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TMI Blog2024 (2) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 2017. 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? 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? HELD THAT:- Doctrine of proportionality - The test of proportionality comprises four steps: (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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 have employed the balancing stage normatively 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 subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 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 return of the valid bond, shall refund the amount to the purchaser s account. X X X X Extracts X X X X X X X X Extracts X X X X ..... ................ 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 ............................................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contributed along with the name of the politica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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; 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Roger Mathew v. South Bank of India, CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 corruption Relied on Kanwar Lal Gupta v. Amar Nath Chawla, 1975 SCC (3) 646 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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; 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). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 iv. The fifth prong of the proportionality analysis as laid down in Gujarat Mazdoor Sabha v. State of Gujarat (2020) 10 SCC 459 and Ramesh Chandra Sharma v. State of Uttar Pradesh 2023 SCC OnLine SC 162 that the legislation should have sufficient saf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act serve no purpose other than perpetuating illegal ends, 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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 visà- vis the state; and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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. 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 More recently, in Swiss Ribbons v. Union of India (2019) 4 SCC 17, 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 followed in Pioneer Urban Land and Infrastructure Limited v. Union of India (2019) 8 SCC 416, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CR 682. 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 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 India AIR 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, 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 viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstituency 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housands 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. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. See State of Punjab v. Sodhi Sukhdev Singh, (1961) 2 SCR 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnised 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 information Also see Dinesh Trivedi v. Union of India, (1997) 4 SCC 306 where this Court observed that sunlight is the best disinfectant. 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002) 5 SCC 294 ("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 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 fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued to be inflexible and immutable theorems. The learned Judge observed that though the voters have a fundamental right to 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 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 qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 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 Constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween 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 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 ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity 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, (1992) Supp (2) SCC 651 [4] 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 centrality of political parties in the electoral system. In Ravi S Naik v. Union of India AIR 1994 SC 1558, this Court observed that voluntarily giving up mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 to determine if the violation of the fundamental right is justified. Modern Dental College & Research Centre v. State of Madhya Pradesh, (2016) 4 SCC 346 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Constitution of India 1950; Article 19(6). 111. In Sakal Papers v. The Union of India AIR 1962 SC 305, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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 expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntary 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, fortyseven 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: See Justice KS Puttaswamy (5J) (supra) and Media One Broadcasting (supra) [103]; a. Whether there are other possible means which could have been adopted by the State; b. Whether the alternative means identified reali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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) 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributors including individuals and companies. The contributions were unequally distributed to the Aam Aadmi 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 pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es (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 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; 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 inconsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 observations above that the Constitution guar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideologies) is as important as the nonintrusion 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). See Romesh Thappar v. State of Madras, (1950) SCR 594 (602) 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 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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." , 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.159 148. 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 Bihar (2017) 4 SCC 397, this Court held that when there is a conflict between two individuals with respect to their right under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 India (2012) 10 SCC 603, used a standard which resembled the structured proportionality standard used in Justice KS Puttaswamy (5J) v. Union of India (2019) 1 SCC 1 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 fundamenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means the freedom to judge the moral qualities of one's conduct. See Supriyo (supra) [238 , 239]; Aishat Shifa v. State of Karnataka, (2023) 2 SCC 1; 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. See Justice KS Puttaswamy v. Union of India, (2017) 10 SCC 1 [372] (opinion of Justice Chelameswar); 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 liberty under Article 21. The Constitution does not create a hier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closure 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curing 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 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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. Report of the Committee on Prevention of Corruption, 1964 [11.5]. The Committee suggested "a total ban on all donations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Basheshar Nath v. CIT, (1959) Supp 1 SCR 528 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, (1951) 1 SCC 1; Also see State of Bombay v. FN Balsara, 1951 SCR 682 Justice S R Das (as the learned Chief Justice then was) laid down 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serving 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 was still some divergence as to the doctrine's application with respect to plenary legislation. In State of Tamil Nadu v. Ananthi Ammal, (1995) 1 SCC 519 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, (1996) 2 SCC 226 a three-Judge Bench of this Court invalidated a legislation on the ground that it was arbitrary and in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, 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. 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, (1978) 1 SCC 248 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agraph 14.9]. 