Association for Democratic Reforms and Another v. Union of India and Others (2024) : A Case Analysis

 

AUTHOR : HASHIM AK , BBA LLB (Hons) Student, Government Law College Kozhikode

Abstract 

This article is a case analysis about the landmark judgement in the Association for Democratic Reforms vs. Union of India and  (2024) or the electoral bond case.The article goes through detailed analysis of facts, issues,contentions by parties,ratio decidendi, and the judgment of the case.This article critically analysis the relevancy of the case in the past, present and the future.This article goes through every aspects of the case to understand it’s narrow and wide interpretation to conclude a critical analysis.

Case citation : Association For Democratic Reforms And Anr. Vs. Union Of India And Ors. (2024) 3 S.C.R. 417 : 2024 INSC 209

Bench strength : five ( Chief Justice DY Chandrachud, Justice Sanjiv Khanna, Justice BR Gavai, Justice JB Pardiwala, and Justice Manoj Misra )

Introduction 

Association for Democratic Reforms and Another v. Union of India and Others (2024) or the electoral bond case is a landmark case in Indian judiciary.It is considered as a important case in 2024.In this case a constitutional bench comprising of 5 supreme court judges ruled that the electoral bond scheme as unconstitutional for violating the right to information of voters.It rewrites the wider aspects of the right to information of a voter.This case also clearly outlined the importance of the separation of judiciary in India.Again Indian judiciary act as the authority to protect the constitution and the constitutional rights upon people.This case critically analysis the narrow and wider aspects of a voters right in India.Transparency and accountability of political parties are interpreted through this case.

Background 

Parties Involved 

Petitioner : Association for Democratic Reforms(ADR) and Communist Party of India (Marxist).

Respondent : Election Commission of India and Union of India .

Facts

Arun Jaitley, former union finance minister proposed the Electoral Bonds Scheme.An electoral bond is a bond that anyone can purchase from a designated bank and redeem a electoral bond in a receipt form which can be given to a political party and that political party can exchange the bond from the designated bank to money and it has no information on the parties in the transaction at all, providing complete anonymous status.

To give the legal framework to introduce the Electoral Bond Scheme, Union government amended the Companies Act (2013),the Income Tax Act (1961), the Representation of the People Act (1951), Foreign Contribution Regulation Act (2010) and  the RBI Act (1934).

Amendment leads to exempting political parties from keeping a detailed record of contributions received through electoral bonds and  removed the upper limit on how much a company could donate to a political party.

Ministry of Finance introduced the Electoral Bond Scheme in Nov 2 2018.

Association for Democratic Reforms and the Communist Party of India (Marxist) filed writ petition in Supreme Court on the grounds that it  violate the right to information under Article 19(1)(a) and the right to free and fair elections.At the outset, the petitions argued that the Finance Acts were wrongfully passed as money bills to prevent higher scrutiny by the Rajya Sabha.

On 31 October 2023, a five-judge Constitution Bench led by CJI Chandrachud, heard arguments over three days and reserved the judgment.

On 15 February 2024, Supreme court held that the electoral bond scheme was unconstitutional because it violated the voters right under Article 19(1)(a) of the Constitution. 

Issues Raised

The key issues in this case are :

• Whether the electoral bond scheme  is unconstitutional?
• Whether the Scheme protect donors right to privacy through anonymous status?
• Whether unlimited funding to political parties infringe the principle of free and fair elections?
• Whether the Scheme violates Article 14 of the Constitution?
• Whether the non-disclosure of information on voluntary contributions to political parties under the Electoral Bond Scheme is violative of the right to information of citizens under Article 19(1)(a) of the Constitution?
• Whether the electoral bond scheme and amendments infringed the rights under Article 19 of the Indian Constitution?

Contentions by parties

By petitioners  

• The Union Government didn’t consider the objections raised by Reserve Bank of India and the Election Commission of India to the Electoral Bond Scheme.
• They violate the right to information concerning the affairs of the public and the Government guaranteed for voters under Article 19(1)(a).
• The undisclosed information of political contributions promotes corruption and  violates Article 21.
• Article 25 which includes the right of the shareholder to know how the resources generated from their property are utilized.The shareholder should have the extend to when feels to exit the business by selling the shares. The information that would enable the shareholder to make such a decision is not disclosed which is violating the rights guaranteed under Article 19(1)(g).
• Corporate funding is violative of the Constitution because corporate entities are not citizens and are not entitled to rights under Article 19(1)(a).
• The funds received through the Electoral Bond Scheme are not restricted to electoral campaigns only and can be utilized in any manner.
• Because of excessive delegation,the amendment of Section 31 of the RBI Act is unconstitutional.
• The right to information on political funding, as guaranteed under Article 19(1)(a), can only be limited by the restrictions explicitly outlined in Article 19(2).The purpose of restricting the black money and protecting donor privacy is not a ground under the Article 19(2).
• The removal of the limits on the corporate donations has strengthened the position of large political parties and  made more barriers for the entry of new political parties.
• Political parties have a right to know the funding sources of rival political parties to enable them criticize other political parties before the people.

