Published On: December 28th 2025
Authored By: Vaibhav Dixit
Chhatrapati Shahu Ji Maharaj University, Kanpur
- Case Title: Association for Democratic Reforms and Anr. vs Union of India & Ors.
- Citation: 2024 INSC 113
- Court: Supreme Court of India
- Date of Judgement: 15th February 2024
- Bench: Dr Dhananjaya Y Chandrachud, CJI
Executive Summary: The Judicial Reaffirmation of Democratic Foundations
The Supreme Court’s decision in Association for Democratic Reforms v. Union of India (2024 INSC 113) is a landmark ruling in Indian electoral jurisprudence. It strikes down the Electoral Bond Scheme of 2018, along with certain statutory amendments, on the grounds that they violate the voters’ right to information under Article 19(1)(a). The judgment reasserts the principle that transparency in political funding is integral to free and fair elections, and places limits on the state’s claim of protecting donor privacy when it conflicts with the public’s right to know.
The Supreme Court of India delivered a defining verdict on the sanctity of electoral transparency on February 15, 2024, in the landmark case of Association for Democratic Reforms (ADR) v. Union of India (2024 INSC 113). This decision, rendered by a unanimous five-judge Constitution Bench led by Chief Justice of India Dr. D.Y. Chandrachud, fundamentally reshaped the landscape of political finance in India.
The Court declared the Electoral Bonds Scheme (EBS) of 2018, along with its enabling legislative amendments, unconstitutional and void. This comprehensive ruling addressed challenges to amendments made through the Finance Act, 2017, to key statutes including the Representation of the People Act, 1951 (RoPA), the Companies Act, 2013, and the Income Tax Act, 1961.
The core principle established by the verdict is a decisive prioritization of the voter’s fundamental Right to Information (RTI)—read into Article 19(1)(a) of the Constitution—over the claimed right to informational privacy (Article 21) of the political donor. The Court concluded that knowledge about political funding sources is not merely desirable but essential for an informed electorate to exercise its franchise effectively. This judgment serves as a powerful constitutional guardrail against the structural capture of the political process by undisclosed corporate wealth.
Facts & Statutory Background
The Electoral Bond Scheme & Amendments
The Government of India introduced the Electoral Bond Scheme (EBS), 2018, via notification under the Finance Act, 2017. Under this scheme, individuals or entities could purchase bearer “electoral bonds” from the State Bank of India (SBI) and donate them to political parties, without disclosing the identity of the donor to the public. The bonds were redeemable by the parties via SBI.
Simultaneously, multiple statutory amendments were made:
- Amendments to Section 29C of the Representation of People Act, 1951 to exempt contributions made via electoral bonds from disclosure in contribution reports.
- Amendments to Section 182 of the Companies Act, 2013 removing the cap on corporate political donations.
- Amendments to Section 13A of the Income Tax Act, 1961 shielding contributions through electoral bonds from certain record-keeping requirements.
The scheme was defended by the State on two main grounds:
Protecting the right to privacy of the donors (to avoid harassment, political retribution, etc.).
That non-disclosure is necessary to curb use of “black money” and promote “clean funding” in electoral politics.
Litigation History & Interim Orders
Petitions were filed in the Supreme Court (Writ Petition (C) No. 880 of 2017 and others) challenging the constitutional validity of the scheme and associated amendments.
The Court had earlier issued interim orders on 12 April 2019, restraining further anonymized disclosures and directing submission of certain donation data to the Election Commission, pending final decision.
Genesis and Legislative Structure of the Electoral Bonds Scheme
The Electoral Bonds Scheme was introduced in 2018 by the Union Government with the stated objective of “cleansing” political funding in India. The government argued that the scheme would shift political contributions away from unregulated, unaccounted, cash-based transactions toward a regulated, digital, and legal framework, thereby curbing the circulation of black money.
The Anatomy of Anonymity
The mechanism of the EBS involved bearer banking instruments sold by specified branches of the State Bank of India (SBI) in high denominations (ranging from ₹1,000 to ₹1,00,00,000). To purchase a bond, the buyer was required to submit Know Your Customer (KYC) details, which the SBI, a government-controlled statutory body, was mandated to keep confidential. Crucially, the bond itself did not carry the buyer’s name, guaranteeing absolute anonymity to the public and, de jure (by law), to the recipient political party.
The Enabling Amendments and the Structure of Opacity
To operationalize the scheme, the Finance Act, 2017, introduced simultaneous amendments that engineered a system of comprehensive financial opacity for political parties:
Representation of the People Act, 1951 (RoPA): An amendment introduced a proviso to Section 29C, exempting political parties from the obligation to disclose contributions received through Electoral Bonds in their annual “Contribution Reports.” Previously, parties were required to disclose all contributions exceeding ₹20,000. This amendment effectively blinded the public to the source of the vast majority of political finance.
