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CASE NOTE:

ASSOCIATION FOR DEMOCRATIC REFORMS V. UNION OF INDIA (ELECTORAL BONDS CASE)

2024 INSC 113

The Supreme Court held that the Electoral Bond Scheme was unconstitutional for violating
the right to information of voters.

PRELIMINARY INFORMATION

PETITIONER: Association for Democratic Reforms; Common Cause; Communist Party of

India (Marxist)

Lawyers: Advocate Prashant Bhushan; Senior Advocate Kapiil Sibal; Advocate Shadan
Farasat; Advocate Nizam Pasha; Senior Advocate Vijay Hansaria

RESPONDENT : Union of India; Election Commission

On 1 April 2019, the Union government submitted a rejoinder claiming that the EBS was “a
pioneer step in bringing electoral reforms, to ensure that the spirit of transparency and
accountability in political funding is maintained.” The Union claimed that political parties
largely received funds through cash donations, leading to an “unregulated flow of black
money.” The Union assured that these issues would no longer hamper political funding
because there is only one authorised bank—the State Bank of India—that can issue such
bonds. Further, providing KYC details ensure accountability.

NOTE: On joining of the Election Commission of India as a respondent:

On 25 March 2019, the Election Commission of India (ECI), one of the respondents, filed
an affidavit opposing the Electoral Bond Scheme. The affidavit claimed that the scheme is
contrary to the goal of transparency in political finance. It also claimed that the ECI had
shared a letter to the Union Government on 26 May 2017, warning against the
“repercussions/impact on the transparency aspect of political finance/funding.” Further, they
submitted that exempting political parties from sharing details regarding contributions would
keep information on foreign funding in the dark. The affidavit stated, “unchecked foreign
funding of political parties in India, which could lead to Indian policies being influenced by
foreign companies.”
Lawyers: Attorney General R. Venkataramani; Solicitor General Tushar Mehta; Advocate
Amit Mishra; Advocate Kanu Agarwal

FACTS:

 The Electoral Bonds scheme was introduced by Union Minister Arun Jaitley in the
budget session of 2017-2018 based on the argument that India lacks a transparent
method of funding political parties, which form the linchpin of free and fair elections.
 What are these Electoral Bonds?
o An electoral bond is like a promissory note. It is a bearer instrument payable
to the bearer on demand. However, unlike a promissory note, which contains
the details of the payer and payee, an electoral bond has no information on
the parties in the transaction at all, providing complete anonymity and
confidentiality to the parties.
o On 2 January 2018, the Ministry of Finance issued a notification that
introduced the Electoral Bond Scheme, 2018.
o Under the 2018 Scheme, certain branches of the State Bank of India (SBI)
were authorised to sell electoral bonds. Bonds can be purchased in
denominations of ₹ 1,000, ₹10,000, ₹1,00,000, ₹10,00,000, and ₹
1,00,00,000 from the SBI.
o They are to be sold for 10 days in January, April, July, and October each year.
The identity of the purchaser remains anonymous to everyone, except the SBI,
who must record the buyer’s Know Your Customer (KYC) details.
o Political parties which secured more than one percent votes “in the last general
election to the House of the People or a Legislative Assembly” are eligible to
accept donations through electoral bonds. The political parties must encash the
bond within 15 days of receiving it. After this period ends, the funds are
deposited to the Prime Minister’s Relief Fund.
o The aim of electoral binds was to make sure that the identity of the donor
remains secret and confidential, while ensuring that the donations come
from tax paid money only.
 I am a little confused as to how electoral bonds would achieve that.
o
 Background:
o On corporate funding, one must note that the court pointed out that over time,
the restriction as to the corporations contributing to parties have been watered
down, evident latest by the electoral bonds laws.
 What were the legal changes that were made to introduce Electoral Bonds?
 o Allowing foreign companies to donate: On 14 May 2016, the Finance Act,
2016 came into force. It amended Section 2(1)(j)(vi) of the Foreign
Contribution Regulation Act, 2010 (FCRA), which defines “foreign source”,
to allow foreign companies who have a majority share in Indian companies to
donate to political parties. Previously, foreign companies were prohibited from
donating to political parties under the FCRA and the Foreign Exchange
Management Act, 1999.
o In 2017, the govt amended Section 11 of the Finance Act, 2017 amended
Section 13A of the Income Tax Act exempting political parties from
keeping a detailed record of contributions received through electoral
bonds.
o Section 135 amended Section 31 of the RBI Act. This permitted the Union
government to “authorise any scheduled bank to issue electoral bond[s].”
 RBI HAD CONCERNS REGARDING THIS SCHEME. It stated that
this scheme could have the effect of facilitating money laundering
activities.
o Section 137 introduced a proviso to Section 29C of RoPA, exempting political
parties from publishing contributions received through electoral bonds in
“Contribution Reports.” These reports disclose contributions received by
parties “in excess of twenty thousand rupees” from companies and individuals.
o Section 154 amended Section 182 of the Companies Act, 2013 which removed
the upper limit on how much a company could donate to a political party.
Previously companies could only donate up to 7.5 percent of three years
of the company’s net profits.
 What were the challenges?
o Shortly after the amendments were introduced, in September 2017 and
January 2018, two Non-Governmental Organisations—Association for
Democratic Reforms (ADR) and Common Cause— and the Communist Party
of India (Marxist) filed petitions in the Supreme Court challenging the
amendments.
o At the outset, the petitions argued that the Finance Acts were wrongfully
passed as money bills to prevent higher scrutiny by the Rajya Sabha. This
 challenge is tagged with the larger challenge to the use of money bills
under Article 110.
o Petitioners also argued that the scheme allowed “non-transparency in political
funding” and legitimised electoral corruption at a “huge scale.”

