Two warnings, a scheme and an interim order
Published 5 October 2026
The Court's judgment sets out, from the government's own files, how the Reserve Bank of India (RBI) and the Election Commission reacted to the bond idea in 2017. These are the Court's account of documents placed before it. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The Reserve Bank of India
On Monday, January 2, 2017, the RBI wrote to the Joint Secretary in the Finance Ministry opposing the idea of bearer bonds. It made three points. Several non-sovereign entities would issue bearer instruments, which went against the RBI's sole authority, and large volumes could "undermine the faith in banknotes". KYC checks would show the buyer but not "intervening persons/entities", which "would impact the principles of the Prevention of Money Laundering Act 2002". And cheques, drafts and electronic payments could do the same job, so "there is no special need" for a new bearer bond. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
On Monday, January 30, 2017, the Finance Ministry replied that the 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". It said the fear about currency use was unfounded because of the redemption time limit. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
On Friday, August 4, 2017, the RBI Deputy Governor said bonds could be issued on a transitional basis through the RBI under Section 31(1) of the RBI Act, with safeguards: A tenure of at most 15 days; values in multiples of Rs 1,000, Rs 10,000 or a lakh; purchase from a KYC-compliant bank account; redemption only into the designated account of an eligible party; sale windows perhaps twice a year for seven days; and issue only at RBI Mumbai. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
On Thursday, September 14, 2017, commenting on a draft scheme that let commercial banks issue the bonds, the RBI wrote that this would "have an adverse impact on public perception about the Scheme, as also the credibility of India's financial system in general and the central bank in particular". It flagged possible misuse by shell companies and suggested an electronic form. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
On Wednesday, September 27, 2017, the RBI's Committee of the Central Board raised "serious reservations" about physical bonds. Issuing currency is a "monopolistic function"; scrips could be passed on for cash with no trail; there was a risk of forgery and counterfeiting and of use by "aggregators"; and the bond could be "projected (albeit wrongly) as enabling" money laundering. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The Election Commission of India
On Friday, May 26, 2017, the ECI wrote to the Law Ministry that the Finance Act amendments would have "serious impact on transparency of political finance/funding of political parties". On the bond proviso to Section 29C it said this was "a retrograde step as far as transparency of donations is concerned and this proviso needs to be withdrawn". Without reports to the ECI, it said, "it cannot be ascertained whether the political party has taken any donation in violation of ... Section 29B", the section that bars donations from Government companies and from foreign sources. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
On the removed cap, the ECI said that unlimited corporate funding would raise the risk of black money moving through shell companies, and that a cap had meant only profitable companies with a track record could give. It asked that party-wise declarations in company accounts be kept and the cap be restored. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The Electoral Bond Scheme was notified on Tuesday, January 2, 2018 by the Department of Economic Affairs under Section 31(3) of the RBI Act. A bond was a bearer banking instrument "in the nature of promissory note" that carried no buyer name (Clause 2(a)). Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
Who could buy and redeem. Clause 3 let a citizen of India or an entity incorporated or established in India buy bonds. "Person" included individuals, Hindu undivided families, companies, firms, associations of persons, artificial juridical persons and agencies or branches owned by them, and individuals could buy singly or jointly. Only an "eligible political party" could redeem (Clause 12). That meant a party registered under Section 29A of the RPA that had won at least one percent of the votes in the last Lok Sabha or Assembly election, and the money had to go into an account with an authorised bank. The State Bank of India (SBI) was the notified bank (Clause 2(b)). Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
How it worked. KYC followed RBI instructions (Clause 4(2)), and payment was in rupees by draft, cheque, electronic clearing or direct debit (Clause 11). Denominations were Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore (Clause 5). A bond was valid for 15 days (Clause 6), and if it was not encashed in that time its value was deposited into the Prime Minister's Relief Fund (Clause 12(2)). There was no refund (Clause 7(6)), no interest (Clause 9), no commission (Clause 10), and the bond could not be traded (Clause 14). Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