Companies Act, 2013: Section 154 of the Finance Act, 2017, significantly amended Section 182. This change removed the statutory cap that restricted corporate political donations to 7.5% of the company’s average net profits over the preceding three financial years. By lifting this ceiling, the scheme facilitated unlimited financial contributions from corporate entities, regardless of their profitability.
Income Tax Act, 1961: The corresponding amendment to Section 13A exempted political parties from the existing obligation to maintain detailed records for contributions received specifically via Electoral Bonds.
The establishment of the EBS and these amendments proceeded despite severe reservations raised by independent institutions. The Election Commission of India (ECI) warned that the amendments constituted a “retrograde step” concerning transparency and would have a “serious impact on transparency of political finance”. Likewise, the Reserve Bank of India (RBI) objected to the use of bearer instruments, citing risks related to money laundering and the potential subversion of its monetary authority.
Issues Framed
The Court identified, and parties debated, several key constitutional issues, including:
- Whether the Electoral Bond Scheme and the connected statutory amendments infringe the voters’ right to information under Article 19(1)(a).
- Whether the State’s claim of donor privacy (as part of informational privacy under Article 21) can override or justify non-disclosure.
- Whether allowing unlimited corporate donations (via the Companies Act amendment) unduly affects the principle of free and fair elections and equality (Article 14).
- What standard of judicial review should apply when legislation affects the electoral process.
- Remedial issues: what directions should the Court issue to undo or mitigate the harmful effects of the scheme (if declared unconstitutional).
Ratio Decidendi & Key Legal Reasoning
Standard of Judicial Review in Electoral Process Cases
One of the essential questions the Court addressed was: how strictly should courts scrutinize legislation that regulates elections? The majority held that the presumption of constitutionality is weaker when a statute affects the electoral process, and that a prima facie case of violation of a fundamental right shifts the burden onto the State to show a compelling justification.
Further, when two fundamental rights conflict (e.g. disclosure vs. privacy), the Court adopted and articulated what has been described as a “double proportionality” standard (i.e.a balancing test applied in the context of colliding rights).
The Voters’ Right to Know (Article 19(1)(a))
The Court reaffirmed that citizens, and especially voters, have a right to information about political funding as an indispensable component of freedom of speech and expression. Transparency in electoral funding helps voters make meaningful electoral choices, detect corruption, and hold parties accountable.
Disclosure, according to the Court, is both a tool for enforcement (exposing undue influence, quid pro quo arrangements) and a substantive right that ensures openness in democratic governance.
Informational Privacy / Donor Protection
While acknowledging that donors may have a legitimate interest in privacy, the Court held that anonymity cannot be absolute, especially when weighed against the critical democratic interest in transparency. A robust justification is needed when restricting transparency for donor privacy.
The Court found that much of the State’s assertions about protecting donors’ privacy or shielding them from retaliation were speculative and insufficiently supported by empirical evidence. Where the harm to disclosure is speculative, it cannot outweigh the clear public interest in openness.
Immediate Consequences and the Public Audit of Political Finance
The judgment was not merely declaratory; it included strict operational directives designed to effect immediate transparency and accountability. The Court mandated that the State Bank of India (SBI) must immediately cease the issuance of electoral bonds and, crucially, compile and submit comprehensive details of all bonds purchased and redeemed since April 2019 to the Election Commission of India (ECI). The ECI was subsequently directed to publish this compiled data on its official website, making the opaque financial flow public for the first time.
The Unveiling of Corporate-Political Nexus
The resulting public disclosure provided an unprecedented and retrospective “public audit” of political finance, confirming the systemic asymmetry inherent in the scheme. The data revealed that high-value bonds overwhelmingly dominated contributions, and a massive proportion of the funds were channeled to the ruling party, validating the critics’ concerns regarding selective transparency and crony capitalism. For instance, reports indicated a significant funding disparity, with the dominant ruling party receiving approximately $788 million, while the most prominent opposition party secured around $134 million.
Disclosure as Democratic Deterrent
The post-judgment period saw a noticeable shift in corporate political behavior. The analysis showed a sharp reduction in formal corporate political donations in subsequent elections following the invalidation of the EBS and the reinstatement of the 7.5% corporate profit cap.
This reduction acts as a powerful indicator that, for many major donors, the core function of the Electoral Bonds Scheme was not just regulatory compliance but guaranteed secrecy. Once the protective veil of anonymity was constitutionally lifted, the incentive for large-scale corporate funding through formal channels diminished, effectively validating the Court’s finding that non-disclosure was intrinsic to the scheme’s operation and attractiveness to influential contributors. The deterrent effect of public disclosure forces transparency into a realm previously shielded by law.
Proportionality / Double Proportionality Analysis
Applying the balancing test, the Court analyzed:
Legitimate aim: The State’s objective (reducing black money, ensuring “clean funding”) was accepted in principle as legitimate.
