Electoral bonds ruling: How SC balanced right to know with right to privacy

The scheme that allows for the purchase of electoral bonds without disclosing who the purchaser is has been struck down unanimously by a constitutional bench of the Supreme Court in the Association of Democratic Reforms v. Union of India case.

Under the scheme, political parties were not needed to disclose  the contributions received through electoral bonds, companies were not required to disclose the details of contributions made in any form, and unlimited corporate funding for political parties was permissible. To facilitate this scheme, the Representation of Peoples Act, the Income Tax Act, the Companies Act and the Finance Act had been amended.

In a remarkable decision authored by Chief Justice DY Chandrachud on the plurality, consisting of Justices BR Gavai, JB Pardiwala, PK Mishra and Sanjeev Khanna, both the scheme and the facilitating provisions were struck down, leaving no scope for ambiguity.

Consequences to follow

What flowed from this finding is that the issue of electoral bonds has been stopped, and the State Bank of India (SBI) is required to “submit details of the electoral bonds purchased, since the interim order of this Court dated 12 April 2019 till date, to the Election Commission of India”. SBI is also required to submit the details of political parties which have received contributions through electoral bonds.

In an indication that this was not merely a declarative judgment and that there were consequences to follow, the court prescribed March 6, 2024, as the deadline for SBI to submit the above information to the Election Commission (EC).

The EC, in turn, was ordered to publish the information shared by SBI on its official website by March 13.,

The right to know

The court, for its reasoning, drew upon its previous precedents regarding proportionality analysis as well as the doctrine of arbitrariness to arrive at this result.

The base of the judgment was the seminal importance of Article 19(1)(a) as including the right to know of citizens. The integrity of the electoral process was based on the citizen’s right to know. And this right to know the court derived from its previous judgments, where it had held that transparency with respect to criminal records/assets of a candidate was essential to a democracy.

However, the Union of India contended that this right to know must be balanced against the right of a person to maintain privacy of their political affiliations and that “donating money to one’s preferred party is a form political self-expression, which lies at the heart of privacy”.

Competing rights

To understand if these rights could be restricted, Chief Justice Chandrachud employed what he called a ‘double proportionality analysis’, under which the two so-called competing rights, namely the right to donate anonymously and the right to know, were analysed within the proportionality framework.

The proportionality framework examined whether the measure restricting a right had a legitimate goal (legitimate goal stage), if the measure was a suitable means for furthering the goal (suitability or rational connection stage), if the measure was the least restrictive and equally effective (necessity stage), and if the measure did not have a disproportionate impact on the right holder (balancing stage).

Privacy issues

With respect to the right of the donor to be anonymous, the court reiterated that the right to not let your political affiliation be disclosed is a legitimate dimension of one’s privacy. However, if that is the concern of the Union of India, the measure adopted is not “suitable”.

In the court’s understanding, “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”.

Justice Khanna’s concurring opinion, which listed the party-wise donation through bonds as being in thousands of crores (mainly flowing to the BJP), added further weight to this conclusion and gave the lie to the Union of India’s argument.

Black money

The court then applied the proportionality analysis to the restrictions on the citizen’s right to know. It took seriously the Union’s argument that this scheme was required to deal with the problem of black money. It then asked the question as to whether this was the “least restrictive” means to achieve that objective. It held that the electoral bond Scheme was not the only means for curbing black money in electoral finance.

In its reasoning, it held that there were alternatives (such as the extant Electoral Trust Scheme) which substantially fulfilled the purpose and impacted the right to information minimally when compared to electoral bonds.

Manifestly arbitrary

The other legal test that the court applied is the doctrine of “manifest arbitrariness”, under which a piece of legislation can be struck down if “the determining principle of it is not in consonance with constitutional values”. In this case, the amendment to Section 182 of the Companies Act, which did away with the distinction between contributions by companies and individuals, was found to be “manifestly arbitrary”.

In the court’s reasoning, this was because “the ability of a company to influence the electoral process through political contributions is much higher when compared to that of an individual” and hence a “company has a much graver influence on the political process” and the two cannot be equated for the purposes of political contributions.

BJP’s monopoly

The future Chief Justice of India, Sanjiv Khanna, in his concurring opinion, agreed on the conclusion of the plurality, but did not agree with the conclusion that to eliminate the distinction between individuals and corporations when it came to political contributions was manifestly arbitrary.

While the judgment is soundly grounded in law, it remains alive to the political context. The citing by Justice Khanna of the thousands of crores received by political parties and disproportionately cornered by the BJP was one example.

Chief Justice Chandrachud was also alive to the context as he observed: “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.” He concluded that the nexus between money and electoral democracy should be borne in mind while deciding these petitions.

Article 370

While this judgment is to be welcomed, it has been seven long years since the case was first filed, allowing for what the Chief Justice appositely called the “murder of democracy”. One cannot but note that the aliveness to the political context which the court exhibited in this judgment was sadly absent in the other major constitutional bench decision – on the constitutionality of the abrogation of Article 370.

Still, this is a step in the right direction and hopefully the court will begin the process of restoring the tattered faith of the common man that the court will vigorously defend the values of the constitution against an overweening executive.