ISSUE:

1. Is the electoral bond scheme constitutional?

2. Does the electoral bond scheme violate the voters’ right to information?
3. Can the Scheme allow anonymity with the view to protect donors’ right to privacy?
4. Does the electoral bond scheme threaten the democratic process, and free and fair
elections?

29. The present batch of petitions gives rise to the following issues:

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.

RULE:

ANALYSIS:

Submissions:

PETITIONERS:

 There is no rational basis for the introduction of electoral bonds scheme.

o Even thought the govt stated that the scheme will ensure transparency through
mandating transaction through legitimate banking channels, still cash
donations are permitted.
 Further, non disclosure of donor is no way a step towards transparency
 It violates the right to information concerning the affairs of the public and the
government.
o This includes the right to information about financial contributions to political
parties because the Constitution through the Tenth Schedule recognizes that
political parties have a decisive control over the formation of Government and
voting by members of the Legislature in the Legislative Assembly;
o The infringement of the right to information does not satisfy the
proportionality standard vis-à-vis the purpose of curbing black money. Even if
the argument that the Electoral Bond Scheme fulfills the purpose is accepted,
non-disclosure of information on political funding is not the least restrictive
means to achieve the purpose.

o Theright to information on political funding which is traceable to Article 19(1)

(a) can only be restricted on the grounds stipulated in Article 19(2). The
purposes of curbing black money and recognizing donor privacy is not
traceable to the grounds in Article 19(2).
 They violate Article 21 because the non-disclosure of information of political
contributions promotes corruption49 and quid pro quo arrangements.
o The limited disclosure clause in the Electoral
BondSchemepreventsinvestigating agencies such as the Central Bureau of
Investigation and Enforcement Directorate from identifying corruption
 It violates free and fair elections.
o The amendments and the Electoral Bond Scheme skew free andfair elections
by permitting unlimited contributions to political parties by corporate entities
and removing the requirement of disclosure of information about political
funding
o Freedom to vote in a positive sense includes the freedom, to vote on the basis
of complete and relevant information about the financial contributions to
political parties, and this scheme prevents that.
o
 Corporate funding per se is violative of the Constitution because corporate entities are
not citizens and thus, are not entitled to rights under Article 19(1)(a)
 The provision permitting non-disclosure of funding by companies is violative of the
shareholders’ rights under:

