Published on: 13th June, 2025
Authored by: Devanshi Singh
Bharati Vidyapeeth University (New Law College, Pune)
Facts of the Case
This case revolved around a Public Interest Litigation (PIL) challenging the Electoral Bond Scheme, 2018. Two applications were filed—one seeking a stay on the sale of electoral bonds and another requesting that the Union of India not open further sale windows under the scheme.
The petitioners—Association for Democratic Reforms (ADR) and Common Cause—contended that the scheme enabled political parties to receive anonymous donations, which compromised transparency in political funding. Although the scheme mandated that transactions occur via banking channels, the identity of the bond purchaser remained concealed. This gave rise to concerns over funding from unidentifiable or dubious sources.
The petition challenged multiple legislative amendments introduced through the Finance Acts of 2016 and 2017, arguing that they undermined transparency in political financing. These included:
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Section 135 of the Finance Act, 2017, amending Section 31 of the Reserve Bank of India Act, 1934.
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Section 137 of the Finance Act, 2017, amending Section 29C of the Representation of the People Act, 1951.
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Section 11 of the Finance Act, 2017, amending Section 13A of the Income Tax Act, 1961.
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Section 154 of the Finance Act, 2017, amending Section 182 of the Companies Act, 2013.
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Section 236 of the Finance Act, 2016, amending Section 2(1)(j)(vi) of the Foreign Contribution Regulation Act (FCRA), 2010.
The petitioners argued that these provisions were unconstitutional, illegal, and violative of the rights guaranteed under the Indian Constitution, particularly Article 19(1)(a), which ensures the right to freedom of speech and expression, encompassing the right to information.
This case marked a significant milestone in reinforcing electoral integrity in India. It emphasized the voter’s right to know the financial contributors behind political parties, thus upholding the principles of transparency and accountability in a democracy.
Although the scheme was intended to streamline electoral funding, it was alleged to have been misused to gain undue political advantage, leading to the filing of this case.
Issues Raised
The Supreme Court considered two key issues:
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Whether the Electoral Bond Scheme, 2018, which allowed anonymous donations by individuals and corporations to political parties, violated citizens’ right to information under Article 19(1)(a) of the Constitution.
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Whether the passage of the scheme through a Finance Bill—bypassing thorough parliamentary scrutiny—was constitutionally valid.
Contentions of the Parties
The petitioners urged that the State Bank of India (SBI) be directed to furnish the Election Commission of India with complete details of electoral bonds sold and redeemed, including the date of purchase/redemption, purchaser’s name, and bond denomination. It was noted that SBI had not disclosed the alphanumeric identifiers of the bonds, further hampering transparency.
It was argued that the Electoral Bond Scheme curtailed the citizens’ Right to Information, a critical aspect of Article 19(1)(a), by keeping political donations secret.
The scheme was also seen as impairing the fairness of the electoral process. By allowing unlimited, anonymous corporate funding, it potentially enabled money laundering, benami transactions, and hawala operations, thereby undermining democratic principles.
Rationale
The Hon’ble Supreme Court emphasized that transparency is a cornerstone of democracy. Non-disclosure of political donors infringed on the citizen’s right to information, which is essential for making informed choices in elections.
The Court held that in the absence of donor identity, accountability and transparency in electoral funding were severely compromised. Further, the judgment criticized the passage of such a far-reaching scheme through a Finance Bill, which lacked detailed parliamentary debate and oversight.
The Court noted the potential for corporate influence over political outcomes, warning that the scheme could tilt electoral fairness in favor of influential parties with greater access to anonymous funding. The judgment underscored the need for legislative scrutiny, especially when reforms directly impact electoral democracy.
Defects in the Law
The scheme’s enactment through a Finance Bill bypassed necessary parliamentary deliberation, despite its potential to infringe fundamental rights. This procedural flaw constituted a major concern in the Court’s reasoning.
Additionally, the removal of caps on corporate donations and the lack of donor disclosure requirements created an environment where unlawful funds could enter the electoral system undetected. The absence of these checks violated the constitutional right to a free and fair election.
Petitions challenging these provisions prompted the Court to intervene. In 2024, the Supreme Court declared the Electoral Bond Scheme unconstitutional, citing its violation of Article 19(1)(a).
Furthermore, the Court noted the lack of public access to crucial financial information, such as who purchased bonds, in what amounts, and to which parties they were donated. This secrecy led to public suspicion and further eroded trust in the electoral process.
The judgment mandated the SBI to disclose all details of bond purchases and redemptions. Political parties were directed to reveal the names of donors and the amounts received via electoral bonds. The ruling also addressed concerns that the ruling party had privileged access to this data, which undermined electoral fairness.
Inference
This case reaffirmed that any scheme infringing upon fundamental rights is subject to judicial review. The Supreme Court’s verdict upheld the primacy of transparency, accountability, and equal access in electoral processes.
It also reinforced that constitutional values must not be compromised for administrative convenience or political expediency. The ruling serves as a reminder that legislative processes must undergo thorough scrutiny, particularly when dealing with reforms that affect the core of Indian democracy.
Ultimately, the judgment is a landmark in electoral jurisprudence, setting a precedent for protecting citizens’ right to information and ensuring a level playing field in elections.