By Respondents 

• Political parties are the product of a free and open society and play an major role in the administration of the affairs of the community.So political parties are entitled to receive all support including financial contributions.
• The benefit of confidentiality to political contributions promotes contribution of clean money to political parties.
• Citizens do not have a general right to know the information about the funding of political parties.
• The former legal framework cause the entry of black money into political parties and the electoral process in India because it is largely in cash-based transactions. The Electoral Bond Scheme is an advancement of the former legal framework.
• This scheme was implemented in the interest of the state which aligned with the landmark judgement KS Puttuswamy v Union Of India.
• The provisions of the Electoral Bond Scheme which helps in curbing black money and protecting donor privacy:

1. Clause 3(3) required a registered political party which has secured at least 1 per cent of the votes polled in the last general election for to be eligible to receive the electoral bonds. This provision ensures that name only political parties are restricted from seeking and receiving political funding.
2. Clause 4 requires the buyer of electoral bonds to meet the requirements of the KYC Norms.It ensures the credibility of buyers.
3. The validity period of 15 days ensures that the bond is not used as a currency.
4. Clause 7(4) mandates the authorized bank to not disclose the information given by a buyer to any authority, except in special cases. This protects the privacy of the buyer.
5. Clause 11 only allows electoral bond through banking channels to curb the circulation of black money.

• Keeping the anonymous status of the political contributions is a part of the concept of secret ballot because it enables to make political choices without the fear of victimization or retaliation from other political parties.
• The amendments are intended to avoid the donations by cash and other means to political parties and protect the information of donors.
• The assumption that the law might be misused cannot treat as a ground for holding the provision procedurally or substantially unreasonable.

Supreme Court Observations

• The Electoral Bond Scheme, Section 182(3) of the Companies Act and the  Section 29C(1) of the Representation of the People Act (1951) are violative of  Article 19(1)(a) and unconstitutional.
• The provision permitting unlimited corporate contributions to political parties is arbitrary and violated the provisions of Article 14.
• Arguments claiming that the Electoral Bond Scheme (EBS) safeguards contributors confidentiality, similar to the secret ballot system, are erroneous.
• Unlimited contributions by companies to political parties undermine the principles of free and fair elections. This is because such unchecked funding allows companies to exert significant influence over policy-making through their considerable resources and clout.
• The ability of a company to influence the electoral process through political contributions is much larger when compared to that of an Individual.Contributions made by companies are made with the intent of securing benefits in return.

Judgement 

The Supreme Court of India, in a landmark Judgement delivered by five-judge bench ruled in favour of the petitioner that the electoral bond scheme as unconstitutional for violating the right to information of voters.The amendments related to the electoral bond scheme as unconstitutional.The Court also directed that the sale of electoral bonds be stopped with immediate effect.Court also directed State Bank of India to submit details of the Electoral Bonds transactions including details of the purchaser and political parties received it.

Judgement Analysis 

The judgment in Association for Democratic Reforms v. Union of India is undoubtedly a land Judgment in Indian jurisprudence, reinforcing the principles of transparency, accountability, and electoral reform.The extension of the right to information under Article 19(1)(a) to political contribution is appreciable.It set a precedent for subsequent cases addressing the intersection of privacy rights and public disclosure in the context of democratic governance.The Court has yet again proved to be an independent body. It was the first time in the history where a court had to create a balance between two constitutional rights with a reasoned Judgement.The Court reaffirmed the principle that in a democracy, the right to information and the public interest in clean governance has outweighed individual and companies privacy concerns.

As the Electoral Bonds Scheme struck down by the Supreme Court, there seems to be no improvement in the transparency and accountability situation concerning political funding.The existing framework and incentives are not much effective in routing clean funds and curbing black money.Given the case’s crucial nature, it is prudent to establish a set of guidelines that clearly outline checks and balances.

Conclusion 

Association for democratic reforms vs. Union of India is a landmark case in Indian judicial history.It protected the right to information of voters for a free and fair election.Throught this case Supreme Court has reaffirmed the rights of voters and the obligations of the state and political parties.This judgement will continue to influence electoral laws and practices, advocating for greater transparency in electoral processes in the future and will lead a way.

FAQ 

1)What is the current status of electoral bond scheme?

A) Supreme Court held that the electoral bond scheme is unconstitutional.So it is not available now.

2)Who are the parties in the electoral bond scheme case?

A) Association for Democratic Reforms, Communist Party of India (Marxist) as petitioners and Union of India, Election Commission of India as respondents.

3)Why electoral bond scheme is held as unconstitutional?

A)As it violated the right to information of voters guaranteed under Article 19 of Indian constitution.

4)What happened after the judgment?

A) Supreme Court ordered to release the list of all transactions of electoral bond with unique identification code and names of parties.

5) Whether RBI and Election Commission objected the electoral bond scheme?

A) Yes, Reserve Bank of India and Election Commission of India objected the scheme,but the union government didn’t accept their objections.