Reportable

2024 INSC 113

IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION

Writ Petition (C) No. 880 of 2017

Association for Democratic Reforms & Anr. …Petitioners

Versus

Union of India & Ors. …Respondents

With
Writ Petition (C) No. 59 of 2018

With
Writ Petition (C) No. 975 of 2022

And With
Writ Petition (C) No. 1132 of 2022

Signature Not Verified

Digitally signed by
CHETAN KUMAR
Date: 2024.02.15
13:18:33 IST
Reason:

1
 JUDGMENT

Dr Dhananjaya Y Chandrachud, CJI

A. Background ................................................................................................... 4

i. Corporate Contributions ........................................................................... 5

ii. Curbing black money .............................................................................. 10

iii. Transparency ........................................................................................... 11

iv. Objections of RBI and ECI to the Electoral Bond Scheme .................. 13

v. Electoral Bond Scheme .......................................................................... 18

B. Issues ........................................................................................................... 23

C. Submissions................................................................................................ 24

i. Submissions of petitioners .................................................................... 24

ii. Submissions of Union of India ............................................................... 36

D. The Scope of Judicial Review .................................................................... 40

E. The close association of politics and money ........................................... 44

F. The challenge to non-disclosure of information on electoral financing 50

i. Infringement of the right to information of the voter ........................... 51

a. The scope of Article 19(1)(a): tracing the right to information ................ 51
b. Right to information of a voter: exploring the judgments in ADR and PUCL
55
c. The focal point of the electoral process: candidate or political party ...... 64
d. The essentiality of information about political funding for the effective
exercise of the choice of voting ..................................................................... 73

ii. Whether the infringement of the right to information of the voter is

justified............................................................................................................ 78
a. Curbing Black money ............................................................................. 80
b. Donor Privacy ........................................................................................ 95

2
 I. Informational privacy of financial contributions to political parties ...... 96
II. Privacy vis-à-vis political party .......................................................... 103
III. Balancing the right to information and the right to informational privacy
103
a) Judicial Approach towards balancing fundamental rights: establishing
the double proportionality standard ...................................................... 103
b) Validity of the Electoral Bond Scheme, Section 11 of the Finance Act
and Section 137 of the Finance Act ..................................................... 113
c. Validity of Section 154 of the Finance Act amending Section 182(3) to the
Companies Act ............................................................................................ 120

G. Challenge to unlimited corporate funding .............................................. 124

i. The application of the principle of non-arbitrariness ........................ 127

a. Arbitrariness as a facet of Article 14..................................................... 127
b. Beyond Shayara Bano: entrenching manifest arbitrariness in Indian
jurisprudence .............................................................................................. 131

ii. Validity of Section 154 of the Finance Act 2017 omitting the first proviso
to Section 182 of the Companies Act ......................................................... 140

H. Conclusion and Directions ...................................................................... 149

3
 PART A

1. The petitioners have instituted proceedings under Article 32 of the

Constitution challenging the constitutional validity of the Electoral Bond

Scheme1 which introduced anonymous financial contributions to political

parties. The petitioners have also challenged the provisions of the Finance

Act 20172 which, among other things, amended the provisions of the Reserve

Bank of India Act 19343, the Representation of the People Act 19514, the

Income Tax Act 19615, and the Companies Act 20136.

A. Background

2. Section 31 of the RBI Act stipulates that only the RBI or the Central

Government authorized by the RBI Act shall draw, accept, make, or issue any

bill of exchange or promissory note for payment of money to the bearer of the

note or bond. The Finance Act amended the RBI Act by including Section

31(3) which permits the Central Government to authorize any scheduled bank

to issue electoral bonds.

3. To understand the context in which the legislative amendments were

introduced, it is necessary to juxtapose the amendments with the regime on

financial contributions to political parties. The law relating to financial

contributions to political parties focusses on (a) contributions by corporate

1 “Electoral Bond Scheme” or “Scheme”

2 “Finance Act”
3 Section 135 of the Finance Act 2017; “RBI Act”
4 Section 137 of the Finance Act 2017;“RPA”
5 Section 11 of the Finance Act 2017; “IT Act”
6 Section 154 of the Finance Act 2017; “Companies Act”

4
 PART A

entities; (b) disclosure of information on contributions; and (c) income tax

exemptions for donations.

i. Corporate Contributions

4. The Companies Act 1956 and the provisions of the RPA, when they were

enacted did not regulate contributions to political parties by companies and

individuals. The Companies (Amendment) Act 1960 included Section 293A7

to regulate contributions by companies. The provision stipulated that

companies cannot contribute to (a) any political party; and (b) to any individual

or body for any political purpose, amounts exceeding twenty-five thousand

rupees in a financial year or five percent of its average net profits during the

three financial years immediately preceding the contribution, whichever is

greater. Companies were also required to disclose the amount contributed in

a financial year in their profit and loss accounts and furnish particulars of the

total amount contributed and the name of the party, individual or entity to

which or to whom such amount was contributed. Companies defaulting in

7“293A. (1) Notwithstanding anything contained in section 293, neither a company in general meeting nor its Board
of directors shall, after the commencement of the Companies (Amendment) Act, 1960, contribute-
(a) To any political party, or
(b) For any political purpose to any individual or body, any amount or amounts which or the aggregate of
which will, in any financial year, exceed twenty-five thousand rupees or five per cent of its average
net profits as determined in accordance with the provisions of sections 349 and 350 during the three
financial years immediately preceding, whichever is greater.
Explanation- Where a portion of a financial year of the company falls before the commencement of the
Companies (Amendment) Act, 1960, and a portion falls after such commencement, the latter portion shall
be deemed to be a financial year within the meaning, and for the purposes, of this sub-section.
(2) Every company shall disclose in its profit and loss account any amount or amounts contributed by it
under sub-section (1) to any political party or for any political purpose to any individual or body during the
financial year to which the account relates, giving particulars of the total amount contributed and the name
of the party, individual or body to which or to whom such amount has been contributed.
(3) If a company makes a default in complying with the provisions of sub-section (2), the company, and
every officer of the company who is in default shall be punishable with fine which may extend to five
thousand rupees.”

5
 PART A

complying with the disclosure requirement were punishable with a fine which

could extend to rupees five thousand.

5. The Companies (Amendment) Act 1969 amended Section 293A 8 so as to ban

contributions to political parties and for political purposes. Companies acting

in contravention of the prohibition were punishable with a fine which could

extend to five thousand rupees, and every officer who defaulted was

punishable with imprisonment which could extend to three years, besides

being liable to fine.

6. The Companies (Amendment) Act 1985 amended Section 293A 9 to permit

contributions to political parties and for political purposes once again. The

8 “Section 293A. (1) Notwithstanding anything contained in any other provision of this Act, neither a company in
general meeting nor its Board of directors shall, after the commencement of the Companies (Amendment) Act 1960
contribute any amount or amounts-
(a) To any political party or
(b) For any political purpose to an individual or body.
(2) If a company contravenes the provisions of sub-section (1) then-
(i) the company shall be punishable with fine which may extend to five thousand rupees; and
(ii) every officer of the company who is in default shall be punishable with imprisonment for a term
which may extend to three years and shall also be liable to fine”
9 “293A. (1) Notwithstanding anything contained in any other provision of this Act-

(a) No Government company; and

(b) No other company which has been in existence for less than three financial years,
shall contribute any amount or amounts, directly or indirectly, -
(i) To any political party; or
(ii) For any political purpose to any person.
(2) A company, not being a company referred to in clause (a) or clause (b) of sub-section (1), may
contribute any amount or amounts directly or indirectly-
(a) to any political party,-
(b) for any political purpose to any person:
Provided that the amount or, as the case may be, the aggregate of the amounts which may be so
contributed by a company in any financial year shall not exceed five percent of its average net profits
determined in accordance with the provisions of sections 349 and 350 during the three preceding financial
years.
Explanation.- Where a portion of a financial year of the company falls before the commencement of the
Companies (Amendment) Act, 1985, and a portion falls after such commencement, the latter portion shall
be deemed to be a financial year within the meaning, and for the purposes of this sub-section:
Provided further that no such contribution shall be made by a company unless a resolution authorizing
the making of such contribution is passed at a meeting of the Board of Directors and such resolution shall,
subject to the other provisions of this section, be deemed to be justification in law for the making and the
acceptance of the contribution authorized by it.
(3) Without prejudice to the generality of the provisions of sub-sections (1) and (2)-
(a) a donation or subscription or payment caused to be given by a company on its behalf or on its account to
a person who, to its knowledge, is carrying on any activity which, at the time at which such donation or
subscription or payment was given or made, can reasonably be regarded as likely to effect public support for

6
 PART A

explanation of the phrase “political purpose” included donations made to a

person who in the knowledge of the donor is carrying out any activity at the

time of donation which can be regarded as public support to a political party.

Further, the direct or indirect expenditure by companies on advertisements by

or on behalf of political parties or publications for the advantage of a political

party were also regarded as contributions for political purposes. Three other

restrictions, in addition to the earlier restriction prescribing a cap on

contributions and disclosure requirement were included. First, the company

(which is not a government company) should have been in existence for more

than three years; second, contributions could only be made when a resolution

authorizing the contributions had been passed at a meeting of the Board of

Directors; and third, the penal consequences attached to the violations of the

provision were made more stringent. A fine extendable to three times the

amount contributed could be imposed, and every officer of the company who

a political party shall also be deemed to be contribution of the amount of such donation, subscription or
payment to such person for a political purpose;

(b) the amount of expenditure incurred, directly or indirectly, by a company on advertisement in any publication
(being a publication in the nature of a souvenir brochure, tract, pamphlet or the like) by or on behalf of a political
party or for its advantage, shall also be deemed,-

(i) where such publication is by or on behalf of a political party, to be a contribution of such amount
to such political party, and
(ii) where such publication is not by or on behalf of but for the advantage of a political party, to be a
contribution for a political purpose to the publishing it.

(4) Every company shall disclose in its profit and loss account any amount or amounts contributed by it to
any political party or for any political purpose to any person during the financial year to which that account relates,
giving particulars of the total amount contributed and the name of the party or person to which or to whom such
amount has been contributed.
(5) If a company makes any contribution in contravention of the provisions of this section-
(a) the company shall be punishable with fine which may extend to three times the amount so
contributed; and
(b) every officer of the company who is in default shall be punishable with imprisonment for a term which may
extend to three years and shall also be liable to fine.

7
 PART A

was in default of the provision was punishable for a term which could extend

to three years and be liable for fine.

7. Section 182 of the Companies Act 2013 substantively incorporated the

provisions of Section 293-A of the 1956 Act, as amended in 1985. Section

182 enables a company to contribute any amount directly or indirectly to any

political party. The provision bars a Government company and a company

which has been in existence for less than three financial years from

contributing to a political party. The provisos to the provision prescribe the

following two conditions:

a. The aggregate of the amount contributed by the company in any

financial year shall not exceed seven and a half per cent of its average

net profits during the three immediately preceding financial years;10 and

b. A contribution can be made only if the Board of Directors issues a

resolution authorizing the contribution at a meeting. Such a resolution

shall, subject to the other provisions of the Section, be deemed to be a

justification in law for the making and acceptance of the contribution

authorized by the Board.11

8. Sub-section (3) of Section 182 mandates every company to disclose in its

profit and loss account any amount contributed by it to any political party

during the financial year with specific particulars of the total amount

10 Companies Act, First proviso to Section 182(1).

11 Companies Act, second proviso to Section 182(1)

8
 PART A

contributed along with the name of the political party to which the contribution

was made.

9. Section 182 of the Companies Act 2013 made two modifications from Section

293-A of the Companies Act 1956: (a) the cap on the contributions which can

be made by companies was increased from 5 % to 7.5% of their average net

profits; and (b) more stringent consequences for violation of were imposed.

The fine was extendable to five times (instead of three times prescribed in the

earlier provision) of the contribution.

10. The Finance Act 2017 made three changes to Section 182 of the Companies

Act:

a. The first proviso to Section 182(1) which prescribed a cap on corporate

funding was omitted;

b. Section 182(3) was amended to only require a disclosure of the total

amount contributed to political parties by a company in a financial year

and excluded the requirement to disclose the particulars of the amount

contributed to each political party; and

c. Sub-section 3A was introduced, by which a company could contribute to

a political party only by a cheque, bank draft, or electronic clearing

system. The proviso to the sub-section states that a company may also

contribute through any instrument issued pursuant to any scheme

notified under any law for the time being in force for contribution to

political parties.

9
 PART A

ii. Curbing black money

11. The Taxation Laws (Amendment) Act 1978 included Section 13A to the IT Act

exempting the income of political parties through financial contributions and

investments from income tax. The objects and reasons of the Amending Act

stipulated that tax exemption would increase disposable funds from

“legitimate sources”. However, to secure the benefit of exemption, the

following conditions prescribed in the proviso were required to be fulfilled:

a. The political party was required to keep and maintain books of account

and other documents which would enable the Assessing Officer to

properly deduce its income;12

b. The political party had to maintain a record of voluntary contributions in

excess of twenty thousand rupees13, along with the name and address

of the person who made such contributions;14 and

c. The accounts of the political party were required to be audited by an

accountant.15

12 IT Act, Proviso (a) to Section 13A

13 It was ten thousand rupees when Section 13A was introduced. It was increased to twenty thousand rupees by
the Election and Other Related Laws (Amendment) Act 2003
14 IT Act, Proviso (b) to Section 13A
15 IT Act, Proviso (c) to Section 13A

10
 PART A

12. By the Election and Other Related Laws (Amendment) Act 2003, Sections

80GGB16 and 80GGC17 were inserted in the IT Act making contributions made

to political parties tax deductible. The speech of Mr Arun Jaitley, the then

Minister of Law and Justice while moving the Bill indicates that contributions

were made tax deductible to “incentivize contributions” through cheque and

other banking channels.

13. The Finance Act 2017 made the following amendments to Section 13A of the

IT Act:

a. The political party was not required to maintain a record of contributions

if the contribution was received by electoral bonds;18 and

b. The political party must receive a donation in excess of two thousand

rupees only by a cheque, bank draft, electronic clearing system or

through an electoral bond.19

iii. Transparency

14. The Election and Other Related Laws (Amendment) Act 2003 amended the

provisions of the RPA. Section 29C of the RP Act was introduced for requiring

each political party to declare the details of the contributions received. The

16 80GGB. “Deduction in respect of contributions made by companies to political parties-In computing the total
income of an assessee, being an Indian company, there shall be deducted any sum contributed by it, in the previous
year to any political party or an electoral trust:
Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash.”
17 80 GGC. “Deduction in respect of contributions made by any person to political parties- In computing the total

income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly
funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year,
to a political party [or an electoral trust] :
[Provided that no deduction shall be allowed under this section in respect of any sum contributed by way of cash.]
Explanation.—For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered
under section 29A of the Representation of the People Act, 1951 (43 of 1951).”
18 IT Act, amendment to Proviso (b) to Section 13A
19 IT Act, Proviso (d) to Section 13A

11
 PART A

treasurer of a political party or any other person authorized by the political

party must in each financial year prepare a report in respect of the

contributions in excess of twenty thousand rupees received by the party from

a person or company other than Government companies in that financial year.

The report prepared must be submitted to the Election Commission before

the due date for furnishing a return of income of that financial year under the

IT Act.20 A political party which fails to submit the report shall not be entitled

to any tax relief as provided under the IT Act.21

15. The provision was amended by the Finance Act 2017 to include a proviso by

which the political party was not required to disclose details of contributions

received by electoral bonds.

Annexure I to this Judgment depicts in a tabular form the amendments to the

provisions of the RP Act, the IT Act, the Companies Act, and the RBI Act by the

Finance Act 2017.

16. The effect of the amendments introduced by the Finance Act to the above

legislations is that:

a. A new scheme for financial contribution to political parties is introduced

in the form of electoral bonds;

b. The political parties need not disclose the contributions received through

electoral bonds;

20 RPA, Section 29C (3)

21 RPA, Section 29C (4)

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 PART A

c. Companies are not required to disclose the details of contributions made

in any form; and

d. Unlimited corporate funding is permissible.

iv. Objections of RBI and ECI to the Electoral Bond Scheme

17. On 2 January 2017, the RBI wrote a letter to the Joint Secretary in the Ministry

of Finance on the proposal of the Government of India to enable Scheduled

Banks to issue electoral bearer bonds for the purpose of donations to political

parties before the Finance Act 2017 was enacted. The RBI objected to the

proposal on the ground that:

a. The amendment would enable multiple non-sovereign entities to issue

bearer instruments. The proposal militated against RBI’s sole authority

for issuing bearer instruments which has the potential of becoming

currency. Electoral bonds can undermine the faith in banknotes issued

by the Central Bank if the bonds are issued in sizable quantities;

b. Though the identity of the person or entity purchasing the bearer bond

will be known because of the Know Your Customer22 requirement, the

identities of the intervening persons/entities will not be known. This

would impact the principles of the Prevention of Money Laundering Act

2002; and

22 “KYC”

13
 PART A

c. The intention of introducing electoral bonds can be accomplished by

cheque, demand draft, and electronic and digital payments. There is no

special need for introducing a new bearer bond in the form of electoral

bonds.

18. On 30 January 2017, the Finance Ministry responded to the observations of

RBI and stated that:

a. RBI has not understood the core purpose of electoral bonds which is to

keep the identity of the donor secret while at the same time ensuring that

the donation is only made from tax paid money; and

b. The fear that electoral bonds might be used as currency is unfounded

because there is a time limit for redeeming the bonds.

19. By a letter dated 4 August 2017, the Deputy Governor of the RBI stated that

India can consider issuing the electoral bonds on a transitional basis through

the RBI under the existing provisions of Section 31(1) of the RBI Act. The RBI

recommended the incorporation of the following safeguards to minimize the

inherent scope of misuse of the bonds for undesirable activities:

a. The electoral bonds may have a maximum tenure of fifteen days;

b. The electoral bonds can be purchased for any value in multiples of a

thousand, ten thousand, or a lakh of rupees;

c. The purchase of electoral bonds would be allowed from a KYC compliant

bank account of the purchaser;

14
 PART A

d. The electoral bonds can be redeemed only upon being deposited into

the designated bank account of an eligible political party;

e. The sale of electoral bonds will be open only for a limited period, may be

twice a year for seven days each; and

f. The electoral bonds will be issued only at RBI, Mumbai.

20. The draft of the Electoral Bond Scheme was circulated to the RBI for its

comments. The draft conferred notified scheduled commercial banks, apart

from the RBI, with the power to issue electoral bonds. The RBI objected to

the draft Scheme by a letter dated 14 September 2017. The RBI stated that

permitting a commercial bank to issue bonds would “have an adverse impact

on public perception about the Scheme, as also the credibility of India’s

financial system in general and the central bank in particular.” The RBI again

flagged the possibility of shell companies misusing bearer bonds for money

laundering transactions. The RBI recommended that electoral bonds may be

issued in electronic form because it would (a) reduce the risk of their being

used for money laundering; (b) reduce the cost; and (c) be more secure.

21. The Electoral Bond Scheme was placed for deliberation and guidance by the

RBI before the Committee of the Central Board. The Committee conveyed

serious reservations on the issuance of electoral bonds in the physical form.

The reservations were communicated by the RBI to the Finance Minister by

a letter dated 27 September 2017. The reservations are catalogued below:

15
 PART A

a. Issuance of currency is a ‘monopolistic function’ of a central authority

which is why Section 31 of the RBI Act bars any person other than the

RBI from issuing bearer bonds;

b. Issuance of electoral bonds in the scrips will run the risk of money

laundering since the consideration for transfer of scrips from the original

subscriber to a transferee will be paid in cash. This will not leave any trail

of transactions. While this would provide anonymity to the contributor, it

will also provide anonymity to several others in the chain of transfer;

c. Issuance of electoral bonds in the scrip form could also expose it to the

risk of forgery and cross-border counterfeiting besides offering a

convenient vehicle for abuse by “aggregators”; and

d. The electoral bond may not only be seen as facilitating money

laundering but could also be projected (albeit wrongly) as enabling it.

22. On 26 May 2017, the Election Commission of India23 wrote to the Ministry of

Law and Justice that the amendments to the IT Act, RPA, and Companies Act

introduced by the Finance Act 2017 will have a “serious impact on

transparency of political finance/funding of political parties.” The letter notes

that the amendment to the RPA by which donations through electoral bonds

were not required to be disclosed is a retrograde step towards transparency

of donations:

“2(ii) It is evident from the Amendment which has been made,

that any donation received by a political party through

23 “ECI”

16
 PART A

electoral bond has been taken out of the ambit of reporting

under the Contribution Report as prescribed under Section
29C of the Representation of the People Act 1951 and
therefore, this is a retrograde step as far as transparency of
donations is concerned and this proviso needs to be
withdrawn.

(iii) Moreover, in a situation where contributions received

through Electoral Bonds is not reported, on perusal of the
Contribution reports of the political parties, it cannot be
ascertained whether the political party has taken any donation
in violation of provisions under Section 29B of the
Representation of the People Act 1951 which prohibits the
political parties from donations from Government Companies
and Foreign sources.”

23. Referring to the deletion of the provision in the Companies Act requiring

companies to disclose particulars of the amount contributed to specific

political parties, the ECI recommended that companies contributing to political

parties must declare party-wise contributions in the profit and loss account to

maintain transparency in the financial funding of political parties. Further, the

ECI also expressed its apprehension to the deletion of the first proviso to

Section 182(1) by which the cap on corporate donations was removed. The

ECI recommended that the earlier provision prescribing a cap on corporate

funding be reintroduced because:

a. Unlimited corporate funding would increase the use of black money for

political funding through shell companies; and

b. Capped corporate funding ensured that only profitable companies with

a proven track record could donate to political parties.

17
 PART A

v. Electoral Bond Scheme

24. On 2 January 2018, the Ministry of Finance in the Department of Economic

Affairs notified the Electoral Bond Scheme 2018 in exercise of the power

under Section 31(3) of the RBI Act. The Electoral Bond is a bond issued in

the nature of promissory note which is a bearer banking instrument and does

not carry the name of the buyer.24 The features of the Scheme are as follows:

a. The Bond may be purchased by a person who is (i) a citizen of India; or

(ii) incorporated or established in India.25 ‘Person’ includes (a) an

individual; (b) a Hindu undivided family; (c) a company; (c) a firm; (d) an

association of persons or a body of individuals, whether incorporated or

not; (e) every artificial juridical person, not falling within any of the above

categories; and (f) any agency, office, or branch owned or controlled by

such a person. An individual can buy bonds either singly or jointly with

other individuals;26

b. An Electoral Bond can only be encashed by an eligible political party.27

A political party, to be eligible to receive an electoral bond, has to be

registered under Section 29A of the RP Act, and ought to have secured

not less than one per cent of the votes polled in the last general election

to the House of the People or the Legislative Assembly of the State.28 An

eligible political party can encash a bond only through a bank account

24 Electoral Bond Scheme, Clause 2(a)

25 Electoral Bond Scheme, Clause 3(1)
26 Electoral Bond Scheme, clause 3(3)
27 Electoral Bond Scheme, Clause 12
28 Electoral Bond Scheme, Clause 3(3)

18
 PART A

with an authorised bank.29 The scheme has notified the State Bank of

India as the bank authorised to issue and encash bonds;30

c. The instructions issued by the Reserve Bank of India regarding KYC

apply to buyers of the bond. The authorised bank may call for additional

KYC documents if necessary;31

d. Payments for the issuance of the bond are accepted in Indian rupees,

through demand draft, cheque, Electronic Clearing System or direct

debit to the buyer’s account. Where payment is made by cheque or

demand draft, it must be drawn in favour of the issuing bank at the place

of issue;32

e. The bonds are issued in denominations of Rs 1000, 10,000, 1,00,000,

10,00,000 and 1,00,00,000;33

f. The bond is valid for fifteen days from the date of issue. No payment will

be made to a political party if the bond is deposited after the expiry of

fifteen days34. If the bond is not encashed within fifteen days, it will be

deposited by the authorised bank with the Prime Minister’s Relief Fund;35

g. A buyer who wishes to purchase electoral bond(s) can apply in the

format specified in Annexure II of the Scheme.36 The issuing branch shall

29 Electoral Bond Scheme, Clause 3(4)

30 Electoral Bond Scheme, Clause 2(b)
31 Electoral Bond Scheme, Clause 4(2)
32 Electoral Bond Scheme, Clause 11
33 Electoral Bond Scheme, Clause 5
34 Electoral Bond Scheme, Clause 6
35 Electoral Bond Scheme, Clause 12(2)
36 Electoral Bond Scheme, Clause 7(1)

19
 PART A

issue the bond if all the requirements are fulfilled.37 The application shall

be rejected if the application is not KYC compliant or if the application

does not meet the requirements of the scheme;38

h. The bond issued is non-refundable;39

i. The information furnished by the buyer is to be treated as confidential by

the authorized bank. It shall be disclosed only when demanded by a

competent court or upon the registration of criminal case by any law

enforcement agency;40

j. The bond shall be available for purchase for a period of ten days on a

quarterly basis, in the months of January, April, July, and October as

specified by the Central Government.41 Bonds will be available for an

additional period of thirty days as specified by the Central Government

in a year when General Elections to the House of People are to be held;42

k. No interest is payable on the bond.43 No commission, brokerage, or any

other charges for issue of a bond shall be payable by the buyer against

purchase of the bond;44

l. The value of the bonds shall be considered as income by way of

voluntary contributions received by an eligible political party for the

37 Electoral Bond Scheme, Clause 7(3)

38 Electoral Bond Scheme, Clause 7(4)
39 Electoral Bond Scheme, Clause 7(6)
40 Electoral Bond Scheme, Clause 7(4)
41 Electoral Bond Scheme, Clause 8(1)
42 Electoral Bond Scheme, Clause 8(2)
43 Electoral Bond Scheme, Clause 9
44 Electoral Bond Scheme, Clause 10

20
 PART A

purpose of exemption from Income Tax under Section 13A of the IT Act;45

and

m. The bonds are not eligible for trading.46

25. The petitioners instituted proceedings under Article 32 seeking a declaration

that Electoral Bond Scheme and the following provisions be declared

unconstitutional:

a. Section 135 of the Finance Act 2017 and the corresponding amendment

in Section 31 of the RBI Act;

b. Section 137 of the Finance Act 2017 and the corresponding amendment

in Section 29C of the RP Act;

c. Section 11 of the Finance Act 2017 and the corresponding amendment

in Section 13A of the IT Act; and

d. Section 154 of the Finance Act 2017 and the corresponding amendment

to Section 182 of the Companies Act.

26. In its order dated 13 April 2019, this Court observed that the amendments

which have been challenged give rise to weighty issues which have a bearing

on the sanctity of the electoral process. This Court directed all political parties,

in the interim to submit details of contributions received through electoral

bonds (with particulars of the credit received against each bond, date of credit,

and particulars of the bank account to which the amount has been credited)

45 Electoral Bond Scheme, Clause 13

46 Electoral Bond Scheme, Clause 14

21
 PART A

to the ECI in a sealed cover. The prayer for interim relief was rejected by

observing that the operations under the scheme are not placed behind “iron

curtains incapable of being pierced”:

"25. The financial statements of companies registered under

the Companies Act, 2013 which are filed with the Registrar of
Companies, are accessible online on the website of the
Ministry of Corporate Affairs for anyone. They can also be
obtained in physical form from the Registrar of Companies
upon payment of prescribed fee. Since the Scheme mandates
political parties to file audited statement of accounts and also
since the Companies Act requires financial statements of
registered companies to be filed with the Registrar of
Companies, the purchase as well as encashment of the
bonds, happening only through banking channels, is always
reflected in documents that eventually come to the public
domain. All that is required is a little more effort to cull out such
information from both sides (purchaser of bond and political
party) and do some “match the following”. Therefore, it is not
as though the operations under the Scheme are behind iron
curtains incapable of being pierced."

27. The petitioners have also challenged the introduction of the Finance Act as a

Money Bill under Article 110 of the Constitution. The issue of the scope of

Article 110 has been referred to a seven-Judge Bench and is pending

adjudication.47 The petitioners submitted that they would press the grounds of

challenge to the Finance Act independent of the issue on Money Bills in view

of the upcoming elections to Parliament.

28. By an order dated 31 October 2023, the batch of petitions was directed to be

listed before a Bench of at least five-Judges in view of the provisions of Article

145(3) of the Constitution. It is in this background that the challenge to the

47 Roger Mathew v. South Bank of India, CA No. 8588/2019

22
 PART B

Electoral Bond Scheme and the amendments is before the Constitution

Bench.

B. Issues

29. The present batch of petitions gives rise to the following issues:

a. Whether unlimited corporate funding to political parties, as envisaged by the

amendment to Section 182(1) of the Companies Act infringes the principle of

free and fair elections and violates Article 14 of the Constitution; and

b. Whether the non-disclosure of information on voluntary contributions to

political parties under the Electoral Bond Scheme and the amendments to

Section 29C of the RPA, Section 182(3) of the Companies Act and Section

13A(b) of the IT Act are violative of the right to information of citizens under

Article 19(1)(a) of the Constitution.

23
 PART C

C. Submissions

i. Submissions of petitioners

30. Mr Prashant Bhushan, learned counsel made the following submissions:

a. There is no rational basis for the introduction of electoral bonds. The

main objective of introducing the Electoral Bond Scheme as reflected in

the article written by the then Finance Minister, Mr. Arun Jaitley was that

it would enhance transparency in electoral funding since electoral bond

transactions can only be made through legitimate banking channels.

However, cash donations are still permitted even after the introduction

of the Electoral Bond Scheme;

b. The Central Government ignored the objections which were raised by

both the RBI and the ECI to the Electoral Bond Scheme;

c. The statutory amendments and the Electoral Bond Scheme which

mandates non-disclosure of information of electoral funding are

unconstitutional because:

i. They defeat the purpose of introducing provisions mandating

disclosure of information on political funding in the RPA and the

Companies Act which was to enhance transparency in electoral

funding;

ii. They violate Article 19(1)(a) which guarantees to the voter the right

to information concerning the affairs of the public and the

24
 PART C

government.48 This includes the right to information about financial

contributions to political parties because the Constitution through

the Tenth Schedule recognizes that political parties have a decisive

control over the formation of Government and voting by members

of the Legislature in the Legislative Assembly;

iii. They violate Article 21 because the non-disclosure of information

of political contributions promotes corruption49 and quid pro quo

arrangements. The available data indicates that more than ninety

four percent of the total electoral bonds are purchased in

denominations of rupees one crore. This indicates that bonds are

purchased by corporates and not individuals. The limited disclosure

clause in the Electoral Bond Scheme prevents investigating

agencies such as the Central Bureau of Investigation and

Enforcement Directorate from identifying corruption; and

d. They violate the rights of shareholders of Companies who are donating

money to political parties by preventing disclosure of information to

them; and

e. The statutory amendments and the Electoral Bond Scheme subvert

democracy and interfere with free and fair elections because the huge

difference in the funds received by ruling parties in the States and Centre

48 Relied on PUCL v. Union of India, (2003) 4 SCC 399; ADR v. Union of India, (2002) 5 SCC 294; Anjali Bhardwaj
v. Union of India, (2019) 18 SCC 246
49 Relied on Kanwar Lal Gupta v. Amar Nath Chawla, 1975 SCC (3) 646

25
 PART C

vitiates a level playing field between different parties and between

parties and independent candidates.

31. Mr Kapil Sibal, learned senior counsel made the following submissions:

a. The amendments and the Electoral Bond Scheme skew free and fair

elections by permitting unlimited contributions to political parties by

corporate entities and removing the requirement of disclosure of

information about political funding;

b. Freedom of a voter in the negative connotation refers to the freedom to

cast their vote without interference and intimidation. Freedom in the

positive connotation includes the freedom to vote on the basis of

complete and relevant information. This includes information about

financial contributions to political parties;

c. The argument of the Union of India that Courts should show judicial

restraint is erroneous because the amendments in question relate to the

electoral process and do not pertain to economic policy;

d. The presumption of constitutionality should not apply to statutes which

alter the ground rules of the electoral process. The principle underlying

the presumption of constitutionality is that the legislature represents the

will of the people and that it is validly constituted through free and fair

elections. It would be paradoxical to accord a presumption of

26
 PART C

constitutionality to the very laws or rules that set the conditions under

which the legislature comes into being50;

e. Corporate funding per se is violative of the Constitution because

corporate entities are not citizens and thus, are not entitled to rights

under Article 19(1)(a);

f. The funds contributed to the Electoral Bond Scheme can be used in any

manner and their use is not restricted to electoral campaigns;

g. The Electoral Bond Scheme severs the link between elections and

representative democracy because those elected are inclined to fulfill

the wishes of the contributors and not the voters. This could be through

direct quid pro quo where an express promise is made to enact a policy

in favour of the donor and indirect quid pro quo where there is an

influence through access to policy makers;

h. The Scheme promotes information asymmetry where the information

about political donations is not disclosed to voters but the Central

Government is privy to such information through the State Bank of India

which is the authorized bank under the Scheme. The information

asymmetry will ensure that a larger portion of the donations would be

made to the ruling party at the Centre. According to the data, the political

party at the center has received fifty seven percent of the total

contributions made through electoral bonds;

50 Relied on Subash Chandra v. Delhi Subordinate Services Selection Board, (2009) 15 SCC 458

27
 PART C

i. The Electoral Bond Scheme skews the principle of one person, one vote

because it gives the corporates a greater opportunity to influence

political parties and electoral outcomes;

j. The amendment to Section 182(3) permits: (i) loss making companies to

contribute to political parties; (ii) unlimited contributions to political

parties enabling significant policy influence; and (iii) non-disclosure of

information on political funding to shareholders;

k. The amendments permitting non-disclosure of information on political

funding are violative of the right to information under Article 19(1)(a). The

right to information on funding of political parties is a natural

consequence of the judgment of this Court in ADR (supra) and PUCL

(supra) because the underlying principle in the judgments is that an

informed voter is essential for a functioning democracy. Information

about funding to political parties is necessary for an informed voter since

the Symbols Order 1968 and the provisions of the Tenth Schedule allow

political parties to influence legislative outcomes and policies;

l. The infringement of the right to information does not satisfy the

proportionality standard vis-à-vis the purpose of curbing black money.

Even if the argument that the Electoral Bond Scheme fulfills the purpose

is accepted, non-disclosure of information on political funding is not the

least restrictive means to achieve the purpose;

28
 PART C

m. The infringement of the right to information does not satisfy the

proportionality standard vis-à-vis the purpose of guaranteeing

informational privacy because:

i. Protecting donor privacy is not a legitimate purpose. There is no

legitimate expectation of informational privacy to political

contributions. The argument that it lies at the heart of privacy

conflates speech with money. Secrecy of voting cannot be equated

to political donations because while the former is an expression of

political equality, the latter is contrary to political equality because

it depends on the economic capacity of the contributor;

ii. Political funding is made to influence public policy. They are public

acts which are by their very nature subject to public scrutiny; and

iii. Even if donor privacy is necessary, on a balance, the public interest

in free and fair elections trumps the private interest in

confidentiality. Further, this Court has to balance between the

possibility of victimization on the disclosure of information and the

infringement of the right to know; and

n. The amendment to Section 31 of the RBI Act is unconstitutional because

of excessive delegation since it does not set out the contours of the

Scheme.

29
 PART C

32. Mr Shadan Farasat, learned counsel made the following submissions:

a. The Scheme does not effectively curb black money. Clause 14 of the

Electoral Bond Scheme prohibits de jure trading of the bonds. However,

trading is de facto permissible. Nothing prevents person A from

purchasing the bond and trading it with person B who pays through cash;

b. The right to information on political funding which is traceable to Article

19(1)(a) can only be restricted on the grounds stipulated in Article 19(2).

The purposes of curbing black money and recognizing donor privacy is

not traceable to the grounds in Article 19(2);

c. Even if the purposes are traceable to Article 19(2), the Scheme is

unreasonable and disproportionate to the purpose of “increasing political

funding through banking channels and reducing political funding through

non-banking channels” because:

i. The purpose is not satisfied: The regime still permits cash funding

up to Rupees two thousand. The operation of the Scheme

increases anonymous funding through electoral bonds at the cost

of contributions through regular banking channels;

ii. There is no rational nexus between the means and the purpose;

iii. Other less restrictive means of contributing through banking

channels are available; and

30
 PART C

iv. The fifth prong of the proportionality analysis as laid down in

Gujarat Mazdoor Sabha v. State of Gujarat51 and Ramesh

Chandra Sharma v. State of Uttar Pradesh52 that the legislation

should have sufficient safeguard to prevent abuse has also not

been satisfied.

d. The statutory amendments and the Scheme are manifestly arbitrary

because (i) large scale corruption and quid pro quo arrangements would

go unidentified due to the non-disclosure of information about political

funding; (ii) they enable capture of democracy by wealthy interests; and

(iii) they infringe the principle of ‘one person-one vote’ because a

selected few overpower the voice of the masses because of their

economic wealth;

e. The deletion of the limit on corporate contributions is manifestly

arbitrary53 because it (i) permits donations by loss making companies;

(ii) removes the control of shareholders over the decisions of the Board;

(iii) permits unlimited contribution by corporates and thereby abrogates

democratic principles;

f. The provision permitting non-disclosure of funding by companies is

violative of the shareholders’ rights under:

i. Article 25 which includes the right of the shareholder to know how

the resources generated from their property are utilized. Once a

51 (2020) 10 SCC 459

52 2023 SCC OnLine SC 162
53 Relied on Shayara Bano v. Union of India, (2017) 9 SCC 1

31
 PART C

shareholder comes to know that a company is financing a political

party and their conscience does not permit it, as an exercise of the

right to conscience, the shareholder should be entitled to sell those

shares; and

ii. If the shareholder feels that the political contributions are not a

sound business decision, they must be entitled to exit the business

by selling the shares. The information that would enable the

shareholder to make such a decision is not disclosed, thus,

infringing upon their right under Article 19(1)(g).

33. Mr Nizam Pasha, learned counsel made the following submissions:

a. The Electoral Bond Scheme and the amendments are arbitrary as they

permit Indian registered companies to purchase electoral bonds without

considering their ownership and control. This goes against foreign

investment laws in India, treating companies owned or controlled by non-

resident Indian citizens as 'foreign owned or controlled companies,'

without rational justification;

b. The Electoral Bond Scheme is arbitrary due to its discriminatory and

non-transparent nature. It contradicts existing laws requiring

transparency and verification of the beneficial ownership and source of

funds; and

c. The amendments to Section 29C of the RPA and Section 182 of the

Companies Act serve no purpose other than perpetuating illegal ends,

32
 PART C

as they exempt companies' purchase of electoral bonds from public

disclosure. This fails to achieve the scheme's stated objective of curbing

cash donations.

