Ass’n for Democratic Reforms V. Union of India (2024) 5 SCCJ; 2024 INSC 113 (India)

Case citation- 2024 TNSC 113 

Case Name: Ass’n for Democratic Reforms V. Union of India, (2024) 5 SCCJ; 2024 INSC 113  (India) 

Court: Supreme Court of India. 

Bench: A Five-Judge constitution Bench led by chief Justice D.Y. Chandrachud, with Justices  Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala and Manoj Misra. 

Date of judgement: February 15, 2024. 

Topic/ subject: Constitutional law, electoral bonds scheme, right to information, right to freedom  of speech and expression, and transparency in political funding. 

– Brief overview of the case 

Electoral Bonds scheme (Herein onwards referred as EBS) has been in spotlight from its creation, the transparency of EBS is the most highlighted topic. EBC works like a promissory note. Individuals or corporations could, subject to fulfilling certain criteria, purchase these bonds through the state bank of india as the authorized bank, which would be transferred to registered  political parties. The political party in question was required to convert them in cash within  fifteen days1 

The corresponding amendments were made in finance act 2017, RBI Act 1932, Income tax act 1967 and companies art 2013.2 

The EBS and all corresponding amendments all collectively challenged before the Supreme  political funding. The court was asked whether it violated the voters’ right to information.3 

Issues / legal questions. – 

1) Whether the scheme’s facilitation of unlimited corporate funding to political parties infringed  on the principle of free and fair elections. 

2) Whether the anonymity embedded in the electoral Bond’s scheme violated the voter’s right to  information. 

3) Whether the court had jurisdiction to hear this case, considering it involved economic policy  matters. 

5) Whether the electoral Bonds Scheme was Justified as tool to curb black money.  

6) Whether the scheme violated the privacy rights of doner donors while impacting the  electorate’s ability to make informed voting decisions 

Arguments & the parties. 

Arguments of the petitioner: After the puttaswamy case4, the right to privacy was upheld under  Article 21 (5) Article 19(1)(a).5 The petitioners did not argue that corporate donations should be prohibited. However, it was argued by some of the petitioners that coercive threats on used to  extract money from businesses as contributions. Virtually protection money. Major opposition  parties, which may come in power, are given smaller amounts, to keep them happy. It was also  submitted that there may should be Cap on the quantum of donations and the law should stipulate  funds to be utilized for political purposes given that the income of the political parties is exempt  from income tax. lastly, suggestions were made that corporate funds should be accumulated  amongst national and the corpus equitably distributed and regional parties. 

respondent’s argument 

EBC, by emphasizing that it was a constitutional and carefully designed mechanism aimed at  improving the political funding system while balancing privacy. It was submitted that scheme’s  provision for anonymous donations was necessary to protect donors from possible political harassment or retribution especially corporate entities and individuals contributing to political  Parties Unlike cash-based systems, system utilizes a greater degree of accountability for  regulatory authorities. furthermore, asserted that the Scheme fell well within the legislature’s  policy-making competence. 

Facts & the case 

Anonymity of Doners: The bonds were designed as a “bearer instrument: – meaning they did not  carry the name of the purchaser or the recipient political party.” This provided complete anonymity to donors, allowing them to contribute to a political party without their identity being revealed to the public. bank of india (SBI), was only entitled to their identity that to maintain a  record of the donor’s KYC (know your customer) details. 

Method of purchase: electoral bands could only be purchased from specified branches of the  state bank of india through a cheque or digital payment. 

Validity: The bonds were valid for 15 days from the date of issue.  

Legislative Amendments. 

– Companies act 2013 

– Representation of the people act, 1951 

– Income tax act 1961 

Decision of the case. 