Secrecy and sale windows. Buyer information was confidential and could be disclosed "only when demanded by a competent court or upon registration of criminal case by any law enforcement agency" (Clause 7(4)). Sale windows were ten days in each of January, April, July and October, plus an extra thirty days in a general election year (Clause 8). Bond income counted as voluntary contribution for the Section 13A tax exemption (Clause 13). Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The petitioners challenged section 135 (which amended the RBI Act), section 137 (RPA), section 11 (Income Tax Act) and section 154 (Companies Act) of the Finance Act 2017. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The Court's April 2019 interim order did not stay the scheme. It ordered political parties to give the Election Commission, in a sealed cover, details of donors and of credits received for each bond. The judgment dates this order "13 April 2019" but "12 April 2019" and in the later orders. Where sources differ: April 12, 2019 was a Friday and April 13 a Saturday, and this piece uses April 12, 2019, the date the Court uses in its directions and in its March 18, 2024 order. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The interim order said the scheme was not "behind iron curtains incapable of being pierced", because company and party accounts are public. It added: "All that is required is a little more effort to cull out such information from both sides ... And do some 'match the following'" (quoted in para 26). Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The petitioners also challenged the Finance Act as a Money Bill under Article 110 of the Constitution. The Court says that question was pending before a seven-judge bench in Roger Mathew v. South Indian Bank (Civil Appeal 8588 of 2019) and that the petitioners pressed grounds independent of it. (The judgment's footnote prints the respondent's name as "South Bank of India"; the case is cited here as Roger Mathew.) On Tuesday, October 31, 2023, the Court directed that the batch be listed before a bench of at least five judges under Article 145(3) of the Constitution, and that became the Constitution Bench. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
Stay requests, 2020 and 2021
The April 2019 order left the scheme running. Nine months later the petitioners came back with a request to stop it. On Monday, January 20, 2020, Prashant Bhushan, appearing for ADR, told the Court that the Delhi Assembly election on February 8 was close and that the scheme was about to be opened again for a sale window. He said new facts had come out since the 2019 order, including documents obtained under the Right to Information Act that showed the RBI's objections. The Indian Express reported that ADR described those papers as repeated warnings from the central bank, which the Finance Ministry had "summarily dismissed", and as Law Ministry reservations the Finance Ministry "chose to ignore". Source: The Indian Express, Jan 21, 2020
The Court did not grant the stay. According to the Indian Express, Chief Justice S A Bobde observed that if a similar plea for a stay had been argued earlier and rejected, there was no question of ordering one now. He gave the Centre and the Election Commission two weeks to reply and said the Court would look at the new documents when the matter was listed again: "We will see that." Rakesh Dwivedi, for the Election Commission, had asked for four weeks and said the arguments were being repeated. Bhushan objected to the delay and argued that the scheme was being opened before elections to favour the party in power. Source: The Indian Express, Jan 21, 2020
Where sources differ: The Supreme Court Observer's report of the same hearing names the bench as Chief Justice Bobde with Justices B R Gavai and Sanjiv Khanna, while the Indian Express names Chief Justice Bobde with Justices B R Gavai and Surya Kant. Both agree that the Court directed the Election Commission to reply within two weeks and did not stay the scheme. Source: Supreme Court Observer, Day 5 of the stay hearings
The same request returned in the spring of 2021. On Friday, March 26, 2021, a bench led by Chief Justice Bobde, with Justices A S Bopanna and V Ramasubramanian (as Bar and Bench named them), dismissed an urgent ADR application to stop a sale window scheduled for April 1 to 10. The Hindu reported that the Chief Justice, reading out the order, said the scheme had begun in 2018 and continued through 2019 and 2020 without any impediments, and that the Court found no reason to stall the sale now. Source: The Hindu, Mar 26, 2021
The state elections ADR had in mind were West Bengal, Tamil Nadu, Kerala and Assam. The Hindu said ADR, represented by Bhushan and Neha Rathi, told the Court that a sale before those polls would "further increase illegal and illicit funding of political parties through shell companies", and that RTI data showed "illegal sale windows" had been opened in the past to benefit certain parties. Attorney General K K Venugopal said the sale had been announced after permission from the Election Commission. Source: The Hindu, Mar 26, 2021
The Election Commission's position at that point surprised the petitioners. The Hindu reported that at the previous hearing, earlier in the week, Rakesh Dwivedi told the Court: "The Election Commission is supporting electoral bonds or we will go back to the pre-existing situation of donations coming in by cash." ADR had argued all along that both the RBI and the Commission had objected to the scheme in 2017, as the Commission's own letter of May 26, 2017 recorded. The same report said the Court had asked at that earlier hearing how the government meant to "flex control" over what parties did with the money, after raising the concern that crores received as bond donations could be misused to fund violent protests or even terror. Source: The Hindu, Mar 26, 2021
The Finance Ministry's affidavit, as the Hindu summarised it, described the secrecy as the product of "well thought-out policy considerations". It said the earlier system of cash donations had left donors worried that, with their identity revealed, they would face "competitive pressure from different political parties receiving donation". Source: The Hindu, Mar 26, 2021
Referral to five judges, October 2023
For the next two and a half years the main petitions waited. By October 2023, The Hindu noted, the case had been pending in the Supreme Court for over eight years. On Tuesday, October 10, 2023, Chief Justice D Y Chandrachud had listed the matter and remarked, "We are here to decide the case." Source: The Hindu, Oct 16, 2023
