Electoral Bonds | How Supreme Court Used Proportionality Test To Give Primacy To Voters' Right To Information

In a profound development, the Supreme Court on Thursday (February 15) struck down the controversial Electoral Bonds (EB) Scheme, holding that anonymous EBs are violative of the right to information enshrined under Article 19(1)(a) of the Constitution.

The decision was rendered by a Constitution Bench comprising CJI DY Chandrachud, Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra which gave two concurring opinions. Notably, the Court directed the Election Commission of India to publish details of political parties that received contributions through EBs during the stipulated period by March 13, 2024.

For an overview of the judgment, click here.

In the present segment, we will see how CJI Chandrachud, in a nuanced and erudite judgment written on behalf of himself, Justices Gavai, Pardiwala and Misra, balanced individuals' right to information under Article 19(1)(a) with contributors' right to informational privacy.

Balancing conflicting fundamental rights

At the outset, the CJI recapitulated that to balance competing fundamental rights in the past, courts have used the collective interest or the public interest standard, the single proportionality standard, and the double proportionality standard.

The public interest standard involved two modalities: first, where the Court would weigh constitutional values of competing rights and circumscribe one of them such that there was no real conflict, and second, where the Court would compare values espoused by the competing rights and give more weightage to the one that was in furtherance of a higher degree of public interest.

The CJI referred to Sahara India Real Estate Corporation Limited v. Securities and Exchange Board of India (2012) to highlight that the Bench in that case evolved a two prong standard to balance fundamental rights through neutralizing devices, which partly resembled the "structured proportionality standard". These two prongs were: (i) there is no other reasonable alternative measure available (necessity test); and (ii) the salutary effects of the measure must outweigh the deleterious effects on the fundamental rights (proportionality standard).

He further alluded to the decision in Mazdoor Kisan Shakti Sangathan v. Union of India (2018) that marked a shift in the degree of justification, ie from the pre-proportionality stage to the proportionality stage. In the captioned case, while balancing right to protest with right to peaceful residence, the Court had applied one of the prongs of the proportionality standard ie the "least restrictive means" prong.

The precedential recap would not have been complete sans mention of Justice KS Puttaswamy (5J) v. Union of India (2019), adverting to which the CJI recalled how Justice AK Sikri (speaking for the majority) employed the "structured proportionality" standard to resolve a conflict between the right to informational privacy and the right to food. He added that on balancing the fundamental rights involved in the said case, the Court had come to a conclusion that provisions furthering the right to food satisfied a larger public interest whereas the invasion of privacy rights was minimal.

Moving on, the CJI spoke of the single proportionality standard, under which it is analyzed if a fundamental right can be restricted for State interest (or a legitimate purpose), and if so, whether the measure employed to that end is proportional to the object sought to be achieved. He opined that the standard suffers from limitations insofar as balancing conflict between two fundamental rights is concerned.

"The proportionality standard is an effective standard to test whether the infringement of the fundamental right is justified. It would prove to be ineffective when the State interest in question is also a reflection of a fundamental right. The proportionality standard is by nature curated to give prominence to the fundamental right and minimize the restriction on it."

The CJI also made reference to Central Public Information Officer, Supreme Court of India v. Subash Chandra Agarwal where, while penning a concurring opinion, he observed that to balance two fundamental rights, Courts must identify the precise interests weighing in favor of both disclosure and privacy, and not merely undertake a doctrinal analysis to determine if one of the fundamental rights takes precedence over the other.