191. In Joseph Shine v. Union of India, (2019) 3 SCC 39 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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-conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imary 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute or, say, the Constitution." Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India, (1985) 1 SCC 641 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhi v. Raj Narain, 1975 Supp SCC 1 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. 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." 203. This Court has also consistently held that free and fair elections form an important concomitant of democracy. Digvijay Mote v. Union of India, (1993) 4 SCC 175; Union of India v. Assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." Lok Sabha Debates, Companies Bill (16 May 1985). 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... randum. 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". 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 lossmaking 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this behalf before the due date for furnishing a return of income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961), to the Election Commission. (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 Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax relief under that Act. Section 29C. Declaration of donation received by the political parties. - (1) The treasurer of a political party or any other person authorized by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely: (a) the contribution in excess of twenty thousand rupees received by such political party from any person in that financial year; (b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year. Provided that nothing contained in this subsection shall apply to the contributions received by way of an electoral bond. Explanation - For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st proviso omitted) Provided that no such contribution shall be made by a company unless a resolution 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 of the contribution authorised by it. Section 182 (3) Every company shall disclose in its profit and loss account any amount or amounts contributed by it to any political party during the financial year to which that account relates, giving particulars of the total amount contributed and the name of the party to which such amount has been contributed. Section 182 (3) Every company shall disclose in its profit and loss account the total amount contributed by it under this section during the financial year to which the account relates. (3A) Notwithstanding anything contained in subsection (1), the 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 electronic clearing system through a bank account: Provided that a company may make contribution through any instruments, issued p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the name and address of the person who has made such contribution; and (c) the accounts of such political party are audited by an accountant as defined in the Explanation below sub- section (2) of section 288; and (d) no donation exceeding two thousand rupees is received by such political party otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral 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. 1) No person in India other than the Bank or, as expressly authorized by this Act, the Central Government shall draw, accept, make or issue any bill of exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dress 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 address of the contributing person/company PAN (if any_ and Income-Tax Ward/Circle Amount of contribution (Rs.) Mode of contribution *(cheque/demand draft/cash) Remarks *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 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any 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 aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to fine. 10 Companies Act, First proviso to Section 182(1). 11 Companies Act, second proviso to Section 182(1) 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 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] : [Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritories, 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. 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) 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 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 Vais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-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. 94 In 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]. 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 100 Symbols Order 1968, Rule 5 101 Symb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees "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. 120 See Ben Ansell and Jean Gingrich J (2021). Political Inequality. The IFS Deaton Review of Inequalities, London: Institute for Fiscal Studies 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. 122 Electoral Bond Scheme; Clause 2(a) 123 Electoral Bond Scheme; Clause 7(4) 128 Ibid; P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thought it appropriate to abolish criminality of defamation in the obtaining social climate." 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) 174 The Companies Act 2013; Section 2(40) 175 The Companies At 2013; Section 137 195 WP (Criminal) 76 of 2016 [Chief Justice Misra, 239] 196 Ibid,[Justice Nariman, 82] 197 Ibid, [Justice DY Chandrachud, 29] 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) 209 Law Commission of India, 170th Report on the Reform of the Electoral Laws (1999) 222 Ins. By Notifin. No. S.O. 1283(E), dated the 10th November, 2003. ASSOCIATION FOR DEMOCRATIC REFORMS AND ANOTHER VERSUS UNION OF INDIA AND OTHERS WRIT PETITION (CIVIL) NO. 880 OF 2017 WITH WRIT PETITION (CIVIL) NO. 59 OF 2018 WRIT PETITION (CIVIL) NO. 975 OF 2022 A N D WRIT PETITION (CIVIL) NO. 1132 OF 2022 JUDGMENT SANJIV KHANNA, J. I have had the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act, 2017 Post Amendment by Section 154 of the Finance Act, 2017 182. Prohibitions and restrictions regarding political contributions- (1) Notwithstanding anything contained in any other provision of this Act, a company, other than a Government company and a company which has been in existence for less than three financial years, may contribute any amount directly or indirectly to any political party: Provided that the amount referred to 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 contribution shall be made by a company unless a resolution 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 secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as would enable the Assessing Officer to properly deduce its income therefrom; (b) in respect of each such voluntary contribution in excess of twenty thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution; and (c) the accounts of such political party are audited by an accountant as defined in the Explanation below sub-section (2) of Section 288: 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 subsection (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. 13-A. Special provision relating to incomes of political parties.-- Any income of a political party which is chargeable under the head "Income from house property" or "Income from other sources" or "capital gains or" any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person: Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on a person's account with a banker, shroff or agent. (2) Notwithstanding anything contained in the Negotiable Instruments Act, 1881 (26 of 1881), no person in India other than the Bank or, as expressly authorised by this Act, the Central Government shall make or issue any promissory note expressed to be payable to the bearer of the instrument Section 31. Issue of demand bills and notes.-- (1) No person in India other than the Bank, or, as expressly authorized by this Act the Central Government shall draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person: Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontribution in excess of twenty thousand rupees received by such political party from any person in that financial year; (b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year. Provided that nothing contained in this sub-section shall apply to the contributions received by way of an electoral bond. Explanation.