On Monday, October 16, 2023, during the oral mentioning hour, the Chief Justice said the Court had received a request to move the case from the three-judge bench to a bench of at least five. He referred it to a Constitution Bench "due to importance of the issue", and kept the hearing date already fixed for October 31. The Hindu read the refusal to wait for a bench to be formed as a signal that the Court did not mean to allow further delay. Bhushan had pressed for a decision before the 2024 Lok Sabha election. Source: The Hindu, Oct 16, 2023
The Court also agreed to concentrate on two questions: The legalisation of anonymous donations, and the citizen's right to information about party funding, under Articles 19, 14 and 21. The Hindu added that the five judges might not decide whether the Finance Act could be passed as a Money Bill, since that question was already before a seven-judge bench; the scheme's 2016 and 2017 amendments had gone through as Money Bills, which, as the Hindu put it, circumvented the Rajya Sabha. Shadan Farasat, for a petitioner, argued that the scheme had "anonymised" and "sanitised" political donations, and Bhushan said the Finance Acts of 2016 and 2017 had "opened the floodgates to unlimited political donations". Source: The Hindu, Oct 16, 2023
Where sources differ: The Hindu dates the referral to Monday, October 16, 2023, while the judgment says the batch was directed to be listed before a bench of at least five judges "by an order dated 31 October 2023", citing Article 145(3). The two can be reconciled only as two steps, which neither source states, so both dates are printed as reported. The judgment adds that the petitioners told the Court they would press their challenge to the Finance Act independently of the Money Bill question, "in view of the upcoming elections to Parliament". Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The judgment then framed the case as two issues. First, whether unlimited corporate funding, as made possible by the amendment to Section 182(1) of the Companies Act, offends free and fair elections and Article 14. Second, whether non-disclosure of voluntary contributions under the scheme, together with the amendments to Section 29C of the Representation of the People Act, Section 182(3) of the Companies Act and Section 13A(b) of the Income Tax Act, violates the citizen's right to information under Article 19(1)(a). Everything argued in the three days that followed was directed at those two questions. Source: Judgment, ADR v. Union of India, 2024 INSC 113 (Feb 15, 2024)
The Attorney General's written position, October 30, 2023
The day before the hearing began, the Hindu published the Union's written case. Attorney General R Venkataramani described the scheme as a way to bring "clean money" to political parties and said it made sure "tax obligations" were met. His central legal argument concerned Article 19(2). Citizens, he said, could not claim a "general right to know anything and everything" without reasonable restrictions, and the right to know had to serve "specific ends" instead of an over-broad idea such as the "general health of democracy". Source: The Hindu, Oct 30-31, 2023
He drew a line between this case and the Court's earlier ruling on candidates' criminal records. The right to know a candidate's antecedents, he wrote, can be useful to the voter's choice, and "neither is comparable to the case on hand nor can there be". He called the scheme "regulatory", because it moved donations through banking channels and required tax compliance, and he said it extended "the benefit of confidentiality to the contributor" without violating any existing right. Questions of this kind, he added, were "highly debatable" and could not be settled by "simplistic statements" without parliamentary debate. Source: The Hindu, Oct 30-31, 2023
Three days in court: October 31 to November 2, 2023
The Constitution Bench of Chief Justice Chandrachud and Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra sat on Tuesday, October 31, 2023. According to the Supreme Court Observer, Bhushan began by saying he would not argue the 2016 challenge to the Foreign Contribution Regulation Act, which was pending before the seven-judge bench, and wanted the electoral bond question decided before the 2024 general election. The Bench pushed counsel to be brief and discouraged repetition. Source: Supreme Court Observer, Day 1
Bhushan's first point was that the 2018 notification required no disclosure of the buyer "to any authority for any purposes" unless a court or a law enforcement agency in a registered criminal case asked, so the Election Commission knew the amount of a donation but not its source. He reminded the Bench of the 2021 interim order's remark that the information could be put together with "a little more effort", and said there were 23,00,000 registered companies in India, so an ordinary citizen could not do it. Farasat, for the CPI(M), called the scheme a "legally ordained information blackhole". Source: Supreme Court Observer, Day 1
On the bonds themselves, Bhushan argued that the only bodies with access to buyer details, the State Bank and enforcement agencies, were controlled by the government, so a ruling party could find out who had funded whom. Kapil Sibal said a large donor would tell the party itself in return for favours: "Let's talk practical politics." The Chief Justice raised the possibility of trading, in which a person A buys a bond, hands it to B, who passes it to C, who gives it to the party, with B possibly acting as an aggregator. Sibal pointed to the State Bank's FAQ, which called the bond a "bearer banking instrument" whose holder was the "Bonafide owner". Source: Supreme Court Observer, Day 1
The Chief Justice described the concern as one of incumbency: A party in power is better placed to attract funds because it can return favours in the form of "government contracts, or leases, or licences, concessions" or policy changes, and concentrating bond money in the ruling party was "an important source of perpetrating power". Source: Supreme Court Observer, Day 1
