Introduction
The Supreme Court of India, in the landmark case of Association for Democratic Reforms & Anr. v. Union of India & Ors., delivered on February 15, 2024, addressed the constitutional validity of the Electoral Bond Scheme, 2018. This scheme was introduced to reform political funding mechanisms in India. The petitioners challenged the scheme on grounds that it violated the principles of transparency and the fundamental rights of citizens under Articles 14 and 19(1)(a) of the Indian Constitution.
Facts of the Case
The Electoral Bond Scheme, 2018, was introduced by the Government of India with the intent to cleanse the political funding system. Under this scheme, individuals and corporate entities could purchase electoral bonds from authorized banks and donate them to political parties. The bonds were designed to ensure donor anonymity, as neither the donor’s nor the recipient’s identities were disclosed to the public. Additionally, amendments made through the Finance Act, 2017, removed previous restrictions on corporate donations, allowing even loss-making companies to contribute without any cap. The petitioners, including the Association for Democratic Reforms (ADR), contended that such anonymity and deregulation could lead to unchecked corporate influence and undermine the integrity of elections.
Main Provisions Challenged
- Electoral Bond Scheme, 2018: Allowed anonymous donations to political parties through bearer bonds.
- Amendments via Finance Act, 2017:
- Companies Act, 2013: Removed the cap of 7.5% of net profits for corporate donations to political parties.
- Income Tax Act, 1961: Exempted political parties from disclosing donations received through electoral bonds.
- Representation of the People Act, 1951: Exempted political parties from reporting contributions received through electoral bonds to the Election Commission.
Issues Involved
- Right to Information: Whether the anonymity provided by the Electoral Bond Scheme infringes upon citizens’ right to know, a facet of Article 19(1)(a).
- Equality Before Law: Whether the scheme violates Article 14 by enabling disproportionate influence of wealthy donors over the political process.
- Free and Fair Elections: Whether the scheme compromises the integrity of elections by promoting opacity in political funding.
Main Principles Laid Down by the Supreme Court
The Supreme Court, in its judgment, declared the Electoral Bond Scheme, 2018, unconstitutional, emphasizing the following principles:
- Transparency in Political Funding: The Court underscored that transparency is essential for the health of a democracy. Opaque funding mechanisms can lead to corruption and erode public trust.
- Right to Know: Affirming that the right to information is intrinsic to Article 19(1)(a), the Court held that citizens must have access to information regarding political funding to make informed electoral choices.
- Equality and Non-Arbitrariness: The removal of caps on corporate donations and the anonymity provided by the scheme were deemed arbitrary, violating the principle of equality enshrined in Article 14.
Impact of the Judgment
The Supreme Court’s decision has profound implications for India’s electoral landscape:
- Enhanced Transparency: Political parties are now mandated to disclose the identities of donors and the amounts received, promoting accountability.
- Regulation of Corporate Donations: Reinstating caps on corporate contributions ensures that no single entity can unduly influence the political process.
- Strengthening Democratic Processes: The judgment reinforces the foundational democratic principle that informed citizens are crucial for the functioning of a healthy democracy.
This ruling is a significant step towards ensuring that electoral processes in India remain free, fair, and transparent, thereby strengthening the democratic fabric of the nation.