 The Scheme and amendments violate Articles 14 and 15 by disproportionately

impacting regional political parties and political parties which represent marginalised
and backward sections of the society. The representation of the backward classes is
low in the corporate sector. Thus, the Scheme has a disparate impact on parties whose
social base is derived from the SC/ STs and backward classes;
o
RESPONDENTS:

 The Scheme ensures confidentiality of the contributions made to political parties. The
benefit of confidentiality to contributors ensures and promotes contribution of clean
money to political parties.
 Citizens do not have a general right to know regarding the funding of political parties.
Right to know is not a general right available to citizens.
O This Court has evolved the right to know for the specific purpose of enabling
and furthering the voter’s choice of electing candidates free from blemish;
 Donors to a political party often apprehended retribution from other political parties.
Such apprehension incentivized donors to contribute unaccounted money to political
parties to avoid identification and victimization by other political parties. The
Electoral Bond Scheme maintains the confidentiality of donors and thereby
incentivizes them to contribute clean money to political parties;

MAIN JUDGMENT;

 The union stated that since this is a case of economic policy, no judicial review is
permissible. But this argument was rejected.
 On judicial review and the presumption of cinstiutitionality, the court stated that
such a presumption is reversed when there exists a prima facie case of violation of
fundamental rights. And for the same, the petitioners can not solely statae that
since the case relates to electoral politics, it is exempted from the presumption,
and they must show a prima facie case, upon which the onus will be on the union
of india to justify their actions.
 The court also recognized the role that money plays in politics. But emphasized
the importance of looking at the effects of the law on fundamental rights, and not
its object.

ON INFRINGEMENT OF RIGHT TO INFORMATION OF THE VOTER

UNDER ARTICLE 19 (1) (a).

 WHAT IS THE PROBLEM IN ELECTORAL BONDS?

O Section29CoftheRPAasamendedbytheFinanceAct2017stipulates that the
political party need not disclose financial contributions received through
electoral bonds.
 O Similarly, Section 13A of the IT Act as amended does not require the
political party to maintain a record of contributions for contributions
received through electoral bonds.
O Section 182 of the Companies Act 2013 as amended by the Finance Act
2017 by which the earlier requirement of disclosure of particulars of the
amount contributed by companies to political parties in their profit and
loss accounts was deleted. The company which has made financial
contributions is now only required to disclose the total amount contributed
to political parties without disclosing specific particulars about the
political party to which the contribution was made.
 SCOPE OF RIGHT TO INFORMATION:
O This right was included in article 19 through judicial decisions. In its
precedential analysis, the court divides the development related to right to
information in 2 phases:
 FIRST PHASE—tracing right to information to values of good
governance, transparency and accountability. Recognizing the
role of citizens to hold the state accountable for its actions and
inactions, for which they must be informed of the state’s actions.
 STATE OF UP V RAJ NARAIN: Recognized that public interest
demands disclosure of information.
 This was further elucidated in SP Gupta v Union of India, and
clarified that the constitution guaranteed right to know which is
necessary to secure true facts.
 FIRST PHASE—relation between right to information and open
governance
 SECOND PHASE: Importance of information to form views on
social, cultural and political issues, and participate and contribute
to discussions.
  BASED ON the idea of active citizen participation in a nation’s
polity. “effective democratic participation” is an end, and not a
means that needs to be achieved.
O PRECEDENTIAL ANALYSIS: VOTERS AND RIGHT TO
INFORMATION
 UNION OF INDIA VS ADR (2002): The court traced the right to
know about the antecedents, including the criminal past of
candidates contesting elections to article 19 (1)(a) of the
constitution.


