SAVITRIBAI PHULE PUNE UNIVERSITY, PUNE
DEPARTMENT OF LAW
SUBJECT NAME
RESEARCH METHODOLOGY-I
CASE COMMENT
ON
[2024] 3 S.C.R. 417 : 2024 INSC 209
Association for Democratic Reforms and Another
vs.
Union of India and Others
(2024)
Under Guidance and supervision of
Prof. Kashmira Lonkar
Submitted By
UMESH SUDHAKAR
SABLE
CITATION: [2024] 3 S.C.R. 417
BENCH: Dhananjaya Y Chandrachud, CJI, Sanjiv Khanna, B R Gavai, J B
Pardiwala and Manoj Misra, JJ
JUDGEMENT: 15 FEBRUARY 2024
INTRODUCTION: In India, the Electoral Bond Scheme (EBS) has been a
subject of Controversy since its inception. Introduced by the ruling
government in 2018, the EBS created a separate category of financial
instrument known As the Electoral Bond which functions like a Promissory
Note. Individuals Or corporations could, subject to fulfilling certain criteria,
purchase these Bonds through the State Bank of India as the authorised
bank, which Would then be transferred to registered political parties. The
political Party in question was required to encash these bonds within fifteen
days. Importantly, the EBS by design did not permit any information of the
Donor, or the political parties they had contributed to, to be disclosed to The
public, 3 falling outside the scope of the Right to Information Act, 2005. To
give effect to the operation of the EBS, correspondent Amendments were
also made to the Finance Act, 2017, Representation of Peoples Act, 1951, the
Reserve Bank of India Act, 1934, the Income Tax Act, 1961 and the
Companies Act, 2013.4 The cumulative effect of all these Amendments was
that political parties were exempted from maintaining Records on the receipt
of electoral bonds beyond the threshold of Indian Rupees Twenty Thousand
(below which is considered a small ticket The case Association for
Democratic Reforms and Another vs Union of India (2024) refers to a legal
challenge concerning the Electoral Bonds Scheme introduced by the
government of India. The petitioners, led by the Association for Democratic
Reforms (ADR) argue that the scheme undermines transparency in political
funding by allowing anonymous donations to political parties. The Electoral
Bonds Scheme which was introduced in 2018, enables individuals or entities
to purchase electoral bonds from designated banks and donate them to
political parties. These bonds can be bought without revealing the identity of
the donor to the public, though political parties receiving the funds must
disclose them to the Election Commission. The petitioners contend that this
lack of transparency leads to the potential for corrupt practices and
excessive influence of money in politics, as it allows undisclosed and
potentially foreign donations to influence elections. The Supreme Court of
India has been hearing the case, and the ADR and other petitioners argue
that the scheme violates the right to information, the right to a free and fair
election, and principles of accountability in democratic governance. The
government, on the other hand, defends the scheme as a legitimate means
to ensure the security of political donations and to curb the use of black
money. The case Is significant because it could have a profound impact on
the future of political funding in India, potentially leading to more stringent
regulations or greater transparency. The Association for Democratic Reforms
and Another vs Union of India 2024 case is a landmark judgment. On
February 15, 2024, the Supreme Court of India struck down the Electoral
Bonds Scheme (EBS) for being ultra vires to the Representation of the People
Act, 1951. The court held that the EBS was unconstitutional as It allowed for
anonymous donations to political parties, which could lead to corruption and
undermine the democratic process. The judgment emphasized the
importance of transparency in political funding and the need to prevent the
influence of money power in politics. The Supreme Court also directed the
State Bank of India to furnish all information related to electoral bonds to the
Election Commission of India ². This judgment is a significant step towards
promoting transparency and accountability in political funding in India.
FACT OF THE CASE:
The Association for democratic Reforms and Another vs Union of India case
revolves around the Electoral Bond Scheme, which was introduced by the
Indian government to facilitate anonymous donations to political parties. The
petitioners challenged the constitutional validity of the Scheme, arguing that
it allows for unaccounted money to influence the electoral process ¹. 1The
case highlights the concerns surrounding the financing of political parties
1
Supreme Court of India
https://digiscr.sci.gov.in › …
[2024] 3 SCR 417 – Digital Supreme Court Reports
and the potential for corruption. The Electoral Bond Scheme was introduced
through amendments to the Reserve Bank of India Act, the Representation of
the People Act, and the Income Tax Act ¹. The Supreme Court’s judgment in
this case is significant, as it addresses the crucial issue of transparency in
political funding. The Court’s decision has implications for the functioning of
democracy in India and the regulation of political finance ².
