Electoral Bonds case: An Analysis of its contributions to the Test of Arbitrariness


The arbitrariness test and its application have been a continuously evolving area of jurisprudence with each case contributing differently to the idea. The judgements between the Mcdowell case to before the Shayara Bano case have been different from each other. None of the judgements have relied much on the previous judgements. Furthermore, there have been an increasing number of cases for declaring legislations arbitrary post-Shayara Bano. In the 3 years following Shayara Bano, there have been 12 such cases in the Supreme court. In 7 out of these 12 cases, the law has been struck down, while in the remaining 5 cases, the law was found to be constitutional. The lack of parity in the application of the Arbitrariness test and the new flux of cases in the Supreme Court makes the analysis of the Electoral Bonds case from this perspective pertinent. In doing so, the author makes some key observations in the judgement to understand how it may propel future developments in the captioned areas. The author also makes an attempt to point out the clarity in the application of law which comes with the judgement.

The scope of this paper is not to delve into the merits and demerits of the application of the law in the judgement or to have a critical analysis of the same. It is an account of key observations which could have the potential to gauge the mindset with which the Honorable Supreme Court is proceeding further when presiding over cases which deal with the arbitrariness test.

This paper is divided into three parts. The author begins with an introduction to the test of arbitrariness. This is followed by the second part where the author describes the arbitrariness principle (as laid out) in the Electoral Bonds case and evaluates the analysis carried out by Hon’ble Justice Chandrachud. In the third part, the author concludes by giving an account of the potential of the judgement in the arbitrariness jurisprudence.


In the realm of legislative review, Article 14 of the Constitution can be seen as having two main aspects. Firstly, it addresses whether a particular piece of legislation is ‘discriminatory,’ thus potentially infringing upon the provisions of Article 14. Secondly, it evaluates whether the legislation is ‘arbitrary,’ which could constitute another violation of Article 14.

The concept of ‘discrimination’ involves comparing different groups or individuals and determining whether the legislation treats them unfairly. This aspect is typically assessed through the application of a ‘classification test,’ wherein the rationale behind the classification made by the legislation is scrutinized for its reasonableness and conformity with constitutional principles.

However, when a particular piece of legislation lacks a rational justification or nexus to purported goals/objectives of the said legislation, it may be deemed as ‘arbitrary.’ In such cases, the principle of ‘manifest arbitrariness’ is applied to assess the legislation’s constitutionality. This principle allows courts to delve deeper into the legislative intent and the impact of the law on individuals or groups beyond mere classification.

In summary, while the ‘discriminatory’ aspect of Article 14 focuses on the fairness of classification in legislation, the ‘arbitrary’ aspect deals with the broader question of whether the law is rational and relevant in light of evolving societal dynamics.

The Concept of Arbitrariness in the Electoral Bond case

The Hon’ble Supreme Court of India in the Electoral Bonds case has relied on a two-pronged argument to hold that the Amendment introduced by the Finance Act, 2017 is arbitrary: The court has held that firstly, the amendment to Companies Act fails to recognize the degree of harm which is caused by the lack of classification; secondly, the Amendment does not serve a purpose which is in consonance with the values of the constitution. In the subsequent paragraphs, the author aims to present an analysis of each prong of arbitrariness and what it means for the upcoming jurisprudence in arbitrariness.

The Amendment to the Companies Act fails to recognize the degree of harm which is caused by lack of classification.

The Amendment removes the proviso which disallowed companies to fund political parties in excess of 5% of its average net profits during previous three financial year.[1] The records of the legislative debates discuss how this cap was established to prevent malpractices in the elections by discouraging shell companies and loss-making companies from making hefty contributions to parties. These contributions were made to obtain a quid pro quo by the companies from the powerful incumbent government.

On the contrary, no such bar was exercised on an individual making them free to make any amount of contribution to the political parties. The court opined that the capacity of a company to sway the elections with political funding and use the money power to its advantage by ensuring quid pro quo from the parties against the funding, is much higher compared to individuals. Hence, the Amendment to the Companies Act, failed to consider that the reason for the classification is to prevent a higher degree of harm as a person and a company are not equally placed.

The Harm test was evolved by Justice Misra in Navtej Singh Johar case. He held that Section 377 which although does not specifically mention the LGBTQ+ community, criminalizes any kind of a sexual act which involves this community. The section fails to recognize the harm which is caused to the LGBTQ+ community owing to their difference in sexual orientation. By criminalizing non-conventional sexual activity, the section causes greater harm to the LGBTQ+ community. Further, the Section classifies consensual and non-consensual act in the LGBTQ+ communities as same. Thus, the failure to make this distinction makes the section arbitrary. Hence, everybody is not equally placed and the degree of harm may occur differently for different people. The legislation should recognize this degree of harm and prevent the harm on non-equals.

Justice Chandrachud made a corollary application of the harm test propounded by Justice Misra in Navtej Johar case. The detrimental impact of funding political parties would be far excess in case of companies as compared to individuals. Hence, the state should not fail to make a classification by omitting an Amendment which distinguishes between a company and an individual, as the harm can be differently caused by the companies and the individuals.[2]

The application of the harm test by Justice Chandrachud has broadened the duties of the state. The earlier principle was based on the harm when the state imposed an arbitrary legislation. However, Justice Chandrachud has extended the duty of the state from not having to impose a law, to not abrogating a law which makes a reasonable distinction and prevents such harm caused. The two-way application of the arbitrariness has increased the burden on the state to not directly impose an arbitrary legislation as well as not abrogate any legislation which prevents arbitrariness based on the harm principle.