 The directive of disclosing information under ADR was reversed in

RPA Section 33B, which was challenged in PUCL v. Union of
India, where the court held this provision to be unconstitutional.
 PRINCIPLES THAT THE COURT DEDUCES FROM
THESE 2 CASES:
 It was based on these 2 cases that the petitioners argued that non-
disclosure of information on the funding of political parties is
violative of the right to information under Article 19 (1) (a).

o Whether the focal point of electoral process is the candidate or political

parties, and based on that, can the requirement of disclosure of information
about the candidates can be extended to political parties?
o The judgments discussed RoI as far as the candidates are
concerned. But in this case, the locus was not the candidates, but
the parties. Hence, the court needed to determine whether the
same standard applied in the case of political parties as well. [79]
 o The court delved into an analysis of the politics of India, using
Symbols order and general elections, to conclude that :

o Whether information about the political funding is essential for the effective
exercise of the choice of voting?
o In ADR (supra) and PUCL (supra), this Court held that a voter has a
right to information which is essential for them to exercise their
freedom to vote. In the previous section, we have concluded that
political parties are a relevant political unit. Thus, the observations of
this Court in PUCL (supra) and ADR (supra) on the right to
information about a candidate contesting elections is also
applicable to political parties.
o The court highlighted that there is a close association between politics
and money. Political Inequality reinforces economic inequality and the
cycle continues. . It is in light of the nexus between economic
inequality and political inequality, and the legal regime in India
regulating party financing that the essentiality of the information on
political financing for an informed voter must be analyzed.
o An economically affluent person has a higher ability to make financial
contributions to political parties, and there is a legitimate possibility
that financial contribution to a political party would lead to quid pro
quo arrangements because of the close nexus between money and
politics. Quid pro quo arrangements could be in the form of
introducing a policy change, or granting a license to the contributor.
o The money that is contributed could not only influence electoral
outcomes but also policies particularly because contributions are not
 merely limited to the campaign or pre-campaign period. Financial
contributions could be made even after a political party or coalition of
parties form Government. The possibility of a quid pro quo
arrangement in such situations is even higher.
o Information about political funding would enable a voter to assess
if there is a correlation between policy making and financial
contributions.

Till now, it has been held that the scheme, withholding information about the donations
to political parties is violative of Article 19 (1) (a) as it violates right to information.
Now, the court will determine whether such a violation was justified ?

II WHETHER THE INFRINGEMENT OF THE RIGHT TO INFORMATION IS

JUSTIFIED. [PROPORTIONALITY TEST]
Rule:
Whether the law had a legitimate goal?
 The legitimate goal stage requires this Court to analyze if the objective of introducing
the law is a legitimate purpose for the infringement of rights. At this stage, the State is
required to discharge two burdens
o First, the State must demonstrate that the objective is legitimate.
o Second, the State must establish that the law is indeed in furtherance of the
legitimate aim that is contended to be served
 As per the government, the 2 aims of electoral bonds scheme was to curb black
money and protecting donor privacy.

 WRT Black money,

o The petitioners had argued that the infringement of right to information which
is traceable to Article 19(1)(a) can only be justified if the purpose of the
restriction is traceable to the grounds stipulated in Article 19(2). They
argue that the purpose of curbing of black money cannot be traced to any of
the grounds in Article 19(2), and thus, is not a legitimate purpose for
restricting the right to information.

o While in Sakal Papers v Union of India, the court held that a reasonable
restriction to the rights under 19, can only be made if the reason is listed
within article 19 (2). And that the grounds stipulated in 19 are exhaustive.
 However, in the specific context of the right to information, the
court observed that in PUCL it was held that the right can be
restricted on grounds not tracable to article 19 (1) (a).
  Further, in Cricket Association Bengal, Justice Jeevan Reddy stated
that the term public interest is synonymous with state interest, which
finds a mention as one of the grounds in article 19.
o However, the court held these cases to be relevant in the specific cases only,
and held that their holding can not be applicable in a general sense.
o Further, even public order means public safety and tranqiility etc, which
is not in line with how the electoral bonds scheme defines public order’

o Hence, the court finds that curbing black money is not a legitimate purpose
for restricting the right to information.

