Supreme Court Invalidates Electoral Bond Scheme: Reinforcing Voter’s Right to Information and Curbing Unregulated Corporate Funding

Introduction

The landmark judgment in Association for Democratic Reforms v. Union of India (2024 INSC 113) has profound implications for the electoral finance landscape in India. The case primarily questioned the constitutionality of the Electoral Bond Scheme (EBS) and the amendments introduced by the Finance Act, 2017, which allowed anonymous corporate funding to political parties. The petitioners, led by the Association for Democratic Reforms (ADR), contended that the EBS violated voters' fundamental rights by obscuring the sources of political donations, thereby undermining electoral transparency and accountability. The Union of India, representing the government, defended the Scheme as a measure to curb black money in electoral financing.

Summary of the Judgment

The Supreme Court of India, in its comprehensive judgment, declared the Electoral Bond Scheme unconstitutional. The Court held that the Scheme infringed upon the voters' right to information under Article 19(1)(a) of the Constitution by allowing anonymous contributions to political parties. Additionally, the deletion of specific disclosure requirements in the Companies Act, 2013, further exacerbated the lack of transparency in political funding. The Court applied the doctrine of proportionality, evaluating whether the government's measures were justified, rational, and minimally invasive. Finding the EBS and associated amendments to be arbitrary and failing the proportionality test, the Court invalidated the Scheme and its supporting legislative provisions.

Analysis

Precedents Cited

The judgment extensively referenced pivotal cases that shaped the understanding of voters' rights and electoral transparency:

• Association for Democratic Reforms v. Union of India (2002): Established the voter's right to information about candidates, including criminal antecedents and assets.
• People's Union for Civil Liberties v. Union of India (2003): Reinforced voters' right to know financial contributions to political parties.
• K.S. Puttaswamy v. Union Of India (Aadhar) (2019): Affirmed the right to privacy as a fundamental right under the Constitution.
• Shayara Bano v. Union of India (2017): Applied the principle of proportionality in striking down unjust laws.

These cases collectively underscored the imperative of transparency in electoral processes and the protection of individual rights against arbitrary state actions.

Legal Reasoning

The Court's legal reasoning was anchored in the doctrine of proportionality, which involves a four-pronged analysis:

• Legitimate Aim: The government aimed to curb black money in electoral funding.
• Rational Connection: The Scheme lacked a clear, rational link between anonymity and the reduction of black money.
• Necessity: Alternative measures existed, such as limiting cash contributions, which were more effective and less restrictive.
• Balancing: The infringement on voters' right to information outweighed the purported benefits of contributor anonymity.

The Court found the EBS to be manifestly arbitrary as it failed to establish a necessary and proportional balance between the state's objectives and individual rights. The anonymity provision, coupled with the removal of detailed disclosure requirements for companies, created loopholes that could be exploited for illicit funding.

Impact

This judgment has significant ramifications for electoral financing in India:

• Enhanced Transparency: Political parties must now disclose detailed information about donations, ensuring voters are informed about the sources of political funding.
• Regulation of Corporate Contributions: The indefinite removal of caps on corporate funding is struck down, reinstating the necessity for regulated and accountable corporate donations.
• Prevention of Undue Influence: By limiting anonymous contributions, the judgment curtails the potential for quid pro quo arrangements between corporations and political entities.
• Strengthening Democratic Processes: The decision reinforces the foundational democratic principle of informed voting, where the electorate can make decisions free from concealed financial influences.

Complex Concepts Simplified

Conclusion

The Supreme Court's invalidation of the Electoral Bond Scheme marks a pivotal juncture in India's pursuit of electoral transparency and integrity. By affirming the voter's fundamental right to information and dismantling mechanisms that permit anonymous corporate funding, the judgment fortifies democratic institutions against undue financial influence. Moving forward, political parties must adhere to stringent disclosure norms, ensuring that electoral financing is transparent and accountable, thereby reinforcing the sanctity of free and fair elections.