A) ABSTRACT / HEADNOTE
The case of Association for Democratic Reforms & Anr. v. Union of India & Ors. ([2024] 2 S.C.R. 420: 2024 INSC 113) revolves around the constitutional validity of the Electoral Bond Scheme, 2018, introduced to allow anonymous contributions to political parties. It also examines amendments under the Finance Act, 2017, impacting the Reserve Bank of India Act, 1934, the Representation of the People Act, 1951, the Income Tax Act, 1961, and the Companies Act, 2013. The challenge was primarily on grounds of violating the principles of free and fair elections under Article 14, and the right to information under Article 19(1)(a) of the Indian Constitution. The Supreme Court declared the scheme unconstitutional, citing its infringement on voters’ rights and its arbitrariness, particularly with provisions enabling unlimited corporate donations and non-disclosure of contributors’ identities.
Keywords:
Electoral Bond Scheme, Right to Information, Article 14, Finance Act 2017, Corporate Donations.
B) CASE DETAILS
- Judgment Cause Title: Association for Democratic Reforms & Anr. v. Union of India & Ors.
- Case Number: Writ Petition (C) No. 880 of 2017.
- Judgment Date: February 15, 2024.
- Court: Supreme Court of India.
- Quorum: Dr. Dhananjaya Y Chandrachud, CJI, Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala, Justice Manoj Misra.
- Author: Chief Justice Dr. Dhananjaya Y Chandrachud.
- Citation: [2024] 2 S.C.R. 420: 2024 INSC 113.
- Legal Provisions Involved:
- Article 14 and Article 19(1)(a) of the Constitution of India.
- Sections 29C of the Representation of the People Act, 1951.
- Section 182(3) of the Companies Act, 2013.
- Section 13A(b) of the Income Tax Act, 1961.
- Section 31(3) of the Reserve Bank of India Act, 1934.
- Judgments Overruled by the Case: None.
- Case Related to Which Law Subjects: Constitutional Law, Election Law, Corporate Law.
C) INTRODUCTION AND BACKGROUND OF JUDGMENT
The Electoral Bond Scheme, introduced in 2018, aimed to legitimize electoral funding while maintaining donor anonymity. However, it faced significant opposition, particularly from organizations like the Association for Democratic Reforms (ADR), which argued that the scheme promoted opacity in political funding, undermining the principles of free and fair elections. The amendments under the Finance Act, 2017, enabled companies, including loss-making entities, to make unlimited donations without disclosing the beneficiary party.
The petitioner contended that these amendments allowed disproportionate influence by corporates and powerful individuals, bypassing transparency mechanisms. The matter brought into question critical aspects of electoral reforms, including the clash between the right to privacy of donors and the right to information of voters.
D) FACTS OF THE CASE
- Electoral Bonds: Introduced as bearer instruments, allowing donations without revealing the identity of the donor or recipient political party.
- Amendments under Finance Act, 2017:
- Removed the cap of 7.5% of net profits on corporate donations.
- Allowed anonymous corporate donations.
- Lack of Transparency: The scheme and amendments enabled non-disclosure of details about political funding, effectively reducing public oversight.
- Impact on Democracy: Critics argued the scheme disproportionately benefited ruling parties due to asymmetrical access to donor information.
E) LEGAL ISSUES RAISED
- Validity of Electoral Bond Scheme under Article 14 and Article 19(1)(a).
- Impact of amendments on free and fair elections.
- Balance between informational privacy of donors and voters’ right to information.
- Compliance of the scheme with democratic principles.
F) PETITIONER/APPELLANT’S ARGUMENTS
- Violation of Article 19(1)(a): The scheme hindered voters’ ability to make informed electoral decisions by withholding crucial funding details.
- Arbitrariness under Article 14: Unlimited corporate funding diluted political equality, enabling undue influence on electoral outcomes.
- Right to Know: Drawing from precedents like PUCL v. Union of India (2003), the petitioners emphasized voters’ right to know the source of funding to maintain electoral integrity.
- Danger of Quid Pro Quo: The anonymity mechanism incentivized quid pro quo arrangements, undermining accountability.
G) RESPONDENT’S ARGUMENTS
- Curbing Black Money: The scheme aimed to reduce black money in politics by introducing banking channels.
- Donor Privacy: Ensuring anonymity protected donors from victimization or retribution.
- Economic Policy: Respondents argued the scheme was part of broader economic reforms and should be adjudicated with deference to legislative policy.
H) JUDGMENT
a. Ratio Decidendi
The Court struck down the Electoral Bond Scheme as unconstitutional, citing the following:
- It violated Article 19(1)(a) by restricting voters’ right to information.
- The amendments to Section 182 of the Companies Act, 2013, were declared manifestly arbitrary under Article 14.
b. Obiter Dicta
The judgment observed that transparency in political funding was integral to the survival of democracy, outweighing claims of donor privacy.
c. Guidelines
- Immediate Halt: Directed the State Bank of India to cease issuance of electoral bonds.
- Mandatory Disclosure: Ordered political parties to disclose details of bonds received.
- Public Access: Required the Election Commission to publish this data for public scrutiny.
I) CONCLUSION & COMMENTS
The judgment emphasized the primacy of free and fair elections, ensuring transparency and accountability in electoral funding. It set a precedent for prioritizing voters’ rights over corporate and individual donor privacy, reinforcing the democratic ethos.
J) REFERENCES
a. Important Cases Referred
- PUCL v. Union of India (2003) – Right to know as part of free speech.
- Common Cause v. Union of India (2017) – Electoral reforms for transparent funding.
b. Important Statutes Referred
- Constitution of India – Articles 14, 19(1)(a).
- Representation of the People Act, 1951 – Section 29C.
- Companies Act, 2013 – Section 182.
- Income Tax Act, 1961 – Section 13A.
