| Court | Supreme Court of India |
|---|---|
| Citation | 2024 INSC 113 |
| Decided | 15 February 2024 |
| Bench | Judgment by Dr Dhananjaya Y Chandrachud, CJI |
In short: Several petitioners, including Association for Democratic Reforms, challenged the Electoral Bond Scheme, which introduced anonymous financial contributions to political parties. The Supreme Court examined whether secret funding violates a voter's right to information and whether unlimited corporate funding is arbitrary. The source text we reviewed does not reproduce the final directions, so this note does not state the final outcome.
Facts
Political parties need money, and the law has long tried to regulate who may give it and how much. The Companies Act 1956 and the Representation of the People Act 1951 did not originally regulate donations by companies and individuals. The Companies (Amendment) Act 1960 added Section 293A. Under it, a company could not give more than twenty-five thousand rupees, or five per cent of its average net profits over the three preceding financial years (whichever was greater), to a political party or for a political purpose. Companies also had to disclose these donations in their profit and loss accounts, naming the recipient. Default in disclosure was punishable with a fine of up to five thousand rupees.
The Companies (Amendment) Act 1969 went further and banned such contributions. Companies that broke the ban faced a fine of up to five thousand rupees, and defaulting officers could face imprisonment of up to three years.
The Finance Act 2017 then changed several laws together: the Reserve Bank of India Act 1934, the Representation of the People Act 1951, the Income Tax Act 1961 and the Companies Act 2013. Section 31 of the RBI Act allows only the RBI or the Central Government to issue bearer bills or notes. The Finance Act added Section 31(3), which lets the Central Government authorise any scheduled bank to issue electoral bonds. The Electoral Bond Scheme introduced anonymous financial contributions to political parties.
The petitioners invoked the Court's power under Article 32 of the Constitution in four writ petitions heard together, led by Writ Petition (C) No. 880 of 2017. They challenged the Scheme and the related Finance Act provisions. The judgment also records objections that the RBI and the Election Commission of India had raised to the Scheme.
Issues
- Does withholding information about who funds political parties infringe the voter's right to information under Article 19(1)(a)?
- If it does, is that infringement justified, for example by the aim of curbing black money or by donors' informational privacy?
- How should the Court balance the right to information against the right to informational privacy?
- Are the Electoral Bond Scheme and the amendments in the Finance Act valid, including the change to Section 182(3) of the Companies Act?
- Is unlimited corporate funding arbitrary under Article 14, after the omission of the first proviso to Section 182 of the Companies Act?
Held
The text available to us contains the judgment's contents page, its opening paragraphs and a closing table comparing review standards. It does not include the final "Conclusion and Directions" (Part H). We therefore do not state the final order here. Please read the full judgment for it. What the text does show about the Court's approach:
- The Court treated judicial review and the close association of politics and money as starting points for its analysis.
- It traced the right to information under Article 19(1)(a) and examined the earlier ADR and PUCL judgments on a voter's right to know. It also asked whether the focal point of elections is the candidate or the political party.
- It considered whether information on political funding is essential for a voter to choose effectively.
- To weigh the right to information against donor privacy, it dealt with a "double proportionality standard". An annexed table compares tests used elsewhere, such as the Canadian necessity test, Australia's approach, US strict scrutiny and the UK Wednesbury unreasonableness test.
- On unlimited corporate funding, it examined arbitrariness as part of Article 14, including "manifest arbitrariness" beyond the Shayara Bano case.
Why it matters
- The case asks whether citizens can know who funds the parties that seek their votes. It sets that right against donors' privacy.
- The judgment shows how the Court weighs two competing fundamental rights, using a proportionality approach.
- It tests whether Parliament can change company law, tax law, election law and banking law through a single Finance Act, and whether the result meets Article 14's ban on arbitrariness.
- Its discussion of earlier rulings (ADR, PUCL, Shayara Bano, Anuradha Bhasin) makes it a useful reference for students of constitutional law.
Exam one-liner
In a challenge to the Electoral Bond Scheme, the Supreme Court examined the voter's right to information under Article 19(1)(a), donor privacy through double proportionality, and arbitrariness under Article 14 in unlimited corporate funding. (ADR v. Union of India, 2024 INSC 113)
Frequently asked questions
What is the Electoral Bond Scheme?
It introduced anonymous financial contributions to political parties. The Finance Act 2017 added Section 31(3) to the RBI Act, allowing the Central Government to authorise any scheduled bank to issue electoral bonds.
Why did the petitioners go straight to the Supreme Court?
They filed under Article 32 of the Constitution, which lets a person approach the Supreme Court directly to challenge the constitutional validity of a law.
What did companies' political donations look like earlier?
Section 293A, added in 1960, capped company donations and required disclosure. The 1969 amendment banned such contributions altogether, with fines and possible imprisonment of officers for breach.