Rational connection: The Court found that the non-disclosure components of the scheme had no rational nexus to the objective. In particular, anonymity undermines the transparency goal, and the scheme did not demonstrably restrict cash donations (which remained permissible).
Least restrictive means / minimal impairment: The Court noted that there were less restrictive alternatives available (for instance, requiring disclosure with safe harbors, anonymization mechanisms, conditional redaction, time-lags, etc.). The scheme was disproportionate in that it completely exempted electoral bond contributions from disclosure.
Balancing two rights: Given the inadequacy of the State’s justification, the Court held that the right to information must prevail, and non-disclosure provisions fail the double proportionality test.
On corporate funding, the Court also struck down the amendment removing donation caps as arbitrary and unjustified, noting that unchecked corporate funding can distort equality, distort electoral competition, and undermine genuine choice.
Remedies & Directions
Having held the scheme (and parts of the amendments) unconstitutional, the Court issued several consequential directions:
- Immediate cessation of issuance of electoral bonds.
- Disclosure by SBI: SBI must submit, for all bonds sold from 12 April 2019 to date, details of purchaser, date of purchase, denomination, and the political parties that encashed them.
- Disclosure by political parties: The parties must disclose all encashed contributions via electoral bonds over the same period.
- Publication by ECI: The Election Commission of India must publish these details on its official website within a week after receipt.
- Refund / return of valid (uncashed) bonds: Bonds still within their validity period but not redeemed must be returned and refunded.
These directions aim not only at redress but at restoring public confidence in electoral processes by retrospective transparency.
Critical Analysis
Strengths of the Decision
- Affirmation of transparency as constitutional norm
The judgment robustly reinforces that the right to information is not peripheral, but central to democratic legitimacy. By linking disclosure in political finance to free speech and citizen empowerment, it strengthens democratic accountability. - Sophisticated balancing of rights
The adoption of a double proportionality approach is commendable, as it explicitly acknowledges that fundamental rights may collide and must be reconciled rather than suppress one over the other. This is an advancement over older methods that sought to subsume one right into another. - Strong remedial regime
The directions issued are concrete and time-bound, and seem well-calibrated to reverse the opacity caused by the scheme. The retrospective disclosures and refunds ensure that past clandestine funding is unearthed. - Guarding electoral integrity
By invalidating unfettered corporate donations, the judgment protects against dominance of moneyed interests in electoral competition, preserving fairness and equality among parties.
Potential Critiques / Limitations
- Speculative nature of harm vs. privacy claims
The Court treated the State’s claims of donor risk with skepticism, calling them speculative. Some critics may argue that in high-stakes, polarized political settings, genuine security or retaliatory concerns may exist, which the Court did not sufficiently engage with. - No comprehensive alternative framework provided
While the Court struck down the scheme, it did not prescribe a full substitute regime for political financing. The gap could lead to regulatory uncertainty until legislature or ECI steps in. - Implementation challenges & compliance
The efficacy of disclosure orders depends heavily on cooperation of SBI, political parties, and ECI. Enforcement, audit, verification, and ensuring accuracy will be challenging in practice. - Judicial overreach concerns
Some might argue that courts, in shaping disclosure regimes and directing retrospective disclosures, venture into policy-making terrain. The balance between judicial correction and democratic law-making is delicate. - Residual opacity / loopholes
Even with electoral bonds struck down, other opaque funding routes (e.g., shell companies, trusts, foreign influence) may still persist. The judgment doesn’t directly tackle all such channels.
Broader Implications
This judgment sets a strong precedent for judicial vigilance over electoral legislation, especially when it impinges on core democratic norms.
It strengthens the conceptual linkage between right to know and electoral legitimacy, perhaps opening the door to increased scrutiny of other hidden or opaque electoral practices (e.g. dark money, third-party spending).
The decision could influence future debates on private funding of elections, public funding, caps, disclosure regimes, and the role of independent regulators (like ECI).
The judgment also signals that donor privacy, while legitimate, is not a trump card; transparency will often prevail in contexts of public interest.
Conclusion
The Supreme Court’s unanimous decision in ADR v. Union of India is a monumental step toward strengthening democratic accountability in India. The Court unequivocally asserted that a vibrant, functioning democracy requires full financial transparency, declaring that political sovereignty cannot be exercised effectively if citizens are forced to vote in the dark regarding the financial interests backing their representatives.
The immediate public disclosure of the donor data validated the premise of the petitioners, confirming the structural risks of selective transparency and asymmetric funding. This retrospective audit serves as a powerful reminder that while money in politics may be inevitable, opacity is not.
The ultimate responsibility for creating a durable and equitable system of political finance now rests with the legislature. Future reforms must utilize less restrictive means to achieve legitimate regulatory goals, ensuring that any new system promotes participatory democracy, reduces the concentration of financial power, and fully upholds the paramount right of every Indian citizen to cast an informed vote. The judgment mandates that the integrity of the electoral process must prevail over the private demands for financial secrecy.