The Bench noted that before 2018 a company's donations were capped at 7.5 percent of three years' average net profit and had to be disclosed. Under the scheme, anonymity extended from the donor and the party to society at large. Sibal added in his written submissions that parties could use the account opened to redeem bonds for any other banking, and close it "at any point of time", so nothing in the scheme tied a donation to the election. Source: Supreme Court Observer, Day 1
The second day, Wednesday, November 1, 2023, belonged to the Union. Solicitor General Tushar Mehta asked the Bench to stop using the words "anonymity" and "opacity" and to say "confidentiality" instead. He then took the Court through the history of corporate donations from the Companies Act of 1956 to the Election Commission's 2014 trust disclosure guidelines. Source: Supreme Court Observer, Day 2
Mehta read from Arun Jaitley's speech in Parliament of Wednesday, February 1, 2017, in which the Finance Minister said the system of political funding needed to be cleansed while donors' identities were protected. Mehta stressed that Jaitley never claimed to end black money, only to bring "substantial" and "significant" change. He argued that a return to the earlier regime would bring back cash donations and relied on an ADR report to say that 69 percent of party income between 2004-05 and 2014-15 came from "unknown sources". Source: Supreme Court Observer, Day 2
The Bench pressed back during that day. The Chief Justice said the premise of transparency was that the donor buys the bond, but "the donor does not have to buy the bonds", so the buyer and the real donor could differ. The Bench also described the scheme as offering selective confidentiality: A ruling party could reach information that the Election Commission and citizens could not, which would leave the opposition without the same knowledge. Mehta said the scheme's features, which he would set out the next day, answered those concerns. Source: Supreme Court Observer, Day 2
On Thursday, November 2, 2023, Mehta described the State Bank as the authorised bank because it was the largest public sector bank, and read out a letter from its Chairman that, in Mehta's words, described a "fool proof" and "scientific" mechanism keeping donor information confidential even from the Union government. He said a breach would leave a "digital footprint" and that the data could be reached only by a court order or a criminal case. In reply, Sibal asked how the public could file a case alleging corruption in political funding without access to the donation data, and exclaimed, "What Court order are we talking about?!" Source: Supreme Court Observer, Day 3
On privacy, Bhushan answered the Union's case that a donor's confidentiality is part of the donor's privacy: privacy, he said, is an individual right flowing from the right to life and cannot be enjoyed by a company. Farasat argued that as an entity's political influence grows, its claim to privacy shrinks. Mehta's reply, that a few flaws are no reason to scrap a scheme ("There can never be a system which is so fool proof, that it can never be misused"), and that any bias toward the ruling party in donations reflected voters' choices, drew Sibal's answer that the scheme was an "unconstitutional, undemocratic, unfair power given to the ruling party". Source: Supreme Court Observer, Day 3
The Court reserved judgment that day, after a three-day hearing that began on October 31. The Indian Express reported that the Bench also directed the Election Commission to collect and file, in a sealed cover, within two weeks, details of the contributions political parties had received through electoral bonds up to September 30, 2023. Source: The Indian Express, Nov 2, 2023
The Election Commission moved the next day. Hindustan Times reported that a November 3 order from the Commission, issued under the Court's order of November 2, asked every party that had received money through bonds to send, by 5pm on November 15, the details of the donors against each bond, the amount of each bond, and "the full particulars of the credit received against each bond, namely, the particulars of the bank account to which the amount has been credited and the date of each such credit". The wording followed the April 2019 interim order, which the November order had repeated. Parties were told to send the material to Binod Kumar, the secretary of the Commission's election expenditure division, in a "double sealed cover" marked "Confidential-Electoral Bond". On Tuesday, November 14, 2023, the Commission sent a reminder. Source: Hindustan Times, Nov 14, 2023
The Court's own order set the outer limit. The Commission was to produce updated data up to September 30, 2023 and hand it to the Registrar (Judicial) in a sealed packet "on or before November 19, 2023". According to Hindustan Times, the Court had also noted that the April 2019 order was not tied to the day it was pronounced, and had said that "if there was any ambiguity, it was necessary for the Election Commission to seek a clarification from this Court". On Thursday, November 16, 2023, a Commission functionary said, in a report carried by State Times, that "the details are being compiled" and that "several parties have shared details", and that major parties including the BJP and the Congress had submitted theirs. Source: State Times, Nov 17, 2023
The same Hindustan Times report carried figures from outside the courtroom. Citing The Week, which in turn cited information obtained under the Right to Information Act by Commodore Lokesh Batra (Retd), it said bonds worth Rs 14,940 crore had been sold between March 2018 and October 2023, and that bonds worth Rs 1,148 crore were sold between October 4 and October 13, just before assembly elections began in five states. These are second-hand figures from an RTI response and are not findings of the Court. Source: Hindustan Times, Nov 14, 2023
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