Ratio Decidendi 

Article 19 (1)(a) 

The logic used by the Supreme Court is based on the fact that with a representative government  the Right to Know is the blood of a free and fair election. In the connection between Article  19(1)(a) to the electoral process, the Court made it clear that freedom of speech does not only  mean the right to speak, but the right of the citizen-voter to be meaningfully informed before  voting. The Court found that to be the fatal flaw in the Electoral Bond Scheme creating a cloak  of secrecy about funding, it failed to allow voters to identify any quid pro quo (favors in  exchange of money) relationships between big corporations and political parties. Though the  Government said that anonymity ensured the privacy of a donor, the Court employed the  Proportionality Test to decide that the privacy of political affiliation could not be invoked as a  defense to enormous financial power. The end result was that the collective right of the people to  an open democracy prevailed over any individual concern of concealment of political  contributions, particularly those contributions that can influence national policy. 

Obiter Dicta 

-The link between Money and politics: The court made broad observations about the deep and  often detrimental relationship between money and politics. 

– Critique of the “Black money” Justification: while the court’s main reasoning for Striking down the scheme was right to information, it also extensively critiqued the government’s argument that  the scheme a necessary measure to curb black money. was

– Disproportionate corporate influence. This judgement reinforces the idea that an election  should primarily reflect the will of individual voters, not corporate interests. – Purpose of information: This expands the scope of the fundamental rights as a right to  information in the context of electoral transparency Reasoning of the court: the court interpreted the right to information as a crucial component of  the right to freedom of Speech and expression. It applied the “Proportionality test” and found that  the scheme’s anonymity was not a suitable or necessary means to Curbing black money and that  the infringement of right to information achieve was not justified. 

The court also held that unlimited corporate funding, under the scheme violated Article 14 (right  to equality).  

Preference to precedent: The court referred to its previous rulings, particularly Union of India v.  Association for democratic Reforms (2002)6. which established of the voters’ right ab out the  antecedents of electoral candidates. The to know court extended this principle to include the right  to know about political party funding. 

Critical analysis / commentary: 

The 2024 ruling in ADR v. Union of India7is a definitive judgmental right against the increasing  murkiness in political funding and confirms that the Article 19(1)(a) of the Constitution Right to  Information is the key to a meaningful vote. The Supreme Court declared the Electoral Bond  Scheme unconstitutional and by doing so, it rendered useless the effort by some to say that  administrative convenience or the policy objective of curbing black money could ever be a valid  excuse to keep the electorate in the dark. The real force of the ruling is the fact that it put into  practice a complex use of the Double Proportionality Test where it weighed the competing  interests between the privacy of the donors and the transparency interests of the people. The  Court cleverly noted that whereas the political affiliation of an individual falls under the domain of privacy, big-box financial contributions, particularly those of corporations, fall under the  realm of publicity because of its ability to potentially aid quid pro quo deals, as well as influence  biased public policy. Thus, the Bench has made the voter a proactive participant in the  constitutional decision-making process and the principle of One Person, One Vote is not turned  into a mockery of One Rupee, one Influence. Finally, this ruling is not just statutory  interpretation which is an exercise in constitutional vigilance that makes people have a renewed  confidence in the judiciary as a check on the excessive influence of money in a democratic  process. 

Impact / Implications 

Administrative Action  

The court ordered state bank of India (SBI)To stop issuing electoral bonds to the people and also  submit a detailed reports on all the bonds purchased and redeemed. The court also struck down  amendments made to different acts like, Income tax act, 1961, Companies act, 2013, etc. 

Conclusion: In electoral bonds case (2024), the Supreme court of india the electoral bond scheme and related amendments as unanimously struck down Constitutional, holding that anonymous  political funding violated voters’ right to information under article 19(1)(a), and undermined  electoral transparency. The court ordered the immediate halt of bond issuance directed the state  bank of india to disclose all dona an & recipient the election ensuring acc details Since April  2019, and required commission of india to publish this data, in political financing and reinforcing democratic integrity.

Reference(S):

1Electoral board scheme2018.official gazette notification. 

2Supreme court oberver. 

3Ibid, 5.12, 7 (4)

4Justice k.s. puttaswamy (Retd.) v. Union of India, (2017) 10 SCC 1 (India) 

5 Constitution of India

6 Union of India v. Ass’n for Democratic Reforms, (2002) 5 SCC 294 (India). 

7 Union of India v. Ass’n for Democratic Reforms, supra note 6.