Authored By: Muskan Pandey
University of Allahabad
I. Case Citation and Basic Information
Case Name: Association for Democratic Reforms & Anr. v. Union of India & Ors.
Citation: 2024 INSC 113; (2024) 5 SCC 1; [2024] 2 S.C.R. 420
Court: Supreme Court of India, Constitution Bench
Date of Judgment: 15 February 2024
Bench: Dr. D.Y. Chandrachud, CJI; Sanjiv Khanna, J.; B.R. Gavai, J.; J.B. Pardiwala, J.; Manoj Misra, J.
Petitioners: Association for Democratic Reforms, Common Cause, Communist Party of India (Marxist), and connected writ petitions
Respondents: Union of India, Election Commission of India
II. Introduction
The Electoral Bonds case is one of the few Supreme Court rulings of the last decade that changed how Indian elections are actually financed, not just how they are talked about. At its centre sat a scheme introduced in 2018 that let anyone buy a bearer bond from the State Bank of India and hand it to a political party without either side having to say who paid whom. Five judges, ruling unanimously on 15 February 2024, decided that this anonymity could not survive a voter’s right to know. The judgment matters less for its constitutional theory, which mostly restates settled ground on Article 19(1)(a), and more for what it forced open: years of hidden donor data that reshaped public debate on money in Indian politics almost overnight.
III. Facts of the Case
The Electoral Bond Scheme was notified on 2 January 2018 under Section 31(3) of the Reserve Bank of India Act, 1934. It let citizens and companies buy interest-free bearer instruments from specified SBI branches during fixed windows each year and hand them to any registered party that had secured at least one per cent of votes in the last election. Neither the donor’s identity nor the amount had to be disclosed to the public or the Election Commission.
The scheme arrived bundled with amendments passed through the Finance Act, 2017 as a money bill. These changes removed the 7.5 per cent cap on corporate donations under the Companies Act, dropped the requirement that companies name the parties they gave to, and altered reporting duties under the Representation of the People Act and the Income Tax Act. Together, they meant even loss-making shell companies could funnel unlimited, untraceable money into party coffers.
Association for Democratic Reforms and other petitioners challenged the scheme almost as soon as it was notified, arguing it gutted transparency the Court itself had built into election law over two decades. The case sat before the Court for roughly six years, with a 2019 interim order requiring sealed-cover disclosure to the Election Commission, before a five-judge bench finally heard it in October and November 2023.
IV. Legal Issues
Whether unlimited, anonymous corporate and individual funding of political parties violates the voter’s right to information under Article 19(1)(a) of the Constitution.
Whether the removal of the cap on corporate donations under the Companies Act amendment is manifestly arbitrary and offends Article 14.
Whether donor anonymity can be justified as protecting a donor’s right to informational privacy, and if so, how that privacy interest should be weighed against the voter’s right to know.
Whether passing these amendments through the Finance Act as a money bill, bypassing the Rajya Sabha, was constitutionally permissible.
V. Arguments Presented
5.1 Petitioner/Appellant’s Arguments
Counsel for the petitioners, including Prashant Bhushan and Kapil Sibal, argued that voters cannot make an informed choice if they do not know who is bankrolling the parties asking for their vote. They pointed to the Court’s 2002 ruling in Union of India v. Association for Democratic Reforms, which recognised a voter’s right to know candidates’ financial and criminal backgrounds, and argued the logic extends naturally to party funding. Scrapping the corporate donation cap, they said, opened the door to quid pro quo arrangements between big business and ruling parties. And SBI’s ability to match donor and bond serial numbers meant the scheme was never truly anonymous, only anonymous to the public, while remaining traceable by the government of the day.
5.2 Respondent’s Arguments
The Union of India, represented by Attorney General R. Venkataramani and Solicitor General Tushar Mehta, defended the scheme as a genuine reform pulling political funding out of the cash economy and into the formal banking system. Donors, they argued, have their own right to informational privacy under Article 21, and anonymity shields them from retaliation or coercion if their contributions became public. Parliament, the government maintained, is entitled to experiment with policy in this space, and courts should be slow to strike down a reform on speculative rather than demonstrated harm.