-- For the purposes of this sub-section, "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 (2 of 1934). (2) The report under sub-section (1) shall be in such form as may be prescribed. (3) The report for a financial year under sub-section (1) shall be submitted by the treasurer of a political party or any other person authorised by the political party in this behalf before the due date for furnishing a return of its income of that financial year under Section 139 of the 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), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n country or territory; (D) trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory; (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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.01.2018, the Department of Economic Affairs, Ministry of Finance, notified the Electoral Bonds Scheme, 201827 in terms of 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 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 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, (2019) 4 SCC 17 and Pioneer Urban Land and Infrastructure and Another v. Union of India and Others, (2019) 8 SCC 416 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15] 1 S.C.R. 3, at paragraphs 143-144 19. The right to vote is a constitutional and statutory right, Article 326, Constitution grounded in Article 19(1)(a) of the Constitution, as the casting of a vote amounts to expression of an opinion by the voter. 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 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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). This is equally important from the perspective of the test of proportionality 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. See K.S. Puttaswamy and Anr. v. Union of India and Ors. (9J) (Privacy), (2017) 10 SCC 1 The identity of the donor can be revealed in 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ognition 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. 29. The test of proportionality is now widely recognised and employed by courts in various jurisdictions like Germany, Canada, Sout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 enj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 parties would say that one party would be given 100 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 parties to enhance transparency in political funding of the candidates and parties.112 The said convention is signed and ratified by India. By ensuring anonymi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fam) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 personal space shrinks contextually. See Bernstein and Ors. v. Bester NO and Others, (1996) ZACC 2, para 67. In this context, the High Court of South Africa in My Vote Counts NPC v. President of the Republic of South Africa and Ors. My Vote Counts NPC v. President of the Republic of South Africa and Ors. (2017) ZAWCHC 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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..." 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) [2004] 1 SCR 827, which upheld the legislative restriction on electoral advertising. In Harper (supra), the Supreme 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 Valeo 424 U.S. 1 (1976). 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 informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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." 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above terms. 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 mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lliding principles (P1 and P2). When abstract weights are equal, as in case of collision of constitutional 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 - 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 Germany Balancing was adopted by the German Constitutional Court in the 1950s as a new methodology for intensive judicial review of rights-restricting legislation. It stems from the belief that the German Constitution posits an original idea of values, and the government and courts, both have a duty to realise these values.142 The main premise of the criticisms of balancing is the wide discretion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternate measure is only accepted as less restrictive when they prove to be as effective as the measure under challenge. David Bilchitz has also proposed that other alternatives must have both characteristics - equal realization of the purpose and lesser invasion/restriction on the right in question.154 A stricter evaluation of evidence becomes crucial at the necessity stage for an objective standard of review, in contrast to ad hoc balancing. In Canada for instance, the onus of proof is on the person seeking to justify the limit, which is generally the government.147 The standard of proof is the civil standard or balance of probabilities.148 Where scientific or social science evidence is available, it will be required; However, where such evidence is inconclusive, or does not exist and cannot not be developed, reason and logic may suffice.149 David Blichitz's approach was followed in Aadhar (5J) (Privacy) (supra) case. This test was referenced in Anuradha Bhasin (supra), which applied a moderate interpretation of the necessity test. To conclude the findings of the necessity stage this Court in Anuradha Bhasin (supra) suggests that an overall comparison be undertaken between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is employed in cases of violation of the most fundamental liberties guaranteed to citizens in the United States of America. For instance, it is employed in cases of infringements on free speech. The test places the burden on the government to show a compelling, or strong interest in the law, and that the law is either very narrowly tailored or is the least speechrestrictive 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 United States of America The courts in the United States use a tiered approach of review with strict scrutiny, intermediate scrutiny and rational basis existing in decreasing degree of intensity. Only a limited number of laws survive under the strict scrutiny test. Its application is reserved for instances where the most intensely protected fundamental rights are affected. Unreasonablenes s / Wednesbury Principles A standard of unreasonableness is used for the judicial review of a public authority's decision. A reasoning or decision is unreasonable (or irrational) when no person acting reasonably could have arrived at it. This test has two li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 For short, "ECS". 16 Section 182(3A) of the Companies Act, 2013 was introduced vide Section 154 of the Finance Act, 2017. 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. 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". 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Arun Jaitley, 'Why Electoral Bonds Are Necessary', Press Information Bureau, 2018. 74 See Aharon Barak, "Proportionality - Constitutional Rights and their Limitations", Cambridge University Press, 2012. 78 See David Bilchitz, "Necessity and Proportionality: Towards a Balance Approach?", (Hart Publishing, Oxford and Portland, Oregon 2016). Also see Aparna Chandra, "Proportionality: A Bridge to Nowhere?", (Oxford Human Rights Journal 2020). 80 Anuradha Bhasin (supra) at paragraph 71. 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. 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tish University System, European review, Vol. 5 Issue 3, pp. 305-321 (1997). 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. 99 See Speech of Arun Jaitley, Minister of Finance, at paragraph 165, Budget 2017-18. 100 Ibid. 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. 109 For short, "PMLA". 110 For short, "FATF". 111 Paragraph 3, Section B, International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation - The FATF Recommendations, 2012. 112 See also United Nations General Assembly Resolution A/RES/S-32/1, 02.06.2021, para 12. 113 This is inapplicable to Bonds under proviso (b) to Section 13A of the Income Tax Act, 1961. 114 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y (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. 141 See Robert Alexy, A Theory of Constitutional Rights (Julian Rivers, trans. Oxford Univ. Press 2002). 143 See 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. Annexure Foot Note 141 See Robert Alexy, A Theory of Constitutional Rights (Julian Rivers, trans. Oxford Univ. Press 2002). 143 See 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. 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 En ..... X X X X Extracts X X X X X X X X Extracts X X X X
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