34. Mr Vijay Hansaria, learned senior counsel made the following submissions:

a. The objects and reasons of the Election and Other Related Laws

(Amendment) Act 2003 which amended the Companies Act 1956, IT Act

1961, and the RPA indicates that the amendments were made to

incentivize contributions through banking channels. Thus, the

amendments to Section 13A of the Income Tax Act and Section 29C of

the RPA are contrary to the object of inserting Section 13A and Section

80GGB and Section 80GGC of the Income Tax Act;

b. Since 1959, when companies were permitted to contribute to political

parties, all companies were required to mandatorily disclose the total

contributions made and the name of party to which they have

contributed. Further, ceiling limits for total contribution by companies

were prescribed. The Finance Act 2017 does away with these

transparency requirements; and

c. International perspectives on political funding regulations, including

those from the United States, the United Kingdom, Switzerland and

Singapore, emphasize the importance of transparency, disclosure, and

reporting in political contributions. These examples underscore the

global consensus on transparency in the political funding process.

33
 PART C

35. Mr Sanjay R. Hegde, learned senior counsel made the following submissions:

a. Public listed companies are subject to scrutiny since they raise funds

from the public. Information pertaining to the company is essential to be

brought to the public domain. This will enable informed debates and

discussions regarding the use of money by such companies. Such

information must particularly be made available to shareholders to

enable them to make an informed choice with regard to trading of

securities. Thus, the amendment to the Companies Act which removes

the requirement of disclosure of information about political contributions

is violative of the right to information of shareholders which flows from

Article 19(1)(a);

b. Public listed companies should not be allowed to make contributions

without the consent of the majority of the shareholders or the consent of

three-fourths of shareholders;

c. Non-disclosure of information about political funding denies

shareholders the right to choice that flows from Article 21. Shareholders

are incapacitated from making a choice about whether they wish to

invest in shares of a company which has contributed to a political party

whose ideology that shareholder does not agree with; and

d. The amendment to Section 182(3) perpetuates the pre-existing

inequality in power between shareholders and the

Board/Promoters/management and puts the shareholders in an even

34
 PART C

weaker position violating the right to substantive equality under Article

14.

36. Mr PB Suresh, learned counsel made the following submissions:

a. The Scheme and amendments violate Articles 14 and 15 by

disproportionately impacting regional political parties and political parties

which represent marginalised and backward sections of the society. The

representation of the backward classes is low in the corporate sector.

Thus, the Scheme has a disparate impact on parties whose social base

is derived from the SC/STs and backward classes;

b. The presumption of constitutionality does not apply in full rigour to

electoral laws because the incumbent legislators have a vested interest

in shaping the laws that would make it easier for them to be re-elected;

c. The removal of the cap on corporate donations has strengthened the

position of major political parties and created more barriers for the entry

of new political parties; and

d. Political parties have a right to know the funding sources of rival political

parties to enable them to critique it before the public.

35
 PART C

ii. Submissions of Union of India

37. The learned Attorney General for India made the following submissions:

a. Political parties are an integral product of a free and open society and

play an important role in the administration of the affairs of the

community. Accordingly, they are entitled to receive all support, including

financial contributions;

b. The Electoral Bond Scheme allows any person to transfer funds to

political parties of their choice through legitimate banking channels

instead of other unregulated ways such as direct transfer through cash;

c. The Scheme ensures confidentiality of the contributions made to political

parties. The benefit of confidentiality to contributors ensures and

promotes contribution of clean money to political parties;

d. Citizens do not have a general right to know regarding the funding of

political parties. Right to know is not a general right available to citizens;

e. This Court has evolved the right to know for the specific purpose of

enabling and furthering the voter’s choice of electing candidates free

from blemish; and

f. The influence of contributions by companies to political parties ought

not to be examined by this Court. It is an issue of democratic significance

and should be best left to the legislature.

36
 PART C

38. The learned Solicitor General of India made the following submissions:

a. The legal framework prior to the enactment of the Electoral Bond

Scheme was mostly cash-based which incentivized infusion of black

money into political parties, and consequently, into the electoral process

in India. The Electoral Bond Scheme is an improvement on the prior legal

framework;

b. Donors to a political party often apprehended retribution from other

political parties. Such apprehension incentivized donors to contribute

unaccounted money to political parties to avoid identification and

victimization by other political parties. The Electoral Bond Scheme

maintains the confidentiality of donors and thereby incentivizes them to

contribute clean money to political parties;

c. In case the donor is a public company, they will have to declare the

amount contributed in their books of account without disclosing the name

of the political party. Similarly, the political parties will also have to

disclose the total amount received through electoral bonds in their

annual audited accounts filed before the Election Commission of India.

This framework ensures a balance between clean money coming into

the system as against the right to information of citizens;

d. The state has a positive obligation to safeguard the privacy of its citizens,

which necessarily includes the citizens’ right to political affiliation. The

right of a buyer to purchase electoral bonds without having to disclose

their preference of political party secures the buyer’s right to privacy;

37
 PART C

e. The Electoral Bond Scheme has been enacted in pursuance of a

legitimate state interest - to shift from cash driven, unregulated and

unaccounted cash based political donations to a regulated, digital and

legal political donation framework. The provisions of the Electoral Bond

Scheme have a specific object and purpose of curbing black money and

protecting donor privacy:

i. Clause 3(3) imposes a pre-condition that only a registered political

party which has secured at least 1 per cent of the votes polled in

the last general election would be eligible to receive bonds. This

provision ensures that ghost political parties are barred from

seeking and receiving political funding;

ii. Clause 4 requires a buyer of electoral bonds to meet the requisite

KYC Norms. This ensures that only KYC compliant persons are

entitled to buy electoral bonds;

iii. The limited validity period of fifteen days ensures that the bond is

not used as a parallel currency;

iv. Clause 7(4) mandates the authorized bank to treat the information

furnished by a buyer as confidential which shall not be disclosed to

any authority, except when directed by a competent court or upon

registration of criminal case by any law enforcement agency. This

provision protects the privacy and personal details of the buyer vis-

à-vis the state; and

38
 PART C

v. Clause 11 mandates that all payments for the purchase of electoral

bonds shall be accepted through banking channels. This provision

curbs the circulation of black money.

f. The right of a citizen to know how political parties are being funded must

be balanced against the right of a person to maintain privacy of their

political affiliations. Donating money to one’s preferred party is a form

political self-expression, which lies at the heart of privacy;

g. Maintaining anonymity of donations to political parties is a part of the

concept of secret ballot because it enables a person to make political

choices without any fear of victimization or retaliation;

h. The right to information only operates against information in the

possession or in the knowledge of the state. It cannot operate for

seeking information not in the knowledge or possession of the state;

i. The amendments to the RBI Act, RPA, and the IT Act are intended to

curb donations made by way of cash and other means to political parties

and secure the anonymity of donors;

j. The amendment to Section 182 of the Companies Act removes the

limitation of seven and a half percent of the net profits on the amount

contributed by political parties. The removal of the contribution limit was

intended to disincentivize creation of shell companies;

k. This Court has recognized that the legislature has a wide latitude in

matters concerning economic policy. Further, the mere possibility that

39
 PART D

the law might be abused cannot be a ground for holding the provision

procedurally or substantially unreasonable; and

l. The fact that one party receives substantially more support through

donations than other parties cannot in itself be a legal ground to

challenge the validity of the Electoral Bond Scheme.

D. The Scope of Judicial Review

39. The Union of India submitted that this Court must exercise judicial restraint

while deciding the challenge to the Electoral Bond Scheme and the statutory

amendments because they relate to economic policy. For this purpose, the

Union of India relied on a series of decisions where this Court has held that

Courts must follow judicial restraint in matters concerning economic and

financial policy.54

40. It is a settled position of law that Courts must adopt a less stringent form of

judicial review while adjudicating challenges to legislation and executive

action which relate to economic policy as compared to laws relating to civil

rights such as the freedom of speech or the freedom of religion. 55 More

recently, in Swiss Ribbons v. Union of India56, this Court while deciding a

challenge to the constitutional validity of provisions of the Insolvency and

Bankruptcy Code 2016 observed that the legislature must be given “free play”

in the joints to experiment with economic policy. This position was also

54 Rustom Cavasjee Cooper v. Union of India, (1970) 1 SCC 248; R.K Garg v. Union of India, (1981) 4 SCC 675;
Premium Granites v. State of Tamil Nadu, (1994) 2 SCC 691; Peerless General Finance and Investment Co v. RBI,
(1992) 2 SCC 343, BALCO Employees Union v. Union of India, (2002) 2 SCC 333.
55 RK Garg v. Union of India, (1981) 4 SCC 675 [8]; See Balco Employees Union v. Union of India, (2002) 2 SCC

333; DG of Foreign Trade v. Kanak Exports, (2016) 2 SCC 226

56 (2019) 4 SCC 17

40
 PART D

followed in Pioneer Urban Land and Infrastructure Limited v. Union of

India57, where amendments to the Insolvency and Bankruptcy Code were

challenged.

41. The question is whether the amendments under challenge relate to economic

policy. While deciding on a constitutional challenge, the Court does not rely

on the ipse dixit of the government, that a legislation is an economic

legislation. Courts before classifying the policy underlying a legislation as

economic policy must undertake an analysis of the true nature of the law. The

amendment to Section 31 of the RBI Act can be classified as a financial

provision to the extent that it seeks to introduce a new form of a bearer

banking instrument. However, any resemblance to an economic policy ends

there. The amendments in question can be clubbed into two heads: first,

provisions mandating non-disclosure of information on electoral financing;

and second, provisions permitting unlimited corporate funding to political

parties. Both these amendments relate to the electoral process.

42. In fact, it is evident from the correspondence between the Ministry of Finance

and RBI (which have been summarized above) on the apprehensions of the

Bonds being used as an alternative currency that the Bonds were introduced

only to curb black money in the electoral process, and protect informational

privacy of financial contributors to political parties. The Union of India has

itself classified the amendments as an “electoral reform”. Thus, the

57 (2019) 8 SCC 416

41
 PART D

submission of the Union of India that the amendments deal with economic

policy cannot be accepted.

43. The second argument that this Court needs to address is to determine the

scope of judicial review to decide this batch of petitions. The petitioners

submitted that the presumption of constitutionality does not apply since the

Scheme deals with the electoral process. The premise of the argument is that

the presumption of constitutionality is based on the principle that the elected

body must be trusted to make decisions and that principle should not be

applied when the rules changing the electoral process are themselves in

challenge.58 It was submitted that in such cases if a prima facie case of

constitutional violation is made out, the State bears a heavy burden of

justifying the law.

44. The presumption of constitutionality is based on two premises. First, it is

based on democratic accountability, that is, legislators are elected

representatives who are aware of the needs of the citizens and are best

placed to frame policies to resolve them59. Second, legislators are privy to

information necessary for policy making which the Courts as an adjudicating

authority are not. However, the policy underlying the legislation must not

violate the freedoms and rights which are entrenched in Part III of the

Constitution and other constitutional provisions. It is for this reason that

previous judgments of this Court have held that the presumption of

58 For this purpose, the petitioners referred to the representation-reinforcement model of judicial review propounded
by John Hart Ely in his book Democracy and Distrust: A Theory of Judicial Review (Harvard University Press, 2002)
and the judgment of this Court in Subash Chandra v. Delhi Subordinate Service Selection Board, (2009) 15 SCC
458
59 See State of Bombay v. FN Balsara, 1951 SCR 682

42
 PART D

constitutionality is rebutted when a prima facie case of violation of a

fundamental right is established. The onus then shifts on the State to prove

that the violation of the fundamental right is justified. In Dharam Dutt v. Union

of India60, a two-Judge Bench of this Court elucidated the principle in the

following terms:

“49. In spite of there being a general presumption in favour of

the constitutionality of the legislation, in a challenge laid to the
validity of any legislation allegedly violating any right or
freedom guaranteed by clause (1) of Article 19 of the
Constitution, on a prima facie case of such violation having
been made out, the onus would shift upon the respondent
State to show that the legislation comes within the permissible
limits of the most relevant out of clauses (2) to (6) of Article 19
of the Constitution, and that the restriction is reasonable. The
Constitutional Court would expect the State to place before it
sufficient material justifying the restriction and its
reasonability. On the State succeeding in bringing the
restriction within the scope of any of the permissible
restrictions, such as, the sovereignty and integrity of India or
public order, decency or morality etc. the onus of showing that
restriction is unreasonable would shift back to the petitioner.
Where the restriction on its face appears to be unreasonable,
nothing more would be required to substantiate the plea of
unreasonability. Thus the onus of proof in such like cases is
an ongoing shifting process to be consciously observed by the
Court called upon to decide the constitutional validity of a
legislation by reference to Article 19 of the Constitution.”

45. The broad argument of the petitioners that the presumption of constitutionality

should not apply to a specific class of statutes, that is, laws which deal with

electoral processes cannot be accepted. Courts cannot carve out an

exception to the evidentiary principle which is available to the legislature

based on the democratic legitimacy which it enjoys. In the challenge to

60AIR 2004 SC 1295; Also see Ramlila Maidan Incident, In re, (2012) 5 SCC 1; State of Bombay v. FN Balsara,
1951 SCR 682; Ameerunissa Begum v. Mahboob Begum, 1952 2 SCC 697

43
 PART E

electoral law, like all legislation, the petitioners would have to prima facie

prove that the law infringes fundamental rights or constitutional provisions,

upon which the onus would shift to the State to justify the infringement.

E. The close association of politics and money

46. The law does not bar electoral financing by the public. Both corporates and

individuals are permitted to contribute to political parties. The legal regime has

not prescribed a cap on the financial contributions which can be received by

a political party or a candidate contesting elections. However, Section 77 of

the RPA read with Rule 90 of the Conduct of Election Rules 1961 61 prescribes

a cap on the total expenditure which can be incurred by a candidate or their

agent in connection with Parliamentary and Assembly elections between the

date on which they are nominated and the date of the declaration of the result.

The maximum limit for the expenditure in a Parliamentary constituency is

between Rupees seventy five lakhs to ninety five lakhs depending on the size

of the State and the Union Territory.62 The maximum limit of election expenses

in an Assembly constituency varies between rupees twenty eight lakhs and

forty lakhs depending on the size of the State.63 However, the law does not

prescribe any limits for the expenditure by a political party. Explanation 1 to

61 Section 77 of the RPA read with Section 169 provides the Central Government in consultation with the Election
Commission, the power to prescribe the amount over which the total expenditure incurred by the candidate or their
agent in connection with Parliamentary election and Assembly election shall not be exceeded. The total expenditure
cap is prescribed in Rule 90 of the Conduct of Election Rules 1961 which is amended from time to time.
62 The expenditure limit is capped at seventy-five Lakhs for the states of Arunachal Pradesh, Goa, and Sikkim, and

the Union Territories of Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli and Daman and Diu,
Lakshadweep, Puducherry, and Ladakh. For the remaining States and Union Territories, the expenditure limit is
capped at ninety-five Lakhs.
63 For State Assembly elections, the expenditure is capped at twenty-eight lakhs for the States of Arunachal

Pradesh, Goa, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura. Amongst the Union Territories, the
expenditure is capped at twenty-eight Lakhs for Puducherry and forty Lakhs for Delhi and Jammu and Kashmir.

44
 PART E

Section 77 stipulates that the expenditure incurred by “leaders of a political

party” on account of travel for propagating the programme of the political party

shall not be deemed to be election expenditure. Thus, there is an underlying

dicohotomy in the legal regime. The law does not regulate contributions to

candidates. It only regulates contributions to political parties. However,

expenditure by the candidates and not the political party is regulated. Be that

as it may, the underlying understanding of the legal regime regulating

electoral finance is that finance is crucial for the sustenance and progression

of electoral politics.

47. It is believed that money does not vote but people do. However, studies have

revealed the direct and indirect influence of money on electoral politics.64 The

primary way through which money directly influences politics is through its

impact on electoral outcomes.

48. One way in which money influences electoral outcomes is through vote

buying. Another way in which money influences electoral outcomes is through

incurring electoral expenditure for political campaigns. Campaigns have a

measurable influence on voting behavior because of the impact of television

advertisements, campaign events, and personal canvassing.65 An informed

voter is one who is assumed to be aware of the policy positions of the

candidate or the party they represent and votes on a thorough analysis of the

pros and cons of electing a candidate. On the other hand, an uninformed voter

64 See Conrad Foreman, Money in Politics: Campaign Finance and its Influence over the Political Process and
Public Policy, 52 UIC J. Marshall L. Rev. 185 (2018)
65 See D Sunshine Hillygus, Campaign Effects on Vote Choice in “The Oxford Handbook of American Elections

and Political Behavior” (Ed. Jan E. Leighley 2010)

45
 PART E

is assumed to not possess knowledge of the policy positions of the

candidates.66 Campaigns have an effect on the voting behavior of both an

informed and an uninformed voter. The impact of campaigns on an informed

voter is supplementary because campaign activities enable an informed voter

to be further informed about the policies and ideology of the political party and

the candidate, and their views on specific issues. Electoral campaigns reduce

the uncertainty about candidates for an informed voter. For an uninformed

voter, electoral campaigns play a much more persuasive role in influencing

electoral behavior because campaigns throw more light on candidates.

49. Political parties use innovative techniques of campaigning by going beyond

the traditional methods of advertisements, door-to-door campaigning and

processions to increase outreach. For example, political parties sponsor

religious festivals and community fairs, organize sporting matches and literary

competitions where cash awards are given.67 These outreach techniques

leave a lasting impression on the minds of uninformed voters. Thus,

enhanced campaign expenditure proportionately increases campaign

outreach which influences the voting behavior of voters.

50. Money also creates entry-barriers to politics by limiting the kind of candidates

and political parties which enter the electoral fray. Studies have shown that

money influences the selection of candidates by political parties because

parties would prefer fielding candidates who would be able to substantially

66 See David P. Baron, Electoral Competition with informed and uninformed voters, American Political Science
Review, Vol. 88, No. 1 March 1994
67 Michael A. Collins, Navigating Fiscal Constraints in “Costs of Democracy: Political Finance in India” (edited by

Devesh Kapur and Milan Vaishnav) OUP 2018

46
 PART E

self-finance their campaign without relying on the party for finance.68 In this

manner, candidates who belong to socio-economically weaker sections face

added barriers because of the close association of money and politics.

51. Money also excludes parties which are new to the electoral fray, and in

particular, parties representing the cause of marginalized communities.

Political parties which do not have enough finance have had to form electoral

coalitions with other established political parties who would in exchange

shoulder a lion’s share of the campaign expenditure of the newly established

political party extending to costs related to coalition propaganda, print and

digital advertising, vehicle and equipment hire, political rallies, food

transportation, and daily expenditure for party cadres69. The compromises

which newly formed political parties have to make lead to a dilution of the

ideology of the party in exchange of its political sustenance. In this manner,

money creates an exclusionary impact by reducing the democratic space for

participation for both candidates and newer and smaller political parties.

52. The judgments of this Court have recognized the influence of money on

politics. They take a critical view of the role played by big business and “big

money” in the electoral process in India. The decision in Kanwar Lal Gupta

v. Amar Nath Chawla,70 notices that money serves as an asset for advertising

and other forms of political solicitation that increases a candidate’s exposure

to the public. The court observed that the availability of large funds allows a

68 See Neelanjan Sircar, Money in Elections: the Role of Personal Wealth in Election Outcomes in Costs of
Democracy: Political Finance in India (ed. By Devesh Kapur and Milan Vaishnav) OUP 2018
69 Michael A. Collins, Navigating Fiscal Constraints in “Costs of Democracy: Political Finance in India” (edited by

Devesh Kapur and Milan Vaishnav) OUP 2018

70 (1975) 3 SCC 646

47
 PART E

candidate or political party “significantly greater opportunity for the

propagation of its programme” in comparison to their political rivals. Such

political disparity, it was observed, results in “serious discrimination between

one political party or individual and another on the basis of money power and

that in turn would mean that “some voters are denied an ‘equal’ voice and

some candidates are denied an ‘equal chance’”.

53. In Vatal Nagaraj v. R Dayanand Sagar,71 Justice V R Krishna Iyer noted that

candidates often evade the legal ceiling on expenditure by using big money

channelled by political parties. The court acknowledged that large monetary

inputs are “necessary evils of modern elections”, which they hoped would be

eradicated sooner rather than later. In P Nalla Thampy Terah v. Union of

India,72 a Constitution Bench of this Court was called upon to decide the

validity of Explanation 1 to Section 77 of the RPA which allowed unlimited

channelling of funds by political parties for the election of their candidates.

While upholding the constitutional validity of the explanation, the Court noted

that the petitioners were justified in criticizing the statute for “diluting the

principle of free and fair elections.”

54. In Common Cause (A Registered Society) v. Union of India,73 this Court

dwelt on the ostentatious use of money by political parties in elections to

further the prospects of candidates set up by them. Justice Kuldip Singh

71 (1975) 4 SCC 127

72 1985 Supp SCC 189
73 (1996) 2 SCC 752

48
 PART E

described the role of money in the electoral process, which is relevant for

contextualizing the issue:

“18. … [The General Elections] is an enormous exercise and

a mammoth venture in terms of money spent. Hundreds and
thousands of vehicles of various kinds are pressed on to the
roads in 543 parliamentary constituencies on behalf of
thousands of aspirants to power, many days before the
general elections are actually held. Millions of leaflets and
many million posters are printed and distributed or pasted all
over the country. Banners by the lakhs are hoisted. Flags go
up, walls are painted, and hundreds of thousands of
loudspeakers play out the loud exhortations and extravagant
promises. VIPs and VVIPs come and go, some of them in
helicopters and air-taxis. The political parties in their quest for
power spend more than one thousand crore of rupees on the
General Election (Parliament alone), yet nobody accounts for
the bulk of money so spent and there is no accountability
anywhere. Nobody discloses the source of the money. There
are no proper accounts and no audit. From where does the
money come from nobody knows. In a democracy where rule
of law prevails this naked display of black money, by violating
the mandatory provisions of law, cannot be permitted.”

55. The challenge to the statutory amendments and the Electoral Bond Scheme

cannot be adjudicated in isolation without a reference to the actual impact of

money on electoral politics. This Court has in numerous judgments held that

the effect and not the object of the law on fundamental rights and other

constitutional provisions must be determined while adjudicating its

constitutional validity. The effect of provisions dealing with electoral finance

cannot be determined without recognizing the influence of money on politics.

Therefore, we must bear in mind the nexus between money and electoral

democracy while deciding on the issues which are before us in this batch of

petitions.

49
 PART F

F. The challenge to non-disclosure of information on electoral financing

56. Section 29C of the RPA as amended by the Finance Act 2017 stipulates that

the political party need not disclose financial contributions received through

electoral bonds. Similarly, Section 13A of the IT Act as amended does not

require the political party to maintain a record of contributions for contributions

received through electoral bonds. Section 182 of the Companies Act 2013 as

amended by the Finance Act 2017 by which the earlier requirement of

disclosure of particulars of the amount contributed by companies to political

parties in their profit and loss accounts was deleted. The company which has

made financial contributions is now only required to disclose the total amount

contributed to political parties without disclosing specific particulars about the

political party to which the contribution was made.

57. Maintaining the anonymity of the contributor is a crucial and primary

characteristic of the Electoral Bond Scheme. The electoral bond is defined as

a bearer banking instrument which does not carry the name of the buyer.74

The law mandates the authorized bank to not disclose the information

furnished by the buyer except when demanded by a competent court or upon

the registration of a criminal case by law enforcement agencies.75

58. The amendments introduced by the Finance Act 2017 and the Electoral Bond

Scheme are challenged on the ground that the non-disclosure of information

74 Electoral Bond Scheme, Clause 2(a)

75 Electoral Bond Scheme, Clause 7(4)

50
 PART F

about electoral contributions is violative of the right to information of the voter

which is traceable to Article 19(1)(a) of the Constitution.

i. Infringement of the right to information of the voter

59. This segment of the judgment will discuss whether the amendments and the

Electoral Bond Scheme infringe the right to information of the voter. For this

purpose, we will discuss the scope of the right to information, and whether the

right extends to information on contributions to political parties.

a. The scope of Article 19(1)(a): tracing the right to information

60. Article 19(1)(a) has been held to guarantee the right to information to citizens.

The judgments of this Court on the right to information can be divided into two

phases. In the first phase, this Court traced the right to information to the

values of good governance, transparency and accountability. These

judgments recognize that it is the role of citizens to hold the State accountable

for its actions and inactions and they must possess information about State

action for them to accomplish this role effectively.

61. In the first phase, this Court delineated the scope of the right to information in

the context of deciding the disclosure of evidence relating to affairs of the

State. Provisions of the Indian Evidence Act stipulate that evidence which is

relevant and material to proceedings need not be disclosed to the party if the

disclosure would violate public interest.76 In the 1960’s, this Court framed the

issue of disclosure of documents related to the affairs of the State in terms of

76 Indian Evidence Act 1872, Section 124

51
 PART F

a conflict between public interest and private interest. This Court observed

that the underlying principle in the provisions of the Indian Evidence Act

bearing on the disclosure of evidence related to the affairs of the State is that

if such disclosure is denied, it would violate the private interest of the party.77

So, when a party seeks the disclosure of documents, and when such

disclosure is denied on the ground that it would violate public interest, there

is a conflict between private interest and public interest. In subsequent cases,

the courts cast the principle underlying the provisions of disclosure in the

Indian Evidence Act as a conflict between two conceptions of public interest.

This Court held that disclosure of information aids the party to the

proceedings. But beyond that, disclosure also serves the public interest in the

administration of justice.78

62. In State of Uttar Pradesh v. Raj Narain79, the respondent sought to summon

documents in an election petition. The State made a claim of privilege from

disclosure of documents. In his concurring opinion in the Constitution Bench,

Justice KK Mathew observed that there is a public interest in the impartial

administration of justice which can only be secured by the disclosure of

relevant and material documents. The learned Judge reaffirmed this

proposition by tracing the right to information to Article 19(1)(a) of the

Constitution:

“74. In a Government of responsibility like ours, where all the

agents of the public must be responsible for their conduct,
there can be but few secrets. The people of this country have

77 See State of Punjab v. Sodhi Sukhdev Singh, (1961) 2 SCR 371 [13]
78 See State of Punjab v. Sodhi Sukhdev Singh, (1961) 2 SCR 371 [Subba Rao J]
79 (1975) 4 SCC 428

52
 PART F

a right to know every public act, everything that is done in a

public way, by their public functionaries. They are entitled to
know the particulars of every public transaction in all its
bearing. The right to know, which is derived from the concept
of freedom of speech, though not absolute, is a factor which
should make one wary, when secrecy is claimed for
transactions which can, at any rate, have no repercussion on
public security.[…]”

63. This principle was further elucidated in SP Gupta v. Union of India80. The

Union of India claimed immunity against the disclosure of the correspondence

between the Law Minister, the Chief Justice of the High Court of Delhi, and

the Chief Justice of India on the reappointment of Additional Judges. Justice

P N Bhagwati while discussing the position of law on claims of non-disclosure,

observed that the Constitution guarantees the “right to know” which is

necessary to secure “true facts” about the administration of the country. The

opinion recognised accountability and transparency of governance as

important features of democratic governance. Democratic governance, the

learned Judge remarked, is not restricted to voting once in every five years

but is a continuous process by which the citizens not merely choose the

members to represent themselves but also hold the government accountable

for their actions and inactions for which citizens need to possess

information81.

64. Our discussion indicates that the first phase of the jurisprudence on the right

to information in India focussed on the close relationship between the right

and open governance. The judgments in this phase were premised on the

801981 Supp SCC 87

81Also see Dinesh Trivedi v. Union of India, (1997) 4 SCC 306 where this Court observed that sunlight is the best
disinfectant.

53
 PART F

principle that the citizens have a duty to hold the government of the day

accountable for their actions and inactions, and they can effectively fulfil this

duty only if the government is open and not clothed in secrecy.

65. In the second phase of the evolution of the jurisprudence on the right to

information, this Court recognised the importance of information to form views

on social, cultural and political issues, and participate in and contribute to

discussions.82 Courts recognised that the relevance of information is to not

only to hold the government accountable but also to discover the truth in a

marketplace of ideas which would ultimately secure the goal of self-

development.83 This Court also recognised that freedom of speech and

expression includes the right to acquire information which would enable

people to debate on social, moral and political issues. These debates would

not only foster the spirit of representative democracy but would also curb the

prevalence of misinformation and monopolies on information. Thus, in the

second phase, the Court went beyond viewing the purpose of freedom of

speech and expression through the lens of holding the government

accountable, by recognising the inherent value in effective participation of the

citizenry in democracy. This Court recognised that effective participation in

democratic governance is not just a means to an end but is an end in itself.

This interpretation of Article 19(1)(a) is in line with the now established

position that fundamental freedoms and the Constitution as a whole seek to

82 Secy., Ministry of Information & Broadcasting, Govt. of India v. Cricket Assn. of Bengal, (1995) 2 SCC 161; Indian
Express Newspapers v. Union of India, AIR 1986 SC 515 ; Romesh Thappar v. State of Madras, AIR 1950 SC 124
83 DC Saxena v. Hon’ble The Chief Justice of India, (1996) 5 SCC 216 [29]

54
 PART F

secure conditions for self-development at both an individual and group level.84

A crucial aspect of the expansion of the right to information in the second

phase is that right to information is not restricted to information about state

affairs, that is, public information. It includes information which would be

necessary to further participatory democracy in other forms and is not

restricted to information about the functioning of public officials. The right to

information has an instrumental exegesis, which recognizes the value of the

right in facilitating the realization of democratic goals. But beyond that, the

right to information has an intrinsic constitutional value; one that recognizes

that it is not just a means to an end but an end in itself.

b. Right to information of a voter: exploring the judgments in ADR and PUCL

66. In Union of India v. Association for Democratic Reforms85 (“ADR”), this

Court traced the right of voters to have information about the antecedents,

including the criminal past, of candidates contesting elections, to Article

19(1)(a) of the Constitution. In ADR (supra), proceedings under Article 226 of

the Constitution were instituted before the High Court of Delhi seeking a

direction to implement the Law Commission’s recommendations to (a) debar

candidates from contesting elections if charges have been framed against

them by a Court in respect of certain offences; and (b) ensure that candidates

furnish details regarding criminal cases which are pending against them. The

High Court held that the Court cannot direct Parliament to implement the

recommendations of the Law Commission. However, the High Court directed

84 See Supriyo v. Union of India, 2023 INSC 920 [213, 214]

85 (2002) 5 SCC 294.

55
 PART F

the ECI to secure information relating to (a) the details of cases in which a

candidate is accused of any offences punishable with imprisonment;(b)

assets possessed by a candidate, their spouse and dependents; (c) facts

bearing on the candidate’s competence, capacity, and suitability for

representing the people; and (d) any other information which ECI considers

necessary for judging the capacity of the candidate fielded by the political

party.

67. The Union of India appealed against the decision of the High Court before this

Court. This Court held that voters have a right to be sufficiently informed about

candidates so as to enable them to exercise their democratic will through

elections in an intelligent manner. Such information was held to be necessary

for elections to be conducted in a “free and fair manner”:

“34. …the members of a democratic society should be

sufficiently informed so that they may influence intelligently
the decisions which may affect themselves and this would
include their decision of casting votes in favour of a particular
candidate. If there is a disclosure by a candidate as sought for
then it would strengthen the voters in taking appropriate
decision of casting their votes.

[…] we fail to understand why the right of a citizen/voter — a

little man — to know about the antecedents of his candidate
cannot be held to be a fundamental right under Article
19(1)(a). In our view, democracy cannot survive without free
and fair election, without free and fairly informed voters. Votes
cast by uninformed voters in favour of X or Y candidate would
be meaningless. As stated in the aforesaid passage, one-
sided information, disinformation, misinformation and non-
information, all equally create an uninformed citizenry which
makes democracy a farce. Therefore, casting of a vote by a
misinformed and non-informed voter or a voter having one-
sided information only is bound to affect the democracy
seriously. Freedom of speech and expression includes right to

56
 PART F

impart and receive information which includes freedom to hold

opinions.”

68. This Court rejected the argument that information about a candidate

contesting elections cannot be compelled to be disclosed because it is not

“public information”. The three-Judge Bench held that information that

candidates are required to disclose is only limited to aiding the voters in

assessing whether they could cast their vote in a candidate’s favour. The

Court observed that the criminal background of a candidate and assets of the

candidate (through which it could be assessed if the candidate has amassed

wealth through corruption when they were elected previously) would aid the

voters to cast their vote in an informed manner. This Court directed the ECI

to call for the following information on affidavit as a part of nomination:

a. Whether the candidate has been convicted, acquitted or discharged of

any criminal offence in the past and if convicted, whether they are

punished with imprisonment or fine;

b. In the six months prior to the filling of nomination papers, whether the

candidate was accused in any pending case for an offence punishable

with imprisonment for two years or more, and in which a charge is framed

or cognizance is taken by the court of law;

c. The assets (immovable, movable, bank balances and others) of a

candidate and of his/her spouse and that of dependents;

d. Liabilities, if any, particularly whether there are any over dues to any

public financial institution or government dues; and

57
 PART F

e. The educational qualifications of the candidate.

69. This Court observed that the ECI can ask candidates to disclose information

about the expenditure incurred by political parties to maintain the purity of

elections.86 However, the operative portion of the judgment did not reflect this

observation.

70. Pursuant to the decision of this Court in ADR (supra), Parliament amended

the RPA to incorporate some of the directions issued by this Court.87 Section

33-B of RPA stipulated that the candidate need not disclose any other

information (other than the information required by law) notwithstanding any

judgment. In PUCL v. Union of India88, proceedings were initiated before this

Court under Article 32 for challenging Section 33-B of the RPA. Justice M B

Shah, writing for the majority, noted that the decision of the three-Judge

Bench in ADR (supra) tracing the right to know the antecedents of candidates

contesting elections had attained finality and Section 33-B was

unconstitutional because it had the effect of rendering the judgment of this

Court inoperative. The learned Judge on an independent interpretation also

held that the right to information of a voter is a facet of Article 19(1)(a).89

86 Paragraph 64(4): “To maintain the purity of elections and in particular to bring transparency in the process of
election, the Commission can ask the candidates about the expenditure incurred by the political parties and this
transparency in the process of election would include transparency of a candidate who seeks election or re-election.
In a democracy, the electoral process has a strategic role. The little man of this country would have basic
elementary right to know full particulars of a candidate who is to represent him in Parliament where laws to bind
his liberty and property may be enacted.”
87 Section 33-A of the RPA required the candidate to furnish the following information:

(a) He is accused of any offence punishable with imprisonment for two years or more in a pending case in
which a charge has been framed by the court of competent jurisdiction; and
(b) He has been convicted of an offence other than any offence referred to in sub-section (1) or sub-section
(2), or covered in sub-section (3), of Section 8 and sentenced to imprisonment for one year or more.
88 (2003) 4 SCC 399
89 (2003) 4 SCC 399 [18, 27]

58
 PART F

71. Justice Venkatarama Reddi observed in his concurring opinion that there are

two postulates which govern the right to vote : first, the formulation of an

opinion about candidates, and second, the expression of choice based on the

opinion formulated by casting votes in favour of a preferred candidate. A voter

must possess relevant and essential information that would enable them to

evaluate a candidate and form an opinion for the purpose of casting votes.90

The learned Judge observed that the Constitution recognises the right of a

voter to know the antecedents of a candidate though the right to vote is a

statutory right91 because the action of voting is a form of expression protected

by Article 19(1)(a):

“Though the initial right cannot be placed on the pedestal of a

fundamental right, but, at the stage when the voter goes to the
polling booth and casts his vote, his freedom to express
arises. The casting of vote in favour of one or the other
candidate tantamounts to expression of his opinion and
preference and that final stage in the exercise of voting right
marks the accomplishment of freedom of expression of the
voter. That is where Article 19(1)(a) is attracted.”

72. In the context of the decision of this Court in ADR (supra), the learned Judge

observed that the Court issued specific directions for the disclosure of certain

information about candidates because of a legislative vacuum, and that the

directions issued to the ECI will fill the vacuum until Parliament legislates on

the subject. Thus, the five directions which were issued by this Court in ADR

(supra) were not construed to be inflexible and immutable theorems. The

learned Judge observed that though the voters have a fundamental right to

90(2003) 4 SCC 399 [96]

91The right to vote is classified as a statutory vote because only citizens who fulfill certain conditions (such as the
age) laid down in a statute can vote.

59
 PART F

know the antecedents of candidates, all the conceptions of this right

formulated by this Court in ADR (supra) cannot be elevated to the realm of

fundamental rights.

73. The majority was of the view that the voters have a fundamental right to all

the information which was directed to be declared by this Court in ADR

(supra). Justice Venkatarama Reddi disagreed. In the opinion of the learned

Judge, only certain information directed to be disclosed in ADR (supra) is

“crucial” and “essential” to the right to information of the voter:

“109. In my view, the points of disclosure spelt out by this Court

in Assn. for Democratic Reforms case [Ed.: See full text at
2003 Current Central Legislation, Pt. II, at p. 3] should serve
as broad indicators or parameters in enacting the legislation
for the purpose of securing the right to information about the
candidate. The paradigms set by the Court, though pro
tempore in nature as clarified supra, are entitled to due weight.
If the legislature in utter disregard of the indicators enunciated
by this Court proceeds to make a legislation providing only for
a semblance or pittance of information or omits to provide for
disclosure on certain essential points, the law would then fail
to pass the muster of Article 19(1)(a). Though certain amount
of deviation from the aspects of disclosure spelt out by this
Court is not impermissible, a substantial departure cannot be
countenanced. The legislative provision should be such as to
promote the right to information to a reasonable extent, if not
to the fullest extent on details of concern to the voters and
citizens at large. While enacting the legislation, the legislature
has to ensure that the fundamental right to know about the
candidate is reasonably secured and information which is
crucial, by any objective standards, is not denied. […] The
Court has to take a holistic view and adopt a balanced
approach, keeping in view the twin principles that the citizens'
right to information to know about the personal details of a
candidate is not an unlimited right and that at any rate, it has
no fixed concept and the legislature has freedom to choose
between two reasonable alternatives. […] But, I reiterate that
the shape of the legislation need not be solely controlled by
the directives issued to the Election Commission to meet an
ad hoc situation. As I said earlier, the right to information
cannot be placed in straitjacket formulae and the perceptions

60
 PART F

regarding the extent and amplitude of this right are bound to

vary.”

