Published on: 27th August 2026
Authored by: Ishika garg
Maharishi Markandeshwar (deemed to be) University
Case Details
Case Name: Association for Democratic Reforms & Anr. v. Union of India & Ors.[1]
Citation: (2024) 5 SCC 1 / 2024 INSC 113
Court: Supreme Court of India (Constitutional Jurisdiction)
Bench: Chief Justice D.Y. Chandrachud, Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala, and Justice Manoj Misra
Date of Judgment: 15 February 2024
Author: Ishika Garg
Provisions Considered: Articles 14 and 19(1)(a) of the Constitution of India;[2] Representation of the People Act, 1951;[3] Companies Act, 2013;[4] Income Tax Act, 1961;[5] Reserve Bank of India Act, 1934.[6]
Introduction
The landmark decision in Association for Democratic Reforms v. Union of India (2024), widely recognized as the Electoral Bonds Case, represents one of the most critical constitutional rulings by the Supreme Court of India in modern legal history. On 15 February 2024, a five-judge Constitution Bench unanimously declared the Electoral Bonds Scheme unconstitutional. The judgment established a decisive constitutional precedent balancing political privacy against electoral transparency, voter awareness, and the fundamental right to information.
Background of the Case
The Central Government introduced the Electoral Bonds Scheme in 2018 via the Finance Act, 2017. The stated objective was to curb cash-based political donations and incentivize political contributions through formal banking channels. Under the scheme, individuals and corporate entities could purchase interest-free bearer bonds from designated branches of the State Bank of India (SBI) in denominations ranging from ₹1,000 to ₹1 crore, which could then be redeemed by registered political parties through specified bank accounts.
The core controversy centered on absolute donor confidentiality. Donors were exempt from disclosure, leaving voters, opposition parties, shareholders, and the Election Commission of India (ECI) unaware of the financial sources backing political parties. To facilitate this scheme, consequential amendments were made to several statutes, including the Representation of the People Act, 1951, the Income Tax Act, 1961, and the Companies Act, 2013. Significantly, the amendment to Section 182 of the Companies Act removed the earlier cap limiting corporate donations to 7.5% of a company’s average net profits over the preceding three years, enabling unlimited political contributions by corporate entities, including newly incorporated or loss-making firms.
The Association for Democratic Reforms (ADR), alongside the Communist Party of India (Marxist) and other petitioners, challenged the constitutionality of the scheme before the Supreme Court under Article 32.
Issues Before the Court
1. Whether the absolute non-disclosure of donor identities under the Electoral Bonds Scheme violates the fundamental right to information under Article 19(1)(a) of the Constitution.
2. Whether the objective of curbing black money justifies restricting the voters’ right to an informed choice.
3. Whether removing the 7.5% net profit cap on corporate contributions under Section 182 of the Companies Act, 2013 is manifest arbitrary and unconstitutional under Article 14.
4. Whether donor privacy rights extend to corporate political contributions.
Arguments of the Parties
Petitioners’ Submissions:
The petitioners argued that a functional democracy depends on an informed electorate. Citizens possess a fundamental right under Article 19(1)(a) to know the financial backers of political parties, as financial contributions create potential channels for policy influence, quid pro quo arrangements, and corporate lobbying. They submitted that anonymous political funding destroys electoral integrity, while removing corporate donation caps encourages the creation of shell companies to channel illicit capital into elections.
Government’s Submissions:
The Union Government defended the scheme, asserting its primary aim was replacing untraceable cash donations with clean, bank-channel transactions. It contended that complete donor anonymity was essential to protect donors’ privacy and prevent political retaliation, harassment, or victimisation from rival political parties upon changes in government.
Judgment and Ratio Decidendi
The Supreme Court unanimously struck down the Electoral Bonds Scheme and the associated statutory amendments as unconstitutional.
1. Right to Information & Informed Choice (Article 19(1)(a)): Building upon precedent established in Union of India v. Association for Democratic Reforms (2002),[7] the Court affirmed that the freedom of speech and expression includes the right to receive information necessary for voters to make meaningful electoral choices. Financial contributions to political parties directly influence governance; thus, voter access to donor identities is a constitutional prerequisite.
2. Failure of Proportionality Test: Applying the four-pronged doctrine of proportionality, the Court conceded that curbing black money is a legitimate state objective. However, complete donor anonymity is not the least restrictive means to achieve that objective. The blanket denial of transparency disproportionately restricts fundamental voter rights.
3. Corporate Funding & Equal Opportunity (Article 14): The Court struck down the amendment removing the 7.5% profit cap on corporate donations. It held that treating corporate entities identically to individual citizens is unconstitutional because corporate donations carry a higher risk of distorting democratic processes through financial leverage. Permitting loss-making and newly formed companies to donate unlimited funds facilitates corruption and shell company operations, violating Article 14.
Ratio Decidendi:
The fundamental right of voters to information under Article 19(1)(a) encompasses knowledge of political party funding sources. Anonymous electoral schemes fail the test of proportionality because donor secrecy is not the least restrictive method to curb black money. Removing profit-based corporate donation limits violates Article 14 by enabling unchecked corporate influence over democratic governance.
Directives Issued by the Court
1. Cease Issuance: The State Bank of India (SBI) was directed to immediately stop issuing electoral bonds.
2. Full Disclosure to ECI: SBI was ordered to submit complete details of all electoral bonds purchased and redeemed from 12 April 2019 onwards to the Election Commission of India.
3. Public Access: The Election Commission of India was mandated to publish all donor and recipient details on its official website, ensuring complete public disclosure of historical political contributions under the scheme.
Critical Analysis
The ruling reinforces the principle that democracy requires structural transparency. By establishing that political privacy cannot override public scrutiny in major political donations, the Court drew a functional distinction between small individual contributions and large-scale corporate funding. Furthermore, by evaluating executive policy against the strict criteria of proportionality, the judgment demonstrates the crucial role of judicial review in safeguarding constitutional rights against legislative overreach.
Conclusion
Association for Democratic Reforms v. Union of India (2024) stands as a monumental milestone in Indian constitutional jurisprudence. By striking down anonymous electoral bonds and restoring statutory checks on corporate funding, the Supreme Court affirmed that electoral integrity, voter awareness, and public accountability are non-negotiable pillars of Indian democracy.
References
[1] Association for Democratic Reforms & Anr. v. Union of India & Ors., (2024) 5 SCC 1.
[2] INDIA CONST. art. 14, 19, cl. 1, sub-cl. a.
[3] Representation of the People Act, 1951, No. 43 of 1951 (India).
[4] Companies Act, 2013, No. 18 of 2013, § 182 (India).
[5] Income Tax Act, 1961, No. 43 of 1961 (India).
[6] Reserve Bank of India Act, 1934, No. 2 of 1934 (India).
[7] Union of India v. Association for Democratic Reforms, (2002) 5 SCC 294.