ISSUES OF THE CASE:
a. Whether unlimited corporate funding to political parties, As
envisaged by the amendment to Section 182(1) of the Companies
Act infringes the principle of free and fair elections And violates
Article 14 of the Constitution; and
b. Whether the non-disclosure of information on voluntary
contributions to political parties under the Electoral Bond Scheme
and the amendments to Section 29C of the RPA, Section 182(3) of
the Companies Act and Section 13A(b) of the IT Act Are violative of
the right to information of citizens under Article 19(1)(a) of the
Constitution.2
ACTS:
Constitution of India; Finance Act, 2017; Companies Act,
1956; Reserve Bank of India Act, 1934; Representation of
The People Act, 1951; Income Tax Act, 1961; Companies
Act, 2013; Companies (Amendment) Act, 1960; Companies
(Amendment)Act, 1969; Companies (Amendment)Act, 1985;
2
https://main.sci.gov.in
Taxation Laws (Amendment) Act, 1978; Evidence Act, 1872;
Election and Other Related Laws (Amendment) Act, 2003;
Election Symbols (Reservation and Allotment) Order, 1968;
Conduct of Election Rules, 1961.
JUDGMENT
a. The Electoral Bond Scheme, the proviso to Section 29C(1) of the
Representation of the People Act 1951 (as amended by Section 137 of
Finance Act 2017), Section 182(3) of the Companies Act (as amended
by Section 154 of the Finance Act 2017), And Section 13A(b) (as
amended by Section 11 of Finance Act 2017) are violative of Article
19(1)(a) and unconstitutional; and The deletion of the proviso to
Section 182(1) of the Companies Act permitting unlimited corporate
contributions to political parties Is arbitrary and violative of Article 14.
We direct the disclosure of information on contributions received By
political parties under the Electoral Bond Scheme to give Logical and
complete effect to our ruling. On 12 April 2019, this Court issued an
interim order directing that the information of Donations received and
donations which will be received must be Submitted by political parties
to the ECI in a sealed cover. This Court directed that political parties
submit detailed particulars Of the donors as against each Bond, the
amount of each bond And the full particulars of the credit received
against each bond, Namely, the particulars of the bank account to
which the amount Has been credited and the date on which each such
credit was Made. During the course of the hearing, Mr Amit Sharma,
Counsel For the ECI, stated that the ECI had only collected information
on Contributions made in 2019 because a reading of Paragraph 14 Of
the interim order indicates that the direction was only limited To
contributions made in that year. Paragraphs 13 and 14 of the Interim
order are extracted below: “13. In the above perspective, according to
us, the just And proper interim direction would be to require all the
Political parties who have received donations through Electoral Bonds
to submit to the Election Commission of India in sealed cover, detailed
particulars of the donors As against each bond; the amount of each
such bond And the full particulars of the credit received against Each
bond, namely, the particulars of the bank account To which the amount
has been credited and the date of Each such credit. The above details
will be furnished forthwith in respect Of Electoral Bonds received by a
political party till date. The details of such other bonds that may be
received by Such a political party upto the date fixed for issuing such
Bonds as per the Note of the Ministry of Finance dated 28.2.2019, i.e
15.5.2019 will be submitted on or before 30th May, 2019. The sealed
covers will remain in the custody Of the Election Commission of India
and will abide by such Orders as may be passed by the Court.”
Paragraph 14 of the interim order does not limit the operation
Paragraph 13. Paragraph 13 contains a direction in unequivocal terms
to political parties to submit particulars of contributions received
Through Electoral Bonds to the ECI. Paragraph 14 only prescribes
Timeline for the submission of particulars on contributions when the
Window for Electoral Bond contributions was open in 2019. In view Of
the interim direction of this Court, the ECI must have collected
Particulars of contributions made to political parties through Electoral
Bonds.