74. Justice Reddi held that Section 33-B was unconstitutional because:

a. Parliament cannot impose a blanket ban on the disclosure of

information other than the disclosure of information required by the

provisions of RPA. The scope of the fundamental right to information

may be expanded in the future to respond to future exigencies and

necessities. The provision had the effect of emasculating the freedom of

speech and expression of which the right to information is a facet; and

b. The provision failed to give effect to an essential aspect of the

fundamental right, namely the disclosure of assets and liabilities of the

candidates.

75. Justice Reddi then proceeded to juxtapose the directions for disclosure issued

by this Court in ADR (supra) with the scope of the provisions of the RPA

mandating disclosure. The learned judge observed that the extent of

disclosure mandated in RPA is fairly adequate with respect to past criminal

records but not with regard to pending cases.92 With respect to assets and

liabilities, the learned Judge observed that the disclosure of assets and

92 ADR required disclosure related to information of whether the candidate has been convicted/acquitted or
discharged of any criminal offence in the past, and whether six months prior to the filing of the nomination paper,
whether the candidate has been accused in any pending case for an offence punishable with imprisonment for
more than two years and in which charge has been framed or cognizance is taken by the Court. With respect to
the first direction, law created a distinction between serious and non-serious offences and mandates disclosure
only if a candidate has been convicted of a serious offence. With respect to the second direction, the provision only
mandated the disclosure of cases in which charge has been framed and excluded the disclosure of cases in which
cognizance has been taken. The learned Judge held that while the non-disclosure of conviction in a serious offence
is a reasonable balance which does not infringe the right to information, the non-disclosure of cases in which
cognizance has been taken would seriously violate the right to information of the voter particularly because framing
of charges gets delayed in a lot of cases.

61
 PART F

liabilities is essential to the right to information of the voter because it would

enable voters to form an opinion about whether the candidate, upon being

elected in the past, had amassed wealth in their name or their family

Additionally, information about dues which are payable by the candidate to

public institutions would enable voters to know the candidate’s dealing with

public money in the past.

76. Justice Reddi observed that the requirement to disclose assets of the

candidate’s family was justified because of the prevalence of Benami

transactions. Though mandating the disclosure of assets and liabilities would

infringe the right to privacy of the candidate and their family, the learned Judge

observed that disclosure which is in furtherance of the right to information

would trump the former because it serves the larger public interest. Justice

Reddi then observed that disclosure of the educational qualifications of a

candidate is not an essential component of the right to information because

educational qualifications do not serve any purpose for the voter to decide

which candidate to cast a vote for since the characteristics of duty and

concern of the people is not “monopolised by the educated”. A conclusion to

the contrary, in the learned Judge’s opinion, would overlook the stark realities

of the society.93

77. The following principles can be deduced from the decisions of this Court in

ADR (supra) and PUCL (supra):

93 (2003) 4 SCC 399 [122]

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 PART F

a. The right to information of voters which is traced to Article 19(1)(a) is

built upon the jurisprudence of both the first and the second phases in

the evolution of the doctrine, identified above. The common thread of

reasoning which runs through both the first and the second phases is

that information which furthers democratic participation must be

provided to citizens. Voters have a right to information which would

enable them to cast their votes rationally and intelligently because voting

is one of the foremost forms of democratic participation;

b. In ADR (supra), this Court observed that while the disclosure of

information may violate the right to privacy of candidates and their

families, such information must be disclosed because it furthers public

interest.94 The opinion of Justice Venkatarama Reddi in PUCL (supra)

also followed the same line of reasoning. Justice M B Shah writing for

himself and Justice D M Dharmadhikari held that the right to privacy

would not be infringed because information about whether a candidate

is involved in a criminal case is a matter of public record. Similarly, the

assets or income are normally required to be disclosed under the

provisions of the Income Tax Act; and

c. The voters have a right to the disclosure of information which is

“essential” for choosing the candidate for whom a vote should be cast.

94In ADR (supra), this Court notes that such information would enable voters to determine if the candidate is
corrupt and would further openness in democracy. [Paragraph 41].

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 PART F

The learned Judges in PUCL (supra) differed to the extent of what they

considered “essential” information for exercising the choice of voting.

78. While relying on the judgments of this Court in ADR (supra) and PUCL (supra)

the petitioners argue that non-disclosure of information on the funding of

political parties is violative of the right to information under Article 19(1)(a).

This Court needs to consider the following two issues to answer the question:

a. Whether the requirements of disclosure of information about

“candidates” can be extended to “political parties”; and

b. If the answer to (a) above is in the affirmative, whether information on

the funding of political parties is “essential” for exercising choice on

voting.

c. The focal point of the electoral process: candidate or political party

79. The decisions in ADR (supra) and PUCL (supra) recognise the right to

information of a voter about candidates, which enables them to cast their

vote in an effective manner. The relief which was granted by this Court in

PUCL (supra) and ADR (supra) was restricted to the disclosure of information

about candidates contesting the election because of the limited nature of the

reliefs sought. The ratio decidendi of the two judgments of this Court is that

voters have a right to receive information which is essential for them to cast

their votes. This Court has to first analyse if the ‘political party’ is a relevant

‘political unit’ in the electoral process to answer the question whether funding

details of political parties are essential information for the voter to possess.

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 PART F

80. The Constitution of India did not make a reference to political parties when it

was adopted. A reference was made when the Tenth Schedule was included

in the Constitution by the Constitution (Fifty-Second) Amendment Act 1985.

However, even though the Constitution on its adoption did not make a

reference to political parties, statutory provisions relating to elections

accorded considerable importance to political parties, signifying that political

parties have been the focal point of elections.

81. The ECI notified the Election Symbols (Reservation and Allotment) Order

196895 in exercise of the powers conferred by Article 344 of the Constitution

read with Section 29A of the RPA and Rules 596 and 1097 of the Conduct of

Election Rules 1961. In terms of the provisions of the Symbols Order, the ECI

shall allot a symbol to every candidate contesting the election. The Symbols

Order classifies political parties into recognised political parties and

unrecognised political parties. The difference in the procedure under the

Symbols Order for allotting symbols to recognised political parties, registered

but unrecognised political parties and independent candidates indicates both

the relevance and significance of political parties in elections in India.

82. A party is classified a National98 or a State recognised party99 based on the

total percentage of votes secured at the last general elections and (or) the

95 “Symbols Order 1968”

96 Rule 5 provides the ECI the power to specify by notification, the symbols which may be chosen by candidates at
elections in parliamentary or assembly constituencies.
97 Rule 10 deals with the preparation of list of contesting candidates. Rule 10(5) states that the allotment of the

returning officer of any symbol to a candidate shall be final except where it is inconsistent with the directions issued
by the ECI, in which case the ECI may revise the allotment. Rule 10(6) states that every candidate shall be informed
of the symbol allotted to the candidate.
98 Symbols Order 1968, Rule 6B
99 Symbols Order 1968, Rule 6A

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 PART F

number of candidates who have been returned to the Legislative Assembly.

Symbols are reserved for allocation to recognised political parties.100 All

candidates who are being set up by a national or a State recognised party are

to be allotted the symbol reserved for that party for the purpose of contesting

elections.101

83. Symbols other than those reserved for recognised political parties shall be

available for allotment to independent candidates and candidates set up by

political parties which are not recognised political parties in terms of the

Symbols Order.102 Candidates set up by a registered but unrecognised

political party may also be allotted a common symbol if they fulfil certain

conditions laid down in the Symbols Order.103

84. Thus, the Symbols Order creates a demarcation between candidates set up

by political parties and candidates contesting individually. Political parties are

allotted a Symbol such that all candidates who are set up by that political party

are allotted the Symbol of their political party while contesting elections. Even

within candidates who are set up by political parties, the Symbols Order

creates a distinction between unrecognised but registered political parties and

recognised political parties. Recognised political parties shall continue to be

allotted the same symbol for all General elections until the time these political

parties fulfil the conditions for recognition under the Symbols Order.104 The

100 Symbols Order 1968, Rule 5

101 Symbols Order 1968, Rule 8(1)
102 Ibid.
103 Symbols Order 1968, Rule 10B. The party is required to set up candidates in at least five percent of the assembly

constituencies.
104 A recognised National or a State Party shall continue to be treated as a recognised party even if the political

party does not fulfil the conditions at the next election to the General Assembly stipulated for recognition as a

66
 PART F

effect of the provisions of the Symbols Order is that the symbols of certain

political parties, particularly those which have enjoyed the status of a

recognised political party for long are entrenched in the minds of the voters

that they associate the symbol with the political party.

85. For unrecognised but registered political parties, though a common symbol is

allotted for all candidates being set up by the political parties, the symbol is

not “reserved” for the Party. The ECI could allot different symbols to that

political party in each General election. The candidates of a registered but

unrecognised political party may be represented by a common symbol but the

people would not attach a specific symbol to the political party because the

symbol by which it is represented may change with every election.

86. The purpose of allotting symbols to political parties is to aid voters in

identifying and remembering the political party. The law recognises the

inextricable link between a political party and the candidate though the vote

is cast for a candidate. The literacy rate in India was 18.33 percent when the

first General Election was held in 1951. Most of the voters identified a political

party only with its symbol and this still continues to the day. In a few cases,

the voters would not possess any knowledge of the candidate being set up by

the political party. They would vote solely based on the symbol which is

allotted to the political party; knowledge of which they have obtained through

campaigning activities or its sustained presence in the electoral fray. Gayatri

Devi, the third Maharani consort of Jaipur who was later set up as a candidate

recognised political party. However, it shall continue to be treated as a recognised political party at the subsequent
general election only if the party fulfils the conditions laid down.

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 PART F

by the Swatantra Party, recalls in her Autobiography that her team spent hours

trying to persuade the voters that they had to vote for the Symbol Star (which

was the symbol of the Swatantra Party) and not a symbol showing a horse

and a rider because she also rode a horse:105

“Since most of India is illiterate, at the polls people vote

according to a visual symbol of their party. […] The Swatantra
Party had a star. Baby, all my other helpers and I spent
endless frustrating hours trying to instruct the women about
voting for the star. On the ballot sheet, we said, over and over
again, this is where the Maharani’s name will appear and next
to it will be a star. But it was not as simple as that. They noticed
a symbol showing a horse and a rider, agree with each other
that the Maharani rides so that must be her symbol.
Repeatedly we said, “No, no, that’s not the right one.” Then
they caught sight of the emblem of a flower. Ah, the flower of
Jaipur – who else could it mean but the Maharani? “No, no,
no, not the flower.” All right, the star. Yes, that seems
appropriate for the Maharani, but look, here is the sun. If the
Maharani is a star, then the sun must certainly mean the
Maharaja. We’ll vote for both. Immediately the vote would
have been invalidated. Even up to the final day, Baby and I
were far from sure that we had managed to get our point
across.”

87. Symbols also gain significance when the names of political parties sound

similar. For example, political parties by the names of “Dravida Munnetra

Kazhagam”, “All Indian Anna Dravida Munnetra Kazhagam”, “Dravida

Kazhagam”, “Desiya Murpokku Dravida Kazhagam”, “Makkal Desiya

Murpokku Dravida Kazhagam”, “Kongu Desa Makkal Katchi”, “Kongunadu

Makkal Desia Katchi”, and “Kongunadu Makkal Katchi” contest elections in

Tamil Nadu. The names of all the political parties bear similarities due to the

usage of the same words with certain additions or deletions. The allocation of

Gayatri Devi and Santha Rama Rau, A Princess remembers: The Memoirs of the Maharani of Jaipur, (Rupa
105

Publications 1995) [301].

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 PART F

Symbols to political parties would help voters identify and distinguish between

political parties which have similar sounding names. It is precisely because of

the close association of the symbol with the political party by voters that both

factions of the party vie for the symbol that is allotted to the Party when there

is a split in a recognised political party.

88. India follows the open-list first past the post form of election in which votes

are cast for a candidate and the candidate who secures the highest number

of votes is chosen to represent the people of that constituency. It could be

argued that this system of elections gives prominence to candidates and not

political parties unlike the system of closed list of elections where the voters

do not have any knowledge of the candidates that are set up by the Political

Party.106

89. However, it cannot be concluded that the decision of voting is solely based on

the individual candidate’s capabilities and not the political party merely

because the voter has knowledge of the candidate who has been set up by

the political party. Such a conclusion cannot be definitively drawn particularly

in view of the design of the electoral voting machine which has a list of the

names of the candidates who are contesting the election from the

constituency along with the symbol of the political party which is fielding the

candidate. Voters casts their votes based on two considerations: the

106See Dominik Hangartner, Nelson A Ruiz, Janne Tukiainen, Open or Closed? How List Type Affects Electoral
Performance, Candidate Selection, and Campaign Effort, VAT Institute for Economic Research Working Papers
120 (2019)

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 PART F

capability of the candidate as a representative and the ideology of the political

party.

90. Political parties publish electoral manifestos containing the ideology of the

party, major policies of the political party, plans, programmes and other

considerations of governance which would be implemented if they came to

power.107 While political manifestos do not necessarily always translate to

policies when the party is elected to power, they throw light upon the integral

nature of political parties in the electoral system. By publishing an election

manifesto, a political party communicates to the voters that they must accord

preference to the political party. Party manifestos prod voters to look away

from a candidate centric and towards a party centric perception of elections.

91. Lastly, the prominence of political parties as electoral units is further

heightened by the form of government in India. India follows a Westminister

system of government which confers prominence to political parties without

strictly separating between the legislature and the executive. The time-

honoured convention of the cabinet form of government is that the leader of

the political party with absolute majority must be called to form the

government.108 The Council of Ministers is appointed by the President on the

aid and advice of the Prime Minister.109 Political parties are intrinsic to this

form of government because of the very process of government formation.

The recommendations of the Sarkaria Commission on the exercise of

107 Election Commission of India, Instructions to political parties on manifestos dated 24.04.2015,
https://www.eci.gov.in/election-manifestos/
108 Constitution of India 1950, Article 75. See, Aradhya Sethia, “Where’s the party?: towards a constitutional

biography of political parties, Indian Law Review, 3:1, 1-32 (2019)

109 Ibid.

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 PART F

discretion by the Governor when no single political party commands an

absolute majority, which has been given judicial recognition in Rameshwar

Prasad v. Union of India,110 also prioritises political parties making them

central to the governance structure.111

92. The centrality of political parties in the electoral system is further accentuated

by the inclusion of the Tenth Schedule. The Tenth Schedule deals with

disqualification on the ground of defection from the political party which set

up the elected individual as its candidate. Paragraph 2 provides the following

grounds of defection:

a. Voluntarily giving up membership of the political party; and

b. Voting or abstaining from voting in the House contrary to direction issued

by the political party without obtaining prior permission from the political

party and when such voting has not been condoned by the political party.

93. The underlying principle of anti-defection law which has been recognised by

a seven-Judge Bench of this Court in Kihoto Hollohon v. Zachillhu,112 is that

a candidate set up by a political party is elected on the basis of the programme

of that political party. In the course of years, while deciding disputes related

to the Tenth Schedule, judgments of this Court have further strengthened the

110 (2006) 2 SCC 1

111 65. “Para 4.11.04 of the Sarkaria Commission Report specifically deals with the situation where no single party
obtains absolute majority and provides the order of preference the Governor should follow in selecting a Chief
Minister. The order of preference suggested is:
a. An alliance of parties that was formed prior to the elections.;
b. The largest single party staking a claim to form the Government with the support of others, including
“independents”;
c. A post-electoral coalition of parties, with all the partners in the coalition joining the Government;
d. A post-electoral alliance of parties, with some of the parties in the alliance forming a Government and the
remaining parties, including “Independents” supporting the Government from outside.”
112 (1992) Supp (2) SCC 651 [4]

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 PART F

centrality of political parties in the electoral system. In Ravi S Naik v. Union

of India113, this Court observed that voluntarily giving up membership of a

political party has a wider connotation and includes not just resignation of the

member from the party and an inference can also be drawn from the conduct

of the member. In Subash Desai v. Principal Secretary, Governor of

Maharashtra,114 a Constitution Bench of this Court while interpreting the

provisions of the Tenth Schedule held that the political party and not the

legislature party (which consists of the members of the House belonging to a

particular political party) appoints the Whip of a political party for the purposes

of Paragraph 2(1)(b) of the Tenth Schedule.115

94. In summation, a ‘political party’ is a relevant political unit in the democratic

electoral process in India for the following three reasons:

a. Voters associate voting with political parties because of the centrality of

symbols in the electoral process;

b. The form of government where the executive is chosen from the legislature

based on the political party or coalition of political parties which has secured

the majority; and

c. The prominence accorded to political parties by the Tenth Schedule of the

Constitution.

113 AIR 1994 SC 1558

114 WP (C) No. 493 of 2022
115 Subash Desai [113]

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 PART F

d. The essentiality of information about political funding for the effective exercise

of the choice of voting

95. In ADR (supra) and PUCL (supra), this Court held that a voter has a right to

information which is essential for them to exercise their freedom to vote. In

the previous section, we have concluded that political parties are a relevant

political unit. Thus, the observations of this Court in PUCL (supra) and ADR

(supra) on the right to information about a candidate contesting elections is

also applicable to political parties. The issue whether information about the

funding received by political parties is essential for an informed voter must

be answered in the context of the core tenets of electoral democracy. The

Preamble to the Constitution resolves to constitute a social, economic, and

politically just society where there is equality of status and opportunity. The

discourse which has emanated within and outside the Courts is often

restricted to the ideals of social and economic justice and rarely includes

political inequality.

96. Electoral democracy in India is premised on the principle of political equality

which the Constitution guarantees in two ways. First, by guaranteeing the

principle of “one person one vote” which assures equal representation in

voting. The Constitution prescribes two conditions with respect to elections to

seats in Parliament which guarantee the principle of “one person one vote”

with respect to every voter and amongst every State:

a. Each State shall be divided into territorial constituencies in such a

manner that the ratio between the population of each constituency and

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 PART F

the number of seats allotted to it shall be the same throughout the

State;116 and

b. The total number of seats allotted to each State in Parliament should be

such that the ratio between the number of seats, and the population of

the State is the same for all States.117

97. Second, the Constitution ensures that socio-economic inequality does not

perpetuate political inequality by mandating reservation of seats for

Scheduled Castes and Scheduled Tribes in Parliament118 and State

Assemblies.119

98. The Constitution guarantees political equality by focusing on the ‘elector’ and

the ‘elected’. These two constitutional precepts foster political equality in the

following two ways. First, the Constitution mandates that the value of each

vote is equal. This guarantee ensures formal political equality where every

person’s vote is accorded equal weightage. Second, the Constitution ensures

that members of socially marginalized groups are not excluded from the

political process. This guarantee ensures (a) equality in representation; and

(b) equality in influence over political decisions.

99. However, political inequality continues to persist in spite of the constitutional

guarantees. One of the factors which contributes to the inequality is the

116 Constitution of India 1950, Article 81 (2)(b). Also see Constitution of India, Article 170(2) where the Constitution
prescribes the same principle with respect to the composition of seats in Legislative Assemblies of State
117 Constitution of India 1950, Article 81(2)(b)
118 Constitution of India 1950, Article 330 guarantees “as nearly as may be” proportional representation for

Scheduled Castes and Scheduled Tribes in Parliament.

119 Constitution of India 1950, Article 332 guarantees “as nearly as may be” proportional representation for

Scheduled Castes and Scheduled Tribes in Legislative Assemblies of the States.

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 PART F

difference in the ability of persons to influence political decisions because of

economic inequality. In a politically equal society, the citizens must have an

equal voice to influence the political process.120 We have already in the

preceding section elucidated the close association of money and politics

where we explained the influence of money over electoral outcomes.

However, the influence of money over electoral politics is not limited to its

impact over electoral outcomes. It also spills over to governmental decisions.

It must be recalled here that the legal regime in India does not distinguish

between campaign funding and electoral funding. The money which is

donated to political parties is not used by the political party only for the

purposes of electoral campaign. Party donations are also used, for instance,

to build offices for the political party and pay party workers. Similarly, the

window for contributions is not open for a limited period only prior to the

elections. Money can be contributed to political parties throughout the year

and the contributed money can be spent by the political party for reasons

other than just election campaigning. It is in light of the nexus between

economic inequality and political inequality, and the legal regime in India

regulating party financing that the essentiality of the information on political

financing for an informed voter must be analyzed.

100. Economic inequality leads to differing levels of political engagement because

of the deep association between money and politics. At a primary level,

political contributions give a “seat at the table” to the contributor. That is, it

120See Ben Ansell and Jean Gingrich J (2021). Political Inequality. The IFS Deaton Review of Inequalities, London:
Institute for Fiscal Studies

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 PART F

enhances access to legislators.121 This access also translates into influence

over policy-making. An economically affluent person has a higher ability to

make financial contributions to political parties, and there is a legitimate

possibility that financial contribution to a political party would lead to quid pro

quo arrangements because of the close nexus between money and politics.

Quid pro quo arrangements could be in the form of introducing a policy

change, or granting a license to the contributor. The money that is contributed

could not only influence electoral outcomes but also policies particularly

because contributions are not merely limited to the campaign or pre-campaign

period. Financial contributions could be made even after a political party or

coalition of parties form Government. The possibility of a quid pro quo

arrangement in such situations is even higher. Information about political

funding would enable a voter to assess if there is a correlation between policy

making and financial contributions.

101. For the information on donor contributions to be relevant and essential, it is

not necessary that voters have to take the initiative to peruse the list of

contributors to find relevant information which would enable them to cast their

vote effectively. Electronic and print media would present the information on

contributions received by political parties, and the probable link between the

contribution and the licenses which were given to the company in an

121 See Joshua L. Kalla and David E. Broockman, “Campaign Contributions Facilitate Access to Congressional
Officials: A Randomized Field Experiment” (2016 60(3)) American Journal of Political Science. A political
organization conducted an experiment to determine if there is a link between political contributions and access to
the policy makers. The Organization scheduled meetings between 191 Congressional offices and the organization’s
members who were campaign donors. When the Congressional offices were informed that prospective attendees
were political donor, policymakers made themselves available for the meeting three to four times more often.

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 PART F

accessible format. The responses to such information by the Government and

political parties would go a long way in informing the voter.

102. However, to establish the argument of quid pro quo arrangements between

the contributor and the political party, it is necessary that the political party

has knowledge of the particulars of funding to its party. The political party to

whom contributions are made cannot enter into a quid pro quo arrangements

if it is unaware of the donor. The Scheme defines electoral bond “as a bond

issued in the nature of promissory note which shall be a bearer banking

instrument and shall not carry the name of the buyer or payee.” 122 The

Scheme also stipulates that the information furnished by the buyer shall be

treated as confidential which shall not be disclosed by any authority except

when demanded by a competent court or by a law enforcement agency upon

the registration of criminal case.123

103. The submission of the Union of India is that the political party which receives

the contribution does not know of identity of the contributor because neither

the bond would have their name nor could the bank discloses such details to

the political party. We do not agree with this submission. While it is true that

the law prescribes anonymity as a central characteristic of electoral bonds,

the de jure anonymity of the contributors does not translate to de facto

anonymity. The Scheme is not fool-proof. There are sufficient gaps in the

Scheme which enable political parties to know the particulars of the

contributions made to them. Clause 12 of the Scheme states that the bond

122 Electoral Bond Scheme; Clause 2(a)

123 Electoral Bond Scheme; Clause 7(4)

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 PART F

can be encashed only by the political party by depositing it in the designated

bank account. The contributor could physically hand over the electoral bond

to an office bearer of the political party or to the legislator belonging to the

political party, or it could have been sent to the office of the political party with

the name of the contributor, or the contributor could after depositing the

electoral bond disclose the particulars of the contribution to a member of the

political party for them to cross-verify. Further, according to the data on

contributions made through electoral bonds, ninety four percent of the

contributions through electoral bonds have been made in the denomination

of one crore. Electoral bonds provide economically resourced contributors

who already have a seat at the table selective anonymity vis-à-vis the public

and not the political party.

104. In view of the above discussion, we are of the opinion that the information

about funding to a political party is essential for a voter to exercise their

freedom to vote in an effective manner. The Electoral Bond Scheme and the

impugned provisions to the extent that they infringe upon the right to

information of the voter by anonymizing contributions through electoral bonds

are violative of Article 19(1)(a).

ii. Whether the infringement of the right to information of the voter is justified

105. The next issue which falls for analysis is whether the violation of the right to

information is justified. This Court has laid down the proportionality standard

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 PART F

to determine if the violation of the fundamental right is justified. 124 The

proportionality standard is as follows:

a. The measure restricting a right must have a legitimate goal (legitimate

goal stage);

b. The measure must be a suitable means for furthering the goal (suitability

or rational connection stage);

c. The measure must be least restrictive and equally effective (necessity

stage); and

d. The measure must not have a disproportionate impact on the right holder

(balancing stage).

106. The legitimate goal stage requires this Court to analyze if the objective of

introducing the law is a legitimate purpose for the infringement of rights. At

this stage, the State is required to discharge two burdens. First, the State

must demonstrate that the objective is legitimate. Second, the State must

establish that the law is indeed in furtherance of the legitimate aim that is

contended to be served.125

107. The then Finance Minister, Mr. Arun Jaitley encapsulated the objective of

introducing the Electoral Bond Scheme thus:

a. An attempt was made in the past to incentivize donations to political

party through banking channels. Both the donor and the donee were

124 Modern Dental College & Research Centre v. State of Madhya Pradesh, (2016) 4 SCC 346
125 See Media One v. Union of India, Civil Appeal No. 8129 of 2022 [77-79]

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 PART F

granted exemption from payment of tax if accounts of contributions were

maintained and returns were filed. However, the situation had only

marginally improved. Political parties continued to receive funds through

anonymous sources; and

b. Donors have been reluctant in donating through the banking channel

because the disclosure of donor identity would entail adverse

consequences.

108. In other words, Mr. Jaitley stated that the main purpose of the Scheme is to

curb black money in electoral financing and this purpose could be achieved

only if information about political donations is kept confidential. That is, donor

privacy is a means to incentivize contributions through the banking channel.

However, Mr. Tushar Mehta argued that protecting donor privacy is an end in

itself. We will now proceed to determine if the infringement of the right to

information of the voters is justified vis-à-vis the purposes of (a) curbing black

money; and (b) protecting donor privacy.

a. Curbing Black money

109. The petitioners argue that the infringement of the right to information which is

traceable to Article 19(1)(a) can only be justified if the purpose of the

restriction is traceable to the grounds stipulated in Article 19(2). They argue

that the purpose of curbing of black money cannot be traced to any of the

grounds in Article 19(2), and thus, is not a legitimate purpose for restricting

the right to information.

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 PART F

110. Article 19(2) stipulates that the right to freedom of speech and expression can

only be restricted on the grounds of: (a) the sovereignty and integrity of India;

(b) the security of the State; (c) friendly relations with foreign states, (d) public

order; (e) decency or morality; (f) contempt of court; (g) defamation; and (h)

incitement to an offence. The purpose of curbing black money is traceable to

public interest. However, public interest is not one of the grounds stipulated

in Article 19(2). Of the rights recognized under Article 19, only Article 19(1)(g)

which guarantees the freedom to practice any profession or to carry on any

occupation, trade or business can be restricted on the ground of public

interest.126

111. In Sakal Papers v. The Union of India127, the constitutional validity of the

Newspaper (Price and Page) Act 1965 and the Daily Newspaper (Price and

Page) Order 1960 which regulated the number of pages according to the price

charged, prescribed the number of supplements to be published and

regulated the area for advertisements in the newspapers was challenged on

the ground that it violated the freedom of press under Article 19(1)(a). The

Union of India submitted that the restriction on the freedom of press was

justified because the purpose of the law was to prevent unfair competition

which was in furtherance of public interest. It was argued that the restriction

was justified because the activities carried out by newspapers were also

traceable to the freedom to carry out a profession which could be restricted

on the ground of public interest under Article 19(6). Justice JR Mudholkar

126 Constitution of India 1950; Article 19(6)

127 AIR 1962 SC 305

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 PART F

writing for the Constitution Bench observed that the impugned legislation

“directly and immediately” curtails the freedom of speech guaranteed under

Article 19(1)(a), and the freedom cannot be restricted on any ground other

than the grounds stipulated in Article 19(2).128 In Express Newspapers v.

Union of India,129 a Constitution Bench while deciding the constitutional

challenge to the Working Journalists (Conditions of Service) and

Miscellaneous Provisions Act 1955 held that a law violating Article 19(1)(a)

would be unconstitutional unless the purpose of the law falls “squarely within

the provisions of Article 19(2)”.130 In Kaushal Kishor v. State of Uttar

Pradesh,131 a Constitution Bench of this Court answered the issue whether

the grounds stipulated in Article 19(1)(a) are exhaustive of the restrictions

which can be placed on the right to free speech under Article 19(1)(a)

affirmatively.

112. However, in the specific context of the right to information, this Court has

observed that the right can be restricted on grounds not traceable to Article

19(1)(a). In PUCL (supra), one of the submissions was that dangerous

consequences would follow if the right to information is culled out from Article

19(1)(a) because the grounds on which the right can be restricted as

prescribed in Article 19(2) are very limited. Justice Reddi in his concurring

opinion in PUCL (supra) observed that the right under Article 19(1)(a) can be

128 Ibid; Paragraph 36:”If a law directly affecting it is challenged, it is no answer that the restriction enacted by it are
justifiable under clauses (3) to (6). For the scheme of Article 19 is to enumerate different freedoms separately and
then to specify the extent of restrictions to which they may be subjected and the objects for securing which this
could be done.”
129 AIR 1958 SC 578
130 Also see, Indian Express Newspapers (Bombay) Pvt Limited v. Union of India, AIR 1986 SC 515;Sodhi

Shamsher v. State of Pepsu, AIR 1954 SC 276; Romesh Thappar v. State of Madras, (1950) SCR 594
131 Writ Petition (Criminal) No. 113 of 2016

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 PART F

restricted on grounds which are not “strictly within the confines of Article

19(2)”.132 For this purpose, Justice Reddi referred to the observations of

Justice Jeevan Reddy in The Secretary, Ministry of Information v. Cricket

Association of Bengal133:

“99. […] This raises the larger question whether apart from the
heads of restriction envisaged by sub-article (2) of Article 19,
certain inherent limitations should not be read into the article,
if it becomes necessary to do so in national or societal
interest. The discussion on this aspect finds its echo in the
separate opinion of Jeevan Reddy, J. in Cricket Assn.
case [(1975) 4 SCC 428] . The learned Judge was of the view
that the freedom of speech and expression cannot be so
exercised as to endanger the interest of the nation or the
interest of the society, even if the expression “national
interest” or “public interest” has not been used in Article 19(2).
It was pointed out that such implied limitation has been read
into the First Amendment of the US Constitution which
guarantees the freedom of speech and expression in
unqualified terms.”

113. In Cricket Association of Bengal (supra), one of the submissions of the

petitioner (Union of India) was that the right to broadcast can be restricted on

grounds other than those stipulated in Article 19(2). Justice P B Sawant

writing for himself and Justice S Mohan observed while summarizing the law

on freedom of speech and expression that Article 19(1)(a) can only be

restricted on the grounds mentioned in Article 19(2).134 The learned Judge

specifically refuted the argument that the right can be restricted on grounds

other than those stipulated in Article 19(2). Such an argument, the learned

Judge states, is to plead for unconstitutional measures. However, while

observing so, Justice P B Sawant states that the right to telecast can be

132 PUCL (supra), [111]

133 1995 AIR 1236
134 Ibid; [45].

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restricted on the grounds mentioned in Article 19(2) and the “dictates of public

interest”:

“78. […] If the right to freedom of speech and expression

includes the right to disseminate information to as wide a
section of the population as is possible, the access which
enables the right to be so exercised is also an integral part of
the said right. The wider range of circulation of information or
its greater impact cannot restrict the content of the right nor
can it justify its denial. The virtues of the electronic media
cannot become its enemies. It may warrant a greater
regulation over licensing and control and vigilance on the
content of the programme telecast. However, this control can
only be exercised within the framework of Article 19(2) and
the dictates of public interest.”

(emphasis supplied)

114. Justice Jeevan Reddy in the concurring opinion segregated the grounds

stipulated in Article 19(2) into grounds in furtherance of “national interest” and

“societal interest”. The learned Judge observed that the grounds of

sovereignty and integrity of India, the security of the State, friendly relations

with foreign State and public order are grounds referable to national interest,

and the grounds of decency, morality, contempt of court, defamation and

incitement of offence are referable to state interest. The learned Judge then

referred to the judgment of the Supreme Court of the United States in FCC v.

National Citizens Committee for Broadcasting135, where it was held that a

station license can be denied on the ground of public interest. Justice Reddy

observed that public interest is synonymous to state interest which is one of

the grounds underlying Article 19(2):

135 436 US 775 (1978)

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“189. Reference may also be made in this connection to the

decision of the United States Supreme Court
in FCC v. National Citizens Committee for Broadcasting [56 L
Ed 2d 697 : 436 US 775 (1978)] referred to hereinbefore,
where it has been held that “to deny a station licence because
the public interest requires it is not a denial of free speech”. It
is significant that this was so said with reference to First
Amendment to the United States Constitution which
guarantees the freedom of speech and expression in absolute
terms. The reason is obvious. The right cannot rise above
the national interest and the interest of society which is
but another name for the interest of general public. It is
true that Article 19(2) does not use the words “national
interest”, “interest of society” or “public interest” but as pointed
hereinabove, the several grounds mentioned in clause (2)
are ultimately referable to the interests of the nation and
of the society.”

(emphasis supplied)

115. The observations of Justice Sawant and the concurring opinion of Justice

Jeevan Reddy in Cricket Association of Bengal (supra) that the right under

Article 19(1)(a) can be restricted on the ground of public interest even though

it is not stipulated in Article 19(2) must be understood in the specific context

of that case. Cricket Association of Bengal (supra), dealt with the access

to and use of a public good (that is, airwaves) for dissemination of information.

The Court distinguished airways from other means of dissemination of

information such as newsprint and held that since broadcasting involves the

use of a public good, it must be utilized to advance free speech rights and

plurality of opinion (that is, public interest).136 The observations in Cricket

Association of Bengal (supra) cannot be interpreted to mean that other

implied grounds of restrictions have been read into Article 19(2).

136 Cricket Association of Bengal [201 (1)(a) and 201(1)(b)]

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116. From the above discussion, it is clear that the right to information under Article

19(1)(a) can only be restricted based on the grounds stipulated in Article

19(2). It could be argued that curbing black money can be traced to the ground

of “public order”. However, a Constitution Bench of this Court has interpreted

the ground “public order” to mean “public safety and tranquility” and “disorder

involving breaches of local significance in contradistinction to national

upheavals, such as civil strife, war, affecting the security of the State.”137 Thus,

the purpose of curbing black money is not traceable to any of the grounds in

Article 19(2).

117. We proceed to apply the subsequent prongs of the proportionality standard,

even assuming that curbing black money is a legitimate purpose for restricting

the right to information. The second prong of the proportionality analysis

requires the State to assess whether the means used are rationally connected

to the purpose. At this stage, the court is required to assess whether the

means, if realised, would increase the likelihood of curbing black money. It is

not necessary that the means chosen should be the only means capable of

realising the purpose. It is sufficient if the means used constitute one of the

many methods by which the purpose can be realised, even if it only partially

gives effect to the purpose.138

118. The respondents submit that before the introduction of the Electoral Bond

Scheme, a major portion of the total contributions received by political parties

was from “unknown sources”. For example, immediately preceding the

137 Superintendent, Central Prison, Fatehgarh v. Dr Ram Manohar Lohia, AIR 1960 SC 633 [18]
138 Media One (supra) [100]

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financial year (2016-17) in which the Electoral Bond Scheme was introduced,

eighty one percent of the contributions (Rupees 580.52 Crores) were received

by political parties through voluntary contributions. Since the amount of

voluntary contributions is not regulated, it allowed the circulation of black

money. However, after the introduction of the Electoral Bond Scheme, forty-

seven percent of the contributions were received through electoral bonds

which is regulated money. The Union of India submitted that providing

anonymity to the contributors incentivizes them to contribute through the

banking channel. Assuming, for the purpose of hypothesis that the Union of

India is right on this prong, what it urges is that non-disclosure of information

about political expenditure has a rational nexus with the goal, that is, curbing

black money or unregulated money.

119. The next stage of the proportionality standard is the least restrictive means

stage. At this stage, this Court is required to determine if the means adopted

(that is, anonymity of the contributor) is the least restrictive means to give

effect to the purpose based on the following standard:139

a. Whether there are other possible means which could have been adopted

by the State;

b. Whether the alternative means identified realise the objective in a ‘real

and substantial manner’;

139 See Justice KS Puttaswamy (5J) (supra) and Media One Broadcasting (supra) [103];

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c. Whether the alternative identified and the means used by the State

impact fundamental rights differently; and

d. Whether on an overall comparison (and balancing) of the measure and

the alternative, the alternative is better suited considering the degree of

realizing the government objective and the impact on fundamental rights.

120. Before we proceed to determine if the Electoral Bond Scheme is the least

restrictive means to curb black money in electoral funding, it is important that

we recall the regime on electoral funding. After the amendments introduced

by the Finance Act 2017, donations to political parties exceeding rupees two

thousand can only be made by an account payee cheque drawn on a bank,

an account payee bank draft, the use of electronic clearing system through a

bank account or through an electoral bond.140 All contributions to political

parties through cash cannot be assumed to be black money. For example,

individuals who contribute to political parties in small donations during party

rallies usually contribute through cash. On the other hand, contributions

through the banking channel are certainly a form of accounted transaction.

Restricting the contributions to political parties in cash to less than rupees two

thousand and prescribing that contributions above the threshold amount must

only be made through banking channels is itself intended to curb black money.

Thus, the legal regime itself provides other alternatives to curb black money:

contributions through cheques, bank draft, or electronic clearing system. The

Union of India submits that though there are other alternatives through which

140 IT Act, Section 13A(d)

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circulation of black money in electoral financing can be curbed, these

alternatives do not realize the objective in a “substantial manner” because

most contributors resort to cash donations as they “fear consequences from

political opponents” to whom donations were not made.

121. In addition to the alternatives identified above, the existing legal regime

provides another alternative in the form of Electoral Trusts through which the

objective of curbing black money in electoral financing can be achieved.

