THE ASSOCIATION FORDEMOCRATIC REFORMS V. UNION OF INDIA

CASE TITLE & CITATION:- 

Association for Democratic Reforms & Ors V. Union of India & Ors (2024 INSC 113)

COURT NAME & BENCH:- 

The Supreme Court of India 

In the Constitution bench of five judges name as follows:- 

• Hon’ble CJI D.Y. Chandrachud 
• Hon’ble Justice Sanjiv Khanna 
• Hon’ble Justice B.R. Gavai 
• Hon’ble Justice J.B. Pardiwala  
• Hon’ble Justice Manoj Misra 

DATE OF JUDGEMENT:- 

Judgement dated 15th February, 2024. 

PARTIES INVOLVED:- 

Petitioners- Association for Democratic Reforms (ADR); Common Cause, Communist Party  of India (Marxist) 

Respondent- Union of India & Ors 

FACTS OF THE CASE:- 

In the year of 2018, the Union Government back then introduced the Electoral Bond Scheme  via the Finance Act amendments, allowing any person or even companies to buy these  electoral bonds from the State Bank of India (SBI) and donate them to the eligible political  parties, with the donor’s identities being kept confidential from the public. 

Further amendments made to the Representation of the People Act, Income Tax Act &  Companies Act on disclosure requirements which thereby enabling the scope of anonymous  and potentially unlimited corporate funding to political parties.  

The ADR, CPI(M) and others challenged this scheme and the amendments as promoting  opacity in political funding, violating voter’s rights to know who funds political parties that  contest elections and other similar type of problems. 

ISSUES:- 

• Whether the Electoral Bond Scheme, 2018 and the related amendments made to  certain statutes violated the fundamental right to information of voters under Article  19 (1) (a)?
• Whether the Scheme and amendments permitting unlimited, anonymous corporate  donations to political parties were compatible with the principles of free and fair  elections and political equality? 

ARGUMENTS MADE BY THE PARTIES:- 

From the Petitioners: 

Voters have their fundamental right to have knowledge about the financial contributions  made to the political parties, this is an essential information to make an informed electoral  choice under Article 19 (1) (a). Anonymous donations and removal of disclosure  obligations foster opacity, encourage corruption and disproportionately favour the ruling  party which can access donor data through SBI and government apparatus.  

Unlimited corporate donations distort electoral equality as companies of any field can  donate ransom amount of money, diluting the voice of individual citizens and allowing  corporate capture of politics. 

From the Respondents: 

The introduction of this scheme is a policy measure aimed at curbing of black money  while funding the political parties by routing donations through banking channels with  KYC compliance and Courts should defer to such economic policy. And donor anonymity is a necessity to protect from victimisation and retaliation by the rival parties. Secrecy  does not substantially affect voter’s rights at the end. 

Since SBI and the regulatory authorities know donor identities, the Scheme actually do  not create opacity, and existing disclosure requirements are sufficient. 

JUDGEMENT:- 

The Supreme Court held unanimously allowed the petitions and struck down this scheme  and other amendments made in respect of it declaring it as unconstitutional for violating  Article 19 (1) (a) of the Constitution. It also said that information about the political  funding of political parties is part of the voter’s right to information. 

The Bench directed the State Bank of India (SBI) must cease issuing the electoral bonds  and disclose it to the Election Commission of India about the details of bonds purchased,  redeemed and other necessary information. Thus, this specific scheme were invalidated as  being inconsistent with constitutional guarantees of transparency and free & fair  elections. 

RATIO DECIDENDI:- 

• The voter’s right to information about the sources of political funding of parties  contesting elections is protected under Article 19(1)(a) of the Constitution, since such  information directly affects the ability to make an informed electoral choice especially  in representational democratic country like India.
• Applying the proportionality test, the Court accepted the ‘curbing black money in  political funding’ as a legitimate aim but simultaneously it held that complete donor  anonymity and removal of disclosure duties imposed a disproportionate restriction on  Article 19(1)(a). 
• The Court also reasoned that the amendments allowing unlimited and opaque  corporate donations violated the constitutional principles of political equality and free  & fair election. 

CONCLUSION:- 

The Apex Court concluded on emphasizing over the transparency in political funding is  essential to preserve the integrity of elections, to ensure that government is responsive to  citizens rather than to undisclosed financiers. Free and fair elections are part of the basic structure and the right to know about the political party funding within a broader  constitutional commitment to democratic accountability.  

This verdict signalled a strong judicial stance against the normativity of opaque corporate  influence in politics and reaffirmed that policy mechanisms to tackle black money cannot be  designed at the cost of the fundamental rights. By ordering disclosure of these electoral  bonds, it re-centre elections around informed citizen choice and political equality.