 Even if for the sake of argument, you assume that curbing black money was a
legitimate purpose, this still doesn’t pass the other prongs.
o The second prong of the proportionality analysis requires the State to assess
whether the means used are rationally connected to the purpose. At this stage,
the court is required to assess whether the means, if realised, would
increase the likelihood of curbing black money. It is not necessary that the
means chosen should be the only means capable of realising the purpose. It is
sufficient if the means used constitute one of the many methods by which the
purpose can be realised, even if it only partially gives effect to the purpose.
 And from the submission of Union of India, it appears that they are
suggesting that non-disclosure of information about political
expenditure has a rational nexus with the goal, that is, curbing black
money or unregulated money.
 Basically, because there is anonymity, the black money will be
regulated.
o The next stage of the proportionality standard is the least restrictive means
stage. At this stage, this Court is required to determine if the means adopted
(that is, anonymity of the contributor) is the least restrictive means to give
effect to the purpose based on the following standard: [119]
 A) Whether there are other possible means which could have been
adopted by the State;
 Whether the alternative means identified realise the objective in a
‘real and substantial manner’;
 Whether the alternative identified and the means used by the State
impact fundamental rights differently; and
  Whether on an overall comparison (and balancing) of the measure
and the alternative, the alternative is better suited considering the
degree of realizing the government objective and the impact on
fundamental rights.
o A little background
 (Less restrictive thing)
o The court propounded electoral trusts as a less restrictive alternative. [124]
o
o
o

Read paras 124-128

 o On an overall balance of the impact of the alternative means on the right to
information and its ability to fulfill the purpose, for contributions below
twenty thousand rupees, contributions through other means of electronic
transfer is the least restrictive means. For contributions
abovetwentythousandrupees,contributionsthroughElectoralTrust is the least
restrictive means. Having concluded that the Electoral Bond Scheme is not the
least restrictive means to achieve the purpose of curbing black money in
electoral process, there is no necessity of applying the balancing prong of the
proportionality standard

 WRT Donor Privacy

o The Union of India submitted that information about financial contributions to
political parties is not disclosed to protect the contributor’s informational
privacy to political affiliation. There are two limbs to the argument of the
Union of India with respect to the purpose of donor privacy.
 First, that the State interest in introducing the Electoral Bond Scheme
which guarantees confidentiality (or anonymity) to financial
contributions is that it furthers donor privacy; and
 second, this State interest facilitates a guaranteed fundamental right.
Thus, the submission of the State is that the right to information can be
restricted even if donor privacy is not traceable to the grounds in
Article 19(2) because privacy is a fundamental right in itself.
So, whether the right to privacy extends to information about a citizen’s political affiliation?
And whether financial contribution constitutes political affiliation?
o Extent of Privacy as guaranteed by KS Puttaswamy [132-133]
o The expression of political beliefs is guaranteed under Article 19(1) (a).
Forming political beliefs and opinion is the first stage of political expression.
The freedom of political expression cannot be exercised freely in the
absence of privacy of political affiliation. Information about a person’s
political beliefs can be used by the State at a political level, to suppress
dissent, and at a personal level, to discriminate by denying employment or
subjecting them to trolls. The lack of privacy of political affiliation would also
disproportionately affect those whose political views do not match the views
of the mainstream.
o Basically, privacy regarding political affiliation is important to prevent
coercion from the opposition.
o Informational privacy to political affiliation is necessary to protect the
freedom of political affiliation and exercise of electoral franchise. Thus, it
follows from the judgment of this Court in Justice KS Puttaswamy (9J) (supra)
and the observations above that the Constitution guarantees the right to
informational privacy of political affiliation.
o To the question of whether financial contribution can be considered as
protected by right to privacy, the court stated that donating money to the
political parties is an act of expression of the Individual’s political affiliation.
 o Since political affiliation is protected by right to privacy, the financial
contributions will also be protected. Just because there is a possibility of
misuse that the contributions may be a part of a quid pro quo does not take
away the nature of the transactions per se—to realise the right to expression of
an individual.
 Further, the court rejected the argument of Union of India that electoral bonds scheme
is akin to electoral ballots as it protects the privacy of a donor vis a vis the party [144]