Section 2(22AA) of the IT Act defines an Electoral Trust as a trust approved

by the Board in accordance with the scheme made in this regard by the

Central Government. Section 13B of the IT Act states that any voluntary

contributions received by an electoral trust shall not be included in the total

income of the previous year of such electoral trust if the it distributes ninety

five percent of the aggregate donations received during the previous year. In

terms of Rule 17CA of the IT Rules 1962, the features of an electoral trust are

as follows:

a. An Electoral Trust may receive voluntary contribution from (i) an

individual who is a citizen of India; (ii) a company registered in India; (iii)

a firm or Hindu undivided family or an Association of persons or a body

of individuals residing in India;

b. When a contribution is made to an electoral trust, a receipt recording the

following information shall, inter alia, be provided: (i) Name and address

of the contributor; (ii) Permanent account number of the contributor or

the passport number if the contributor is not a resident of India; (iii)

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 PART F

Amount contributed; (iv) The mode of contribution including the name

and branch of the bank and the date of receipt of such contribution; and

(v) PAN of the electoral trust;

c. Contributions to the electoral trust can only be made through cheque,

bank draft and electronic transfer. Contributions made in cash shall not

be accepted by the Electoral Trust;

d. The Electoral Trust shall spend five percent of the total contributions

received in a year subject to a limit of Rupees five hundred thousand in

the first year of incorporation and Rupees three hundred thousand in the

second year.141 The remaining money (that is, ninety five percent of the

total contributions received in that financial year along with any surplus

from the previous year) shall be distributed to political parties registered

under Section 29A of the RP Act;142

e. The political party to which the trust donated money shall provide a

receipt indicating the name of the political party, the PAN and the amount

of contribution received from the trust;143

f. The trust shall also maintain a list of persons from whom contributions

have been received and to whom they have been distributed;144 and

141 IT Rules 1962, Rule 17CA(8)(i)

142 IT Rules 1962, Rule 17CA(7) and Rules 17CA(8)(ii)
143 IT Rules 1962, Rule 17CA(9)
144 IT Rules 1962, Rule 17CA(11)(ii)

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g. The trust shall furnish a certified copy of the list of contributors and list

of political parties to whom contributions have been made to the

Commissioner of Income Tax along with the audit report.145

122. In summary, an Electoral Trust is formed only for collecting political

contributions from donors. An electoral trust can contribute to more than one

party. To illustrate, if ten individuals and one company have contributed to an

Electoral Trust and the donations are contributed to three political parties

equally or unequally, the information about which of the individuals

contributed to which of the political parties will not be disclosed. In this

manner, the purpose of curbing black money in electoral financing will be met.

At the same time, there would be no fear of consequences from political

opponents because the information as to which political party were made is

not disclosed.

123. On 6 June 2014, the ECI circulated Guidelines for submission of contribution

reports of Electoral Trusts mandating in the interest of transparency that all

Electoral Trusts shall submit an Annual Report containing details of

contributions received and disbursed by them to political parties. Pursuant to

the Guidelines, Electoral Trusts submit Annual Reports to the ECI every year.

For example, according to the Annual Report of the Prudent Electoral Trust

for the financial year 2021-22, the Trust received contributions of a total of

Rupees 4,64,83,00,116 from seventy contributors including individuals and

companies. The contributions were unequally distributed to the Aam Aadmi

145 IT Rules 1962, Rule 17CA(14)

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 PART F

Party, All India Congress Committee, Bharatiya Janata Party, Goa Congress

Committee, Goa Forward Party, Indian National Congress, Punjab Lok

Congress, Samajwadi Party, Shiromani Akali Dal, Telangana Rashtra Samiti,

and YSR Congress. From the report, it cannot be discerned if contributor ‘A’

contributed to a particular political party. It can only be concluded that

contributor ‘A’ could have contributed to the Party.

124. Thus, even if the argument of the Union of India that the other alternative

means such as the other modes of electronic transfer do not realize the

objective of curbing black money substantially because contributors would

resort to cash donations due to the fear of consequences is accepted,

Electoral Trusts are an effective alternative. There will be a lesser degree of

“political consequences” for contributions made to the Electoral Trust because

the information about which of the contributors contributed to which of the

parties will not be disclosed. It is only where the Electoral Trust contributes to

one political party, would there be a possibility of political consequences and

witch-hunting (assuming that there is a link between anonymity and

contributions). However, in that case, it is a choice expressly made by the

contributors. Additionally, the law mandates disclosure only of contributions

made above twenty thousand in a financial year. So, for contributions less

than twenty-five thousand, cheques and other modes of electronic transfer

are an effective alternative.

125. When these three methods of political contribution (electronic transfer other

than electoral bonds, contribution to Electoral Trust, and Electoral Bonds) are

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placed on a continuum, transfer through electronic means (other than

electoral bonds) would be placed on one end and Electoral Bonds would be

placed on the other end. A voter would receive complete information about

contributions made above twenty thousand to a political party in the case of

electronic transfer made directly to a political party other than through

electoral bonds.146

126. With respect to contributions through electoral bonds, the voter would not

receive any information about financial contributions in terms of Section 29C

of RPA as amended by the Finance Act. This Court in the interim order dated

31 October 2023 in the specific context of contributions made by companies

through electoral bonds prima facie observed the voter would be able to

secure information about the funding by matching the information of the

aggregate sum contributed by the Company (as required to be disclosed

under Section 182(3) of the Companies Act as amended by the Finance Act)

with the information disclosed by the political party. However, on a detailed

analysis of the Scheme and the amendments we are of the opinion that such

an exercise would not reveal the particulars of the donations because the

Company under the provisions of Section 182 and the political party are only

required to disclose the consolidated amount contributed and received

through Electoral Bonds respectively. The particulars about the political party

to which the contributions were made which is crucial to the right to

146 RPA; Section 29A

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information of political funding cannot be identified through the matching

exercise.

127. With respect to contributions to an Electoral Trust, a voter receives partial

information. The voter would know the total amount contributed by the donor

and that the donor contributed to one of the political parties (in case the

Electoral Trust has made contributions to multiple parties). But the donor

would not be aware of the exact details of the contribution.

128. Assuming that anonymity incentivizes contributions through banking channels

(which would lead to curbing black money in the electoral process), electoral

bonds would be the most effective means in curbing black money, followed

by Electoral Trust, and then other means of electronic transfer. This

conclusion is premised on the belief that the Electoral Bond curbs black

money. However, the Scheme is not fool-proof. The Electoral Bond Scheme

does not provide any regulatory check to prevent the trading of bonds though

Clause 14 of the Electoral Bond Scheme states that the bonds shall not be

eligible for trading.

129. On an overall balance of the impact of the alternative means on the right to

information and its ability to fulfill the purpose, for contributions below twenty

thousand rupees, contributions through other means of electronic transfer is

the least restrictive means. For contributions above twenty thousand rupees,

contributions through Electoral Trust is the least restrictive means. Having

concluded that the Electoral Bond Scheme is not the least restrictive means

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to achieve the purpose of curbing black money in electoral process, there is

no necessity of applying the balancing prong of the proportionality standard.

130. Based on the above discussion, we conclude that Electoral Bond Scheme

does not fulfill the least restrictive means test. The Electoral Bond Scheme is

not the only means for curbing black money in Electoral Finance. There are

other alternatives which substantially fulfill the purpose and impact the right

to information minimally when compared to the impact of electoral bonds on

the right to information.

b. Donor Privacy

131. The Union of India submitted that information about financial contributions to

political parties is not disclosed to protect the contributor’s informational

privacy to political affiliation. There are two limbs to the argument of the Union

of India with respect to the purpose of donor privacy. First, that the State

interest in introducing the Electoral Bond Scheme which guarantees

confidentiality (or anonymity) to financial contributions is that it furthers donor

privacy; and second, this State interest facilitates a guaranteed fundamental

right. Thus, the submission of the State is that the right to information can be

restricted even if donor privacy is not traceable to the grounds in Article 19(2)

because privacy is a fundamental right in itself. This Court needs to decide

the following issues to determine if the right to information of voters can be

restricted on the ground of donor privacy:

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a. Whether the fundamental right to informational privacy recognized by

this Court in Justice KS Puttaswamy (9J) v. Union of India147, includes

information about a citizen’s political affiliation; and

b. If (a) above is answered in the affirmative, whether financial contribution

to a political party is a facet of political affiliation.

If the right to informational privacy extends to financial contributions to a political

party, this Court needs to decide if the Electoral Bond Scheme adequately

balances the right to information and right to informational privacy of political

affiliation.

I. Informational privacy of financial contributions to political parties

132. In Justice KS Puttaswamy (9J) (supra), a nine-Judge Bench of this Court

held that the Constitution guarantees the right to privacy. This Court traced

the right to privacy to the constitutional ideals of dignity, liberty, and the thread

of non-arbitrariness that runs through the provisions of Part III. The scope of

the right to privacy discussed in Justice KS Puttaswamy (9J) (supra) is

summarized below:

a. The right to privacy includes “repose”, that is, the freedom from

unwanted stimuli, “sanctuary”, the protection against intrusive

observation into intimate decisions and autonomy with respect to

personal choices;

147 (2017) 10 SCC 1

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b. Privacy over intimate decisions includes decisions related to the mind

and body. Privacy extends to both the decision and the process of

arriving at the decision. A lack of privacy over thought (which leads to

decision-making) would suppress voices and lead to homogeneity which

is contrary to the values that the Constitution espouses148;

c. Privacy over decisions and choices would enable the exercise of

fundamental freedoms such as the freedom of thought, expression, and

association freely without coercion;149

d. Privacy is attached to a person and not a space. The scope of privacy

cannot be restricted only to the “private” space; and

e. Privacy includes informational privacy. Information which may seem

inconsequential in silos can be used to influence decision making

behavior when aggregated.150

133. The content of privacy is not limited to “private” actions and decisions such as

the choice of a life partner, procreation and sexuality. Neither is privacy merely

defined from the point of direct State intrusion. Privacy is defined as essential

protection for the exercise and development of other freedoms protected by

the Constitution, and from direct or indirect influence by both State and non-

148 Justice Chandrachud (Paragraph 168), Justice Kaul (Paragraph 19)

149 Justice Chandrachud, Justice Chellameshwar, Justice Bobde (paragraph 25 and 29)
150 Justice Chandrachud (paragraph 170): “[…] Individually, these information silos may seem inconsequential. In

aggregation, they disclose the nature of the personality: food habits, language, health, hobbies, sexual preferences,
friendships, ways of dress and political affiliation. Justice Chelameshwar (Paragraph 38), Justice Kaul (Paragaph
19)

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State actors. Viewed in this manner, privacy takes within its fold, decisions

which also have a ‘public component’.

134. The expression of political beliefs is guaranteed under Article 19(1)(a).

Forming political beliefs and opinion is the first stage of political expression.

The freedom of political expression cannot be exercised freely in the absence

of privacy of political affiliation. Information about a person’s political beliefs

can be used by the State at a political level, to suppress dissent, and at a

personal level, to discriminate by denying employment or subjecting them to

trolls. The lack of privacy of political affiliation would also disproportionately

affect those whose political views do not match the views of the mainstream.

135. In the specific context of exercising electoral franchise, the lack of privacy of

political affiliation would be catastrophic. It is crucial to electoral democracy

that the exercise of the freedom to vote is not subject to undue influence. It is

precisely for this reason that the law recognizes certain ‘corrupt practices’ by

candidates. These ‘corrupt practices’ do not merely include ‘financial’ corrupt

practices such as bribery. They also include undue influence of the voters by

an attempt to interfere with the free exercise of electoral right151, publication

of false information about the personal character of any candidate152, and

providing vehicles for the free conveyance of electors153. The law penalizes

practices which have the effect of dis-franchising the voter through illegitimate

means.

151 RPA, Section 123(2). The provision includes the threatening with injury including social ostracism and ex-
communication from any caste or community.
152 RPA; Section 123(4)
153 RPA; Section 123(5)

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136. Information about a person’s political affiliation can be used to dis-enfranchise

voters through voter surveillance.154 Voter databases which are developed

through surveillance identify voting patterns of the electors and attempt to

interfere with their opinions based on the information. For example, the data

of online purchase histories such as the books purchased (which would

indicate the ideological leaning of the individual), clothing brands used (which

would indicate the social class to which the individual belongs) or the news

consumed or the newspapers subscribed (which would indicate the political

leanings or ideologies) can be used to draw on the relative political affiliation

of people. This information about the political affiliation of individuals can then

be used to influence their votes. Voter surveillance gains particular

significance when fewer people have attachments to political parties.155

137. At a systemic level, information secured through voter surveillance could be

used to invalidate the foundation of the electoral system. Information about

political affiliation could be used to engage in gerrymandering, the practice by

which constituencies are delimited based on the electoral preference of the

voters.

138. Informational privacy to political affiliation is necessary to protect the freedom

of political affiliation and exercise of electoral franchise. Thus, it follows from

the judgment of this Court in Justice KS Puttaswamy (9J) (supra) and the

154 See Philip N Howard and Daniel Kreiss, Political Parties and Voter privacy: Australia, Canada, the United
Kingdom, and United States in Comparative Perspective, First Monday 15(12) 2010
155 Colin Bennet, The politics of privacy and privacy of politics: Parties, elections, and voter surveillance in Western

Democracies. First Monday, 18(8) 2013

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observations above that the Constitution guarantees the right to informational

privacy of political affiliation.

139. Having concluded that the Constitution guarantees a right to informational

privacy of political affiliation, it needs to be decided if the right can be extended

to the contributions to political parties. The Electoral Bond Scheme has two

manifestations of privacy: first, informational privacy by prescribing

confidentiality vis-à-vis the political party; and second, informational privacy

by prescribing non-disclosure of the information of political contributions to

the public. The Union of India submitted that contributions made to political

parties must be protected both from the political party itself and the public

because donor privacy is an extension of the principle of secret ballot and is

a facet of free and fair elections. The petitioners argue that equating political

contributions with expression of political preference through voting is flawed

because it conflates money with speech. The petitioners also argue that

informational privacy does not extend to political contributions because they

are by their very nature public acts which influence public policy, and thus,

must be subject to public scrutiny.

140. The issue before this Court is not whether public funding of political parties is

permissible. Neither is the issue whether a restriction can be placed on the

contribution which can be made by a citizen to a political party. If it was, then

the question of whether financial contribution to a political party is in

furtherance of the right to freedom of political speech and expression under

Article 19(1)(a) or the right to freedom to form associations under Article

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19(1)(c) would arise. However, that not being the case, this Court is not

required to decide whether financial contribution to a political party is

protected by Articles 19(1)(a) and 19(1)(c).

141. This Court in Justice KS Puttaswamy (9J) (supra) did not trace the right to

privacy to a particular provision of the Constitution such as Article 21. Rather,

this Court observed that privacy is crucial for the fulfilment of the constitutional

values of self-determination, autonomy and liberty in addition to its essentiality

for realizing the fundamental freedoms such as the freedom of speech and

expression. This Court further held that the non-intrusion of the mind (the

ability to preserve beliefs, thoughts and ideologies) is as important as the non-

intrusion of the body. This Court (supra) did not hold that privacy is extendable

to the action of speech or the action of expression, both of which are required

to possess a communicative element to receive the protection under Article

19(1)(a).156 Rather, the proposition in Justice KS Puttaswamy (9J) is that

privacy (including informational privacy) is extendable to thoughts, beliefs,

and opinions formed for the exercise of speech and action. Thus,

informational privacy would extend to financial contributions to political parties

even if contributions are not traceable to Article 19(1)(a) provided that the

information on political contributions indicates the political affiliation of the

contributor.

142. Financial contributions to political parties are usually made for two reasons.

First, they may constitute an expression of support to the political party and

156 See Romesh Thappar v. State of Madras, (1950) SCR 594 (602)

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second, the contribution may be based on a quid pro quo. The law as it

currently stands permits contributions to political parties by both corporations

and individuals. The huge political contributions made by corporations and

companies should not be allowed to conceal the reason for financial

contributions made by another section of the population: a student, a daily

wage worker, an artist, or a teacher. When the law permits political

contributions and such contributions could be made as an expression of

political support which would indicate the political affiliation of a person, it is

the duty of the Constitution to protect them. Not all political contributions are

made with the intent of attempting to alter public policy. Contributions are also

made to political parties which are not substantially represented in the

legislatures. Contributions to such political parties are made purely with the

intent of expressing support. At this juncture, the close association of money

and politics which has been explained above needs to be recounted. Money

is not only essential for electoral outcomes and for influencing policies. It is

also necessary for true democratic participation. It is necessary for enhancing

the number of political parties and candidates contesting the elections which

would in-turn impact the demographics of representatives in the Assembly. It

is true that contributions made as quid pro quo transactions are not an

expression of political support. However, to not grant the umbrella of

informational privacy to political contributions only because a portion of the

contributions is made for other reasons would be impermissible. The

Constitution does not turn a blind eye merely because of the possibilities of

misuse.

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II. Privacy vis-à-vis political party

143. The second issue is whether the right to privacy of political contributions can

be extended to include privacy vis-à-vis the political party to which

contributions are made since according to the Union of India under the

Electoral Bond Scheme, the political party to which the contribution is made

would not know the particulars of the contributor. Hence, it is submitted that

the scheme is akin to the secret ballot.

144. We are unable to see how the disclosure of information about contributors to

the political party to which the contribution is made would infringe political

expression. The disclosure of the particulars of the contributions may affect

the freedom of individuals to the limited extent that the political party with the

information could coerce those who have not contributed to them. However,

we have already held above that the scheme only grants de jure and not de

facto confidentiality vis-à-vis the political party. Under the current Scheme, it

is still open to the political party to coerce persons to contribute. Thus, the

argument of the Union of India that the Electoral Bond Scheme protects the

confidentiality of the contributor akin to the system of secret ballot is

erroneous.

III. Balancing the right to information and the right to informational privacy

a) Judicial Approach towards balancing fundamental rights: establishing the

double proportionality standard

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145. At the core of governance is the conflict between different constitutional

values or different conceptions of the same constitutional value. Countries

with a written Constitution attempt to resolve these conflicts by creating a

hierarchy of rights within the constitutional order where a few fundamental

rights are subjected to others. For example, Article 25 of the Indian

Constitution which guarantees the freedom of conscience, and the

profession, practice and propagation of religion is subject to public order,

morality, health and other provisions of Part III. The first exercise that the

Court must undertake while balancing two fundamental rights is to determine

if the Constitution creates a hierarchy between the two rights in conflict. If the

Constitution does not create a hierarchy between the conflicting rights, the

Courts must use judicial tools to balance the conflict between the two rights.

146. The judicial approach towards balancing fundamental rights has evolved over

the course of years. Courts have used the collective interest or the public

interest standard, the single proportionality standard, and the double

proportionality standard to balance the competing interests of fundamental

rights.

147. Before the proportionality standard was employed to test the validity of the

justification for the infringement of fundamental rights, Courts balanced

conflicting fundamental rights by according prominence to one fundamental

right over the other based on public interest. This approach was undertaken

through two modalities. In the first modality, the Court while identifying the

fundamental rights in conflict circumscribed one of the fundamental rights in

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question such that there was no real conflict between the rights. The Court

while circumscribing the right undertook an exercise of weighing the relative

constitutional values of the rights based on public interest. In Re Noise

Pollution157, writ petitions were filed seeking to curb noise pollution. A two-

Judge Bench of this Court observed that those who make noise often justify

their actions based on freedom of speech and expression guaranteed under

Article 19(1)(a). However, this Court observed that the right to freedom of

speech and expression does not include the freedom to “engage in aural

aggression”. In this case, there was no necessity for this Court to “balance”

two fundamental rights because the right in question (freedom of speech and

expression) was circumscribed to not include the actions challenged (noise

pollution). In Subramanian Swamy v. Union of India158, Sections 499 and

500 of the Indian Penal Code 1860 which criminalized defamation were

challenged. A two-Judge Bench of this Court framed the issue as a conflict

between the right to speech and expression under Article 19(1)(a) and the

right to reputation traceable to Article 21. In this case, the two Judge Bench

held that the right to speech and expression does not include the right to

defame a person. Justice Dipak Misra (as the learned Chief Justice then was)

observed that a contrary interpretation would completely abrogate the right to

reputation.159

157 (2005) 5 SCC 733

158 (2016) 7 SCC 221; Paragraph 11 “While one has a right to speech, others have a right to listen or decline to
listen. […] Nobody can indulge in aural aggression. If anyone increases his volume of speech and that too with the
assistance of artificial devices so as to compulsorily expose unwilling persons to hear a noise raised to unpleasant
or obnoxious levels, then the person speaking is violating the right of others to a peaceful, comfortable and
pollution-free life guaranteed by Article 21. Article 19(1)(a) cannot be pressed into service for defeating the
fundamental right guaranteed by Article 21.”
159 144: “[…] Reputation being an inherent component of Article 21, we do not think it should be allowed to be

sullied solely because another individual can have its freedom. It is not a restriction that has an inevitable

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148. In the second modality of the public interest approach, the Courts undertook

a comparison of the values which the rights (and the conceptions of the rights)

espouse and gave more weightage to the right which was in furtherance of a

higher degree of public or collective interest. In Asha Ranjan v. State of

Bihar160, this Court held that when there is a conflict between two individuals

with respect to their right under Article 21, the facts and circumstances must

be weighed “on the scale of constitutional norms and sensibility and larger

public interest.” In PUCL (supra), one of the issues before this Court was

whether the disclosure of the assets of the candidates contesting the elections

in furtherance of the right to information of the voters violates the right to

privacy of candidates.161 Justice Reddi authoring the concurring opinion

observed that the right to information of the assets of candidates contesting

elections trumps the right to privacy because the former serves a larger public

interest. In Mazdoor Kisan Shakti Sangathan v. Union of India162,

proceedings under Article 32 were initiated challenging orders issued under

Section 144 of the Code of Criminal Procedure prohibiting protests in certain

areas in Delhi. The issue before this Court was whether the total ban of

protests at the Jantar Mantar Road would violate the right to protest which is

traceable to Articles 19(1)(a) and 19(1)(b). One of the inter-related issues was

whether the right to hold peaceful demonstrations violates the right of

consequence which impairs circulation of thought and ideas. In fact, it is control regard being had to another
person's right to go to court and state that he has been wronged and abused. He can take recourse to a procedure
recognised and accepted in law to retrieve and redeem his reputation. Therefore, the balance between the two
rights needs to be struck. “Reputation” of one cannot be allowed to be crucified at the altar of the other's right of
free speech. The legislature in its wisdom has not thought it appropriate to abolish criminality of defamation in the
obtaining social climate.”
160 (2017) 4 SCC 397
161 Ibid, [121]
162 (2018) 17 SCC 324

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peaceful residence under Article 21, and if it does, how this Court should

balance the conflicting fundamental rights. This Court observed that the Court

must while balancing two fundamental rights examine where the larger public

interest lies.163 This Court framed the following issue in the specific context of

the case: whether disturbances caused to residents by the protest is a larger

public interest which outweighs the rights of protestors. The two-Judge Bench

held that “demonstrations as it has been happening” are causing serious

discomfort to the residents, and that the right to protest could be balanced

with the right to peaceful residence if authorities had taken adequate

safeguards such as earmarking specific areas for protest, placing restrictions

on the use of loudspeakers and on parking of vehicles around residential

places.

149. The judgment of this Court in Mazdoor Kisan Shakti (supra), represents the

gradual shift from the pre-proportionality phase to the proportionality stage

which signifies a shift in the degree of justification and the employment of a

structured analysis for balancing fundamental rights. In Mazdoor Kisan

Shakti (supra), this Court applied one of the prongs of the proportionality

standard (the least restrictive means prong) while balancing the right to

protest and the right to peaceful residence. The Court identified other means

which would have infringed the right to a peaceful residence to a lesser extent.

150. In 2012, a five-Judge Bench of this Court in Sahara India Real Estate

Corporation Limited v. Securities and Exchange Board of India164, used

163 (2018) 17 SCC 324 [58]

164 (2012) 10 SCC 603

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a standard which resembled the structured proportionality standard used in

Justice KS Puttaswamy (5J) v. Union of India165 to balance the conflict

between two fundamental rights. This judgment marked the first departure

from the series of cases in which this Court balanced two fundamental rights

based on doctrinal predominance. In Sahara (supra), the petitioner submitted

a proposal for the repayment of OFCDs (optionally fully convertible bonds) to

the investors. The details of the proposals were published by a news channel.

Interlocutory applications were filed in the Court praying for the issuance of

guidelines for reporting matters which are sub-judice. This Court resolved the

conflict between the freedom of press protected under Article 19(1)(a) and the

right to free trial under Article 21 by evolving a neutralizing device. This Court

held that it has the power to evolve neutralizing devices such as the

postponement of trial, retrial, change of venue, and in appropriate cases,

grant acquittal in case of excessive media prejudicial publicity to neutralize

the conflicting rights. This Court followed the Canadian approach in evolving

a two prong standard to balance fundamental rights through neutralizing

devices which partly resembled the structured proportionality standard. The

two-pronged test was as follows:166

a. There is no other reasonable alternative measure available (necessity

test); and

165 (2019) 1 SCC 1

166 (2012) 10 SCC 603 [42, 22]

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b. The salutary effects of the measure must outweigh the deleterious

effects on the fundamental rights (proportionality standard).

151. Finally, this Court in Justice KS Puttaswamy (5J) (supra) applied the

structured proportionality standard to balance two fundamental rights. In this

case, a Constitution Bench of this Court while testing the validity of the Aadhar

Act 2016 had to resolve the conflict between the right to informational privacy

and the right to food. Justice Sikri writing for the majority held that the Aadhar

Act fulfills all the four prongs of the proportionality standard. In the final prong

of the proportionality stage, that is the balancing stage, this Court held that

one of the considerations was to balance the right to privacy and the right to

food. On balancing the fundamental rights, this Court held that the provisions

furthering the right to food satisfy a larger public interest whereas the invasion

of privacy rights was minimal.167

152. However, the single proportionality standard which is used to test whether the

fundamental right in question can be restricted for the State interest (that is,

the legitimate purpose) and if it can, whether the measure used to restrict the

right is proportional to the objective is insufficient for balancing the conflict

between two fundamental rights. The proportionality standard is an effective

standard to test whether the infringement of the fundamental right is justified.

It would prove to be ineffective when the State interest in question is also a

reflection of a fundamental right.

167 (2019) 1 SCC 1 [308]

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153. The proportionality standard is by nature curated to give prominence to the

fundamental right and minimize the restriction on it. If this Court were to

employ the single proportionality standard to the considerations in this case,

at the suitability prong, this Court would determine if non-disclosure is a

suitable means for furthering the right to privacy. At the necessity stage, the

Court would determine if non-disclosure is the least restrictive means to give

effect to the right to privacy. At the balancing stage, the Court would determine

if non-disclosure has a disproportionate effect on the right holder. In this

analysis, the necessity and the suitability prongs will inevitably be satisfied

because the purpose is substantial: it is a fundamental right. The balancing

stage will only account for the disproportionate impact of the measure on the

right to information (the right) and not the right to privacy (the purpose) since

the Court is required to balance the impact on the right with the fulfillment of

the purpose through the selected means. Thus, the Court while applying the

proportionality standard to resolve the conflict between two fundamental

rights preferentially frames the standard to give prominence to the

fundamental right which is alleged to be violated by the petitioners (in this

case, the right to information).168 This could well be critiqued for its limitations.

154. In Campbell v. MGM Limited169, Baroness Hale adopted the double

proportionality standard to adequately balance two conflicting fundamental

rights. In this case, the claimant, a public figure, instituted proceedings against

a newspaper for publishing details of her efforts to overcome drug addiction.

168 Hon’ble Mr Justice Andrew Cheung PJ, Conflict of fundamental rights and the double proportionality test, A
lecture in the Common Law Lecture Series 2019 delivered at the University of Hong Kong (17 September 2019)
169 [2004] UKHL 22

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Baroness Hale applied the following standard to balance the right to privacy

of the claimant and the right to a free press:

“141. […] This involved looking first at the comparative

importance of the actual rights being claimed in the individual
case; then at the justifications for interfering with or restricting
each of those rights; and applying the proportionality test to
each”

155. In Central Public Information Officer, Supreme Court of India v. Subash

Chandra Agarwal170, one of us (Justice D Y Chandrachud) while authoring

the concurring opinion adopted the double proportionality standard as

formulated in Campbell (supra). Referring to the double proportionality

standard, the concurring opinion observes that the Court while balancing

between two fundamental rights must identify the precise interests weighing

in favour of both disclosure and privacy and not merely undertake a doctrinal

analysis to determine if one of the fundamental rights takes precedence over

the other:

“113. Take the example of where an information applicant

sought the disclosure of how many leaves were taken by a
public employee and the reasons for such leave. The need to
ensure accountability of public employees is of clear public
interest in favour of disclosure. The reasons for the leave may
also include medical information with respect to the public
employee, creating a clear privacy interest in favour of non-
disclosure. It is insufficient to state that the privacy interest in
medical records is extremely high and therefore the outcome
should be blanket non-disclosure. The principle of
proportionality may necessitate that the number of and
reasons for the leaves be disclosed and the medical reasons
for the leave be omitted. This would ensure that the interest in
accountability is only abridged to the extent necessary to

170 Civil Appeal No. 10044 of 2010

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protect the legitimate aim of the privacy of the public

employee.”

156. Baroness Hale in Campbell (supra) employed a three step approach to

balance fundamental rights. The first step is to analyse the comparative

importance of the actual rights claimed. The second step is to lay down the

justifications for the infringement of the rights. The third is to apply the

proportionality standard to both the rights. The approach adopted by

Baroness Hale must be slightly tempered to suit our jurisprudence on

proportionality. The Indian Courts adopt a four prong structured proportionality

standard to test the infringement of the fundamental rights. In the last stage

of the analysis, the Court undertakes a balancing exercise to analyse if the

cost of the interference with the right is proportional to the extent of fulfilment

of the purpose. It is in this step that the Court undertakes an analysis of the

comparative importance of the considerations involved in the case, the

justifications for the infringement of the rights, and if the effect of infringement

of one right is proportional to achieve the goal. Thus, the first two steps laid

down by Baroness Hale are subsumed within the balancing prong of the

proportionality analysis.

157. Based on the above discussion, the standard which must be followed by

Courts to balance the conflict between two fundamental rights is as follows:

a. Does the Constitution create a hierarchy between the rights in conflict?

If yes, then the right which has been granted a higher status will prevail

over the other right involved. If not, the following standard must be

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employed from the perspective of both the rights where rights A and B

are in conflict:

b. Whether the measure is a suitable means for furthering right A and right

B;

c. Whether the measure is least restrictive and equally effective to realise

right A and right B; and

d. Whether the measure has a disproportionate impact on right A and right

B.

b) Validity of the Electoral Bond Scheme, Section 11 of the Finance Act and

Section 137 of the Finance Act

158. To recall, Section 13A of the IT Act before the amendment mandated that the

political party must maintain a record of contributions in excess of rupees

twenty thousand. Section 11 of the Finance Act 2017 amended Section 13A

creating an exception for contributions made through Electoral Bonds. Upon

the amendment, political parties are not required to maintain a record of any

contribution received through electoral bonds. Section 29C of the RPA

mandated the political party to prepare a report with respect to contributions

received in excess of twenty thousand rupees from a person or company in a

financial year. Section 137 of the Finance Act amended Section 29C of the

RPA by which a political party is now not required to include contributions

received by electoral bonds in its report. As explained earlier, the feature of

anonymity of the contributor vis-à-vis the public is intrinsic to the Electoral

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Bond Scheme. Amendments had to be made to Section 13A of the IT Act and

Section 29C of the RPA to implement the Electoral Bond Scheme because

the EBS mandates anonymity of the contributor. In this Section, we will

answer the question of whether the EBS adequately balances the right to

informational privacy of the contributor and the right to information of the voter.

159. In Justice KS Puttaswamy (9J) (supra), this Court did not trace the right to

privacy only to Article 21. This Court considered privacy as an essential

component for the effective fulfillment of the all entrenched rights. Article 25

of the Constitution is the only provision in Part III which subjects the right to

other fundamental rights. Article 25 guarantees the freedom of conscience

which means the freedom to judge the moral qualities of one’s conduct.171

Financial contributions to a political party (as a form of expression of political

support and belief) can be traced to the exercise of the freedom of conscience

under Article 25.172 It can very well be argued that the right to information of

the voter prevails over the right to anonymity of political contributions which

may be traceable to the freedom of conscience recognized under Article 25

since it is subject to all other fundamental rights, including Article 19(1)(a).

However, the right to privacy of financial contributions to political parties can

also be traced to Article 19(1) because the informational privacy of a person’s

political affiliation is necessary to enjoy the right to political speech under

Article 19(1)(a), the right to political protests under Article 19(1)(b), the right

to form a political association under Article 19(1)(c), and the right to life and

171 See Supriyo (supra) [238 , 239]; Aishat Shifa v. State of Karnataka, (2023) 2 SCC 1;
172 See Justice KS Puttaswamy v. Union of India, (2017) 10 SCC 1 [372] (opinion of Justice Chelameswar);

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liberty under Article 21. The Constitution does not create a hierarchy amongst

these rights. Thus, there is no constitutional hierarchy between the right to

information and the right to informational privacy of political affiliation.

160. This Court must now apply the double proportionality standard, that is, the

proportionality standard to both the rights (as purposes) to determine if the

means used are suitable, necessary and proportionate to the fundamental

rights. The Union of India submitted that Clause 7(4) of the Electoral Bond

Scheme balances the right to information of the voter and the right to

informational privacy of the contributor. Clause 7(4) stipulates that the

information furnished by the buyer shall be treated as confidential by the

authorized bank. The bank has to disclose the information when it is

demanded by a competent court or upon the registration of a criminal case by

a law enforcement agency. It needs to be analyzed if the measure employed

(Clause 7(4)) balances the rights or tilts the balance towards one of the

fundamental rights.

161. The first prong of the analysis is whether the means has a rational connection

with both the purposes, that is, informational privacy of the political

contributions and disclosure of information to the voter. It is not necessary that

the means chosen should be the only means capable of realising the purpose

of the state action. This stage of the analysis does not prescribe an efficiency

standard. It is sufficient if the means constitute one of the many methods by

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which the purpose can be realised, even if it only partially gives effect to the

purpose.173

162. This Court while applying the suitability prong to the purpose of privacy of

political contribution must consider whether the non-disclosure of information

to the voter and its disclosure only when demanded by a competent court and

upon the registration of criminal case has a rational nexus with the purpose

of achieving privacy of political contribution. Undoubtedly, the measure by

prescribing non-disclosure of information about political funding shares a

nexus with the purpose. The non-disclosure of information grants anonymity

to the contributor, thereby protecting information privacy. It is certainly one of

the ways capable of realizing the purpose of informational privacy of political

affiliation.

163. The suitability prong must next be applied to the purpose of disclosure of

information about political contributions to voters. There is no nexus between

the balancing measure adopted with the purpose of disclosure of information

to the voter. According to Clause 7(4) of the Electoral Bond Scheme and the

amendments, the information about contributions made through the Electoral

Bond Scheme is exempted from disclosure requirements. This information is

never disclosed to the voter. The purpose of securing information about

political funding can never be fulfilled by absolute non-disclosure. The

measure adopted does not satisfy the suitability prong vis-à-vis the purpose

of information of political funding. However, let us proceed to apply the

173 Media One Broadcasting (supra), [101]

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subsequent prongs of the double proportionality analysis assuming that the

means adopted has a rational nexus with the purpose of securing information

about political funding to voters.

164. The next stage of the analysis is the necessity prong. At this stage, the Court

determines if the measure identified is the least restrictive and equally

effective measure. To recall, the Court must determine if there are other

possible means which could have been adopted to fulfill the purpose, and

whether such alternative means (a) realize the purpose in a real and

substantial manner; (b) impact fundamental rights differently; and (c) are

better suited on an overall comparison of the degree of realizing the purpose

and the impact on fundamental rights.

165. The provisions of the RPA provide an alternative measure. Section 29C states

that contributions in excess of rupees twenty thousand received from a person

or company for that financial year must be disclosed by the political party

through a report. The report must be filled in the format prescribed in Form

24A of the Conduct of Election Rules 1961. The form is annexed as Annexure

II to this judgment. A crucial component of this provision when juxtaposed with

Section 13A of the IT Act must be noted. Section 13A of the IT Act requires

the political party to maintain a record of the contributions made in excess of

rupees twenty thousand. Section 29C of the RPA requires the political party

to disclose information about contributions in excess of rupees twenty

thousand made by a person or company in a financial year. Section 13A

mandates record keeping of every contribution. On the other hand, Section

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29C mandates disclosure of information of contributions beyond rupees

twenty thousand per person or per company in one financial year.

166. Section 29C(1) is one of the means to achieve the purpose of protecting the

informational privacy of political affiliation of individuals. Parliament in its

wisdom has prescribed rupees twenty thousand as the threshold where the

considerations of disclosure of information of political contribution outweigh

the considerations of informational privacy. It could very well be debated

whether rupees twenty thousand is on the lower or higher range of the

spectrum. However, that is not a question for this Court to answer in this batch

of petitions. The petitioners have not challenged the threshold of rupees

twenty thousand prescribed for the disclosure of information prescribed by

Section 29C. They have only raised a challenge to the disclosure exception

granted to contributions by Electoral Bonds. Thus, this Court need not

determine if the threshold tilts the balance in favour of one of the interests.

We are only required to determine if the disclosure of information on financial

contributions in a year beyond rupees twenty thousand is an alternative

means to achieve the purposes of securing the information on financial

contributions and informational privacy regarding political affiliation.

167. It must be recalled that we have held above that the right to information of the

voter includes the right to information of financial contributions to a political

party because of the influence of money in electoral politics (through electoral

outcomes) and governmental decisions (through a seat at the table and quid

pro quo arrangements between the contributor and the political party). The

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underlying rationale of Section 29C(1) is that contributions below the

threshold do not have the ability to influence decisions, and the right to

information of financial contributions does not extend to contributions which

do not have the ability to influence decisions. Similarly, the right to privacy of

political affiliations does not extend to contributions which may be made to

influence policies. It only extends to contributions made as a genuine form of

political support that the disclosure of such information would indicate their

political affiliation and curb various forms of political expression and

association.

168. It is quite possible that contributions which are made beyond the threshold

could also be a form of political support and not necessarily a quid pro quo

arrangement, and contributions below the threshold could influence electoral

outcomes. However, the restriction on the right to information and

informational privacy of such contributions is minimal when compared to a

blanket non-disclosure of information on contributions to political parties.

Thus, this alternative realizes the objective of securing disclosure for an

informed voter and informational privacy to political affiliation in a ‘real and

substantial manner’. The measure in the Electoral Bond Scheme completely

tilts the balance in favor of the purpose of informational privacy and abrogates

informational interests. On an overall comparison of the measure and the

alternative, the alternative is better suited because it realizes the purposes to

a considerable extent and imposes a lesser restriction on the fundamental

rights. Having concluded that Clause 7(4) of the Scheme is not the least

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restrictive means to balance the fundamental rights, there is no necessity of

applying the balancing prong of the proportionality standard.

