Published On: July 30, 2026
Authored By: Vaishno Asish Mohapatra
SOA National Institute of Law
Association for Democratic Reforms & Anr. v. Union of India & Ors.
Writ Petition (Civil) No. 880 of 2017
Citation: (2024) 5 SCC 1; 2024 INSC 113
Bench: Dr. D.Y. Chandrachud, C.J., Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala and Manoj Misra, JJ.
Date of Judgment: 15 February 2024
Introduction & Background
Electoral reform has been a defining feature of India’s political landscape, and the financing of political parties directly affects the health of its democracy. As the demand for transparent institutions and clean elections has grown, corporate funding of political parties has taken on renewed significance.
On 15 February 2024, a five-judge Constitution Bench of the Supreme Court unanimously struck down the Electoral Bonds Scheme, 2018,[2] holding it unconstitutional. In doing so, the Court recognised the voters’ right to know the sources of political funding, a right that the anonymity built into the scheme had directly undermined.
The decision was widely regarded as a significant victory for free and fair elections, reinforcing constitutional safeguards against the corrosive influence of undisclosed money in politics.[3] Introduced by the government in 2017, the Electoral Bonds Scheme had allowed individuals and companies to donate to political parties without disclosing their identity. The Court found this opacity untenable: it permitted corporations to fund political parties without accountability, in a manner inconsistent with the constitutional guarantee of free and fair elections.
Facts of the Case
The Electoral Bonds Scheme was notified in January 2018 through amendments to the Representation of the People Act, 1951, the Income Tax Act, 1961, the Companies Act, 2013, and the Reserve Bank of India Act, 1934 — all introduced via the Finance Act, 2017. Under the scheme, the State Bank of India was authorised to issue bearer bonds, functioning like cash instruments, which any donor could purchase and transfer to a political party of their choice.
The scheme guaranteed complete anonymity to donors: neither the public, nor the Election Commission of India (ECI),[4] nor even the recipient political parties could trace the source of a donation. This anonymity became the central point of challenge. The Union of India defended the scheme as a step toward curbing the use of cash in elections by channelling donations through formal banking transactions. Petitioners, in turn, challenged the scheme and the accompanying Finance Act, 2017 amendments under Article 32 of the Constitution.[5]
While the scheme afforded donors near-complete secrecy, the corresponding lack of public disclosure of bond particulars meant there was no transparency in political funding.
Legal Issues Raised
The issues before the Constitution Bench were as follows:
1. Whether the anonymity guaranteed under the Electoral Bonds Scheme violates the voters’ right to know under Article 19(1)(a) of the Constitution.
2. Whether the amendment to Section 182 of the Companies Act, 2013, permitting unrestricted corporate donations to political parties, violates the right to equality under Article 14.
3. Whether political affiliation falls within the ambit of the right to informational privacy, and whether the voters’ right to information can coexist with donors’ right to informational privacy.
4. Whether curbing black money in elections constitutes a legitimate governmental objective under Article 19(2) sufficient to justify the restriction.
Arguments Advanced by the Petitioners
The petitioners argued that the right to know is an integral facet of the freedom of speech and expression guaranteed under Article 19(1)(a). Relying on Union of India v. Association for Democratic Reforms (2002),[1] they submitted that voters must know the source of a political party’s funding to assess whether its policies reflect public interest or the interests of its financial backers. This right to know, they contended, is essential to enable informed electoral choice.
The petitioners further argued that the 2013 amendment to the Companies Act violated the equality principle under Article 14. By removing the earlier cap limiting corporate donations to 7.5% of a company’s average net profits, the amendment, they claimed, enabled the creation of shell companies to channel concealed funds to political parties through electoral bonds.
Finally, the petitioners contended that the scheme allowed corporate donors to seek specific policy favours from the government in exchange for funding, undermining the constitutional guarantee of free and fair elections.[7]
Arguments Advanced by the Respondents
The Union of India argued that by channelling donations through the banking system rather than cash,[8] the Electoral Bonds Scheme represented a positive step toward reducing black money in elections. It further argued that donor anonymity was necessary to protect the donors’ right to informational privacy under Article 21, as recognised in K.S. Puttaswamy v. Union of India,[9] shielding them from potential reprisals by political parties following disclosure. The Union submitted that the scheme struck a reasonable balance between donors’ privacy and voters’ right to know, and that the Court ought to defer to the State’s policy choice in this regard.
Judgement & Ratio Decidendi
The five-judge Constitution Bench delivered a unanimous judgment. The ratio decidendi holds that anonymity in political funding violates the voters’ fundamental right to know, a right integral to free and fair elections. The Court held both the Electoral Bonds Scheme and the accompanying statutory amendments unconstitutional. Applying the four-fold proportionality test, the Court found that anonymous electoral bonds were not the “least restrictive means” of curbing black money in elections, observing that electoral trusts offered a viable alternative capable of achieving the same objective without infringing voters’ rights.[10]
Applying this test, the Chief Justice observed that while political donations are ostensibly a private matter for donors, they are, in substance, a matter of public interest since such contributions can influence government policy and thereby affect the public at large. The Court held that the public’s right to know the sources of political funding rendered the anonymity granted under the scheme a disproportionate interference with that right. Applying a further test of double proportionality, the Court also held that the 2013 amendment to the Companies Act violated Article 14, reasoning that removal of the 7.5% cap allowed corporations to dominate electoral funding, undermining the principle of “one person, one vote.”[11]
Critical Analysis & Observations
The Electoral Bonds Scheme permitted six years of unregulated and anonymous political funding. By declaring it invalid, the Supreme Court has taken a significant step toward restoring public trust in India’s electoral system. It remains to be seen whether the Court will revisit the issue once the State Bank of India discloses electoral bond data, which is expected to reveal the identities of major donors. The removal of the 7.5% cap on corporate donations, meanwhile, continues to raise concerns about large-scale corporate influence on political funding going forward.
The Court’s application of the double proportionality test to balance donors’ informational privacy against voters’ right to know was a sound doctrinal approach.[12] That said, the judgment offers limited guidance on how political donations should be structured going forward. To ensure genuinely clean money in elections, the Court, or the legislature, may need to consider further reforms — including state funding of elections and real-time disclosure norms.[13]
References
[1] Union of India v. Association for Democratic Reforms (2002) 5 SCC 294.
[2] Association for Democratic Reforms & Anr. v. Union of India & Ors. (2024) 5 SCC 1.
[3] Kesavananda Bharati v. State of Kerala (1973) 4 SCC 225.
[4] Election Commission of India, ‘Status Report on Electoral Reforms’ (New Delhi, 2022) 45.
[5] Writ Petition (Civil) No. 880 of 2017 (Supreme Court of India).
[6] People’s Union for Civil Liberties (PUCL) v. Union of India (2003) 4 SCC 399.
[7] M.V. Ramana, ‘Corporate Power and the Distortion of Democratic Discourse in India’ (2021) 56 Economic and Political Weekly 32.
[8] Ministry of Finance, ‘Written Submissions on behalf of the Union of India in the Electoral Bonds Matter’ (November 2023).
[9] K.S. Puttaswamy v. Union of India (2017) 10 SCC 1.
[10] Association for Democratic Reforms (n 2) para 142 per Chandrachud CJI.
[11] ibid para 211.
[12] Shibam Talukdar, ‘Electoral Bonds Judgment: A Step Towards Transparency or an Incomplete Reform?’ (2025) 8 International Journal for Legal Research and Analysis 112.
[13] Supreme Court Bar Association v. Union of India (2024) 6 SCC 45.