Test to be employed for balancing two fundamental rights

The CJI summarized the test to be applied by courts while attempting to resolve a conflict between two fundamental rights (say, A and B) as follows:

a. Does the Constitution create a hierarchy between the rights in conflict? If yes, then the right which has been granted a higher status will prevail over the other right involved. If not, the following standard must be employed from the perspective of both the conflicting rights,

b. Whether the measure is a suitable means for furthering right A and right B? It is not necessary that the measure should be the only means capable of realizing the rights. It is sufficient if the measure only partially gives effect to the right(s),

c. Whether the measure is least restrictive and equally effective to realize right A and right B? Court must determine if there are other possible measures which could have been adopted to realize the rights, and whether such alternative measures (a) realize the rights in a real and substantial manner; (b) impact the rights differently; and (c) are better suited on an overall comparison of the degree of realizing the rights and the impact on them,

d. Whether the measure has a disproportionate impact on right A and right B? In the last prong, it is analyzed if the cost of interference with one right is proportional to the extent of fulfilment of the other. In undertaking this exercise, Court shall assess 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 (in this case, right to information) is proportional to achieve the goal (in this case, right to privacy).

Notably, when conflict between two fundamental rights is sought to be resolved, the single proportionality standard is to be applied to both the rights (as purposes). 

Application of the test to EB scheme

After laying down the test, the CJI progressed towards determining whether Clause 7(4) of the EB scheme (measure) balanced the right to informational privacy of a contributor (first right) and the right to information of a voter (second right).

Suffice it to mention, Clause 7(4) stipulates that the information furnished by the EB buyer shall be treated as confidential by the authorized bank. The bank has to disclose the information when it is demanded by a competent court or upon the registration of a criminal case by a law enforcement agency.

On applying the aforementioned test, CJI gave the following conclusions:

a. No constitutional hierarchy between the two rights: The Constitution does not provide for a clear-cut hierarchy between the two rights involved in the present case. Both voter's right to information and right to anonymity of political contributions are traceable to Article 19(1)(a) - the latter because informational privacy of a person's political affiliation is necessary to enjoy the right to political speech, the right to political protests, etc.

b. Clause 7(4) does not satisfy the suitability prong vis-à-vis voter's right to information about political funding: Applied to the purpose of privacy of political contribution, the measure (non-disclosure of information to a voter) has a rational nexus as it grants anonymity to a contributor. But when applied to the purpose of disclosure of information about political contributions to voters, the measure has no rational nexus, as information about contributions made through EB scheme is exempted from disclosure requirements and never disclosed to voters. "The purpose of securing information about political funding can never be fulfilled by absolute non-disclosure", the court said.

c. Alternative measure to secure the two rights in a real and substantive manner exists: Section 29C of Representation of Peoples Act, which requires political parties to disclose contributions received from a person/company over a financial year if they are in excess of Rs.20,000, provides one of the means of protecting informational privacy of political affiliations. It realizes the purposes to a considerable extent and imposes lesser restriction on fundamental rights. At the 20,000-benchmark, considerations of disclosure of information of political contribution outweigh the considerations of informational privacy. The underlying rationale of Section 29C(1) can be explained thus: Contributions of less than Rs.20,000 do not have the ability to influence governmental/political decisions, as such, right to information of financial contributions does not apply to such contributions. Per contra, contributions beyond the threshold limit can influence decisions and thus, there is no right to privacy of political affiliations over them.

d. Balancing prong not required to be applied: Having concluded that Clause 7(4) was not the least restrictive means to balance the two rights, the Court deemed it unnecessary to apply the balancing prong.

Summing up, the Court said that Clause 7(4) completely tilts the balance in favor of the purpose of informational privacy and abrogates informational interests. Notably, instead of only striking down the said Clause for failing to withstand the double proportionality standard, the Court declared unconstitutional the entire EB scheme. It reasoned that anonymity of contributor was intrinsic to the entire scheme. It was not distinguishable from other modes of contributions through banking channels such as cheque transfer, transfer through Electronic Clearing System or direct debit, if anonymity component was struck down.

Other reports about the judgment can be read here.

Case Title: Association for Democratic Reforms & Anr. v. Union of India & Ors. | Writ Petition (Civil) No. 880 of 2017

Citation: 2024 LiveLaw (SC) 118

Click here to read/download judgment