169. The Union of India has been unable to establish that the measure employed

in Clause 7(4) of the Electoral Bond Scheme is the least restrictive means to

balance the rights of informational privacy to political contributions and the

right to information of political contributions. Thus, the amendment to Section

13A(b) of the IT Act introduced by the Finance Act 2017, and the amendment

to Section 29C(1) of the RPA are unconstitutional. The question is whether

this Court should only strike down the non-disclosure provision in the Electoral

Bond Scheme, that is Clause 7(4). However, as explained above, the

anonymity of the contributor is intrinsic to the Electoral Bond Scheme. The

Electoral Bond is not distinguishable from other modes of contributions

through the banking channels such as cheque transfer, transfer through the

Electronic Clearing System or direct debit if the anonymity component of the

Scheme is struck down. Thus, the Electoral Bond Scheme 2018 will also

consequentially have to be struck down as unconstitutional.

c. Validity of Section 154 of the Finance Act amending Section 182(3) to

the Companies Act

170. Before the 2017 amendment, Section 182(3) of the Companies Act,

mandated companies to disclose the details of the amount contributed to a

political party along with the name of the political party to which the amount

was contributed in its profit and loss account. After the amendment, Section

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182(3) only requires the disclosure of the total amount contributed to political

parties in a financial year. For example, under Section 182(3) as it existed

before the amendment, if a Company contributed rupees twenty thousand to

a political party, the company was required to disclose in its profit and loss

account, the details of the specific contributions made to that political party.

However, after the 2017 amendment, the Company is only required to

disclose that it contributed rupees twenty thousand to a political party under

the provision without disclosing the details of the contribution, that is, the

political party to which the contribution was made. The profit and loss account

of a company is included in the financial statement which companies are

mandated to prepare.174 A copy of the financial statement adopted at the

annual general meeting of the company must be filed with the Registrar of

Companies.175

171. As discussed in the earlier segment of this judgment, the Companies Act 1956

was amended in 1960 to include Section 293A by which contributions by

companies to political parties and for political purposes were regulated.

Companies were permitted to contribute within the cap prescribed. All such

contributions were required to be disclosed by the Company in its profit and

loss account with details. Companies which contravened the disclosure

requirement were subject to fine. It is crucial to note here that contributions to

political parties by companies were regulated long before the IT Act was

amended in 1978 to exempt the income of political parties through voluntary

174 The Companies Act 2013; Section 2(40)

175 The Companies At 2013; Section 137

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contributions for tax purposes (ostensibly to curb black money). It is clear as

day light that the purpose of mandating the disclosure of contributions made

by companies was not merely to curb black money in electoral financing but

crucially to make the financial transactions between companies and political

parties transparent. Contributions for “political purposes” was widely defined

in the 1985 amendment (which was later incorporated in Section 182 of the

Companies Act 2013) to include expenditure (either directly or indirectly) for

advertisement on behalf of political parties and payment to a person “who is

carrying activity which can be regarded as likely to affect public support to a

political party”. This indicates that the legislative intent of the provision

mandating disclosure was to bring transparency to political contributions by

companies. Companies have always been subject to a higher disclosure

requirement because of their huge financial presence and the higher

possibility of quid pro quo transactions between companies and political

parties. The disclosure requirements in Section 182(3) were included to

ensure that corporate interests do not have an undue influence in electoral

democracy, and if they do, the electorate must be made aware of it.

172. Section 182(3) as amended by the Finance Act 2017 mandates the disclosure

of total contributions made by political parties. This requirement would ensure

that the money which is contributed to political parties is accounted for.

However, the deletion of the mandate of disclosing the particulars of

contributions violates the right to information of the voter since they would not

possess information about the political party to which the contribution was

made which, as we have held above, is necessary to identify corruption and

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quid pro quo transactions in governance. Such information is also necessary

for exercising an informed vote.

173. Section 182(3) of the Companies Act and Section 29C of the RPA as amended

by the Finance Act must be read together. Section 29C exempts political

parties from disclosing information of contributions received through Electoral

Bonds. However, Section 182(3) not only applies to contributions made

through electoral bonds but through all modes of transfer. In terms of the

provisions of the RPA, if a company made contributions to political parties

through cheque or ECS, the political party had to disclose the details in its

report. Thus, the information about contributions by the company would be in

the public domain. The only purpose of amending Section 182(3) was to bring

the provision in tune with the amendment under the RPA exempting

disclosure requirements for contributions through electoral bonds. The

amendment to Section 182(3) of the Companies Act becomes otiose in terms

of our holding in the preceding section that the Electoral Bond Scheme and

relevant amendments to the RPA and the IT Act mandating non-disclosure of

particulars on political contributions through electoral bonds is

unconstitutional.

174. In terms of Section 136 of the Companies Act, every shareholder in a

company has a right to a copy of the financial statement which also contains

the profit and loss account. The petitioners submitted that the non-disclosure

of the details of the political contributions made by companies in the financial

statement would infringe upon the right of the shareholders to decide to sell

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the shares of a company if a shareholder does not support the political

ideology of the party to which contributions were made. This it was contended,

violates Articles 19(1)(a), 19(1)(g), 21 and 25. We do not see the necessity of

viewing the non-disclosure requirement in Section 182(3) of the Companies

Act from the lens of a shareholder in this case when we have identified the

impact of non-disclosure of information on political funding from the larger

compass of a citizen and a voter. In view of the above discussion, Section

182(3) as amended by the Finance Act 2017 is unconstitutional.

G. Challenge to unlimited corporate funding

175. The Companies Act 1956,176 as originally enacted, did not contain any

provision relating to political contributions by companies. Regardless of the

same, many companies sought to make contributions to political parties by

amending their memorandum. In Jayantilal Ranchhoddas Koticha v. Tata

Iron and Steel Co. Ltd.,177 the decision of the company to amend its

memorandum enabling it to make contributions to political parties was

challenged before the High Court of Judicature at Bombay. The High Court

upheld the decision of the company to amend its memorandum on the ground

that there was no law prohibiting companies from contributing to the funds of

a party. Chief Justice M C Chagla, cautioned against the influential role of “big

business and money bags” in throttling democracy. The learned Judge

emphasized that it is the duty of Courts to “prevent any influence being

176 “1956 Act”

177 AIR 1958 Bom 155

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exercised upon the voter which is an improper influence or which may be

looked at from any point of view as a corrupt influence.” Chief Justice Chagla

highlighted the grave danger inherent in permitting companies to donate to

political parties and hoped Parliament would “consider under what

circumstances and under what limitations companies should be permitted to

make these contributions”.

176. Subsequently, Parliament enacted the Companies (Amendment) Act 1960 to

incorporate Section 293A in the 1956 Act. The new provision allowed a

company to contribute to: (a) any political party; or (b) for any political purpose

to any individual or body. However, the amount of contribution was restricted

to either twenty-five thousand rupees in a financial year or five percent of the

average net profits during the preceding three financial years, whichever was

greater. The provision also mandated every company to disclose in its profit

and loss account any amount contributed by it to any political party or for any

political purpose to any individual or body during the financial year to which

that account relates by giving particulars of the total amount contributed and

the name of the party, individual, or body to which or to whom such amount

has been contributed.

177. In 1963, the Report of the Santhanam Committee on Prevention of Corruption

highlighted the prevalence of corruption at high political levels due to

unregulated collection of funds and electioneering by political parties. 178 The

Committee suggested “a total ban on all donations by incorporated bodies to

178 Report of the Committee on Prevention of Corruption, 1964 [11.5].

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political parties.” Subsequently, Section 293A of the 1956 Act was amended

through the Companies (Amendment) Act 1969 to prohibit companies from

contributing funds to any political party or to any individual or body for any

political purpose.

178. In 1985, Parliament again amended Section 293A, in the process reversing

its previous ban on political contributions by companies. It allowed a company,

other than a government company and any other company with less than

three years of existence, to contribute any amount or amounts to any political

party or to any person for any political purpose. It further provided that the

aggregate of amounts which may be contributed by a company in any

financial year shall not exceed five percent of its average net profits during

the three immediately preceding financial years. This provision was retained

under Section 182 of the Companies Act 2013. The only change was that the

aggregate amount donated by a company was increased to seven and a half

percent of its average net profits during the three immediately preceding

financial years. Section 154 of the Finance Act 2017 amended Section 182 of

the 2013 Act to delete this limit contained in the first proviso of the provision.

179. At the outset, it is important to be mindful of the fact that the petitioners are

not challenging the vires of Section 182 of the 2013 Act. Neither are the

petitioners challenging the legality of contributions made by companies to

political parties. The challenge is restricted to Section 154 of the Finance Act

2017 which amended Section 182 of the 2013 Act.

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i.The application of the principle of non-arbitrariness

180. The petitioners argue that Section 154 of the Finance Act 2017 violates Article

14 of the Constitution. The primary ground of challenge is that the amendment

to Section 182 of the 2013 Act is manifestly arbitrary as it allows companies,

including loss-making companies, to contribute unlimited amounts to political

parties. It has also been argued that the law now facilitates the creation of

shell companies solely for the purposes of contributing funds to political

parties. On the other hand, the respondent has questioned the applicability of

the doctrine of manifest arbitrariness for invalidating legislation.

a. Arbitrariness as a facet of Article 14

181. At the outset, the relevant question that this Court has to answer is whether

a legislative enactment can be challenged on the sole ground of manifest

arbitrariness. Article 14 of the Constitution provides that the State shall not

deny to any person equality before the law or the equal protection of laws

within the territory of India. Article 14 is an injunction to both the legislative as

well the executive organs of the State to secure to all persons within the

territory of India equality before law and equal protection of the laws. 179

Traditionally, Article 14 was understood to only guarantee non-discrimination.

In this context, Courts held that Article 14 does not forbid all classifications

but only that which is discriminatory. In State of West Bengal v. Anwar Ali

Sarkar,180 Justice S R Das (as the learned Chief Justice then was) laid down

179 Basheshar Nath v. CIT, (1959) Supp 1 SCR 528

180 (1951) 1 SCC 1; Also see State of Bombay v. FN Balsara, 1951 SCR 682

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the following two conditions which a legislation must satisfy to get over the

inhibition of Article 14: first, the classification must be founded on an

intelligible differentia which distinguishes those that are grouped together

from others; and second, the differentia must have a rational relation to the

object sought to be achieved by the legislation. In the ensuing years, this

Court followed this “traditional approach” to test the constitutionality of a

legislation on the touchstone of Article 14.181

182. In E P Royappa v. State of Tamil Nadu,182 this Court expanded the ambit of

Article 14 by laying down non-arbitrariness as a limiting principle in the context

of executive actions. Justice P N Bhagwati (as the learned Chief Justice then

was), speaking for the Bench, observed that equality is a dynamic concept

with many aspects and dimensions which cannot be confined within traditional

and doctrinaire limits. The opinion declared that equality is antithetic to

arbitrariness, further finding that equality belongs to the rule of law in a

republic, while arbitrariness belongs to the whim and caprice of an absolute

monarch. In Ajay Hasia v. Khalid Mujib Seheravardi,183 a Constitution

Bench of this Court considered it to be well settled that any action that is

arbitrary necessarily involves negation of equality. Justice Bhagwati observed

that the doctrine of non-arbitrariness can also be extended to a legislative

action. He observed that:

“[w]herever therefore there is arbitrariness in State action

whether it be of the legislature or of the executive or of an

181 Kathi Raning Rawat v. State of Saurashtra, (1952) 1 SCC 215; Budhan Chowdhury v. State of Bihar, (1955) 1
SCR 1045; Ram Krishna Dalmia v. S R Tendolkar, 1959 SCR 279.
182 (1974) 4 SCC 3
183 (1981) 1 SCC 722

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“authority” under Article 12, Article 14 immediately springs into

action and strikes down such State action.”

183. Immediately after the judgment in Ajay Hasia (supra), Justice E S

Venkataramaiah (as the learned Chief Justice then was) in Indian Express

Newspapers (Bombay) (P) Ltd. v. Union of India,184 laid down the test of

manifest arbitrariness with respect to subordinate legislation. It was held that

a subordinate legislation does not carry the same degree of immunity enjoyed

by a statute passed by a competent legislature. Therefore, this Court held that

a subordinate legislation “may also be questioned on the ground that it is

unreasonable, unreasonable not in the sense of not being reasonable, but in

the sense that it is manifestly arbitrary.” In Sharma Transport v. Government

of Andhra Pradesh,185 this Court reiterated Indian Express Newspapers

(supra) by observing that the test of arbitrariness as applied to an executive

action cannot be applied to delegated legislation. It was held that to declare

a delegated legislation as arbitrary, “it must be shown that it was not

reasonable and manifestly arbitrary.” This Court further went on to define

“arbitrarily” to mean “in an unreasonable manner, as fixed or done capriciously

or at pleasure, without adequate determining principle, not founded in the

nature of things, non-rational, not done or acting according to reason or

judgment, depending on the will alone.”

184. While this Court accepted it as a settled proposition of law that a subordinate

legislation can be challenged on the ground of manifest arbitrariness, there

184 (1985) 1 SCC 641

185 (2002) 2 SCC 188

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was still some divergence as to the doctrine’s application with respect to

plenary legislation. In State of Tamil Nadu v. Ananthi Ammal,186 a three-

Judge Bench of this Court held that a statute can be declared invalid under

Article 14 if it is found to be arbitrary or unreasonable. Similarly, in Dr. K R

Lakshmanan v. State of Tamil Nadu,187 a three-Judge Bench of this Court

invalidated a legislation on the ground that it was arbitrary and in violation of

Article 14. However, in State of Andhra Pradesh v. McDowell & Co.,188

another three-Judge Bench of this Court held that a plenary legislation cannot

be struck down on the ground that it is arbitrary or unreasonable. In McDowell

(supra), this Court held that a legislation can be invalidated on only two

grounds: first, the lack of legislative competence; and second, on the violation

of any fundamental rights guaranteed in Part III of the Constitution or of any

other constitutional provision.

185. This divergence became more apparent when a three-Judge Bench of this

Court in Malpe Vishwanath Acharya v. State of Maharashtra,189 invalidated

certain provisions of the Bombay Rents, Hotel and Lodging House Rates

Control Act 1947 relating to the determination and fixation of the standard

rent. This Court declared the provisions in question unreasonable, arbitrary,

and violative of Article 14. However, the Court did not strike down the

provisions on the ground that the extended period of the statute was to come

to an end very soon, requiring the government to reconsider the statutory

186 (1995) 1 SCC 519

187 (1996) 2 SCC 226
188 (1996) 3 SCC 709
189 (1998) 2 SCC 1

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provisions. Similarly, in Mardia Chemicals Ltd. v. Union of India,190 another

three-Judge Bench of this Court invalidated Section 17(2) of the Securitization

and Reconstruction of Financial Assets and Enforcement of Security Interest

Act, 2002 for being unreasonable and arbitrary.

186. In Natural Resources Allocation, In Re Special Reference No. 1 of

2012,191 a Constitution Bench of this Court referred to McDowell (supra) to

observe that a law may not be struck down as arbitrary without a constitutional

infirmity. Thus, it was held that a mere finding of arbitrariness was not

sufficient to invalidate a legislation. The Court has to enquire whether the

legislation contravened any other constitutional provision or principle.

b. Beyond Shayara Bano: entrenching manifest arbitrariness in Indian

jurisprudence

187. In Shayara Bano v. Union of India,192 a Constitution Bench of this Court set

aside the practice of Talaq-e-Bidaat (Triple Talaq). Section 2 of the Muslim

Personal Law (Shariat) Act 1937 was also impugned before this Court. The

provision provides that the personal law of the Muslims, that is Shariat, will be

applicable in matters relating to marriage, dissolution of marriage and talaq.

Justice R F Nariman, speaking for the majority, held that Triple Talaq is

manifestly arbitrary because it allows a Muslim man to capriciously and

whimsically break a marital tie without any attempt at reconciliation to save it.

190 (2004) 4 SCC 311

191 (2012) 10 SCC 1
192 (2017) 9 SCC 1

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Thus, Justice Nariman applied the principle of manifest arbitrariness for the

purpose of testing the constitutional validity of the legislation on the

touchstone of Article 14.

188. Justice Nariman traced the evolution of non-arbitrariness jurisprudence in

India to observe that McDowells (supra) failed to consider two binding

precedents, namely, Ajay Hasia (supra) and K R Lakshmanan (supra). This

Court further observed that McDowells (supra) did not notice Maneka

Gandhi v. Union of India,193 where this Court held that substantive due

process is a part of Article 21 which has to be read along with Articles 14 and

19 of the Constitution. Therefore, Justice Nariman held that arbitrariness of a

legislation is a facet of unreasonableness in Articles 19(2) to (6) and therefore

arbitrariness can also be used as a standard to strike down legislation under

Article 14. It held McDowells (supra) to be per incuriam and bad in law.

189. Shayara Bano (supra) clarified In Re Special Reference No. 1 of 2012

(supra) by holding that a finding of manifest arbitrariness is in itself a

constitutional infirmity and, therefore, a ground for invalidating legislation for

the violation of Article 14. Moreover, it was held that there is no rational

distinction between subordinate legislation and plenary legislation for the

purposes of Article 14. Accordingly, the test of manifest arbitrariness laid down

by this Court in Indian Express Newspapers (supra) in the context of

subordinate legislation was also held to be applicable to plenary legislation.

In conclusion, this Court held that manifest arbitrariness “must be something

193 (1978) 1 SCC 248

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done by the legislature capriciously, irrationally and/or without adequate

determining principle.” It was further held that a legislation which is excessive

and disproportionate would also be manifestly arbitrary. The doctrine of

manifest arbitrariness has been subsequently reiterated by this Court in

numerous other judgments.

190. The standard of manifest arbitrariness was further cemented by the

Constitution Bench of this Court in Navtej Singh Johar v. Union of India.194

In Navtej Singh Johar (supra), Section 377 of the Indian Penal Code 1860

was challenged, inter alia, on the ground it is manifestly arbitrary. Section 377

criminalized any person who has had “voluntary carnal intercourse against

the order of nature”. Chief Justice Dipak Misra (writing for himself and Justice

AM Khanwilkar) held that Section 377 is manifestly arbitrary for failing to make

a distinction between consensual and non-consensual sexual acts between

consenting adults.195 Justice Nariman, in the concurring opinion, observed

that Section 377 is manifestly arbitrary for penalizing “consensual gay sex”.

Justice Nariman faulted the provision for (a) not distinguishing between

consensual and non-consensual sex for the purpose of criminalization; and

(b) criminalizing sexual activity between two persons of the same gender. 196

Justice DY Chandrachud noted that Section 377 to the extent that it penalizes

physical manifestation of love by a section of the population (the LGBTQ+

community) is manifestly arbitrary.197 Similarly, Justice Indu Malhotra

194 (2018) 10 SCC 1

195 WP (Criminal) 76 of 2016 [Chief Justice Misra, 239]
196 Ibid,[Justice Nariman, 82]
197 Ibid, [Justice DY Chandrachud, 29]

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observed that the provision is manifestly arbitrary because the basis of

criminalization is the sexual orientation of a person which is not a “rationale

principle”198.

191. In Joseph Shine v. Union of India,199 a Constitution Bench of this Court

expressly concurred with the doctrine of manifest arbitrariness as evolved in

Shayara Bano (supra). In Joseph Shine (supra), one of us (Justice D Y

Chandrachud) observed that the doctrine of manifest arbitrariness serves as

a check against state action or legislation “which has elements of caprice,

irrationality or lacks an adequate determining principle.” In Joseph Shine

(supra), the validity of Section 497 of the Indian Penal Code was challenged.

Section 497 penalized a man who has sexual intercourse with a woman who

is and whom he knows or has a reason to believe to be the wife of another

man, without the “consent and connivance of that man” for the offence of

adultery. Justice Nariman observed that the provision has paternalistic

undertones because the provision does not penalize a married man for having

sexual intercourse with a married woman if he obtains her husband’s consent.

The learned Judge observed that the provision treats a woman like a chattel:

“23. […] This can only be on the paternalistic notion of a

woman being likened to chattel, for if one is to use the chattel
or is licensed to use the chattel by the ―licensor‖, namely, the
husband, no offence is committed. Consequently, the wife
who has committed adultery is not the subject matter of the
offence, and cannot, for the reason that she is regarded only
as chattel, even be punished as an abettor. This is also for the
chauvinistic reason that the third-party male has seduced her,
she being his victim. What is clear, therefore, is that this
archaic law has long outlived its purpose and does not square

198 Ibid, [Justice Malhotra, paragraph 14.9]

199 (2019) 3 SCC 39

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with today‘s constitutional morality, in that the very object with

which it was made has since become manifestly arbitrary,
having lost its rationale long ago and having become in
today‘s day and age, utterly irrational. On this basis alone, the
law deserves to be struck down, for with the passage of time,
Article 14 springs into action and interdicts such law as being
manifestly arbitrary.”

192. The learned Judge further observed that the “ostensible object of Section 497”

as pleaded by the State which is to preserve the sanctity of marriage is not in

fact the object of the provision because: (a) the sanctity of marriage can be

destroyed even if a married man has sexual intercourse with an unmarried

woman or a widow; and (b) the offence is not committed if the consent of the

husband of the woman is sought.

193. Justice DY Chandrachud in his opinion observed that a provision is manifestly

arbitrary if the determining principle of it is not in consonance with

constitutional values. The opinion noted that Section 497 makes an

“ostensible” effort to protect the sanctity of marriage but in essence is based

on the notion of marital subordination of women which is inconsistent with

constitutional values.200 Chief Justice Misra (writing for himself and Justice

AM Khanwilkar) held that the provision is manifestly arbitrary for lacking

“logical consistency” since it does not treat the wife of the adulterer as an

aggrieved person and confers a ‘license’ to the husband of the woman.

194. It is now a settled position of law that a statute can be challenged on the

ground it is manifestly arbitrary. The standard laid down by Justice Nariman

in Shayara Bano (supra), has been citied with approval by the Constitution

200 (2019) 3 SCC 39 [Paragraph 35]

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Benches in Navtej Singh Johar (supra) and Joseph Shine (supra). Courts

while testing the validity of a law on the ground of manifest arbitrariness have

to determine if the statute is capricious, irrational and without adequate

determining principle, or something which is excessive and disproportionate.

This Court has applied the standard of “manifest arbitrariness” in the following

manner:

a. A provision lacks an “adequate determining principle” if the purpose is

not in consonance with constitutional values. In applying this standard,

Courts must make a distinction between the “ostensible purpose”, that

is, the purpose which is claimed by the State and the “real purpose”, the

purpose identified by Courts based on the available material such as a

reading of the provision201; and

b. A provision is manifestly arbitrary even if the provision does not make a

classification.202

195. This Court in previous judgments has discussed the first of the above

applications of the doctrine by distinguishing between the “ostensible

purpose” and the “real purpose” of a provision with sufficient clarity. The

application of the doctrine of manifest arbitrariness by Chief Justice Misra and

Justice Nariman in Navtej Singh Johar (supra) to strike down a provision for

not classifying between consensual and non-consensual sex must be

understood in the background of two jurisprudential developments on the

201 Justice Chandrachud, Justice Malhotra, and Justice Nariman in Navtej Singh Johar (supra); Justices
Chandrachud and Nariman in Joseph Shine (supra).
202 Chief Justice Misra in Navtej Singh Johar (supra)

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interpretation of Part III of the Constitution. The first, is the shift from reading

the provisions of Part III of the Constitution as isolated silos to understanding

the thread of reasonableness which runs through all the provisions and

elevating unreasonable (and arbitrary) action to the realm of fundamental

rights. The second is the reading of Article 14 to include the facets of formal

equality and substantive equality. Article 14 consists of two components.

“Equality before the law” which means that the law must treat everybody

equally in the formal sense. “Equal protection of the laws” signifies a

guarantee to secure factual equality. The legislature and the executive makes

classifications to achieve factual equality. The underlying premise of

substantive equality is the recognition that not everybody is equally placed

and that the degree of harm suffered by a group of persons (or an individual)

varies because of unequal situations. This Court has in numerous judgments

recognized that the legislature is free to recognize the degrees of harm and

confine its benefits or restrictions to those cases where the need is the

clearest.203 The corollary of the proposition that it is reasonable to identify the

degrees of harm, is that it is unreasonable, unjust, and arbitrary if the

Legislature does not identify the degrees of harm for the purpose of law.

196. It is undoubtedly true that it is not the constitutional role of this Court to second

guess the intention of the legislature in enacting a particular statute. The

legislature represents the democratic will of the people, and therefore, the

courts will always presume that the legislature is supposed to know and will

Mohd. Hanif Quareshi v. State of Bihar, AIR 1958 SC 731; Binoy Viswam v. Union of India, (2017) 7 SCC 59;
203

Charanjit Lal Chowdhuri v. Union of India, 1950 SCC 833

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be aware of the needs of the people. Moreover, this Court must be mindful of

falling into an error of equating a plenary legislation with a subordinate

legislation. In Re Delhi Laws Act 1912,204 Justice Fazl Ali summed up the

extent and scope of plenary legislation and delegated legislation, in the

following terms:

“32. The conclusions at which I have arrived so far may now

be summed up:

(1) The legislature must normally discharge its primary

legislative function itself and not through others.

(2) Once it is established that it has sovereign powers within a

certain sphere, it must follow as a corollary that it is free to
legislate within that sphere in any way which appears to it to
be the best way to give effect to its intention and policy in
making a particular law, and that it may utilise any outside
agency to any extent it finds necessary for doing things which
it is unable to do itself or finds it inconvenient to do. In other
words, it can do everything which is ancillary to and necessary
for the full and effective exercise of its power of legislation.

(3) It cannot abdicate its legislative functions, and therefore

while entrusting power to an outside agency, it must see that
such agency acts as a subordinate authority and does not
become a parallel legislature.

(4) The doctrine of separation of powers and the judicial

interpretation it has received in America ever since the
American Constitution was framed, enables the American
courts to check undue and excessive delegation but the
courts of this country are not committed to that doctrine and
cannot apply it in the same way as it has been applied in
America. Therefore, there are only two main checks in this
country on the power of the legislature to delegate, these
being its good sense and the principle that it should not cross

204 1951 SCC 568

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the line beyond which delegation amounts to “abdication and

self-effacement”.

197. In Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. Assistant Commissioner of

Sales Tax and others,205 a Constitution Bench of this Court held that a

subordinate legislation is ancillary to the statute. Therefore, the delegate must

enact the subordinate legislation “consistent with the law under which it is

made and cannot go beyond the limits of the policy and standard laid down in

the law.” Since the power delegated by a statute is limited by its terms, the

delegate is expected to “act in good faith, reasonably, intra vires the power

granted and on relevant consideration of material facts.”206 This Court has to

be cognizant of this distinction. In fact, the doctrine of manifest arbitrariness,

as developed by this Court in Indian Express Newspapers (supra) in the

context of subordinate legislation, was applicable to the extent that “it is so

arbitrary that it could not be said to be in conformity with the statute or that it

offends Article 14 of the Constitution.”207

198. The above discussion shows that manifest arbitrariness of a subordinate

legislation has to be primarily tested vis-a-vis its conformity with the parent

statute. Therefore, in situations where a subordinate legislation is challenged

on the ground of manifest arbitrariness, this Court will proceed to determine

205 (1974) 4 SCC 98

206 Shri Sitaram Sugar Co. Ltd. v. Union of India, (1990) 3 SCC 223
207 In Khoday Distilleries Ltd. V. State of Karnataka, (1996) 10 SCC 304, this Court reiterated Indian Express

Newspapers (supra) by holding that a delegated legislation is manifestly arbitrary if it “could not be reasonably
expected to emanate from an authority delegated with the law-making power.” Similarly, in State of Tamil Nadu v.
P Krishnamurthy, (2006) 4 SCC 517 this Court held that subordinate legislation can be challenged on the ground
of manifest arbitrariness to an extent “where the court might well say that the legislature never intended to give
authority to make such rules.”

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whether the delegate has failed “to take into account very vital facts which

either expressly or by necessary implication are required to be taken into

consideration by the statute or, say, the Constitution.”208 In contrast,

application of manifest arbitrariness to a plenary legislation passed by a

competent legislation requires the Court to adopt a different standard because

it carries greater immunity than a subordinate legislation. We concur with

Shayara Bano (supra) that a legislative action can also be tested for being

manifestly arbitrary. However, we wish to clarify that there is, and ought to be,

a distinction between plenary legislation and subordinate legislation when

they are challenged for being manifestly arbitrary.

ii. Validity of Section 154 of the Finance Act 2017 omitting the first proviso to

Section 182 of the Companies Act

199. We now turn to examine the vires of Section 154 of the Finance Act 2017.

The result of the amendment is that: (a) a company, other than a government

company and a company which has been in existence for less than three

financial years, can contribute unlimited amounts to any political party; and

(b) companies, regardless of the fact whether they are profit making or

otherwise, can contribute funds to political parties. The issue that arises for

consideration is whether the removal of contribution restrictions is manifestly

arbitrary and violates Article 14 of the Constitution.

200. As discussed in the earlier section, this Court has consistently pointed out the

pernicious effect of money on the integrity of the electoral process in India.

208 Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India, (1985) 1 SCC 641

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The Law Commission of India in its 170th Report also observed that “most

business houses already know where their interest lies and they make their

contributions accordingly to that political party which is likely to advance their

interest more.”209 This issue becomes particularly problematic when we look

at the avenues through which political parties accumulate their capital.

Section 182 of the 2013 Act is one such legal provision allowing companies

to contribute to political parties. The question before us is not how political

parties expend their financial resources, but how they acquire their financial

resources in the first instance.

201. The Preamble to the Constitution describes India as a “democratic republic”:

a democracy in which citizens are guaranteed political equality irrespective of

caste and class and where the value of every vote is equal. Democracy does

not begin and end with elections. Democracy sustains because the elected

are responsive to the electors who hold them accountable for their actions

and inactions. Would we remain a democracy if the elected do not heed to

the hue and cry of the needy? We have established the close relationship

between money and politics above where we explained the importance of

money for entry to politics, for winning elections, and for remaining in power.

That being the case, the question that we ask ourselves is whether the elected

would truly be responsive to the electorate if companies which bring with them

huge finances and engage in quid pro quo arrangements with parties are

permitted to contribute unlimited amounts. The reason for political

209 Law Commission of India, 170th Report on the Reform of the Electoral Laws (1999)

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contributions by companies is as open as day light. Even the learned Solicitor

General did not deny during the course of the hearings that corporate

donations are made to receive favors through quid pro quo arrangements.

202. In Kesavananda Bharati v. State of Kerala,210 the majority of this Court held

that “republican and democratic form of government” form the basic elements

of the constitutional structure. Subsequently, in Indira Nehru Gandhi v. Raj

Narain,211 Justice H R Khanna reiterated that the democratic set up of

government is a part of the basic features of the Constitution. Elections matter

in democracy because they are the most profound expression of the will of

the people. Our parliamentary democracy enables citizens to express their

will through their elected representatives. The integrity of the electoral

process is a necessary concomitant to the maintenance of the democratic

form of government.212

203. This Court has also consistently held that free and fair elections form an

important concomitant of democracy.213 In Kuldip Nayar v. Union of India,214

a Constitution Bench of this Court held that a democratic form of government

depends on a free and fair election system. In People’s Union for Civil

Liberties v. Union of India,215 this Court held that free and fair elections

210 (1973) 4 SCC 225

211 1975 Supp SCC 1
212 In Indira Nehru Gandhi v. Raj Narain, 1975 Supp SCC 1, Justice Khanna observed that periodical elections

are a necessary postulate of a democratic setup as it allows citizens to elect their representatives. He further
observed that democracy can function “only upon the faith that elections are free and fair and not rigged and
manipulated, that they are effective instruments of ascertaining popular will both in reality and form and are not
mere rituals calculated to generate illusion of defence to mass opinion.”
213 Digvijay Mote v. Union of India, (1993) 4 SCC 175; Union of India v. Association for Democratic Reforms, (2002)

5 SCC 294.
214 (2006) 7 SCC 1
215 (2013) 10 SCC 1

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denote equal opportunity to all people. It was further observed that a free and

fair election is one which is not “rigged and manipulated and the candidates

and their agents are not able to resort to unfair means and malpractices.”

204. The integrity of the election process is pivotal for sustaining the democratic

form of government. The Constitution also places the conduct of free and fair

elections in India on a high pedestal. To this purpose, Article 324 puts the

Election Commission in charge of the entire electoral process commencing

with the issue of the notification by the President to the final declaration of the

result.216 However, it is not the sole duty of the Election Commission to secure

the purity and integrity of the electoral process. There is also a positive

constitutional duty on the other organs of the government, including the

legislature, executive and the judiciary, to secure the integrity of the electoral

process.

205. During the course of the arguments, the learned Solicitor General submitted

that the limit of seven and a half percent of the average net profits in the

preceding three financial years was perceived as a restriction on companies

who would want to donate in excess of the statutory cap. The learned Solicitor

General further submitted that companies who wanted to donate in excess of

the statutory cap would create shell companies and route their contributions

through them. Therefore, it was suggested that the statutory cap was

removed to discourage the creation of shell companies.

216 Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405

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206. The limit on restrictions to political parties was incorporated in Section 293A

of the 1956 Act through the Companies (Amendment) Bill 1985. The original

restriction on contribution was five per cent of a company’s average net profits

during the three immediately preceding financial years. The Lok Sabha

debates pertaining to the Companies Bill furnish an insight into why

contribution restrictions were imposed in the first place. The then Minister of

Chemicals and Fertilizers and Industry and Company Affairs justified the

contribution restrictions, stating that:

“Since companies not having profits should not be encouraged

to make political contributions, monetary ceiling as an
alternative to a certain percentage of profits for arriving at the
permissible amount of political donation has been done away
with.”217

207. Thus, the object behind limiting contributions was to discourage loss-making

companies from contributing to political parties. In 1985, Parliament

prescribed the condition that only companies which have been in existence

for more than three years can contribute. This condition was also included to

prevent loss-making companies and shell companies from making financial

contributions to political parties. If the ostensible object of the amendment, as

contended by the learned Solicitor General, was to discourage the creation of

shell companies, there is no justification for removing the cap on contributions

which was included for the very same purpose: to deter shell companies from

making political contributions. In fact, when the proposal to amend Section

182 of the 2013 Act was mooted by the Government in 2017, the Election

217 Lok Sabha Debates, Companies Bill (16 May 1985).

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Commission of India opposed the amendment and suggested that the

Government reconsider its decision on the ground that it would open up the

possibility of creating shell companies. The relevant portion of the opinion of

the ECI is reproduced below:

“Certain amendments have been proposed in Section 182 of

the Companies Act, where the first proviso has been omitted
and consequently the limit of seven and a half percent (7.5 %)
of the average net profits in the preceding three financial years
on contributions by companies has been removed from the
statute. This opens up the possibility of shell companies being
set up for the sole purpose of making donations to political
parties with no other business of consequence having
disbursable profits.”218

208. After the amendment, companies similar to individuals, can make unlimited

contributions and contributions can be made by both profit-making and loss-

making companies to political parties. Thus, in essence, it could be argued

that the amendment is merely removing classification for the purpose of

political contribution between companies and individuals on the one hand and

loss-making and profit-making companies on the other.

209. The proposition on the principle of manifest arbitrariness culled out above

needs to be recalled. The doctrine of manifest arbitrariness can be used to

strike down a provision where: (a) the legislature fails to make a classification

by recognizing the degrees of harm; and (b) the purpose is not in consonance

with constitutional values.

218 Election Commission of India, Letter dated 26 May 2017, No. 56/PPEMS/Transparency/2017

145
 PART G

210. One of the reasons for which companies may contribute to political parties

could be to secure income tax benefit.219 However, companies have been

contributing to political parties much before the Indian legal regime in 2003

exempted contributions to political parties. Contributions are made for

reasons other than saving on the Income Tax. The chief reason for corporate

funding of political parties is to influence the political process which may in

turn improve the company’s business performance.220 A company, whatever

may be its form or character, is principally incorporated to carry out the objects

contained in the memorandum. However, the amendment now allows a

company, through its Board of Directors, to contribute unlimited amounts to

political parties without any accountability and scrutiny. Unlimited contribution

by companies to political parties is antithetical to free and fair elections

because it allows certain persons/companies to wield their clout and

resources to influence policy making. The purpose of Section 182 is to curb

corruption in electoral financing. For instance, the purpose of banning a

Government company from contributing is to prevent such companies from

entering into the political fray by making contributions to political parties. The

amendment to Section 182 by permitting unlimited corporate contributions

(including by shell companies) authorizes unrestrained influence of

companies on the electoral process. This is violative of the principle of free

and fair elections and political equality captured in the value of “one person

one vote”.

219 IT Act, Section 80 GGB

220 Jayantilal Ranchhoddas Koticha v. Tata Iron & Steel Co. Ltd (supra)

146
 PART G

211. The amendment to Section 182 of the Companies Act must be read along

with other provisions on financial contributions to political parties under the

RPA and the IT Act. Neither the RPA nor the IT Act place a cap on the

contributions which can be made by an individual. The amendment to the

Companies Act when viewed along with other provisions on electoral funding,

seek to equalize an individual and a company for the purposes of electoral

funding.

212. The ability of a company to influence the electoral process through political

contributions is much higher when compared to that of an individual. A

company has a much graver influence on the political process, both in terms

of the quantum of money contributed to political parties and the purpose of

making such contributions. Contributions made by individuals have a degree

of support or affiliation to a political association. However, contributions made

by companies are purely business transactions, made with the intent of

securing benefits in return. In Citizens United v. Federal Election

Commission,221 the issue before the Supreme Court of the United States

was whether a corporation can use the general treasury funds to pay for

electioneering communication. The majority held that limitations on corporate

funding bans political speech (through contributions) based on the corporate

identity of the contributor. Justice Steven writing for the minority on the issue

of corporate funding observed that companies and natural persons cannot be

treated alike for the purposes of political funding:

221 558 U.S 310

147
 PART G

“In the context of election to public office, the distinction

between corporate and human speakers is significant.
Although they make enormous contributions to our society,
corporations are not actually members of it. They cannot vote
or run for office. Because they may be managed and
controlled by non-residents, their interests may conflict in
fundamental respects with the interests of eligible voters. The
financial resources, legal structure, and instrumental
orientation of corporations raise legitimate concerns about
their role in the electoral process.”

213. In view of the above discussion, we are of the opinion that companies and

individuals cannot be equated for the purpose of political contributions.

214. Further, Companies before the amendment to Section 182 could only

contribute a certain percentage of the net aggregate profits. The provision

classified between loss-making companies and profit-making companies for

the purpose of political contributions and for good reason. The underlying

principle of this distinction was that it is more plausible that loss-making

companies will contribute to political parties with a quid pro quo and not for

the purpose of income tax benefits. The provision (as amended by the

Finance Act 2017) does not recognize that the harm of contributions by loss-

making companies in the form of quid pro quo is much higher. Thus, the

amendment to Section 182 is also manifestly arbitrary for not making a

distinction between profit-making and loss-making companies for the

purposes of political contributions.