VI. Court’s Reasoning and Analysis
Chief Justice Chandrachud, writing for the bench with a concurring opinion from Justice Khanna, framed the dispute as a conflict between two rights rather than a simple validity question. The Court accepted that donors have an informational privacy interest, but held that it cannot cover political contributions, which are made specifically to influence policy and electoral outcomes and are therefore inherently public in character. Weighed against the voter’s right to know, the donor’s privacy claim gave way.
On proportionality, the Court found that complete anonymity was not the least restrictive means of curbing black money in elections. A modest disclosure threshold existed as an alternative and had not been considered before the government opted for blanket secrecy. The removal of the corporate donation cap was struck down separately as manifestly arbitrary, since it erased the distinction between genuine profit and a shell entity built purely to route money to a chosen party.
The bench declined to rule on the money-bill question, since it had already been referred to a larger bench in an earlier case, leaving that issue open for future litigation.
VII. Judgment and Ratio Decidendi
The Court unanimously declared the Electoral Bond Scheme unconstitutional and struck it down along with the enabling amendments to the Companies Act, the Representation of the People Act, and the Income Tax Act. It directed SBI to stop issuing bonds immediately and to disclose to the Election Commission, by 6 March 2024, the details of every bond purchased since the interim order of 12 April 2019. The Commission was ordered to publish this on its website by 13 March 2024, and unencashed bonds within their validity period had to be refunded.
The ratio decidendi is narrow but consequential: anonymity in political funding, when it is total rather than calibrated, cannot be justified by an appeal to donor privacy once it forecloses the voter’s ability to assess who is financing the parties competing for power. Blanket secrecy fails the proportionality standard when a less restrictive, disclosure-based alternative is available.
VIII. Critical Analysis
8.1 Significance of the Decision
This is the first time the Supreme Court has struck down an entire funding mechanism for political parties rather than tinkering with disclosure rules at the margins. It also revived, and sharpened, the right-to-know jurisprudence first built in the 2002 ADR case, extending it from candidates to the parties themselves.
8.2 Implications and Impact
The immediate effect was practical rather than theoretical. Once SBI handed over its data, journalists cross-matched donor and recipient lists within weeks, revealing patterns invisible for six years, including donations from companies facing regulatory scrutiny around the same period they gave money. That disclosure shifted the 2024 election conversation toward corporate influence on policy in a way no prior report on political funding had managed. Beyond the immediate fallout, the ruling forces any future funding mechanism Parliament designs to build in disclosure by default, and it reinforces the Court’s willingness to use proportionality review over pure rationality review when a law touches a constitutional right.
8.3 Critical Evaluation
The judgment has gaps. It struck down the scheme going forward but ordered no investigation into whether specific donations had actually influenced government decisions, leaving that question to political and media scrutiny rather than legal consequence. It also sidestepped the money-bill route by which the scheme was passed in the first place, a procedural shortcut that arguably deserved a direct ruling. And without a replacement framework, India reverts to the pre-2018 regime, which had its own well-documented cash-donation problems; the ruling closes one loophole without fully solving the financing gap that motivated the scheme.
IX. Conclusion
The Electoral Bonds judgment reset the terms on which Indian political parties can raise money, insisting that a voter’s right to know outweighs a donor’s claim to invisibility once that donor is trying to shape who governs. Its lasting value lies less in doctrine than in disclosure: six years of hidden transactions became public record within weeks of the ruling, and any scheme Parliament designs next will have to reckon with that precedent rather than write around it.
X. Reference(S):
Association for Democratic Reforms & Anr. v. Union of India & Ors., 2024 INSC 113 (Supreme Court of India, 15 February 2024).
Union of India v. Association for Democratic Reforms, (2002) 5 SCC 294.
Supreme Court Observer, ‘Constitutionality of the Electoral Bond Scheme’, scobserver.in.
Legal Bites, ‘Case Analysis: Association for Democratic Reforms & Anr. v. Union of India & Ors. (2024)’, legalbites.in.
LawFoyer, ‘Association for Democratic Reforms & Anr. vs. Union of India & Ors.’, lawfoyer.in.
Indian Kanoon, full text of judgment, indiankanoon.org/doc/121499464.
