K.S. Puttaswamy v. Union of India (2019) 1 SCC 1.
[14] Supra 1