215. Thus, the amendment to Section 182 is manifestly arbitrary for (a) treating

political contributions by companies and individuals alike; (b) permitting the

unregulated influence of companies in the governance and political process

violating the principle of free and fair elections; and (c) treating contributions

148
 PART H

made by profit-making and loss-making companies to political parties alike.

The observations made above must not be construed to mean that the

Legislature cannot place a cap on the contributions made by individuals. The

exposition is that the law must not treat companies and individual contributors

alike because of the variance in the degree of harm on free and fair elections.

H. Conclusion and Directions

216. In view of the discussion above, the following are our conclusions:

a. The Electoral Bond Scheme, the proviso to Section 29C(1) of the

Representation of the People Act 1951 (as amended by Section 137 of

Finance Act 2017), Section 182(3) of the Companies Act (as amended

by Section 154 of the Finance Act 2017), and Section 13A(b) (as

amended by Section 11 of Finance Act 2017) are violative of Article

19(1)(a) and unconstitutional; and

b. The deletion of the proviso to Section 182(1) of the Companies Act

permitting unlimited corporate contributions to political parties is arbitrary

and violative of Article 14.

217. We direct the disclosure of information on contributions received by political

parties under the Electoral Bond Scheme to give logical and complete effect

to our ruling. On 12 April 2019, this Court issued an interim order directing

that the information of donations received and donations which will be

received must be submitted by political parties to the ECI in a sealed cover.

This Court directed that political parties submit detailed particulars of the

149
 PART H

donors as against each Bond, the amount of each bond and the full particulars

of the credit received against each bond, namely, the particulars of the bank

account to which the amount has been credited and the date on which each

such credit was made. During the course of the hearing, Mr Amit Sharma,

Counsel for the ECI, stated that the ECI had only collected information on

contributions made in 2019 because a reading of Paragraph 14 of the interim

order indicates that the direction was only limited to contributions made in that

year. Paragraphs 13 and 14 of the interim order are extracted below:

“13. In the above perspective, according to us, the just and

proper interim direction would be to require all the political
parties who have received donations through Electoral Bonds
to submit to the Election Commission of India in sealed cover,
detailed particulars of the donors as against each bond; the
amount of each such bond and the full particulars of the credit
received against each bond, namely, the particulars of the bank
account to which the amount has been credited and the date of
each such credit.

14. The above details will be furnished forthwith in respect of

Electoral Bonds received by a political party till date. The details
of such other bonds that may be received by such a political
party upto the date fixed for issuing such bonds as per the Note
of the Ministry of Finance dated 28.2.2019, i.e 15.5.2019 will
be submitted on or before 30th May, 2019. The sealed covers
will remain in the custody of the Election Commission of India
and will abide by such orders as may be passed by the Court.”

218. Paragraph 14 of the interim order does not limit the operation of Paragraph

13. Paragraph 13 contains a direction in unequivocal terms to political parties

to submit particulars of contributions received through Electoral Bonds to the

ECI. Paragraph 14 only prescribes a timeline for the submission of particulars

on contributions when the window for Electoral Bond contributions was open

in 2019. In view of the interim direction of this Court, the ECI must have

150
 PART H

collected particulars of contributions made to political parties through

Electoral Bonds.

219. In view of our discussion above, the following directions are issued:

a. The issuing bank shall herewith stop the issuance of Electoral Bonds;

b. SBI shall submit details of the Electoral Bonds purchased since the

interim order of this Court dated 12 April 2019 till date to the ECI. The

details shall include the date of purchase of each Electoral Bond, the

name of the purchaser of the bond and the denomination of the Electoral

Bond purchased;

c. SBI shall submit the details of political parties which have received

contributions through Electoral Bonds since the interim order of this

Court dated 12 April 2019 till date to the ECI. SBI must disclose details

of each Electoral Bond encashed by political parties which shall include

the date of encashment and the denomination of the Electoral Bond;

d. SBI shall submit the above information to the ECI within three weeks

from the date of this judgment, that is, by 6 March 2024;

e. The ECI shall publish the information shared by the SBI on its official

website within one week of the receipt of the information, that is, by 13

March 2024; and

f. Electoral Bonds which are within the validity period of fifteen days but

that which have not been encashed by the political party yet shall be

returned by the political party or the purchaser depending on who is in

possession of the bond to the issuing bank. The issuing bank, upon the

151
 PART H

return of the valid bond, shall refund the amount to the purchaser’s

account.

220. Writ petitions are disposed of in terms of the above judgment.

221. Pending applications(s), if any, stand disposed of.

…..…..…....…........……………….…........CJI.
[Dr Dhananjaya Y Chandrachud]

.…....…..…....…........……………….…........J.
[B R Gavai]

.…....…..…....…........……………….…........J.
[J B Pardiwala]

.…....…..…....…........……………….…........J.
[Manoj Misra]

New Delhi;
February 15, 2024

152
 ANNEXURE I

Section 29C, Representation of the People Act 1951

Prior to Amendment by the Finance Act 2017 Upon Amendment by Section 137 of the
Finance Act, 2017

29C. Declaration of donation received by the Section 29C. Declaration of donation received
political parties. - by the political parties. –

(1) The treasurer of a political party or any (1) The treasurer of a political party or any
other person authorized by the political other person authorized by the political
party in this behalf shall, in each financial party in this behalf shall, in each financial
year, prepare a report in respect of the year, prepare a report in respect of the
following, namely; following, namely:
(a) the contribution in excess of twenty (a) the contribution in excess of twenty
thousand rupees received by such thousand rupees received by such political
political party from any person in that party from any person in that financial year;
financial year; (b) the contribution in excess of twenty
(b) the contribution in excess of twenty thousand rupees received by such political
thousand rupees received by such party from companies other than
political party from companies other than Government companies in that financial
Government companies in that financial year.
year.
Provided that nothing contained in this
(2) The report under sub-section (1) shall be subsection shall apply to the contributions
in such form as may be prescribed. received by way of an electoral bond.
Explanation – For the purposes of this
(3) The report for a financial year under subsection, “electoral bond” means a bond
subsection (1) shall be submitted by the referred to in the Explanation to sub-
treasurer of a political party or any other section (3) of section 31 of the Reserve
person authorized by the political party in Bank of India Act, 1934.
this behalf before the due date for
furnishing a return of income of that (2) The report under sub-section (1) shall be in
financial year under section 139 of the such form as may be prescribed.
Income-tax Act, 1961 (43 of 1961), to the (3) The report for a financial year under
Election Commission. subsection (1) shall be submitted by the
(4) Where the treasurer of any political party treasurer of a political party or any other
or any other person authorized by the person authorized by the political party in
political party in this behalf fails to submit this behalf before the due date for
a report under sub-section (3) then, furnishing a return of income of that
notwithstanding anything contained in the financial year under section 139 of the
Income-tax Act, 1961 (43 of 1961), such Income-tax Act, 1961 (43 of 1961), to the
political party shall not be entitled to any Election Commission.
tax relief under that Act. (4) Where the treasurer of any political party or
any other person authorized by the political
party in this behalf fails to submit a report
under sub-section (3) then,
notwithstanding anything contained in the

153
 Income-tax Act, 1961 (43 of 1961), such
political party shall not be entitled to any tax
relief under that Act.

Section 182, Companies Act 2013

Prior to Amendment by the Finance Act, 2017 Upon Amendment by Section 154 of the
Finance Act, 2017

182.Prohibitions and restrictions regarding 182.Prohibitions and restrictions regarding

political contributions. political contributions.

1) Notwithstanding anything contained in 1) Notwithstanding anything contained in

any other provision of this Act, a any other provision of this Act, a
company, other than a Government company, other than a Government
company and a company which has company and a company which has
been in existence for less than three been in existence for less than three
financial years, may contribute any financial years, may contribute any
amount directly or indirectly to any amount directly or indirectly to any
political party: political party:

Provided that the amount referred to in (First proviso omitted)

subsection (1) or, as the case may be, the
aggregate of the amount which may be so Provided that no such contribution shall be
contributed by the company in any financial made by a company unless a resolution
year shall not exceed seven and a half per cent authorising the making of such contribution is
of its average net profits during the three passed at a meeting of the Board of Directors
immediately preceding financial years: and such resolution shall, subject to the other
provisions of this section, be deemed to be
Provided further that no such contribution shall justification in law for the making of the
be made by a company unless a resolution contribution authorised by it.
authorising the making of such contribution is
passed at a meeting of the Board of Directors
and such resolution shall, subject to the other
provisions of this section, be deemed to be
justification in law for the making and the
acceptance of the contribution authorised by it.
Section 182 (3) Every company shall disclose Section 182 (3) Every company shall disclose
in its profit and loss account any amount or in its profit and loss account the total amount
amounts contributed by it to any political party contributed by it under this section during the
during the financial year to which that account financial year to which the account relates.
relates, giving particulars of the total (3A) Notwithstanding anything contained in
amount contributed and the name of the subsection (1), the contribution under this
party to which such amount has been section shall not be made except by an
contributed. account payee cheque drawn on a bank or an
account payee bank draft or use of electronic
clearing system through a bank account:

154
 Provided that a company may make
contribution through any instruments,
issued pursuant to any scheme notified
under any law for the time being in force,
for contribution to the political parties.

Section 13A, Income Tax Act 1995

Prior to Amendment by the Finance Act, 2017 Upon Amendment by Section 11 of the Finance
Act, 2017

13A. Special provision relating to incomes 13A. Special provision relating to incomes
of political parties of political parties

Any income of a political party which is Any income of a political party which is
chargeable under the head "Income from chargeable under the head "Income from
house property" or "Income from other house property" or "Income from other
sources" or any income by way of voluntary sources" or any income by way of voluntary
contributions received by a political party from contributions received by a political party from
any person shall not be included in the total any person shall not be included in the total
income of the previous year of such political income of the previous year of such political
party: party:

Provided that- Provided that-

(a) such political party keeps and maintains (a) such political party keeps and maintains
such books of account and other such books of account and other
documents as would enable the Assessing documents as would enable the Assessing
Officer to properly deduce its income Officer to properly deduce its income
therefrom; therefrom;
(b) in respect of each such voluntary (b) in respect of each such voluntary
contribution in excess of ten thousand contribution other than contribution by
rupees, such political party keeps and way of electoral bond in excess of ten
maintains a record of such contribution and thousand rupees, such political party
the name and address of the person who keeps and maintains a record of such
has made such contribution; and contribution and the name and address of
(c) the accounts of such political party are the person who has made such
audited by an accountant as defined in the contribution; and
Explanation below sub- section (2) of (c) the accounts of such political party are
section 288. audited by an accountant as defined in the
Explanation below sub- section (2) of
Explanation.- For the purposes of this section, section 288; and
"political party" means an association or body (d) no donation exceeding two thousand
of individual citizens of India registered with the rupees is received by such political
Election Commission of India as a political party otherwise than by an account
party under paragraph 3 of the Election payee cheque drawn on a bank or an
Symbols (Reservation and Allotment) Order, account payee bank draft or use of
1968, and includes a political party deemed to electronic clearing system through a

155
be registered with that Commission under the bank account or through electoral
proviso to subparagraph (2) of that paragraph. bond.

Explanation.- For the purposes of this proviso,

“electoral bond” means a bond referred to
in the Explanation to sub- section (3) of
section 31 of the Reserve Bank of India Act,
1934;

Provided also that such political party furnishes

a return of income for the previous year in
accordance with the provisions of sub-section
(4B) of section 139 on or before the due date
under that section.

Section 31, Reserve Bank of India Act 1931

Prior to Amendment by the Finance Act, 2017 Upon Amendment by Section 11 of the Finance
Act, 2017

31. Issue of demand bills and notes. 31. Issue of demand bills and notes.

1) No person in India other than the Bank or, 1) No person in India other than the Bank or,
as expressly authorized by this Act, the as expressly authorized by this Act, the
Central Government shall draw, accept, Central Government shall draw, accept,
make or issue any bill of exchange, hundi, make or issue any bill of exchange, hundi,
promissory note or engagement for the promissory note or engagement for the
payment of money payable to bearer on payment of money payable to bearer on
demand, or borrow, owe or take up any demand, or borrow, owe or take up any
sum or sums of money on the bills, hundis sum or sums of money on the bills, hundis
or notes payable to bearer on demand of or notes payable to bearer on demand of
any such person: any such person:

Provided that cheques or drafts, including Provided that cheques or drafts, including
hundis, payable to bearer on demand or hundis, payable to bearer on demand or
otherwise may be drawn on a person’s account otherwise may be drawn on a person’s account
with a banker, shroff or agent. with a banker, shroff or agent.

(2) Notwithstanding anything contained in the 2) Notwithstanding anything contained in the

Negotiable Instruments Act, 1881, no Negotiable Instruments Act, 1881, no
person in India other than the Bank or, as person in India other than the Bank or, as
expressly authorised by this Act, the expressly authorised by this Act, the
Central Government shall make or issue Central Government shall make or issue
any promissory note expressed to be any promissory note expressed to be
payable to the bearer of the instrument. payable to the bearer of the instrument.

156
 3) Notwithstanding anything contained in
this section, the Central Government
may authorise any scheduled bank to
issue electoral bond

Explanation.-For the purposes of this

subsection, ‘electoral bond’ means a
bond issued by any scheduled bank
under the scheme as may be notified by
the Central Government.

157
 ANNEXURE II

Conduct of Elections Rules, 1961

(Statutory Rules and Order)

222
[FORM 24A
(See rule 85B)

[This form should be filed with the Election Commission before the due date for furnishing a return of the Political Party’s income of the concerned
financial year under section 139 of the Income-tax Act, 1961 (43 of 1961) and a certificate to this effect should be attached with the Income-tax
return to claim exemption under the Income-tax Act, 1961 (43 of 1961).]

1. Name of Political Party:

2. Status of the Political Party:

(recognised/unrecognised)

3. Address of the headquarters of the Political Party:

4. Date of registration of Political Party with Election Commission:

5. Permanent Account Number (PAN) and Income-tax Ward/Circle where return of the political party is filed:_______

6. Details of the contributions received, in excess of rupees twenty thousand, during the Financial Year:20 – . –20 .

Serial number Name and complete PAN (if any_ and Amount of Mode of contribution Remarks
address of the Income-Tax contribution (Rs.) *(cheque/demand
contributing Ward/Circle draft/cash)
person/company

*In case of payment by cheque/demand draft, indicate name of the bank and branch of the bank on which the cheque/demand draft has been
drawn.

7. In case the contributor is a company, whether the conditions laid down under section 293A of the Companies Act, 1956 (1 of 1956) have been
complied with (A copy of the certificate to this obtained from the company should be attached).

Verification

I,______________________________(full name in Block letters), son/daughter of ___________________________solemnly

declare that to the best of my knowledge and belief, the information given in this Form is correct, complete and truly stated.
I further declare that I am verifying this form in my capacity as ______________________on behalf of the Political Party above
named and I am also competent to do so.

(Signature and name of the Treasurer/Authorised person)]

Date:____________________
Place:____________________

222 Ins. By Notifin. No. S.O. 1283(E), dated the 10th November, 2003.

158
 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO. 880 OF 2017

ASSOCIATION FOR DEMOCRATIC

REFORMS AND ANOTHER ..... APPELLANTS

VERSUS

UNION OF INDIA AND OTHERS ..... RESPONDENTS

WITH

WRIT PETITION (CIVIL) NO. 59 OF 2018

WRIT PETITION (CIVIL) NO. 975 OF 2022

AND

WRIT PETITION (CIVIL) NO. 1132 OF 2022

JUDGMENT
SANJIV KHANNA, J.

I have had the benefit of perusing the judgment authored by

Dr. D.Y. Chandrachud, the Hon’ble Chief Justice. I respectfully

agree with the findings and conclusions recorded therein. However,

since my reasoning is different to arrive at the same conclusion,

Writ Petition (C) No. 880 of 2017 & Ors. Page 1 of 74

 including application of the doctrine of proportionality, I am penning

down my separate opinion.

2. To avoid prolixity, the contentions of the parties are not referred to

separately and the facts are narrated in brief.

3. Corporate funding of political parties has been a contentious issue

with the legislature’s approach varying from time to time. The

amendments to the Companies Act, 1956 reveal the spectrum of

views of the legislature. It began with regulations and restrictions in

19601 to a complete ban on contributions to political parties in

19692. The ban was partially lifted in 1985 with restrictions and

stipulations.3 The aggregate amount contributed to a political party

in a financial year could not exceed 5% of the average net profit

during the three immediately preceding financial years.4 A new

condition stipulated that the board of directors5 in their meeting

would pass a resolution giving legitimacy and authorisation to

contributions to a political party.6

1 The Companies (Amendment) Act 1960, s 100 inserted into the Companies Act 1956, s 293A which
stipulates that contributions to political parties cannot exceed 5% of the average net profit of the
company during the three immediately preceding financial years.
2 The Companies (Amendment) Act 1969, s 3 substituted of the Companies Act 1956, s 293A

introducing a ban on contributions to political parties.

3 The Companies (Amendment) Act 1985, s 2 replaced of the Companies Act 1956, s 293A bringing

back the 5% cap on contributions to political parties.

4 The Companies Act 1956, s 293A.
5 For short, the “Board”.
6 Second proviso to Section 293A(2), Companies Act, 1956.

Writ Petition (C) No. 880 of 2017 & Ors. Page 2 of 74

4. The Companies Act of 2013 replaced the Companies Act of 1956.

Section 182(1) of the Companies Act, 20137 permitted contributions

by companies of any amount to any political party, if the said

company had been in existence for more than three immediately

preceding financial years and is not a government company. The

requirement of authorisation vide Board resolution is retained.8 The

cap of 5% is enhanced to 7.5% of the average net profits during the

three immediately preceding financial years.9 It is also mandated

that the company must disclose the amount contributed by it to

political parties in the profit and loss account, including particulars

of name of political party and the amount contributed.10 In case of

violation of the terms, penalties stand prescribed.

5. The Finance Act, 2017 made several amendments to the

Companies Act, 2013, Income Tax Act, 1961, Reserve Bank of

India11 Act, 1934, the Representation of the People Act, 1951, and

the Foreign Contribution Regulation Act, 2010. These changes

were brought in to allow contributions/donations through Electoral

Bonds12. The changes made by the Finance Act, 2017 to these

7 As originally enacted.
8 Unamended second proviso to Section 182(1) of the Companies Act, 2013. This condition continues
to remain.
9 Unamended first proviso to Section 182(1) of the Companies Act, 2013.
10 Unamended Section 182(3) of the Companies Act, 2013.
11 For short, “RBI”.
12 For short, “Bonds”.

Writ Petition (C) No. 880 of 2017 & Ors. Page 3 of 74

 legislations were provided in a tabular format by the petitioners. For

clarity, I have reproduced the table below. The specific changes are

highlighted in bold and italics for ease of reference:

Section 182 of the Companies Act, 2013

Prior to Amendment by the Finance Post Amendment by Section 154 of the
Act, 2017 Finance Act, 2017
182. Prohibitions and restrictions 182. Prohibitions and restrictions
regarding political contributions- regarding political contributions-
(1) Notwithstanding anything contained (1) Notwithstanding anything contained in
in any other provision of this Act, a any other provision of this Act, a
company, other than a Government company, other than a Government
company and a company which has company and a company which has been
been in existence for less than three in existence for less than three financial
financial years, may contribute any years, may contribute any amount directly
amount directly or indirectly to any or indirectly to any political party:
political party:

Provided that the amount referred to [First proviso omitted]

in sub-section (1) or, as the case may
be, the aggregate of the amount
which may be so contributed by the
company in any financial year shall
not exceed seven and a half per cent
of its average net profits during the
three immediately preceding financial
years:

Provided further that no such Provided that no such contribution shall

contribution shall be made by a be made by a company unless a
company unless a resolution authorising resolution authorising the making of such
the making of such contribution is contribution is passed at a meeting of the
passed at a meeting of the Board of Board of Directors and such resolution
Directors and such resolution shall, shall, subject to the other provisions of
subject to the other provisions of this this section, be deemed to be justification
section, be deemed to be justification in in law for the making of the contribution
law for the making and the acceptance authorised by it.
of the contribution authorised by it.
182 (3) Every company shall disclose in 182 (3) Every company shall disclose in
its profit and loss account any amount its profit and loss account the total
or amounts contributed by it to any amount contributed by it under this
political party during the financial year to section during the financial year to which
which that account relates, giving the account relates.
particulars of the total amount
contributed and the name of the party (3A) Notwithstanding anything
to which such amount has been contained in sub-section (1), the
contributed. contribution under this section shall
not be made except by an account
payee cheque drawn on a bank or an
account payee bank draft or use of

Writ Petition (C) No. 880 of 2017 & Ors. Page 4 of 74

 electronic clearing system through a
bank account:

Provided that a company may make

contribution through any instrument,
issued pursuant to any scheme
notified under any law for the time
being in force, for contribution to the
political parties.

Section 13-A of the Income Tax Act, 1961

Prior to Amendment by the Finance Post Amendment by Section 11 of the
Act, 2017 Finance Act, 2017
13-A. Special provision relating to 13-A. Special provision relating to
incomes of political parties.— Any incomes of political parties.— Any income
income of a political party which is of a political party which is chargeable
chargeable under the head “Income under the head “Income from house
from house property” or “Income from property” or “Income from other sources”
other sources” or “capital gains or” any or “capital gains or” any income by way of
income by way of voluntary contributions voluntary contributions received by a
received by a political party from any political party from any person shall not be
person shall not be included in the total included in the total income of the
income of the previous year of such previous year of such political party:
political party:

Provided that— Provided that—

(a) such political party keeps and (a) such political party keeps and
maintains such books of account and maintains such books of account and
other documents as would enable the other documents as would enable the
Assessing Officer to properly deduce its Assessing Officer to properly deduce its
income therefrom; income therefrom;
(b) in respect of each such voluntary (b) in respect of each such voluntary
contribution in excess of twenty contribution other than contribution by
thousand rupees, such political party way of electoral bond in excess of
keeps and maintains a record of such twenty thousand rupees, such political
contribution and the name and address party keeps and maintains a record of
of the person who has made such such contribution and the name and
contribution; and address of the person who has made
(c) the accounts of such political party such contribution;
are audited by an accountant as defined (c) the accounts of such political party are
in the Explanation below sub-section (2) audited by an accountant as defined in the
of Section 288: Explanation below sub-section (2) of
Provided further that if the Treasurer of Section 288 and:
such political party or any other person (d) no donation exceeding two
authorised by that political party in this thousand rupees is received by such
behalf fails to submit a report under sub- political party otherwise than by an
section (3) of Section 29-C of the account payee cheque drawn on a
Representation of the People Act, 1951 bank or an account payee bank draft or
(43 of 1951) for a financial year, no use of electronic clearing system
exemption under this section shall be through a bank account or through
available for that political party for such electoral bond.
financial year.

Writ Petition (C) No. 880 of 2017 & Ors. Page 5 of 74

 Explanation.—For the purposes of this Explanation.— For the purposes of this
section, “political party” means a political proviso, “electoral bond” means a bond
party registered under Section 29-A of referred to in the Explanation to sub-
the Representation of the People Act, section (3) of Section 31 of the Reserve
1951 (43 of 1951). Bank of India Act, 1934 (2 of 1934).

Provided further that if the Treasurer of

such political party or any other person
authorised by that political party in this
behalf fails to submit a report under sub-
section (3) of Section 29-C of the
Representation of the People Act, 1951
(43 of 1951) for a financial year, no
exemption under this section shall be
available for that political party for such
financial year.
Provided also that such political party
furnishes a return of income for the
previous year in accordance with the
provisions of sub-section (4B) of Section
139 on or before the due date under that
section.

Explanation.—For the purposes of this

section, “political party” means a political
party registered under Section 29-A of the
Representation of the People Act, 1951
(43 of 1951).

Section 31 of the Reserve Bank of India Act, 1934

Prior to Amendment by the Finance Act Post Amendment by Section 135 of the
2017 Finance Act 2017
Section 31. Issue of demand bills and Section 31. Issue of demand bills and
notes.— notes.—
(1) No person in India other than the (1) No person in India other than the Bank,
Bank, or, as expressly authorized by this or, as expressly authorized by this Act the
Act the Central Government shall draw, Central Government shall draw, accept,
accept, make or issue any bill of make or issue any bill of exchange, hundi,
exchange, hundi, promissory note or promissory note or engagement for the
engagement for the payment of money payment of money payable to bearer on
payable to bearer on demand, or demand, or borrow, owe or take up any
borrow, owe or take up any sum or sums sum or sums of money on the bills, hundis
of money on the bills, hundis or notes or notes payable to bearer on demand of
payable to bearer on demand of any any such person:
such person:
Provided that cheques or drafts, including
Provided that cheques or drafts, hundis, payable to bearer on demand or
including hundis, payable to bearer on otherwise may be drawn on a person's
demand or otherwise may be drawn on account with a banker, shroff or agent.
a person's account with a banker, shroff
or agent. 2) Notwithstanding anything contained in
the Negotiable Instruments Act, 1881 (26
(2) Notwithstanding anything contained of 1881), no person in India other than the
in the Negotiable Instruments Act, 1881 Bank or, as expressly authorised by this

Writ Petition (C) No. 880 of 2017 & Ors. Page 6 of 74

 (26 of 1881), no person in India other Act, the Central Government shall make
than the Bank or, as expressly or issue any promissory note expressed
authorised by this Act, the Central to be payable to the bearer of the
Government shall make or issue any instrument.
promissory note expressed to be
payable to the bearer of the instrument. (3) Notwithstanding anything
contained in this section, the Central
Government may authorise any
scheduled bank to issue electoral
bond.
Explanation.— For the purposes of this
sub-section, “electroal bond” means a
bond issued by any scheduled bank
under the scheme as may be notified
by the Central Government.

Section 29-C of the Representation of the People Act 1951

Prior to Amendment by the Finance Act Post Amendment by Section 137 of the
2017 Finance Act 2017
29-C. Declaration of donation received 29-C. Declaration of donation received by
by the political parties.— the political parties.—
(1) The treasurer of the political party or (1) The treasurer of the political party or
any other person authorised by the any other person authorised by the
political party in this behalf shall, in each political party in this behalf shall, in each
financial year, prepare a report in financial year, prepare a report in respect
respect of the following, namely:— of the following, namely:—
(a) the contribution in excess of twenty (a) the contribution in excess of twenty
thousand rupees received by such thousand rupees received by such
political party from any person in that political party from any person in that
financial year; financial year;
(b) the contribution in excess of twenty (b) the contribution in excess of twenty
thousand rupees received by such thousand rupees received by such
political party from companies other than political party from companies other than
Government companies in that financial Government companies in that financial
year. year.

(2) The report under sub-section (1) Provided that nothing contained in this
shall be in such form as may be sub-section shall apply to the
prescribed. contributions received by way of an
electoral bond.
(3) The report for a financial year under
sub-section (1) shall be submitted by the Explanation.— For the purposes of this
treasurer of a political party or any other sub-section, “electoral bond” means a
person authorised by the political party bond referred to in the Explanation to
in this behalf before the due date for sub-section (3) of Section 31 of the
furnishing a return of its income of that Reserve Bank of India Act, 1934 (2 of
financial year under Section 139 of the 1934).
Income Tax, 1961 (43 of 1961) to the
Election Commission. (2) The report under sub-section (1) shall
be in such form as may be prescribed.
(4) Where the treasurer of any political
party or any other person authorised by (3) The report for a financial year under
the political party in this behalf fails to sub-section (1) shall be submitted by the
submit a report under sub-section (3), treasurer of a political party or any other

Writ Petition (C) No. 880 of 2017 & Ors. Page 7 of 74

 then, notwithstanding anything person authorised by the political party in
contained in the Income Tax Act, 1961 this behalf before the due date for
(43 of 1961), such political party shall not furnishing a return of its income of that
be entitled to any tax relief under that financial year under Section 139 of the
Act. Income Tax, 1961 (43 of 1961) to the
Election Commission.

(4) Where the treasurer of any political

party or any other person authorised by
the political party in this behalf fails to
submit a report under sub-section (3),
then, notwithstanding anything contained
in the Income Tax Act, 1961 (43 of 1961),
such political party shall not be entitled to
any tax relief under that Act.

Section 2 of the Foreign Contribution Regulation Act, 2010

Prior to Amendment by the Finance Act Post Amendment by Section 236 the
2017 Finance Act 2017
Section 2 (1) (j) Section 2 (1) (j)
(j) “foreign source” includes,— (j) “foreign source” includes,—
(i) the Government of any foreign (i) the Government of any foreign country
country or territory and any agency of or territory and any agency of such
such Government; Government;
(ii) any international agency, not being (ii) any international agency, not being the
the United Nations or any of its United Nations or any of its specialised
specialised agencies, the World Bank, agencies, the World Bank, International
International Monetary Fund or such Monetary Fund or such other agency as
other agency as the Central the Central Government may, by
Government may, by notification, notification, specify in this behalf;
specify in this behalf; (iii) a foreign company;
(iii) a foreign company; (iv) a corporation, not being a foreign
(iv) a corporation, not being a foreign company, incorporated in a foreign
company, incorporated in a foreign country or territory;
country or territory; (v) a multi-national corporation referred to
(v) a multi-national corporation referred in sub-clause (iv) of clause (g);
to in sub-clause (iv) of clause (g); (vi) a company within the meaning of the
(vi) a company within the meaning of the Companies Act, 1956 (1 of 1956), and
Companies Act, 1956 (1 of 1956), and more than one-half of the nominal value of
more than one-half of the nominal value its share capital is held, either singly or in
of its share capital is held, either singly the aggregate, by one or more of the
or in the aggregate, by one or more of following, namely—
the following, namely— (A) the Government of a foreign country
(A) the Government of a foreign country or territory;
or territory; (B) the citizens of a foreign country or
(B) the citizens of a foreign country or territory;
territory; (C) corporations incorporated in a foreign
(C) corporations incorporated in a country or territory;
foreign country or territory; (D) trusts, societies or other associations
(D) trusts, societies or other of individuals (whether incorporated or
associations of individuals (whether not), formed or registered in a foreign
incorporated or not), formed or country or territory;
registered in a foreign country or (E) foreign company;
territory;

Writ Petition (C) No. 880 of 2017 & Ors. Page 8 of 74

 (E) foreign company; Provided that where the nominal value
of share capital is within the limits
specified for foreign investment under
the Foreign Exchange Management
Act, 1999 (42 of 1999), or the rules or
regulations made thereunder, then,
notwithstanding the nominal value of
share capital of a company being more
than one-half of such value at the time
of making the contribution, such
company shall not be a foreign source.

6. The amended Companies Act, 2013 removes the cap on corporate

funding.13 The requirement that the contribution will require a

resolution passed at the meeting of the Board is retained. In the

profit and loss account, a company is now only required to disclose

the total amount contributed to political parties in a financial year.14

The requirement to disclose the specific amounts contributed and

the names of the political parties is omitted. Section 182(3A), as

introduced, stipulates that the company could contribute to a

political party only by way of a cheque, Electronic Clearing

System15, or demand draft.16 The proviso to Section 182(3A)

permits a company to contribute through any instrument issued

pursuant to any scheme notified under the law, for the time being

in force, for contribution to political parties.

13 First proviso to Section 182(1), Companies Act, 2013 has been omitted vide the Finance Act, 2017.
14 Section 182(3) of the Companies Act, 2013.
15 For short, “ECS”.
16 Section 182(3A) of the Companies Act, 2013 was introduced vide Section 154 of the Finance Act,

2017.

Writ Petition (C) No. 880 of 2017 & Ors. Page 9 of 74

7. Section 13A of the Income Tax Act, 1961,17 exempts income of

political parties, including financial contributions and investments,

from income tax. The object of providing a tax exemption is to

increase the funds of political parties from legitimate sources.

However, conditions imposed require political parties to maintain

books of accounts and other documents to enable the assessing

officer to properly deduce their income.18 Political parties are

required to maintain records of the name and addresses of persons

who make voluntary contributions in excess of Rs.20,000/-.19

Accounts of the political parties are required to be audited.20

8. In 2003, Section 80GGB and 80GGC were inserted in the Income

Tax Act, 1961, permitting contributions to political parties. These

contributions are tax deductible, though they are not expenditure

for purposes of business, to incentivise contributions through

banking channels.21

9. By the Finance Act, 2017, Section 13A of the Income Tax Act, 1961,

was amended. Section 13A now stipulates that a political party is

not required to maintain a record of the contributions received by

17 As amended in 1978.
18 First proviso 1(a) to the unamended Section 13A of the Income Tax Act, 1961.
19 Second proviso to the unamended Section 13A of the Income Tax Act, 1961.
20 Third proviso to Section 13A Income Tax Act, 1961.
21 See Section 37 of the Income Tax Act, 1961.

Writ Petition (C) No. 880 of 2017 & Ors. Page 10 of 74

 Bonds.22 Further, donations over Rs.2,000/- are only permitted

through cheques, bank drafts, ECS or Bonds.23

10. Section 29C of the Representation of the People Act, 1951 was

introduced in 2003.24 The section requires each political party to file

a report for all contributions over Rs.20,000/- to the Election

Commission of India.25 The report is required to be filed before the

due date of filing income tax returns of the financial year under the

Income Tax Act, 1961. Failure to submit a report disentitles a

political party from any tax relief, as provided under the Income Tax

Act, 1961. Section 29C of the Finance Act, 2017, as amended,

stipulates that political parties are not required to disclose the

details of contributions received by Bonds.26

11. Section 31(3) of the RBI Act, 1934 was added by the Finance Act,

2017 to effectuate the issuance of the Bonds which, as envisaged,

are not to mention the name of the political party to whom they are

payable, and hence are in the nature of bearer demand bill or note.

12. On 02.01.2018, the Department of Economic Affairs, Ministry of

Finance, notified the Electoral Bonds Scheme, 201827 in terms of

22 Second proviso to Section 13A of the Income Tax Act, 1961.

23 Fourth proviso to Section 13A of the Income Tax Act, 1961.
24 Introduced vide Section 2, Election and Other Related Laws (Amendment) Act, 2003.
25 For short, “ECI”.
26 Proviso to Section 29C(1) of the Representation of the People Act, 1951.
27 For short, “the Scheme”.

Writ Petition (C) No. 880 of 2017 & Ors. Page 11 of 74

 Section 31(3) of the RBI Act, 1934.28 The salient features of this

Scheme are:

 Bonds are in the nature of a promissory note and bearer

instrument.29 They do not carry the name of the buyer or

payee.30

 Bonds can be purchased by any ‘person’31 who is a citizen of

India or who is a body corporate incorporated or established in

India.32 Any ‘person’ who is an individual can purchase Bonds

either singly or jointly with other individuals.33

 Bonds are to be issued in denominations of Rs.1,000/-,

Rs.10,000/-, Rs.1,00,000/-, Rs.10,00,000/- and

Rs.1,00,00,000/-.34 They are valid for a period of 15 days from

the date of issue.35 The amount of Bonds not encashed within

the validity period of 15 days, would be deposited by the

authorised bank to the Prime Minister Relief Fund.36

 The Bond is non-refundable.37

28 Finance Act, 2017 has also amended and added Section 31(3) to the RBI Act, 1934 as the Bonds in
question are bearer bonds like Indian currency. However, we do not think this amendment is required
to be separately adjudicated as it merely effectuates the Bonds scheme.
29 Paragraph 2(a) of the Scheme.
30 Ibid.
31 Paragraph 2(d) of the Scheme defines a ‘person’ to include an individual, Hindu undivided family,

company, firm, an association of persons or body of individuals, whether incorporated or not. It also
includes every artificial judicial person and any agency, office or branch owned by such ‘person’.
32 Paragraph 3(1) of the Scheme.
33 Paragraph 3(2) of the Scheme.
34 Paragraph 5 of the Scheme.
35 Paragraph 6 of the Scheme.
36 Paragraph 12(2) of the Scheme.
37 Paragraph 7(6) of the Scheme.

Writ Petition (C) No. 880 of 2017 & Ors. Page 12 of 74

  A ‘person’ who wishes to purchase a Bond is required to apply

in the specified format.38 Non-compliant applications are to be

rejected.

 To purchase Bonds, a buyer is required to apply to the

authorised bank.39 RBI’s Know Your Customer40 requirements

apply and the authorised bank could ask for additional KYC

documents, if necessary.41

 The payments for the issuance of Bonds are required to be

made in Indian rupees through demand draft, cheque, ECS or

direct debit to the buyer’s account.42

 The identity and information furnished by the buyer for the

issuance of Bonds is to be treated as confidential by the

authorised issuing bank.43 The details, including identity, can be

disclosed only when demanded by a competent court or on

registration of any criminal case by any law enforcement

agency.44

 Only eligible political parties, meaning a party that is registered

under Section 29A of the Representation of the People Act,

38 Paragraph 7 of the Scheme.

39 Paragraph 2(b) of the Scheme defines an authorized bank as the State Bank of India and its specified
branches.
40 For short, “KYC”.
41 Paragraph 4 of the Scheme.
42 Paragraph 11 of the Scheme.
43 Paragraph 7(4) of the Scheme.
44 Ibid.

Writ Petition (C) No. 880 of 2017 & Ors. Page 13 of 74

 1951, and has secured not less than 1% of the votes polled in

the last general election to the House of People or the

Legislative Assembly, can receive a Bond.45

 The eligible political party can encash the Bond through their

bank account in the authorised bank.46

 The Bonds are made available for purchase for a period of 10

days every quarter, in the months of January, April, July and

October, as may be specified by the Central Government.47

They are also made available for an additional period of 30 days,

as specified by the central government in a year where general

elections to the House of People are held.48

 The Bonds are not eligible for trading,49 and commission,

brokerage or other charges are not chargeable/payable for

issuance of a Bond.50

 The value of the Bond is considered as income by way of

voluntary contributions to eligible political parties for the

purposes of tax exemption under Section 13A of the Income Tax

Act, 1961.51

45 Paragraph 3(3) of the Scheme.

46 Paragraph 3(4) of the Scheme.
47 Paragraph 8(1) of the Scheme.
48 Paragraph 8(2) of the Scheme.
49 Paragraph 14 of the Scheme.
50 Paragraph 12 of the Scheme.
51 Paragraph 13 of the Scheme.

Writ Petition (C) No. 880 of 2017 & Ors. Page 14 of 74

13. In the afore-mentioned writ petitions filed under Article 32 of the

Constitution of India,52 the petitioners are seeking a declaration that

the Scheme and the relevant amendments made by the Finance

Act, 2017, are unconstitutional.

