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Association for Democratic Reforms & Anr. vs Union of India & Ors.

Not available · 2024 INSC 113Decided 15 Feb 2024
Not available

Background

An NGO working on electoral transparency, along with connected petitioners, challenged the Electoral Bond Scheme introduced by the Union Government in 2017-18, along with related amendments to the Representation of the People Act, the Companies Act, and the Income Tax Act. The scheme allowed individuals and companies to anonymously donate unlimited money to political parties by purchasing bearer bonds from the State Bank of India, with neither the public nor (in practice) the Election Commission able to trace who funded which party. The petitioners argued this anonymity violated citizens' right to know who funds political parties (essential to making an informed vote), while the government defended it as necessary to curb the flow of illicit "black money" into politics and protect donor privacy.

Decision Breakdown

The Constitution Bench unanimously struck down the Electoral Bond Scheme as unconstitutional. It held that the complete anonymity of political donations violated the voters' right to information under Article 19(1)(a) of the Constitution, since financial contributions to a party can reveal quid pro quo arrangements and policy influence that voters are entitled to know before casting their ballot; the Court found that curbing black money, while a legitimate goal, did not justify a total blackout of information and that less restrictive alternatives (e.g., contribution caps with disclosure) existed. It also struck down the 2017 amendment that removed the earlier cap on how much a company could donate to political parties, holding that unlimited corporate political contributions were manifestly arbitrary and violated Article 14, since companies can influence elections far more than individuals and the removed cap had no adequate substitute safeguard. As a result, the Court ordered an immediate stop to the issuance of further Electoral Bonds, directed the SBI to disclose to the Election Commission full details of every bond purchased and encashed since April 2019 (donor names, amounts, and recipient parties), and directed the Election Commission to publish this information publicly; unencashed valid bonds were ordered returned for a refund.

Lesson Learnt

Voters have a constitutional right to know who is financially bankrolling political parties, because that information affects how they exercise their franchise; a scheme that hides political donations behind total anonymity cannot survive constitutional scrutiny even if its stated aim is to curb black money, and companies cannot be permitted unlimited, undisclosed influence over the political process.

Official source (sci.gov.in)View Judgment (PDF)

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