The court answered the question in YES—the right to privacy extends to information about a
citizen’s political affiliation and financial contribution is a part of it
Now the court needs to decide whether the electoral bonds scheme adequately balances the
right to information (as required by the petitioners) and right to informational privacy of
political affiliation (as given as a legitimate goal by the Union of India).
Judicial Approach towards balancing fundamental rights: establishing the double
proportionality standard
 Since this challenge is a bit different from the previous proportionality analysis that
we undertook—now we are equating one fundamental right as against another.
 Hence, we have to apply a new standard—which the court termed as double
proportionality standard.
 Under this,
o The first exercise that the Court must undertake while balancing two
fundamental rights is to determine if the Constitution creates a hierarchy
between the two rights in conflict. Eg. If article 25 violates any other
fundamental right, then it would be void to that extent
o If the Constitution does not create a hierarchy between the conflicting rights,
the Courts must use judicial tools to balance the conflict between the two
rights
o A little judicial history:
 Public Interest
  Identifying the fundamental rights in conflict circumscribed
one of the fundamental rights in question such that there was no
real conflict between the rights.
 Assigning Weights
 In the second modality of the public interest approach, the
Courts undertook a comparison of the values which the rights
(and the conceptions of the rights) espouse and gave more
weightage to the right which wasinfurtherance of a higher
degreeofpublic or collective interest
 Single Proportionality


 Double Proportionality
COMPLETE THIS AFTER READING JUDGMENT
o Based on this, the court created the following standard: [157]
 Does the Constitution create a hierarchy between the rights in conflict?
If yes, then the right which has been granted a higher status will prevail
over the other right involved. If not, the following standard must be
employed from the perspective of both the rights where rights A and B
are in conflict;
 Whether the measure is a suitable means for furthering right A and
right B;
 Whether the measure is least restrictive and equally effective to realise
right A and right B; and
 Whether the measure has a disproportionate impact on right A and
right B.
Validity of Electoral Bonds Scheme, Section 11 of the Finance Act and Section 137 of the
Finance Act
 Section 11—political parties were no longer mandated to maintain a record of any
contributions made through electoral bonds.
 Section 137 of theFinanceActamendedSection29CoftheRPA by which a political party
is now not required to include contributions received by electoral bonds in its report.
 Has this provision adequately balanced right to informational privacy of the
contributor and the right to information of the voter.
o One comes from Article 19 and the other from Article 21. The constitution
creates no hierarchy between these rights to begin with. There is no
constitutional hierarchy between the right to information and the right to
informational privacy of political affiliation.
o This Court must now apply the double proportionality standard, that is,
the proportionality standard to both the rights (as purposes) to determine
if the meansusedaresuitable,necessaryandproportionate to the
fundamental rights.
o Rational Connection test:Whether the electoral bonds scheme, specifically the
means of confidentiality has a rational connection with both the purposes—
one informational privacy and right to information
Whether the measure is a suitable means for furthering right A and
right B;
 It needs to be noted that under the scheme, the contributor’s
information is only provided upon the order of a court, or upon
registration of a criminal case
 Now, does this means –non disclosure of contributor information under
electoral bonds has a rational nexus with the purpose of achieving
privacy of political contribution?—The court says yes. [162-163]
 On the other hand, does the means have a rational nexus with the
purpose of disclosure of information to the voters. The court noted
that since in no case is the information divulged to the voter, there
is no rational nexus. “The purpose of securing information about
poitical funding can never be fulfukled by absolute non
disclosure[163]”
 Nevertheles, the court went on to evaluate the other prongs.
o Necessity Prong:s if the measure identified is the least restrictive and equally
effective measure.
 To recall, the Court must determine if there are other possible means
which could have been adopted to fulfill the purpose, and whether such
alternative means (a) realize the purpose in a real andsubstantial
manner; (b) impact fundamental rights differently; and (c) are better
suited on an overall comparison of the degree of realizing the purpose
and the impact on fundamental rights.
 The court noted that earlier, there was a 20,000 threshold. Below it,
there was a blanket non disclosure, but above that there was a
mandated disclosure. This measure was, on any day, less restrictive
than a complete blanket non disclosure introduced by electoral
bonds scheme.
  S