14. The question of the constitutional validity of the Scheme and the

amendments introduced by the Finance Act, 2017 are being

examined by us. The question of introducing these amendments

through a money bill under Article 110 of the Constitution is not

being examined by us.53 The scope of Article 110 of the Constitution

has been referred to a seven-judge Bench and is sub-judice.54

Further, a batch of petitions challenging the amendments to the

Foreign Contribution Regulation Act, 2010 by the Finance Acts of

2016 and 2018 are pending. The challenge to the said amendments

is not being decided by us.

15. I fully agree with the Hon’ble Chief Justice, that the Scheme cannot

be tested on the parameters applicable to economic policy. Matters

of economic policy normally pertain to trade, business and

commerce, whereas contributions to political parties relate to the

democratic polity, citizens’ right to know and accountability in our

52 For short, “the Constitution”.

53 The Finance Act, 2017 was introduced and passed as a money bill by the Parliament under Article
110 of the Constitution.
54 Rojer Matthew v. South Indian Bank Ltd. and Ors., Civil Appeal No. 8588 of 2019.

Writ Petition (C) No. 880 of 2017 & Ors. Page 15 of 74

 democracy. The primary objective of the Scheme, and relevant

amendments introduced by the Finance Act, 2017, is electoral

reform and not economic reform. Thus, the dictum and the

principles enunciated by this Court in Swiss Ribbons (P.) Ltd. and

Another v. Union of India and Others,55 and Pioneer Urban Land

and Infrastructure and Another v. Union of India and Others,56

relating to judicial review on economic policy matters have no

application to the present case. To give the legislation the latitude

of economic policy, we will be diluting the principle of free and fair

elections. Clearly, the importance of the issue and the nexus

between money and electoral democracy requires us to undertake

an in-depth review, albeit under the settled powers of judicial

review.

16. Even otherwise, it is wrong to state as a principle that judicial review

cannot be exercised over every matter pertaining to economic

policy.57 The law is that the legislature has to be given latitude in

matters of economic policy as they involve complex financial

issues.58 The degree of deference to be shown by the court while

55 (2019) 4 SCC 17.

56 (2019) 8 SCC 416.
57 R.K. Garg v. Union of India and Others, (1981) 4 SCC 675.
58 Ibid. See also Bhavesh D. Parish and Others v. Union of India and Others, (2000) 5 SCC 471, and

Directorate General of Foreign Trade and Others v. Kanak Exports and Another, (2016) 2 SCC 226.

Writ Petition (C) No. 880 of 2017 & Ors. Page 16 of 74

 exercising the power of judicial review cannot be put in a

straitjacket.

17. On the question of burden of proof, I respectfully agree with the

observations made by the Hon’ble Chief Justice, that once the

petitioners are able to prima facie establish a breach of a

fundamental right, then the onus is on the State to show that the

right limiting measure pursues a proper purpose, has rational nexus

with that purpose, the means adopted were necessary for achieving

that purpose, and lastly proper balance has been incorporated.

18. The doctrine of presumption of constitutionality has its limitations

when we apply the test of proportionality. In a way the structured

proportionality places an obligation on the State at a higher level,

as it is a polycentric examination, both empirical and normative.

While the courts do not pass a value judgment on contested

questions of policy, and give weight and deference to the

government decision by acknowledging the legislature’s expertise

to determine complex factual issues, the proportionality test is not

based on preconceived notion or presumption. The standard of

proof is a civil standard or a balance of probabilities;59 where

scientific or social science evidence is available, it is examined; and

59 R. v. Oakes, (1986) 1 S.C.R. 103.

Writ Petition (C) No. 880 of 2017 & Ors. Page 17 of 74

 where such evidence is inconclusive or does not exist and cannot

be developed, reason and logic may suffice.60

19. The right to vote is a constitutional and statutory right,61 grounded

in Article 19(1)(a) of the Constitution, as the casting of a vote

amounts to expression of an opinion by the voter.62 The citizens’

right to know stems from this very right, as meaningfully exercising

choice by voting requires information. Representatives elected as

a result of the votes cast in their favour, enact new, and amend

existing laws, and when in power, take policy decisions. Access to

information which can materially shape the citizens’ choice is

necessary for them to have a say in how their lives are affected.

Thus, the right to know is paramount for free and fair elections and

democracy.

20. The decisions in Association for Democratic Reforms (supra)

and People’s Union of Civil Liberties (PUCL) (supra) should not

be read as restricting the right to know the antecedents of a

candidate contesting the elections.63 The political parties select

60 See Libman v. Quebec (A.G.), [1997] 3 S.C.R. 569; RJR-MacDonald Inc. v. Canada (Attorney
General), [1995] 3 S.C.R. 199; Thomson Newspapers Co. v. Canada (A.G.), [1998] 1 S.C.R. 877; R.
v. Sharpe, [2001] 1 S.C.R. 45; Harper v. Canada (A.G.), [2004] 1 S.C.R. 827, at paragraph 77; R. v.
Bryan, [2007] 1 S.C.R. 527, at paragraphs 16-19, 29; Mounted Police Association of Ontario v. Canada
(Attorney General), [2015] 1 S.C.R. 3, at paragraphs 143-144.
61 Article 326, Constitution.
62 Union of India v. Association for Democratic Reforms and Another, (2002) 5 SCC 294, and People’s

Union of Civil Liberties (PUCL) and Another v. Union of India and Another, (2003) 4 SCC 399.
58 Ibid.

Writ Petition (C) No. 880 of 2017 & Ors. Page 18 of 74

 candidates who contest elections on the symbol allotted to the

respective political parties64. Upon nomination, the candidates

enjoy the patronage of the political parties, and are financed by

them. The voters elect a candidate with the objective that the

candidate’s political party will come to power and fulfil the promises.

21. The Hon’ble Chief Justice has referred to the Tenth Schedule of the

Constitution. The Schedule incorporates a provision for the

disqualification of candidates on the ground of defection, which

reflects the importance of political parties in our democracy. Section

77 of the Representation of the People Act, 1951, requires

monetary limits to be prescribed for expenditures incurred by

candidates.65 As political parties are at the helm of the electoral

process, including its finances, the argument that the right of the

voter does not extend to knowing the funding of political parties and

is restricted to antecedents of candidates, will lead to an

incongruity. I, respectfully, agree with Hon’ble the Chief Justice, that

denying voters the right to know the details of funding of political

parties would lead to a dichotomous situation. The funding of

64 The Representation of the People Act, 1951 permits candidates not set up by a recognized political
party, that is independent candidates, to contest elections as well.
65 Under Explanation 1 to Section 77 of the Representation of the People Act, 1951, the expenditure

incurred by ‘leaders of political parties’ on account of travel for propagating the programme of the
political party, is not deemed to be election expenditure.

Writ Petition (C) No. 880 of 2017 & Ors. Page 19 of 74

 political parties cannot be treated differently from that of the

candidates who contest elections.66

22. Democratic legitimacy is drawn not only from representative

democracy but also through the maintenance of an efficient

participatory democracy. In the absence of fair and effective

participation of all stakeholders, the notion of representation in a

democracy would be rendered hollow. In a democratic set-up,

public participation is meant to fulfil three functions; the epistemic

function of ensuring reasonably sound decisions,67 the ethical

function of advancing mutual respect among citizens, and the

democratic function of promoting “an inclusive process of collective

choice”.68 James Fishkin lists five criteria which define the quality of

a deliberative process.69 These are:

➢ Information (the extent to which participants are given access to

accurate and reliable information);

66 See observations of this court in Kanwar Lal Gupta v. Amar Nath Chawla & Ors., (1975) 3 SCC 646.
67 This function is elaborated as to “produce preferences, opinions, and decisions that are appropriately
informed by facts and logic and are the outcome of substantive and meaningful consideration of
relevant reasons(...). Because the topics of these deliberations are issues of common concern,
epistemically well-grounded preferences, opinions, and decisions must be informed by, and take into
consideration, the preferences and opinions of fellow citizens", Jane Mansbridge and others, ‘A
Systemic Approach to Deliberative Democracy’ in John Parkinson and Jane Mansbridge (eds),
Deliberative Systems (1st edn, Cambridge University Press 2012) 11.
68 Ibid at 12.
69 James S Fishkin, When the People Speak: Deliberative Democracy and Public Consultation (Oxford

University Press 2011) 33– 34.

Writ Petition (C) No. 880 of 2017 & Ors. Page 20 of 74

 ➢ Substantive balance (the extent to which arguments offered by

one side are answered by considerations offered by those who

hold other perspectives);

➢ Diversity (the extent to which major positions in the public are

represented by participants);

➢ Conscientiousness, (the degree to which participants sincerely

weigh the merits of the arguments); and

➢ Equal consideration (the extent to which arguments offered by

all participants are considered on its merits regardless of who

offered them).70

23. The State has contested the writ petitions primarily on three

grounds:

(i) Donors of a political party often apprehend retribution from

other political parties or actors and thus their identities should

remain anonymous. The Bonds uphold the right to privacy of

donors by providing confidentiality. Further, donating money

to one’s preferred political party is a matter of self-expression

by the donor. Therefore, revealing the identity invades the

informational privacy of donors protected by the

Constitution.71 The identity of the donor can be revealed in

70 This is equally important from the perspective of the test of proportionality.

71 See K.S. Puttaswamy and Anr. v. Union of India and Ors. (9J) (Privacy), (2017) 10 SCC 1.

Writ Petition (C) No. 880 of 2017 & Ors. Page 21 of 74

 exceptional cases, for instance on directions of a competent

court, or registration of a criminal case by any law

enforcement agency.72

(ii) The Scheme, by incentivising banking channels and

providing confidentiality, checks the use of black or

unaccounted money in political contributions.73

(iii) The Scheme is an improvement to the prior legal framework.

It has inbuilt safeguards such as compliance of donors with

KYC norms, bearer bonds having a limited validity of fifteen

days and recipients belonging to a recognised political party

that has secured more than 1% votes in the last general

elections.

24. Hon’ble the Chief Justice has rejected the Union of India’s

submissions by applying the doctrine of proportionality. This is a

principle applied by courts when they exercise their power of judicial

review in cases involving a restriction on fundamental rights. It is

applied to strike an appropriate balance between the fundamental

right and the pursued purpose and objective of the restriction.

72 Paragraph 7(4) of the Scheme.

73 See Arun Jaitley, ‘Why Electoral Bonds Are Necessary’, Press Information Bureau, 2018.

Writ Petition (C) No. 880 of 2017 & Ors. Page 22 of 74

25. The test of proportionality comprises four steps:74

(i) The first step is to examine whether the act/measure

restricting the fundamental right has a legitimate aim

(legitimate aim/purpose).

(ii) The second step is to examine whether the restriction has

rational connection with the aim (rational connection).

(iii) The third step is to examine whether there should have been

a less restrictive alternate measure that is equally effective

(minimal impairment/necessity test).

(iv) The last stage is to strike an appropriate balance between the

fundamental right and the pursued public purpose (balancing

act).

26. In Modern Dental College & Research Centre and Others v.

State of Madhya Pradesh and Others,75 this Court had applied

proportionality in its four-part doctrinal form76 as a standard for

reviewing right limitations in India. This test was modified in K.S.

Puttaswamy (Retired) and Anr. (Aadhar) v. Union of India and

Anr. (5J),77 where this Court adopted a more tempered and

74 See Aharon Barak, “Proportionality – Constitutional Rights and their Limitations”, Cambridge
University Press, 2012.
75 (2016) 7 SCC 353.
76 In Gujarat Mazdoor Sabha and Another v. State of Gujarat, (2020) 10 SCC 459, the Court added

fifth prong to proportionality test. It stipulated that the state should provide sufficient safeguards against
the abuse of such restriction. This was relied upon in Ramesh Chandra Sharma and Others v. State
of U.P. and Others, 2023 SCC OnLine SC 162.
77 (2019) 1 SCC 1.

Writ Petition (C) No. 880 of 2017 & Ors. Page 23 of 74

 nuanced approach.78 The Court, inter alia, imposed a stricter test

for the third and fourth prongs, namely necessity and balancing

stages of the test of proportionality, as reproduced below.

“155. ...In order to preserve a meaningful but not unduly

strict role for the necessity stage, Bilchitz proposes the
following inquiry. First, a range of possible alternatives
to the measure employed by the Government must be
identified. Secondly, the effectiveness of these
measures must be determined individually; the test
here is not whether each respective measure realises
the governmental objective to the same extent, but
rather whether it realises it in a “real and substantial
manner”. Thirdly, the impact of the respective measures
on the right at stake must be determined. Finally, an
overall judgment must be made as to whether in light of
the findings of the previous steps, there exists an
alternative which is preferable; and this judgment will go
beyond the strict means-ends assessment favoured by
Grimm and the German version of the proportionality
test; it will also require a form of balancing to be carried
out at the necessity stage.

156. Insofar as second problem in German test is

concerned, it can be taken care of by avoiding “ad hoc
balancing” and instead proceeding on some “bright-line
rules” i.e. by doing the act of balancing on the basis of
some established rule or by creating a sound rule...

xx xx xx

158. ...This Court, in its earlier judgments, applied

German approach while applying proportionality test to
the case at hand. We would like to proceed on that very
basis which, however, is tempered with more nuanced
approach as suggested by Bilchitz. This, in fact, is the
amalgam of German and Canadian approach. We feel
that the stages, as mentioned in Modern Dental College
& Research Centre and recapitulated above, would be
the safe method in undertaking this exercise, with focus

See David Bilchitz, “Necessity and Proportionality: Towards a Balance Approach?“, (Hart Publishing,
78

Oxford and Portland, Oregon 2016). Also see Aparna Chandra, “Proportionality: A Bridge to
Nowhere?”, (Oxford Human Rights Journal 2020).

Writ Petition (C) No. 880 of 2017 & Ors. Page 24 of 74

 on the parameters as suggested by Bilchitz, as this
projects an ideal approach that need to be adopted.”

27. The said test was also referred to in Anuradha Bhasin v. Union of

India and Others,79 with the observation that the principle of

proportionality is inherently embedded in the Constitution under the

doctrine of reasonable restriction. This means that limitations

imposed on a right should not be arbitrary or of excessive nature

beyond what is required in the interest of public. This judgment

thereupon references works of scholars/jurists who have argued

that if the necessity prong of the proportionality test is applied

strictly, legislations and policies, no matter how well intended,

would fail the proportionality test even if any other slightly less

drastic measure exists.80 Thereupon, the Court accepted the

suggestion in favour of a moderate interpretation of the necessity

test. Necessity involves a process of reasoning designed to ensure

that only measures with a strong relationship to the objective they

seek to achieve can justify an invasion of fundamental rights. The

process thus requires a court to reason through the various stages

of moderate interpretation of necessity in the following manner:

“(MN1) All feasible alternatives need to be identified,

with courts being explicit as to criteria of feasibility;

79 (2020) 3 SCC 637.

80 Anuradha Bhasin (supra) at paragraph 71.

Writ Petition (C) No. 880 of 2017 & Ors. Page 25 of 74

 (MN2) The relationship between the government
measure under consideration, the alternatives
identified in MN1 and the objective sought to be
achieved must be determined. An attempt must be
made to retain only those alternatives to the measure
that realise the objective in a real and substantial
manner;

(MN3) The differing impact of the measure and the

alternatives (identified in MN2) upon fundamental
rights must be determined, with it being recognised that
this requires a recognition of approximate impact; and

(MN4) Given the findings in MN2 and MN3, an overall

comparison (and balancing exercise) must be
undertaken between the measure and the alternatives.
A judgment must be made whether the government
measure is the best of all feasible alternatives,
considering both the degree to which it realises the
government objective and the degree of impact upon
fundamental rights (“the comparative component”).

28. Dr. Justice D.Y. Chandrachud, as his Lordship then was, in K.S.

Puttaswamy (5J)(Aadhar)(supra), had observed that the objective

of the second prong of rational connection test is essential to the

test of proportionality.81 Sanjay Kishan Kaul, J. in his concurring

opinion in K.S. Puttaswamy (9J) (Privacy) (supra) had held that

actions not only should be sanctioned by law, but the proposed

actions must be necessary in a democratic society for a legitimate

aim. The extent of interference must be proportionate to the need

for such interference and there must be procedural guarantees

against abuse of such interference.

81 Dr. Justice D.Y. Chandrachud was in minority in K.S. Puttaswamy (Aadhaar) (supra), albeit his
observations on the objective of the second prong of rational connection are good and in consonance
with the law on the subject.

Writ Petition (C) No. 880 of 2017 & Ors. Page 26 of 74

29. The test of proportionality is now widely recognised and employed

by courts in various jurisdictions like Germany, Canada, South

Africa, Australia and the United Kingdom.82 However, there isn’t

uniformity in how the test is applied or the method of using the last

two prongs in these jurisdictions.

30. The first two prongs of proportionality resemble a means-ends

review of the traditional reasonableness analysis, and they are

applied relatively consistently across jurisdictions. Courts first

determine if the ends of the restriction serve a legitimate purpose,

and then assess whether the proposed restriction is a suitable

means for furthering the same ends, meaning it has a rational

connection with the purpose.

31. In the third prong, courts examine whether the restriction is

necessary to achieve the desired end. When assessing the

necessity of the measure, the courts consider whether a less

intrusive alternative is available to achieve the same ends, aiming

for minimal impairment. As elaborated above, this Court Anuradha

Bhasin (supra), relying on suggestions given by some jurists,83

82 We will be referring to certain facets of the proportionality enquiry employed by these countries in
our judgment. The test is also employed in various other jurisdictions like Israel, New Zealand, and the
European Union.
83 See David Bilchitz at supra note 76.

Writ Petition (C) No. 880 of 2017 & Ors. Page 27 of 74

 emphasised the need to employ a moderate interpretation of the

necessity prong. To conclude its findings on the necessity prong,

this Court is inter alia required to undertake an overall comparison

between the measure and its feasible alternatives.84

32. We will now delve into the fourth prong, the balancing stage, in

some detail. This stage has been a matter of debate amongst jurists

and courts. Some jurists believe that balancing is ambiguous and

value-based.85 This stems from the premise of rule-based legal

adjudication, where courts determine entitlements rather than

balancing interests. However, proportionality is a standard-based

review rather than a rule-based one. Given the diversity of factual

scenarios, the balancing stage enables judges to consider various

factors by analysing them against the standards proposed by the

four prongs of proportionality. This ensures that all aspects of a

case are carefully weighed in decision-making. This perspective

finds support in the work of jurists who believe that constitutional

84 In Anuradha Bhasin (supra), the Court stipulated the following requirement for a conclusion of
findings on the necessity prong: “…A judgment must be made whether the government measure is the
best of all feasible alternatives, considering both the degree to which it realises the government
objective and the degree of impact upon fundamental rights…”
85 See Jochen von Bernstroff, Proportionality Without Balancing: Why Judicial Ad Hoc Balancing is

Unnecessary and Potentially Detrimental to Realisation of Collective and Individual Self Determination,
Reasoning Rights – Comparative Judicial Engagement, (Ed. Liaora Lazarus); Bernhard Schlink,
‘Abwägung im Verfassungsrecht’, Duncker & Humblot, 1976, and Francisco J. Urbina, ‘Is It Really That
Easy? A Critique of Proportionality and Balancing as Reasoning’ Canadian Journal of Law and
Jurisprudence, 2014.

Writ Petition (C) No. 880 of 2017 & Ors. Page 28 of 74

 rights and restrictions/measures are both principles, and thus they

should be optimised/balanced to their fullest extent.86

33. While balancing is integral to the standard of proportionality, such

an exercise should be rooted in empirical data and evidence. In

most countries that adopt the proportionality test, the State places

on record empirical data as evidence supporting the enactment and

justification for the encroachment of rights.87 This is essential

because the proportionality enquiry necessitates objective

evaluation of conflicting values rather than relying on perceptions

and biases. Empirical deference is given to the legislature owing to

their institutional competence and expertise to determine complex

factual legislation and policies. However, factors like lack of

parliamentary deliberation and a failure to make relevant enquiries

weigh in on the court’s decision. In the absence of data and figures,

there is a lack of standards by which proportionality stricto sensu

can be determined. Nevertheless, many of the constitutional courts

86 According to Robert Alexy, the ‘Law of Balancing’ is as follows: “…the greater the degree of non-
satisfaction of, or detriment to, one principle, the greater must be the importance of satisfying the
other…” See Robert Alexy, A Theory of Constitutional Rights (Julian Rivers, trans. Oxford Univ. Press
2002).
87 For instance, in Canada, where the doctrine of proportionality is employed by courts, a cabinet

directive requires the standard to be incorporated into law-making. These guidelines stipulate that prior
to enactment of laws, the matter and its alternate solutions must be analysed, the relevant ministerial
department should engage in consultation with those who have an interest in the matter, and they
should analyse the impact of the proposed solution. See Cabinet Directive on Law-making in Guide to
Making Federal Acts and Regulations (2nd edn, Government of Canada).

Writ Petition (C) No. 880 of 2017 & Ors. Page 29 of 74

 have employed the balancing stage ‘normatively’88 by examining

the weight of the seriousness of the right infringement against the

urgency of the factors that justify it. Examination under the first three

stages requires the court to first examine scientific evidence, and

where such evidence is inconclusive or does not exist and cannot

be developed, reason and logic apply. We shall subsequently be

referring to the balancing prong during our application of the test of

proportionality.

34. In Germany, the courts enjoy a high judicial discretion. The

parliament and the judiciary in Germany have the same goal, that

is, to realise the values of the German Constitution.89 Canadian

courts, some believe, in practice give wider discretion to the

legislature when a restriction is backed by sufficient data and

evidence.90 The constitutional court in South Africa, as per some

jurists, collectively applies the four prongs of proportionality instead

of a structured application.91 While proportionality is the

predominant doctrine in Australia, an alternate calibrated scrutiny

test is applied by a few judges.92 It is based on the premise that a

88 The first and second steps, legitimate aim and rational connection prong, and to some extent
necessity prong, are factual.
89 See Article 1 and 20, Basic Law for the Federal Republic of Germany.
90 Niels Petersen, ‘Proportionality and judicial Activism: Fundamental Rights Adjudication in Canada,

Germany and South Africa, (CUP 2017).

91 Ibid.
92 See Annexure A.

Writ Petition (C) No. 880 of 2017 & Ors. Page 30 of 74

 contextual, instead of broad standard of review, is required to be

adopted for constitutional adjudication.

35. Findings of empirical legal studies provide a more solid foundation

for normative reasoning93 and enhance understanding of the

relationship between means and ends.94 In our view, proportionality

analyses would be more accurate when empirical inquiries on

causal relations between a legislative measure under review and

the ends of such a measure are considered. It also leads to better

and more democratic governance. While one cannot jump from “is”

to “ought”, to reach an “ought” conclusion, one has to rely on

accurate knowledge of “is”, for “is” and “ought” to be united.95 While

we emphasise the need of addressing the quantitative/empirical

deficit for a contextual and holistic balancing analysis, the pitfalls of

selective data sharing must be kept in mind. After all, if a measure

becomes a target, it ceases to be a good measure.96

36. To avoid this judgment from becoming complex, I have enclosed as

an annexure a chart giving different viewpoints on the doctrine of

proportionality as a test for judicial review exercised by the courts

93 See Yun-chien Chand & Peng-Hsiang Wang, The Empirical Foundation of Normative Arguments in
Legal Reasoning (Univ. Chicago Coase-Sandor Inst. For L. & Econ., Res. Paper No. 745, 2016).
94 Lee Epstein & Andrew D. Martin, An Introduction to Empirical Legal Research 6 (2014).
95 See Joshua B. Fischman, Reuniting “Is” and “Ought” in Empirical Legal Scholarship, 162 U. Pa. L.

Rev. 117 (2013).

96 Marilyn Strathern, Improving Ratings: Audit in the British University System, European review, Vol.

5 Issue 3, pp. 305-321 (1997).

Writ Petition (C) No. 880 of 2017 & Ors. Page 31 of 74

 to test the validity of the legislation. The same is enclosed as

Annexure-A to this judgment.97

37. When we turn to the reply or the defence of the Union of India in

the present case, which we have referred to above,98 the matter of

concern is the first submission made regarding the purpose and

rationale of the Scheme and amendments to the Finance Act of

2017. Lest remains any doubt, I would like to specifically quote from

the transcript of hearing dated 01.11.2023, where on behalf of the

Union of India it was submitted:

“..the bottom line is this. What was really found? That

what is the reason, why a person who contributes to a
political party chooses the mode of unclean money as
a payment mode and Your Lordships would
immediately agree with me if we go by the practicalities
of life. What happens is, suppose one state is going for
an election. There are two parties, there are multiple
parties, but by and large there are two parties which go
neck to neck. Suppose I am a contractor. I’m not a
company or anything. I am a contractor and I’m
supposed to give my political contribution to Party A
and Party B or Party A or Party B, as the case may be.
But the fear was if I give by way of accounted money
or by clean money, by way of cheque, it would be easily
identifiable. If I give to party A and Party B forms the
Government, I would be facing victimization and
retribution and vice versa. If I give money to Party B
and Party A continues to be in Government, then I
would be facing retribution or victimization. Therefore,
the safest course was to pay by cash, so that none of
the parties know what I paid to which party, and both
parties are happy that I have paid something. So, that,
the payment by cash ensured confidentiality. Both
97 Annexure A should not be read as an opinion of this Court or even as obiter dicta expressed by this
Court. The Annexure is only for the purpose of pointing out different viewpoints on the test of
proportionality.
98 See paragraph 23 of this judgment.

Writ Petition (C) No. 880 of 2017 & Ors. Page 32 of 74

 parties would say that one party would be given 100
crores, one party would be given 40 crores, depending
upon my assessment of their winnability. But both
would not know who is paid what. My Lord, sometimes
what used to happen is in my business, I get only clean
money or substantial part of the clean money, but
practicalities require that I contribute to the political
parties, and practicality again requires that I contribute
with a degree of confidentiality so that I am not
victimized in the future. And therefore clean money
used to be converted into unclean money. White
money is being converted into black money so that it
can be paid, according to them anonymously, and
according to me with confidentiality. And this is
disastrous for the economy when white money is
converted into black money.”

While introducing the Finance Act of 2017, the then Finance

Minister had elucidated that the main purpose of the Scheme was

to curb the flow of black money in electoral finance.99 This, it is

stated, could be achieved only if information about political

donations and the donor were kept confidential.100 It was believed

that this would incentivise donations to political parties through

banking channels.

38. I am of the opinion that retribution, victimisation or retaliation cannot

by any stretch be treated as a legitimate aim. This will not satisfy

the legitimate purpose prong of the proportionality test. Neither is

the Scheme nor the amendments to the Finance Act, 2017,

rationally connected to the fulfilment of that purpose, namely, to

99 See Speech of Arun Jaitley, Minister of Finance, at paragraph 165, Budget 2017-18.
100 Ibid.

Writ Petition (C) No. 880 of 2017 & Ors. Page 33 of 74

 counter retribution, victimisation or retaliation in political donations.

In our opinion, it will also not satisfy the necessity stage of the

proportionality even if we have to ignore the balancing stage.

39. Retribution, victimisation or retaliation against any donor exercising

their choice to donate to a political party is an abuse of law and

power. This has to be checked and corrected. As it is a wrong, the

wrong itself cannot be a justification or a purpose. The argument,

therefore, suffers on the grounds of inconsistency and coherence

as it seeks to perpetuate and accept the wrong rather than deal with

the malady and correct it. The inconsistency is also apparent as the

change in law, by giving a cloak of secrecy, leads to severe

restriction and curtailment of the collective’s right to information and

the right to know, which is a check and counters cases of retribution,

victimisation and retaliation. Transparency and not secrecy is the

cure and antidote.

40. Similarly, the second argument that the donor may like to keep his

identity anonymous is a mere ipse dixit assumption. The plea of

infringement of the right to privacy has no application at all if the

donor makes the contribution, that too through a banking channel,

to a political party. It is the transaction between the donor and the

third person. The fact that donation has been made to a political

Writ Petition (C) No. 880 of 2017 & Ors. Page 34 of 74

 party has to be specified and is not left hidden and concealed.101

What is not revealed is the quantum of the contribution and the

political party to whom the contribution is made. Further, when a

donor goes to purchase a Bond, he has to provide full particulars

and fulfil the KYC norms of the bank.102 His identity is then

asymmetrically known to the person and the officers of the bank

from where the Bond is purchased.103 Similarly, the officers in the

branch of the authorised bank104 where the political party has an

account and encashes the Bond are known to the officers in the

said bank.105

41. The argument raised by the Union of India that details can be

revealed when an order is passed by a court or when it is required

for investigation pursuant to registration of a criminal case106

overlooks the fact that it is their stand that the identities of the

contributors/donors should be concealed because of fear of

retaliation, victimisation and reprisal. That fear would still exist as

the identity of the purchaser of the Bond can always be revealed

upon registration of a criminal case or by an order/direction of the

101 Section 182(3) of the Companies Act, 2013 requires companies to mention the total political
contributions made.
102 Paragraph 4 of the Scheme.
103 In terms of paragraph 2(b) of the Scheme, only State Bank of India and its specified branches are

allowed to issue Bonds.

104 Ibid.
105 Paragraph 3(4) of the Scheme.
106 See paragraph 7(4) of the Scheme.

Writ Petition (C) No. 880 of 2017 & Ors. Page 35 of 74

 court. Thus, the fear of reprisal and vindictiveness does not

evaporate. The so-called protection exists only on paper but in

practical terms is not a good safeguard even if we accept that the

purpose is legitimate. It fails the rational nexus prong.

42. The fear of the identities of donors being revealed exists in another

manner. Under the Scheme, political parties in power may have

asymmetric access to information with the authorised bank. They

also retain the ability to use their power and authority of

investigation to compel the revelation of Bond related

information.107 Thus, the entire objective of the Scheme is

contradictory and inconsistent.

43. Further, it is the case of the Union of India that parties in power at

the Centre and State are the recipients of the highest amounts of

donations through Bonds. If that is the case, the argument of

retribution, victimisation and retaliation is tempered and loses much

of its force.108

107 Ibid.
108 In Brown v. Socialist Workers Comm., 459 U.S. 87 (1982), the Supreme Court of the United States
of America held that disclosure laws requiring the reporting of names and addresses of every campaign
contributor could be waived when “specific evidence of hostility, threats, harassment and reprisals”
existed, thus adopting a case-by-case approach. Marshall J., delivering the opinion of the court
observed that the Socialist Workers Party, a minor political party had historically been the object of
harassment by government officials and private parties. Therefore, the court held that the government
was prohibited from compelling disclosures from the said party, a minor political party, since there
existed a reasonable probability that the compelled disclosures would subject their donors, if identified,
to threats, harassment or reprisals.

Writ Petition (C) No. 880 of 2017 & Ors. Page 36 of 74

44. The rational connection test fails since the purpose of curtailing

black or unaccounted-for money in the electoral process has no

connection or relationship with the concealment of the identity of

the donor. Payment through banking channels is easy and an

existing antidote. On the other hand, obfuscation of the details may

lead to unaccounted and laundered money getting legitimised.

45. The RBI had objected to the Scheme since the Bonds could change

hands after they have been issued. There is no check for the same

as the purchaser who has completed the KYC, whose identity is

thereupon completely concealed, may not be the actual contributor/

donor. In fact, the Scheme may enable the actual contributor/donor

to not leave any traceability or money trail.

46. Money laundering can be undertaken in diverse ways. Political

contributions for a quid pro quo may amount to money laundering,

as defined under the Prevention of Money Laundering Act, 2002109.

The Financial Action Task Force110 has observed that the signatory

States are required to check money laundering on account of

contributions made to political parties.111 Article 7(3) of the United

Nations Convention against Corruption, 2003 mandates the state

109For short, “PMLA”.

110For short, “FATF”.
111 Paragraph 3, Section B, International Standards on Combating Money Laundering and the

Financing of Terrorism and Proliferation – The FATF Recommendations, 2012.

Writ Petition (C) No. 880 of 2017 & Ors. Page 37 of 74

 parties to enhance transparency in political funding of the

candidates and parties.112 The said convention is signed and

ratified by India. By ensuring anonymity, the policy ensures that the

money laundered on account of quid pro quo or illegal connection

escapes eyeballs of the public.

47. The economic policies of the government have an impact on

business and commerce. Political pressure groups promote

different agendas, including perspectives on economic policies. As

long as these pressure groups put forward their perspective with

evidence and data, there should not be any objection even if they

interact with elected representatives. The position would be

different if monetary contributions to political parties were made as

a quid pro quo to secure a favourable economic policy. This would

be an offence under the Prevention of Corruption Act, 1988 and

also under the PMLA. Such offences when committed by political

parties in power can never see the light of the day if secrecy and

anonymity of the donor is maintained.

48. In view of the aforesaid observations, the argument raised by the

petitioners that there is no rational connection between the

112 See also United Nations General Assembly Resolution A/RES/S-32/1, 02.06.2021, para 12.

Writ Petition (C) No. 880 of 2017 & Ors. Page 38 of 74

 measure and the purpose, which is also illegitimate, has merit and

should be accepted.

49. On the question of alternative measures, that is the necessity prong

of the proportionality test, it is accepted that post the amendments

brought about by the Finance Act, 2017, political parties cannot

receive donations in cash for amounts above Rs.2,000/-. However,

political parties do not have to record the details and particulars of

donations received for amounts less than Rs.20,000/-.113

Therefore, the reduction of the upper limit of cash donations from

Rs.20,000/- to Rs.2,000/- serves no purpose. It is open to the

political parties to bifurcate the law and camouflage larger

donations in smaller stacks. There is no way or method to verify the

donor if the amount shown in the books of the political party is less

than Rs.2,000/-.

50. It is an accepted position that the Electoral Trust Scheme114 was

introduced in 2013 to ensure the secrecy of contributors. As per the

Trust Scheme, contributions could be made by a person or body

corporate to the trust. The trust would thereafter transfer the

amount to the political party. The trust is, therefore, treated as the

contributor to the political party. Interestingly, it is the ECI that had

113 This is inapplicable to Bonds under proviso (b) to Section 13A of the Income Tax Act, 1961.
114 For short, “Trust Scheme”.

Writ Petition (C) No. 880 of 2017 & Ors. Page 39 of 74

 issued guidelines dated 06.06.2014 whereby the trusts were

required to specify and give full particulars to the ECI of the

depositors with the trust and amounts which were subsequently

transferred as a contribution to the political party. The guidelines

were issued by the ECI to ensure transparency and openness in

the electoral process.115

51. The trust can have multiple donors. Similarly, contributions are

made by the trust to multiple political parties. The disclosure

requirements provided in ECI’s guidelines dated 06.06.2014 only

impose disclosure requirements at the inflow and outflow points of

the trust’s donations, that is, the trust is required to provide

particulars of its depositors and the amounts donated to political

parties, including the names of the political parties. Thus, the Trust

Scheme protects the anonymity of the donors vis-à-vis their

contributions to the political party. When we apply the necessity test

propounded in Anuradha Bhasin (supra)116, the Trust Scheme

115 Similarly, early campaign finance laws in the United Kingdom permitted trusts to donate to political
parties. It came to be disallowed since it was contrary to openness and accountability. See Suchindran
Bhaskar Narayan and Lalit Panda, Money and Elections – Necessary Reforms in Electoral Finance,
Vidhi 2018 at p. 19. See also Lord Neill of Bladen, QC, ‘Fifth Report of the Committee on Standards in
Public Life: The Funding of Political Parties in the United Kingdom’, 1998 pp 61-62.
116 As elaborated in paragraph 27] of this judgement, Anuradha Bhasin (supra) proposes a four sub-

pronged inquiry at the necessity stage of proportionality, that is (MN1) to (MN4). To arrive at the
conclusion of the necessity inquiry, this Court has proposed at (MN4) that: “…an overall comparison
(and balancing exercise) must be undertaken between the measure and the alternatives. A judgment
must be made whether the government measure is the best of all feasible alternatives, considering
both the degree to which it realises the government objective and the degree of impact upon
fundamental rights (the comparative component).”

Writ Petition (C) No. 880 of 2017 & Ors. Page 40 of 74

 achieves the objective of the Union of India in a real and substantial

manner and is also a less restrictive alternate measure in view of

the disclosure requirements, viz. the right to know of voters. The

Trust Scheme is in force and is a result of the legislative process.

In a comparison of limited alternatives, it is a measure that best

realises the objective of the Union of India in a real and substantial

manner without significantly impacting the fundamental right of the

voter to know. The ECI, if required, can suitably modify the

guidelines dated 06.06.2014.

52. I would now come to the fourth prong. I would begin by first referring

to the judgment cited by Hon’ble the Chief Justice in the case of

Campbell v. MGM Limited117. This judgment adopts double

proportionality standard to adequately balance two conflicting

fundamental rights. Double proportionality has been distinguished

from the single proportionality standard in paragraph 152 of the

judgment authored by Hon’ble the Chief Justice. Campbell (supra)

states that the single proportionality test and the principle of

reasonableness are applied to determine whether a private right

claim offers sufficient justification for the interference with the

fundamental rights. However, this test may not apply when two

117 [2004] 2 AC 457.

Writ Petition (C) No. 880 of 2017 & Ors. Page 41 of 74

 fundamental rights are at conflict and one has to balance the

application of one right and restriction of the other.

53. In Campbell (supra), Baroness Hale has suggested a three-step

approach to balance conflicting fundamental rights, when two rights

are in play. The first step is to analyse the comparative importance

of the fundamental rights being claimed in the particular case. In

the second step, the court should consider the justification for

interfering with or restricting each of these rights. The third step

requires the application of a proportionality standard to both these

rights.

54. In a subsequent decision, the House of Lords (Lord Steyn) in In

re.S118, distilled four principles to resolve the question of conflict of

rights as under:

“17. (...) First, neither article has as such precedence

over the other. Secondly, where the values under the
two articles are in conflict, an intense focus on the
comparative importance of the specific rights being
claimed in the individual case is necessary. Thirdly, the
justifications for interfering with or restricting each right
must be taken into account. Finally, the proportionality
test must be applied to each. For convenience I will call
this the ultimate balancing test. This is how I will
approach the present case.”

118 [2005] 1 AC 593.