In view of our discussion above, the following directions are issued:
The issuing bank shall herewith stop the issuance of Electoral Bonds; SBI
shall submit details of the Electoral Bonds purchased since The interim order
of this Court dated 12 April 2019 till date to The ECI. The details shall include
the date of purchase of each Electoral Bond, the name of the purchaser of
the bond and the Denomination of the Electoral Bond purchased; SBI shall
submit the details of political parties which have Received contributions
through Electoral Bonds since the interim Order of this Court dated 12 April
2019 till date to the ECI. SBI Must disclose details of each Electoral Bond
encashed by Political parties which shall include the date of encashment and
The denomination of the Electoral Bond; SBI shall submit the above
information to the ECI within threeWeeks from the date of this judgment, that
is, by 6 March 2024; The ECI shall publish the information shared by the SBI
on its Official website within one week of the receipt of the information, That
is, by 13 March 2024; and Electoral Bonds which are within the validity
period of fifteen Days but that which have not been encashed by the political
Party yet shall be returned by the political party or the Purchaser depending
on who is in possession of the bond To the issuing bank. The issuing bank,
upon the return of The valid bond, shall refund the amount to the purchaser’s
Account. Writ petitions are disposed of in terms of the above judgment.
Pending applications(s), if any, stand disposed of.
Analysis:
The judgment is a significant step towards promoting transparency and
accountability in political funding in India. The Court’s decision highlights the
importance of protecting the integrity of the electoral process and ensuring
that citizens have access to information about the sources of funding for
political parties. The judgment is likely to have a significant impact on the
functioning of political parties in India. It may lead to increased transparency
and accountability in political funding, and may also reduce the influence of
money power in politics.
IMPACT OF DECISION AND APPLICATION:
On Political Funding : The judgment has significant implications
for the transparency of political funding in India. While it permits
the continuation of the Electoral Bond Scheme, it has also been
criticized for potentially allowing greater opacity in political
donations. This means that voters, the media, and civil society
may not be able to easily track the sources of funding for political
parties, which could undermine the integrity of elections.
On Democracy : Critics argue that the scheme undermines
democratic accountability by facilitating anonymous, large-scale
donations. It could potentially lead to a situation where political
parties are beholden to corporate or other powerful interests,
influencing policy decisions and electoral outcomes in ways that
are not visible to the public.
On Transparency and Accountability : The decision has
sparked a debate about the need for a more transparent system
of political funding, where donors’ identities are disclosed to the
public. Proponents of the scheme argue that it has helped clean
up political donations by encouraging legal, tracked donations,
but opponents believe it still lacks adequate transparency.
Potential Future Developments: Although the Court did not
strike down the scheme, there is still a possibility of future
challenges or legislative changes. Civil society groups, opposition
parties, and other stakeholders may continue to push for reforms
in electoral funding laws to increase transparency and reduce the
influence of money in politics.
CONCLUSION:
The Supreme Court’s decision on the Electoral Bond Scheme case,
while upholding the validity of the scheme, has drawn mixed
reactions. Its application has significant implications for
transparency, electoral integrity, and the broader functioning of
democracy in India. The debate over the Electoral Bond Scheme is
likely to continue, with calls for reforms aimed at ensuring that
political funding remains transparent and accountable. The
Supreme Court’s attempt to make the electoral process fully
transparent is a welcome step. Setting a precedent, the Court
struck down a set of legislations for it believed that the State
could have applied a less restrictive and less encroached
approach towards Fundamental Rights. The way forward could be
the formulation of a new scheme on similar lines with the
erstwhile Electoral Trust. To enable public funding of elections and
guarantee that all parties get set quantities during the elections,
a National Election Fund that offers 100% tax exemption for
business and individual contributions might be established.
Independent audits by third parties is also a viable solution.
Transparency in the transactions of political parties would be
guaranteed by independent audits. This would assist in locating
the funding sources and verifying their legitimacy. The legislature
must keep in mind accountability and transparency as paramount
factors while forming electoral policies. This ruling certainly will
have long-term effects on the election process and is unarguably
one of the most important rulings of recent times.