 The Union of India has been unable to establish that the measure
employed in Clause 7(4) of the Electoral Bond Scheme is the least
restrictive means to balance the rights of informational privacy to
political contributions and the right to information of political
contributions. Thus, the amendment to Section 13A(b) of the IT Act
introduced by the Finance Act 2017, and the amendment to Section
29C(1) of the RPAare unconstitutional. The question is whether this
Court should only strike down the non-disclosure provision in the
Electoral Bond Scheme, that is Clause 7(4). However, as explained
above, the anonymity of the contributor is intrinsic to the Electoral
Bond Scheme. The Electoral Bond is not distinguishable from other
modesofcontributions through the banking channels suchascheque
transfer, transfer through the Electronic Clearing System or direct debit
if the anonymity component of the Scheme is struck down. Thus, the
Electoral Bond Scheme 2018 will also consequentially have to be
struck down as unconstitutional.
 Validity of Section 154 of the Finance Act amending Section 182(3) to the Companies
Act
o Under the new law, only the factum of contribution was mandated to be
disclosed under the electoral bonds scheme.
o Section 182(3) as amended by the Finance Act 2017 mandates the disclosure
of total contributions made by political parties. This requirement would ensure
that the money which is contributed to political parties is accounted for.
However, the deletion of the mandate of disclosing the particulars of
contributions violates the right to information of the voter since they would
not possess information about the political party to which the contribution was
made which, as wehave held above, is necessary to identify corruption and
 quid pro quo transactions in governance. Such information is also necessary
for exercising an informed vote.
o Section 182(3) of the Companies Act and Section 29C of the RPA as amended
by the FinanceAct must be read together. Section 29C exempts political
parties from disclosing information of contributions received through Electoral
Bonds. However, Section 182(3) not only applies to contributions made
through electoral bonds but through all modes of transfer. In terms of the
provisions of the RPA, if a company made contributions to political parties
through cheque or ECS, the political party had to disclose the details in its
report. Thus, the information about contributions by the company would be in
the public domain. The only purpose of amending Section 182(3) was to bring
the provision in tune with the amendment under the RPA exemptingdisclosure
requirements for contributions through electoral bonds. The amendment to
Section 182(3) of the Companies Act becomes otiose in terms of our holding
in the preceding section that the Electoral Bond Scheme and relevant
amendments to the RPA and the IT Act mandating non-disclosure of
particulars on political contributions through electoral bonds is
unconstitutional

ARTICLE 14 JUDGMENT
 On the principle of non arbitrariness
o The primary ground of challenge is that the amendment to Section 182 of the
2013 Act is manifestly arbitrary as it allows companies, including loss-making
companies, to contribute unlimited amounts to political parties. It has also
been argued that the law now facilitates the creation of shell companies solely
for the purposes of contributing funds to political parties. On the other hand,
the respondent has questioned the applicability of the doctrine of manifest
arbitrariness for invalidating legislation.
o Arbitrariness as a facet of Article 14
 Whether a legislative enactment can be challenged on the sole ground
of manifest arbitrariness?



 Further, manifest arbitrariness of a subordinated legislation has

to be primarily tested vis a vis its conformity with the parent
statute
 Validity of Section 154 of the Finance Act omitting the first
proviso to Section 182 of the Companies Act


 The doctrine of manifest arbitrariness can be used to strike down a
provision where: (a) the legislature fails to make a classification by
recognizing the degrees of harm; and (b) the purpose is not in
consonance with constitutional values.
 PARAS 210-215
 Ordinarilly, the companies were kept at a different pedestal in terms of
electoral funding. But through the electoral laws, they were kept at the
same place, which was challenged based on article 14.
 Basically, there is no intelligible differentia that is created by the
electoral bns which passes the test of manifest arbitrariness.
Justice Sanjij Khanna
Concurring
Difference:
1. Application of proportionality.
Paras 27-