Writ Petition (C) No. 880 of 2017 & Ors. Page 42 of 74

55. The fourth principle, that is, the ultimate balancing test, was

elaborated upon by Sir Mark Potter in In Re. W119 in the following

terms:

“53. (...) each Article propounds a fundamental right

which there is a pressing social need to protect.
Equally, each Article qualifies the right it propounds so
far as it may be lawful, necessary and proportionate to
do so in order to accommodate the other. The exercise
to be performed is one of parallel analysis in which the
starting point is presumptive parity, in that neither
Article has precedence over or “trumps” the other. The
exercise of parallel analysis requires the court to
examine the justification for interfering with each right
and the issue of proportionality is to be considered in
respect of each. It is not a mechanical exercise to be
decided upon the basis of rival generalities. An intense
focus on the comparative importance of the specific
rights being claimed in the individual case is necessary
before the ultimate balancing test in terms of
proportionality is carried out.”

56. Fundamental rights are not absolute, legislations/policies restricting

the rights may be enacted in accordance with the scheme of the

Constitution. However, it is now well settled that the provisions of

fundamental rights in Part III of the Constitution are not independent

silos and have to be read together as complementary rights.120

Therefore, the thread of reasonableness applies to all such

restrictions.121 Secondly, Article 14, as observed by the Hon’ble

Chief Justice in his judgment122 includes the facet of formal equality

119 [2005] EWHC 1564 (Fam).

120 Rustom Cavasjee Cooper v. Union of India, (1970) 1 SCC 248; K.S. Puttaswamy (9J) (Privacy)
(supra), and Maneka Gandhi v. Union of India and Another, (1978) 1 SCC 248.
121 The test of single proportionality will apply.
122 See paragraphs 191 to 195 of the Hon’ble Chief Justice’s judgment.

Writ Petition (C) No. 880 of 2017 & Ors. Page 43 of 74

 and substantive equality. Thus, the principle ‘equal protection of

law’ requires the legislature and the executive to achieve factual

equality. This principle can be extended to any restriction on

fundamental rights which must be reasonable to the identified

degree of harm. If the restriction is unreasonable, unjust or

arbitrary, then the law should be struck down. Further, it is for the

legislature to identify the degree of harm. I have referred to the said

observation in the context that there appears to be a divergent

opinion in K.S. Puttaswamy (9-J) (Privacy) (supra) as to whether

right of privacy is an essential component for effective fulfilment of

all fundamental rights or can be held to be a part or a component of

Article 21 and Article 19(1)(a) of the Constitution.

57. When we apply the fourth prong, that is the balancing prong of

proportionality, I have no hesitation or doubt, given the findings

recorded above, that the Scheme falls foul and negates and

overwhelmingly disavows and annuls the voters right in an electoral

process as neither the right of privacy nor the purpose of

incentivising donations to political parties through banking

channels, justify the infringement of the right to voters. The voters

right to know and access to information is far too important in a

democratic set-up so as to curtail and deny ‘essential’ information

on the pretext of privacy and the desire to check the flow of

Writ Petition (C) No. 880 of 2017 & Ors. Page 44 of 74

 unaccounted for money to the political parties. While secret ballots

are integral to fostering free and fair elections, transparency—not

secrecy—in funding of political parties is a prerequisite for free and

fair elections. The confidentiality of the voting booth does not

extend to the anonymity in contributions to political parties.

58. In K.S. Puttasamy (9-J) (Privacy) (supra), all opinions accept that

the right to privacy has to be tested and is not absolute. The right

to privacy must yield in given circumstances when dissemination of

information is legitimate and required in state or public interest.

Therefore, the right to privacy is to be applied on balancing the said

right with social or public interest. The reasonableness of the

restriction should not outweigh the particular aspect of privacy

claimed.123 Sanjay Kishan Kaul, J., in his opinion in K.S. Puttasamy

(9-J) (Privacy) (supra), has said that restriction on right to privacy

may be justifiable and is subject to the principle of proportionality

when considering the right to privacy in relation to its function in

society.

59. As observed above, the right to privacy operates in the personal

realm, but as the person moves into communal relations and

activities such as business and social interaction, the scope of

123 While giving the aforesaid finding, we are applying the single proportionality test.

Writ Petition (C) No. 880 of 2017 & Ors. Page 45 of 74

 personal space shrinks contextually.124 In this context, the High

Court of South Africa in My Vote Counts NPC v. President of the

Republic of South Africa and Ors.125 observes that:

“(...) given the public nature of political parties and the

fact that the private funds they receive have a distinctly
public purpose, their rights to privacy can justifiably be
attenuated. The same principles must, as a
necessary corollary, apply to their donors. (...)”
(emphasis supplied)

60. The great underlying principle of the Constitution is that rights of

individuals in a democratic set-up is sufficiently secured by ensuring

each a share in political power.126 This right gets affected when a

few make large political donations to secure selective access to

those in power. We have already commented on pressure groups

that exert such persuasion, within the boundaries of law. However,

when money is exchanged as quid pro quo then the line between

persuasion and corruption gets blurred.

61. It is in this context that the High Court of Australia in Jeffery

Raymond McCloy and Others v. State of New South Wales and

Another127, observes that corruption can be of different kinds.

When a wealthy donor makes contribution to a political party in

124 See Bernstein and Ors. v. Bester NO and Others, (1996) ZACC 2, para 67.
125 My Vote Counts NPC v. President of the Republic of South Africa and Ors. (2017) ZAWCHC 105,
para 67.
126 Harrison Moore, The Constitution of the Commonwealth of Australia, p.329 (1902).
127 (2015) HCA 34.

Writ Petition (C) No. 880 of 2017 & Ors. Page 46 of 74

 return of a benefit, it is described as quid pro quo corruption. More

subtle corruption arises when those in power decide issues not on

merits or the desires of their constituencies, but according to the

wishes and desires of those who make large contributions. This

kind of corruption is described as ‘clientelism’. This can arise from

the dependence128 on the financial support of a wealthy patron to a

degree that it compromises the expectation, fundamental to

representative democracy, that public power will be exercised in

public interest. This affects the vitality as well as integrity of the

political branches of government. While quid pro quo and

clientelistic corruption erodes quality and integrity of government

decision making, the power of money may also pose threat to the

electoral process itself. This phenomenon is referred to as ‘war-

chest’ corruption.129

62. In Jefferey Raymond (supra), the High Court of Australia had

referred to the decision of the Supreme Court of Canada in Harper

v. Canada (Attorney General)130, which upheld the legislative

restriction on electoral advertising. In Harper (supra), the Supreme

128 James Madison in the Federalist Paper No. 52 notes that a government must “depend on the people
alone”. This condition, according to Professor Lawrence Lessig, has two elements – first, it identifies a
proper dependency (“on the people”) and second, it describes that dependence as exclusive (“alone”).
129 See Federal Election Commission v. National Right to Work Committee, 459 U.S. 197 (1982), where

the petitioners submitted: “...substantial aggregations of wealth amassed by the special advantages
which go with the corporate form of organization should not be converted into political "war chests"
which could be used to incur political debts from legislators who are aided by the contributions...”
130 [2004] 1 SCR 827.

Writ Petition (C) No. 880 of 2017 & Ors. Page 47 of 74

 Court of Canada has held that the State can provide a voice to

those who otherwise might not be heard and the State can also

restrict voices that dominate political discourse so that others can

be heard as well.

63. The Supreme Court of the United States in Buckley v. R Valeo131

has commented on the concern of quid pro quo arrangements and

its dangers to a fair and effective government. Improper influence

erodes and harms the confidence in the system of representative

government. Contrastingly, disclosure provides the electorate with

information as to where the political campaign money comes from

and how it is spent. This helps and aides the voter in evaluating

those contesting elections. It allows the voter to identify interests

which candidates are most likely to be responsive to, thereby

facilitating prediction of future performance in office. Secondly, it

checks actual corruption and helps avoid the appearance of

corruption by exposing large contributions and expenditures to the

light of publicity. Relying upon Grosjean v. American Press Co.132,

it holds that informed public opinion is the most potent of all

restraints upon misgovernment. Thirdly, record keeping, reporting

131 424 U.S. 1 (1976).

132 297 U.S. 233 (1936).

Writ Petition (C) No. 880 of 2017 & Ors. Page 48 of 74

 and disclosure are essential means of gathering data necessary to

detect violations of contribution limitations.

64. In Nixon, Attorney General of Missouri, et al v. Shrink Missouri

Government PAC et al,133 the Supreme Court of the United States

observes that large contributions given to secure a political quid pro

quo undermines the system of representative democracy. It stems

public awareness of the opportunities for abuse inherent in a regime

of large contributions. This effects the integrity of the electoral

process not only in the form of corruption or quid pro quo

arrangements, but also extending to the broader threat of the

beneficiary being too compliant with the wishes of large

contributors.

65. Recently, a five judge Constitution Bench of this Court in Anoop

Baranwal v. Union of India134 has highlighted the importance of

purity of electoral process in the following words:

“215. …Without attaining power, men organised as

political parties cannot achieve their goals. Power
becomes, therefore, a means to an end. The goal can
only be to govern so that the lofty aims enshrined in the
directive principles are achieved while observing the
fundamental rights as also the mandate of all the laws.
What is contemplated is a lawful Government. So far
so good. What, however, is disturbing and forms as we
understand the substratum of the complaints of the
petitioner is the pollution of the stream or the sullying

133 528 U.S. 377 (2000).

134 (2023) 6 SCC 161.

Writ Petition (C) No. 880 of 2017 & Ors. Page 49 of 74

 of the electoral process which precedes the gaining of
power. Can ends justify the means?

216. There can be no doubt that the strength of a

democracy and its credibility, and therefore, its
enduring nature must depend upon the means
employed to gain power being as fair as the conduct of
the Government after the assumption of power by it.
The assumption of power itself through the electoral
process in the democracy cannot and should not be
perceived as an end. The end at any rate cannot justify
the means. The means to gain power in a democracy
must remain wholly pure and abide by the Constitution
and the laws. An unrelenting abuse of the electoral
process over a period of time is the surest way to the
grave of the democracy. Democracy can succeed only
insofar as all stakeholders uncompromisingly work at it
and the most important aspect of democracy is the very
process, the electoral process, the purity of which
alone will truly reflect the will of the people so that the
fruits of democracy are truly reaped.

217. The essential hallmark of a genuine democracy is

the transformation of the “Ruled” into a citizenry
clothed with rights which in the case of the Indian
Constitution also consist of fundamental rights, which
are also being freely exercised and the concomitant
and radical change of the ruler from an “Emperor” to a
public servant. With the accumulation of wealth and
emergence of near monopolies or duopolies and the
rise of certain sections in the Media, the propensity for
the electoral process to be afflicted with the vice of
wholly unfair means being overlooked by those who
are the guardians of the rights of the citizenry as
declared by this Court would spell disastrous
consequences.”

66. The Law Commission of India in its 255th Report noted the concern

of financial superiority translating into electoral advantage.135 It was

observed that lobbying and capture give undue importance to big

135 Law Commission of India, Electoral Reforms, Report No. 255, March 2015.

Writ Petition (C) No. 880 of 2017 & Ors. Page 50 of 74

 donors and certain interest groups, at the expense of the ordinary

citizen, violating “the right of equal participation of each citizen in

the polity.”136 While noting the candidate-party dichotomy in the

regulations under Section 77 of the Representation of the People

Act, 1951, the Law Commission of India recommends to require

candidates to maintain an account of contributions received from

their political party (not in cash) or any other permissible donor.

67. At this stage, we would like to refer to the data as available on the

website of the ECI and the data submitted by the petitioners for a

limited purpose and objective to support our reasoning while

applying balancing. We have not stricto sensu applied

proportionality as the data is not sufficient for us. I also clarify that

we have not opened the sealed envelope given by the ECI pursuant

to the directions of this Court dated 02.11.2023.

68. An analysis of the annual audit reports of political parties from 2017-

18 to 2022-23 showcases party-wise donations received through

the Bonds as reproduced below:

PARTY-WISE DONATION THROUGH BONDS (IN RS. CR)

Party 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
BJP 210.00 1,450.890 2,555.000 22.385 1,033.7000 1294.1499
INC 5.00 383.260 317.861 10.075 236.0995 171.0200
AITC 0.00 97.280 100.4646 42.000 528.1430 325.1000
NCP 0.00 29.250 20.500 0.000 14.0000 --
TRS 0.00 141.500 89.153 0.000 153.0000 --

136 R.C.Poudyal v. Union of India and Others, (1994) Supp 1 SCC 324.

Writ Petition (C) No. 880 of 2017 & Ors. Page 51 of 74

 TDP 0.00 27.500 81.600 0.000 3.5000 34.0000
YSR-C 0.00 99.840 74.350 96.250 60.0000 52.0000
BJD 0.00 213.500 50.500 67.000 291.0000 152.0000
DMK 0.00 0.000 45.500 80.000 306.0000 185.0000
SHS 0.00 60.400 40.980 0.000 -- --
AAP* 0.00 -- 17.765 5.950 25.1200 45.4500
JDU 0.00 0.000 13.000 1.400 10.0000 --
SP 0.00 0.000 10.840 0.000 3.2100 0.0000
JDS 6.03 35.250 7.500 0.000 0.0000 --
SAD 0.00 0.000 6.760 0.000 0.5000 0.0000
AIADMK 0.00 0.000 6.050 0.000 0.0000 0.0000
RJD 0.00 0.000 2.500 0.000 0.0000 --
JMM 0.00 0.000 1.000 0.000 0.0000 --
SDF 0.00 0.500 0.000 0.000 0.0000 0.0000
MGP 0.00 0.000 0.000 0.000 0.5500 --
TOTAL 221.03 2,539.170 3,441.324 325.060 2,664.8225 --
Asterisk (*) means that the AAP had declared their donations through Bonds/Electoral
Trust, but the party had not declared a separate amount for Bonds.

69. It is clear from the available data that majority of contribution

through Bonds has gone to political parties which are ruling parties

in the Centre and the States. There has also been a substantial

increase in contribution/donation through Bonds.

70. Petitioner no. 1 – Association for Democratic Reforms has

submitted the following table which showcases party-wise donation

by corporate houses to national parties:

PARTY-WISE CORPORATE DONATION (NATIONAL PARTIES) (IN RS. Cr)

Party 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Total

BJP 515.500 400.200 698.140 720.407 416.794 548.808 3,299.8500
INC 36.060 19.298 127.602 133.040 35.890 54.567 406.4570
NCP 6.100 1.637 11.345 57.086 18.150 15.280 109.5980
CPI(M) 3.560 0.872 1.187 6.917 9.815 6.811 29.1615
AITC 2.030 0.000 42.986 4.500 0.000 0.250 49.7660
CPI 0.003 0.003 0.000 0.000 0.000 0.000 0.0055
BSP 0.000 0.000 0.000 0.000 0.000 0.000 0.0000
TOTAL 563.253 422.010 881.260 921.950 480.649 625.716 3,894.8380

Writ Petition (C) No. 880 of 2017 & Ors. Page 52 of 74

 As per the said table, the data shows that the party-wise donation

by the corporate houses has been more or less stagnant from the

years 2016-17 to 2021-22. We do not have the comments or official

details in this regard from the Union of India or the ECI. The figures

support our conclusion, but I would not, without certainty, base my

analysis on these figures. However, we do have data of

denomination/sale of Bonds, as submitted by the petitioners, during

the 27 phases from March 2018 to July 2023, which is as under:

DENOMINATION WISE SALE OF EB DURING 27 PHASES

(MARCH, 2018-JULY, 2023)

No. of Electoral Amount

Denomination
Bonds Sold (In Rupees)
12,999 12,999 Crore
1 Crore
(54.13%) (94.25%)
7,618 761.80 Crore
10 Lakhs
(31.72%) (5.52%)
3,088 30.88 Crore
1 Lakh
(12.86%) (0.22%)
208 20.80 Lakh
10 Thousand
(0.86%) (0.001%)
99
1 Thousand 99,000
(0.41%)
Total 24,012 13791.8979 Cr.

Analysis of this data shows that more than 50% of the Bonds

in number, and 94% of the Bonds in value terms were for

Rs.1 crore. This supports our reasoning and conclusion on the

application of the doctrine of proportionality. This is indicative of the

quantum of corporate funding through the anonymous Bonds.

Writ Petition (C) No. 880 of 2017 & Ors. Page 53 of 74

71. The share of income from unknown sources for national parties

rose from 66% during the years 2014-15 to 2016-17 to 72% during

the years 2018-19 to 2021-22. Between the years 2019-20 to 2021-

22 the Bond income has been 81% of the total unknown income of

national parties. The total unknown income, that is donations made

under Rs.20,000/-, sale of coupons etc. has not shown ebbing and

has substantially increased from Rs.2,550 crores during the years

2014-15 to 2016-17 to Rs.8,489 crores during the years 2018-19 to

2021-22. To this we can add total income of the national political

parties without other known sources, which has increased from

Rs.3,864 crores during the years 2014-15 to 2016-17 to Rs.11,829

crores during the years 2018-19 to 2021-22. The Bonds income

between the years 2018-19 to 2021-22 constitutes 58% of the total

income of the national political parties.137

72. Based on the analysis of the data currently available to us, along

with our previous observation asserting that voters' right to know

supersedes anonymity in political party funding, I arrive at the

conclusion that the Scheme fails to meet the balancing prong of the

proportionality test. However, I would like to reiterate that I have not

137 “Parties’ unknown income rise despite electoral bonds”, The Hindu, 02.11.2023, pg.7.

Writ Petition (C) No. 880 of 2017 & Ors. Page 54 of 74

 applied proportionality stricto sensu due to the limited availability of

data and evidence.

73. I respectfully agree with the reasoning and the finding recorded by

Hon’ble the Chief Justice, holding that the amendment to Section

182 of the Companies Act, deleting the first proviso thereunder

should be struck down. While doing so, I would rather apply the

principle of proportionality which, in my opinion, would subsume the

test of manifest arbitrariness.138 In addition, the claim of privacy by

a corporate or a company, especially a public limited company

would be on very limited grounds, restricted possibly to protect the

privacy of the individuals and persons responsible for conducting

the business and commerce of the company. It will be rather difficult

for a public (or even a private) limited company to claim a violation

of privacy as its affairs have to be open to the shareholders and the

public who are interacting with the body corporate/company. This

principle would be equally, with some deference, apply to private

limited companies, partnerships and sole proprietorships.

138The proportionality test, as adopted and applied by us, essentially checks, invalidates and does not
condone manifest arbitrariness. Proportionality analysis recognizes the thread of reasonableness
which is the underlying principle behind the first three prongs, legitimate aim, rational connection and
necessity test. The balancing analysis of the permissible degree of harm for a constitutionally
permissible purpose effectuates the guarantee of reasonableness. Therefore, any legislative action
which is manifestly arbitrary, would be disproportionate and will fall foul when we apply the principle of
proportionality. See also Shayara Bano v. Union of India, (2017) 9 SCC 1, where the Court held at
paragraph 95, that rationality, logic and reasoning are the triple underpinnings of the test of manifest
arbitrariness.

Writ Petition (C) No. 880 of 2017 & Ors. Page 55 of 74

74. In consonance with the above reasoning and on application of the

doctrine of proportionality, proviso to Section 29C(1) of the

Representation of the People Act 1951, Section 182(3) of the

Companies Act 2013 (as amended by the Finance Act 2017),

Section 13A(b) of the Income Tax Act 1961 (as amended by the

Finance Act 2017), are held to be unconstitutional. Similarly,

Section 31(3) of the RBI Act 1934, along with the Explanation

enacted by the Finance Act 2017, has to be struck down as

unconstitutional, as it permits issuance of Bonds payable to a

bearer on demand by such person.

75. The petitioners have not argued that corporate donations should be

prohibited. However, it was argued by some of the petitioners that

coercive threats are used to extract money from businesses as

contributions virtually as protection money. Major opposition

parties, which may come to power, are given smaller amounts to

keep them happy. It was also submitted that there should be a cap

on the quantum of donations and the law should stipulate funds to

be utilised for political purposes given that the income of the political

parties is exempt from income tax. Lastly, suggestions were made

that corporate funds should be accumulated and the corpus

equitably distributed amongst national and regional parties. I have

Writ Petition (C) No. 880 of 2017 & Ors. Page 56 of 74

 not in-depth examined these aspects to make a pronouncement.

However, the issues raised do require examination and study.

76. By an interim order dated 26.03.2021, this Court in the context of

contributions made by companies through Bonds had prima facie

observed that the voter would be able to secure information about

the funding by matching the information of aggregate sum

contributed by the company as required to be disclosed under

Section 182(3) of the Companies Act, as amended by the Finance

Act 2017, with the information disclosed by the political party.

Dr. D.Y. Chandrachud, Hon’ble the Chief Justice, rightly observes

in his judgment that this exercise would not reveal the particulars of

donations, including the name of the donor.

77. By the order dated 02.11.2023, this Court had asked for ECI’s

compliance with the interim order of this Court dated 12.04.2019.

Relevant portion whereof is reproduced below:

“In the above perspective, according to us, the just and

proper interim direction would be to require all the
political parties who have received donations through
Electoral Bonds to submit to the Election Commission
of India in sealed cover, detailed particulars of the
donors as against the each Bond; the amount of each
such bond and the full particulars of the credit received
against each bond, namely, the particulars of the bank
account to which the amount has been credited and the
date of each such credit.”

Writ Petition (C) No. 880 of 2017 & Ors. Page 57 of 74

 The intent of the order dated 12.04.2019 is that the ECI will continue

to maintain full particulars of the donors against each Bond; the

amount of each such Bond and the full particulars of the credit

received against each Bond, that is, the particulars of the bank

account to which the amount has been credited and the date of

each such credit. This is clear from paragraph 14 of the order dated

12.04.2019 which had directed that the details mentioned in

paragraph 13 of the order dated 12.04.2019 will be furnished

forthwith in respect of the Bonds received by a political party till the

date of passing of the order.

78. In view of the findings recorded above, I would direct the ECI to

disclose the full particular details of the donor and the amount

donated to the particular political party through Bonds. I would

restrict this direction to any donations made on or after the interim

order dated 12.04.2019. The donors/purchasers being unknown

and not parties, albeit the principle of lis pendens applies, and it is

too obvious that the donors/purchasers would be aware of the

present litigation. Hence, they cannot claim surprise.

79. I, therefore, respectfully agree and also conclude that:

(i) the Scheme is unconstitutional and is accordingly struck down;

Writ Petition (C) No. 880 of 2017 & Ors. Page 58 of 74

 (ii) proviso to Section 29C(1) of the Representation of the People

Act, Section 182(3) of the Companies Act, 2013, and Section

13A(b) of the Income Tax Act, 1961, as amended by the

Finance Act, 2017, are unconstitutional, and are struck down;

(iii) deletion of proviso to Section 182(1) to the Companies Act of

2013, thereby permitting unlimited contributions to political

parties is unconstitutional, and is struck down;

(iv) sub-section (3) to Section 31 of the RBI Act, 1934 and the

Explanation thereto introduced by the Finance Act, 2017 are

unconstitutional, and are struck down;

(v) the ECI will ascertain the details from the political parties and

the State Bank of India, which has issued the Bonds, and the

bankers of the political parties and thereupon disclose the

details and names of the donor/purchaser of the Bonds and the

amounts donated to the political party. The said exercise would

be completed as per the timelines fixed by the Hon’ble the

Chief Justice;

(vi) Henceforth, as the Scheme has been declared

unconstitutional, the issuance of fresh Bonds is prohibited;

(vii) In case the Bonds issued (within the validity period) are with

the donor/purchaser, the donor/purchaser may return them to

the authorised bank for refund of the amount. In case the

Writ Petition (C) No. 880 of 2017 & Ors. Page 59 of 74

 Bonds (within the validity period) are with the donee/political

party, the donee/political party will return the Bonds to the

issuing bank, which will then refund the amount to the

donor/purchaser. On failure, the amount will be credited to the

Prime Ministers Relief Fund.

80. The writ petitions are allowed and disposed of in the above terms.

......................................J.
(SANJIV KHANNA)

NEW DELHI;
FEBRUARY 15, 2024.

Writ Petition (C) No. 880 of 2017 & Ors. Page 60 of 74

 Annexure - A

Standards of Review - Proportionality & Alternatives

Proportionality is a standard-based model. It allows factual and contextual flexibility to judges who encounter diverse factual scenarios to analyse
and decide the outcome of factual clashes against the standards. Proportionality, particularly its balancing prong, has been criticized by jurists
who contend that legal adjudication should be rule-based rather than principle-based.139 They argue that this provides legal certainty by virtue
of rules being definitive in nature. In response, jurists in favour of balancing contend that neither rules nor principles are definitive but rather
prima facie.140 Therefore, both rights and legislations/policies are required to be balanced and realized to the optimum possible extent.

This jurisprudential clash is visible in the various forms and structures of adoptions of proportionality. Generally, two models can be differentiated
from works of jurists.

1) Model I – Firstly, the traditional two stages of the means–end comparison is applied. After having ascertained the legitimate purpose of
the law, the judge asks whether the imposed restriction is a suitable means of furthering this purpose (rational connection). Additionally
in this model, the judge ascertains whether the restriction was necessary to achieve the desired end. The reasoning focuses on whether
a less intrusive means existed to achieve the same ends (minimal impairment/necessity).

139 Francisco J. Urbina, A Critique of Proportionality, American Journal of Jurisprudence, Vol 57, 2012. Also see Ronald Dworkin, Taking Rights Seriously (Bloomsbury 2013),
pp 41-42.
140 Robert Alexy, A Theory of Constitutional Rights, (translated by Julian Rivers, first published 2002, OUP 2010), pp. 47-48.

Writ Petition (C) No. 880 of 2017 & Ors. Page 61 of 74

 2) Model II – This model adds a fourth step to the first model, namely the balancing stage, which weighs the seriousness of the infringement
against the importance and urgency of the factors that justify it.

In the table provided below, we have summarised the different models of proportionality and its alternatives, as propounded by jurists and
adopted by courts internationally. We have also summarized other traditional standards of review like the means-ends test and Wednesbury
unreasonableness for contextual clarity. In the last column we have captured the relevant criticisms, as propounded by jurists, to each such
model.

Test/Model Scope of Test/Model Jurisdictions Applied Criticism

Four-stage In this model, all the four prongs of Germany The main premise of the criticisms of balancing
Proportionality proportionality test are employed, including Balancing was adopted by is the wide discretion available to judges.
the final balancing stage. the German Constitutional
Court in the 1950s as a To capture three contemporary criticisms in
According to Robert Alexy, values and new methodology for brief: (i) it leads to a comparison of
interests (rights of citizens and objects of intensive judicial review of incommensurable values;143 (ii) it fails to create
legislations/policies) are both principles and rights-restricting predictability in the legal system and is
principles are optimization requirements.141 legislation. It stems from
the belief that the German

141
See Robert Alexy, A Theory of Constitutional Rights (Julian Rivers, trans. Oxford Univ. Press 2002).
143See Francisco J. Urbina, ‘Is It Really That Easy? A Critique of Proportionality and Balancing as Reasoning’ Canadian Journal of Law and Jurisprudence, 2014; and
Bernhard Schlink, ‘Abwägung im Verfassungsrecht’, Duncker & Humblot, 1976.

Writ Petition (C) No. 880 of 2017 & Ors. Page 62 of 74

 They are norms and hence their threshold of Constitution posits an potentially dangerous for human rights;144 and
satisfaction is not strict, and can happen in original idea of values, (iii) conversely, it is equally intrusive from the
varying degrees. They must be satisfied to and the government and perspective of separation of powers.145
the greatest extent possible in the legal and courts, both have a duty to
factual scenarios, as they exist. All stages of realise these values.142
the proportionality test therefore seek to
optimize relative to what is legally and
factually possible.
 The rational connection and necessity
prongs of the proportionality test are
applicable to factual possibilities.
 The balancing stage optimizes each
principle within what is legally
possible, by weighing the relevant
competing principles.

142 See Article 1 and 20, Basic Law for the Federal Republic of Germany.
144 Jochen von Bernstroff, Proportionality Without Balancing: Why Judicial Ad Hoc Balancing is Unnecessary and Potentially Detrimental to Realisation of Collective and
Individual Self Determination, Reasoning Rights – Comparative Judicial Engagement, (Ed. Liaora Lazarus);
145 Ibid.

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 Alexy proposes the ‘weight formula’, which
quantifies competing values (rights of
individuals) and interests (objective of
legislation/policy) by reducing them to
numbers. It is a method of thinking about
conflicting values/interests.

W1.2 = (I1 . W1 . R1 ) / (I2 . W2 . R2 )

 W1.2 represents the concrete weight of

principle P1 relative to the colliding
principle P2.
 I1 stand for intensity of interference
with P1. I2 stands for importance of
satisfying the colliding principle P2.
 W1 and W2 stand for abstract weights
of colliding principles (P1 and P2).
 When abstract weights are equal, as
in case of collision of constitutional

Writ Petition (C) No. 880 of 2017 & Ors. Page 64 of 74

 rights (W1 and W2) – they cancel each
other out.
 R1 and R2 stands for reliability of
empirical and normative assumptions
with regard to the question of how
intensive the interpretation is.

The weight formula is thereupon reduced to

numbers on an exponential scale of 2.

(i) The scale assigns following values

to intensity of interference (I) and
abstract weights (W)- light (l),
moderate (m), and serious (s) – in
numbers these are – 20, 21, 22 –
i.e., 1, 2 and 4 respectively.

(ii) To reliability (R), i.e., the epistemic

side, the values assigned are –

Writ Petition (C) No. 880 of 2017 & Ors. Page 65 of 74

 reliable (r), plausible (p) and not
evidently false (e) – in numbers
these are - 20, 2-1, 2-2 – i.e., 1, 0.5
and 0.25

Three-stage This model proposes limiting the Canada (i) In absence of the balancing stage, the
Proportionality proportionality enquiry to its first three Canada prefers to resolve courts must be mindful of certain
prongs, i.e., minus the balancing stage. cases in the first three analytical weaknesses of the necessity
Von Bernstorff argues against ad hoc prongs. Only in limited stage that can be dealt with at the
balancing based on two principal reasons: (i) instances, does the balancing stage.152
ad hoc balancing fails to erect stable and Canadian Supreme Court
predictable standards of human rights decide that a measure (ii) The core of the necessity test is whether
protection, allowing even the most intensive survives the first three an alternate measure is as effective in
infringements of civil liberties to be prongs but nevertheless achieving the purpose as the measure
conveniently balanced out of existence when fails at the final balancing under challenge, while being less
the stakes are high enough; and (ii) the lack stage.150 Despite this, restrictive. But often, considerations of
of predictability leads to a situation where past jurisprudence in balancing may become disguised in the
every act of parliament is threatened, Canada does affirm the necessity prong, as the court must

150 See Charterpedia, Department of Justice, Government of Canada, available at: https://www.justice.gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/check/art1.html. Also see Niels
Petersen (supra).
152 Niels Petersen, ‘Proportionality and judicial Activism: Fundamental Rights Adjudication in Canada, Germany and South Africa, (CUP 2017).

Writ Petition (C) No. 880 of 2017 & Ors. Page 66 of 74

 however well intentioned, in the judicial significance of final confront uncertainty in weighing the
balancing exercise and thus ad hoc balancing stage.151 efficacy of the alternatives.153
balancing is potentially overly intrusive from
a separation of powers perspective.146 (iii) Some jurists/courts have suggested a
strict interpretation of necessity, where
He, however, defends the use of judicially an alternate measure is only accepted as
established bright-line rules for specific cases less restrictive when they prove to be as
where intensive interferences are at stake. effective as the measure under
The bright line rule brings clarity to a law or challenge.
regulation that could be interpreted in
multiple ways. Bright line rules constitute the David Bilchitz has also proposed that
‘core’, ‘substance’ or ‘essence’ of a particular other alternatives must have both
right, making human rights categorical characteristics – equal realization of the
instead of open-ended in nature. purpose and lesser invasion/restriction
on the right in question.154

146 Jochen von Bernstroff, Proportionality Without Balancing: Why Judicial Ad Hoc Balancing is Unnecessary and Potentially Detrimental to Realisation of Collective and
Individual Self Determination, Reasoning Rights – Comparative Judicial Engagement, (Ed. Liaora Lazarus); Also see Bernhard Schlink, ‘Abwägung im Verfassungsrecht’,
Duncker & Humblot, 1976, pp. 192–219.
151 Ibid. Also see Canada (Attorney General) v. JTI-Macdonald Corp., [2007] 2 S.C.R. 610, at paragraph 46; Alberta v. Hutterian Brethren of Wilson Colony, and [2009] 2

S.C.R. 567, at paragraphs 72-78.

153 Ibid.
154 David Bilchitz, Necessity and Proportionality: Towards a Balance Approach?, (Hart Publishing, Oxford and Portland, Oregon 2016).

Writ Petition (C) No. 880 of 2017 & Ors. Page 67 of 74

 A stricter evaluation of evidence becomes
crucial at the necessity stage for an objective David Blichitz’s approach was followed in
standard of review, in contrast to ad hoc Aadhar (5J) (Privacy) (supra) case. This
balancing. test was referenced in Anuradha
Bhasin (supra), which applied a
In Canada for instance, the onus of proof is moderate interpretation of the necessity
on the person seeking to justify the limit, test. To conclude the findings of the
which is generally the government.147 necessity stage this Court in Anuradha
 The standard of proof is the civil Bhasin (supra) suggests that an overall
standard or balance of probabilities.148 comparison be undertaken between the
 Where scientific or social science measure and its feasible alternatives.
evidence is available, it will be
required;
 However, where such evidence is
inconclusive, or does not exist and

147 R. v. Oakes [1986] 1 S.C.R. 103.

148 Oakes (supra).

Writ Petition (C) No. 880 of 2017 & Ors. Page 68 of 74

 cannot not be developed, reason and
logic may suffice.149
Means-ends Test The doctrine is similar to a reasonableness Australia The test is simplistic and gives limited judicial
inquiry, albeit with some variation. The test was followed in flexibility. It does not account for diverse factual
Australia before the scenarios.
In Australia, for instance, courts enquire development of
whether a law is ‘reasonably appropriate and proportionality and is not
adapted’ to achieving a legitimate end in a frequently used in
manner compatible with the constitutionally contemporary times.
prescribed system of representative and
responsible government.
Calibrated The essential elements of the approach are Australia Critics of this approach have emphasized that it
Scrutiny (evolved as follows:155 While proportionality is takes away from the flexibility that is required
means-ends test)  First, a judge determines the nature the predominant doctrine while considering factually diverse legal
and intensity of the burden on the right in Australia, this alternate challenges. Therefore, the test cannot
by the challenged law; test is applied by a few

149 Libman v. Quebec (A.G.), [1997] 3 S.C.R. 569; RJR-MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199; Thomson Newspapers Co. v. Canada
(A.G.), [1998] 1 S.C.R. 877; R. v. Sharpe, [2001] 1 S.C.R. 45; Harper v. Canada (A.G.), [2004] 1 S.C.R. 827, at paragraph 77; R. v. Bryan, [2007] 1 S.C.R. 527, at
paragraphs 16-19, 29; Mounted Police Association of Ontario v. Canada (Attorney General), [2015] 1 S.C.R. 3, at paragraphs 143-144.
155 Judgment by Gagler J. in Clubb v. Edwards, (2019) 93 ALJR 448; Also see Adrienne Stone, Proportionality and its Alternatives, Melbourne Legal Studies Research

Paper Series No. 848

Writ Petition (C) No. 880 of 2017 & Ors. Page 69 of 74

  Second, the judge calibrates ‘the judges. These judges substitute a contextually guided judicial
appropriate level of scrutiny to the risk raise concerns about the approach.156
posed to maintenance of the application of a test of
constitutionally prescribed system of structured proportionality
representative and responsible and suggest that it was
government; best understood as ‘a tool’
 Third, the judge isolates and assesses of analysis, or ‘a means of
the importance of constitutionally setting out steps to a
permissible purpose of the prohibition; conclusion’, ‘not a
and constitutional doctrine’.
 Finally the judge applies the
appropriate level of scrutiny so as to
determine whether the challenged law
is justified as reasonably appropriate
and adapted to achieve that purpose
in a manner compatible with the
maintenance of the constitutionally
prescribed system of government,

156 See John Braithwaite, Rules and Principles: a Theory of Legal Certainty, Australian Journal of Legal Philosophy 47 (2002).

Writ Petition (C) No. 880 of 2017 & Ors. Page 70 of 74

 The test is similar to some prongs of the
proportionality test. However, it is more rule
oriented instead of being standard/principle
oriented.
Strict Scrutiny This is considered one of the heightened United States of Only a limited number of laws survive under the
Test forms of judicial review that can be used to America strict scrutiny test. Its application is reserved for
evaluate the constitutionality of laws, The courts in the United instances where the most intensely protected
regulations, or other governmental policies States use a tiered fundamental rights are affected.
under legal challenge.157 approach of review with
strict scrutiny,
Strict scrutiny is employed in cases of intermediate scrutiny and
violation of the most fundamental liberties rational basis existing in
guaranteed to citizens in the United States of decreasing degree of
America. For instance, it is employed in intensity.
cases of infringements on free speech.

The test places the burden on the

government to show a compelling, or strong

157See Jennifer L. Greenblatt, Putting the Government to the (Heightened, Intermediate, or Strict) Scrutiny Test: Disparate Application Shows Not All Rights and Powers Are
Created Equal, (2009) 10 Fla Coastal L Rev 421.

Writ Petition (C) No. 880 of 2017 & Ors. Page 71 of 74

 interest in the law, and that the law is either
very narrowly tailored or is the least speech-
restrictive means available to the
government.

The usual presumption of constitutionality is

removed, and the law must also pass the
threshold of both – necessity/end and means.
Unreasonablenes A standard of unreasonableness is used Associated Provincial The test is simplistic and is traditionally only
s/ for the judicial review of a public authority's Picture Houses Ltd v. used for policies/administrative
Wednesbury decision. A reasoning or decision is Wednesbury decisions/delegated legislation.
Principles unreasonable (or irrational) when no person Corporation158
acting reasonably could have arrived at it.

This test has two limbs:

(i) The court is entitled to investigate the
action to check whether the authority has
considered and decided on matters which
they ought not to have considered, or

158 (1948) 1 KB 223.

Writ Petition (C) No. 880 of 2017 & Ors. Page 72 of 74

 conversely, have refused to consider or
neglected to consider matters which they
ought to have considered.

(ii) If the above query is answered in favour

of the local authority, it may be held that,
although the local authority has ruled on
matters which they ought to have considered,
the conclusion they have arrived at is
nonetheless so unreasonable that no
reasonable authority could ever have arrived
at it.

Please note that:-

(i) The above table briefly summarises the different standards of constitutional review and it does not elaborate on the said tests in detail;

(ii) the theories propounded by the jurists are not followed in toto across the jurisdictions and this has been pointed out appropriately; and

Writ Petition (C) No. 880 of 2017 & Ors. Page 73 of 74

 (iii) the table does not provide an exhaustive account of the full range of standards of review employed internationally and is restricted to the
tests identified therein.

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