The Supreme Court of India, in a unanimous judgment delivered on 15 February 2024 by a five-judge Constitution Bench, struck down the Electoral Bonds Scheme 2018 as unconstitutional. The Bench, led by Chief Justice D.Y. Chandrachud and comprising Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala, and Justice Manoj Misra, held that the scheme of anonymous political donations violated the voters' fundamental right to information under Article 19(1)(a) of the Constitution. The Court directed the State Bank of India to disclose all bond transaction data to the Election Commission of India within three weeks.
Background
The Electoral Bonds Scheme was introduced in 2018 through amendments to multiple statutes effected via the Finance Act, 2017. Under the scheme, individuals and corporate entities could purchase bearer bonds from the State Bank of India in specified denominations and donate them to registered political parties. The key feature of the scheme was anonymity: the identity of the purchaser was not disclosed to the public, the Election Commission, or the recipient party, and political parties were exempted from disclosing the identity of donors who contributed through electoral bonds.
The scheme was challenged by the Association for Democratic Reforms and other petitioners on the ground that it created an opaque channel for unlimited corporate funding of political parties, removing all transparency from the political donation process. The petitioners argued that voters had a constitutionally protected right to know who funds political parties, as such information is essential for informed electoral choice. The Union Government defended the scheme as a measure to bring political donations into the formal banking channel and to protect donors from political victimisation.
Key Holdings
The Constitution Bench delivered the following holdings:
Right to information of voters is fundamental: The Court held that the right to information about political funding is a constitutive element of the right to freedom of speech and expression under Article 19(1)(a). Voters are entitled to know who funds the political parties seeking their vote, as this information bears directly on electoral choice and democratic accountability.
Anonymity provision unconstitutional: The scheme's core mechanism of anonymity — shielding donor identity from public disclosure — was held to be violative of Article 19(1)(a). The Court rejected the Government's proportionality argument, holding that the infringement on the right to information was not proportionate to the stated objective of curbing black money.
Informational privacy of donors cannot override voter rights: While acknowledging that donors have a right to informational privacy, the Bench held that this right does not extend to shielding the identity of political contributions from public scrutiny. The public interest in electoral transparency outweighs the individual interest in anonymity of political donations.
Disclosure of all bond data directed: The State Bank of India was directed to furnish complete details of all electoral bonds purchased and redeemed — including purchaser identity, bond denomination, date of purchase, and recipient political party — to the Election Commission of India within three weeks. The ECI was directed to publish this data on its website within one week of receipt.
Amendments to parent statutes struck down: The relevant amendments made through the Finance Act, 2017 to the Representation of the People Act, 1951, the Income Tax Act, 1961, and the Companies Act, 2013 — which had enabled the scheme's opacity — were struck down as unconstitutional.
Implications for Practitioners
This judgment represents one of the most consequential constitutional law decisions in recent Indian jurisprudence, fundamentally reshaping the legal framework governing political finance. The immediate practical consequence is the prospective disclosure of all electoral bond transactions, which will reveal the pattern of corporate and individual funding to political parties over the six years the scheme was operational.
For election law practitioners, the decision establishes that transparency in political funding is a constitutionally enforceable right, not merely a matter of legislative policy. Any future political funding mechanism will need to satisfy the proportionality standard articulated by the Court, making it difficult for Parliament to reintroduce anonymous donation channels.
Corporate law practitioners advising clients on political contributions must note that all past electoral bond purchases will become public information. Companies that made significant contributions may face public scrutiny, and boards will need to consider reputational implications and shareholder communication strategies.
The judgment also strengthens the doctrinal framework of the right to information as a facet of Article 19(1)(a), with potential application beyond electoral funding to other areas where governmental opacity limits informed public participation.