The Amendment does not serve a purpose which is in consonance with the values of the constitution.

Justice Chandrachud also delved into the idea of constitutional values of democracy including the importance of conducting free and fair elections. The judgement focuses on the lack of classification between an individual and company which is a detriment to the fair elections as the corporates would have an undue advantage over the political parties they fund. Similar analysis of legislations obstructing the constitutional values enshrined have been done in various cases which deal with determination of manifest arbitrariness in legislations.

The adultery laws were read down by the court as the provisions gave a meaning that a man’s consent to another man for sexual relations with the former’s wife would not be violative of the adultery provisions.[3] Justice Chandrachud held that the aforementioned interpretation of the provision leads to a conclusion that the women are chaste and owing to the marriage, they have lost their sexual autonomy to the man they married. Hence, the provisions were held stereotypical and discriminatory by Justice Chandrachud in light of the constitutional values.

Interestingly, in his judgement in Joseph Shine, Justice Chandrachud did not define constitutional values based on the basic structure doctrine. Reliance was placed on the wide reading of ‘liberty’ in Article 21 to infer how a person’s sexual autonomy cannot be nullified on the grounds of marriage. However, in the Electoral Bonds case, Justice Chandrachud has relied on the basic structure to adjudge a constitutional value which is breached.

The reason for adjudging arbitrariness of the statute is based on the detrimental impact caused on the democracy because of an impediment to the free and fair elections owing to the money power of the corporations. Hence, an obstruction in free and fair elections is a constitutional value which is being breached. The judgement holds that free and fair elections is concomitant to democracy which is a part of the basic structure.[4] The judgement also allows the application of the basic structure doctrine to an ordinary legislation departing from the specific application of the same to the constitutional amendments. Does this mean that arbitrariness in the present case has been held so, owing to the breach in democratic values which form the part of the basic structure.

The above analysis lead to two pertinent questions: first, why did Justice Chandrachud define the breach in the constitutional values which causes arbitrariness, as leading to a breach in democracy which is a part of the basic structure? Second, why is the similar schema for relying on basic structure not followed by him when he drafted the Joseph Shine case. The author will come back to these questions.

In Mardia Chemicals, the court held the sections 13, 15, 17 and 34 of the SARFAESI Act, 2002 as arbitrary. Section 17 imposed a requirement of depositing 75% of the amount claimed by the creditor with the tribunal. The court held that the deposit of such a high amount of 75% especially when the borrower is not in a position to raise funds for such a non-determinative future demand, especially at the stage of the initiation of the proceeding is arbitrary and violative of Article 14. The court held that the remedy which although seems to be available with the borrower was rendered illusory owing to the unreasonable deposit.

In the case, there has been a clear curtailment of the right to approach the judiciary which is fundamental to the Constitution. Abhinav Chandrachud has made a few key observations in regard to the analysis of the court in curtailment of this right.

His article observes that right to Constitutional remedies under Article 32 does not include within it the concept of judicial review in respect of all the courts as a fundamental right. The judicial review in abstract is broader than what has been enshrined as a fundamental right in the Constitution. It is the right to approach the Supreme Court which is given the status of a fundamental right by the constitution and not the right to appeal to any judicial organ. However, the concept of judicial review is a part of the basic structure and any unreasonable constraint on the exercise of this right would prove to be violative of the basic structure. Hence, the court in Mardia Chemicals could not adjudge the right of the borrower to initiate proceedings in a tribunal as a fundamental right, but it could examine it on the grounds of basic structure.

The judgement has defined the demand of 75% deposit for the initiation of the proceeding as “not alone onerous and oppressive but also unreasonable and arbitrary.” However, it has not described the benchmark for what unreasonable and arbitrary is, which has led to criticisms on the arbitrary application of the test of arbitrariness.

Although Mardia Chemicals does not explicitly mention the reason for holding manifest arbitrariness in the right to appeal as arbitrary. There is bound to be a metric which dictates that having such a provision which would make the remedy of judicial review as devoid of meaning, is per se arbitrary. The application of basic structure fits clearly in this gap. The Judicial review is a part of the basic structure of the constitution. Hence, if a provision such as the one in Mardia Chemicals, violates the basic structure it can be held arbitrary.

Now reverting back to the question why we have the constitutional values read alongside the basic structure of the constitution. In the Electoral Bonds case, Justice Chandrachud has made arbitrariness test be applied together with the basic structure to fill the gap what remained in Mardia Chemicals.

The application of basic structure makes the application of this test viable only in circumstances when a statute is so arbitrary in its nature that it is a threat to the fundamentals of constitution which is enshrined by the basic structure. Thus, the basic structure reference for arbitrariness may help to shape a test for arbitrariness in a more definitive manner. This idea was also propounded by learned author Abhinav Chandrachud in his previously mentioned work. The basic structure reliance in Electoral Bonds case might be a stepping stone in the establishment of a jurisprudence which brings together arbitrariness and basic structure.


The above analysis evidences the importance of the arbitrariness doctrine. The acceptance and application of the said doctrine has led to a huge number of cases challenging a number of legislations basis the said doctrine. Between 22nd August 2017 (when the Shayara Bano judgment was announced) and February 2020, i.e., approximately 2.5 years, claims invoking the doctrine of manifest arbitrariness to challenge a legislation have emerged in over 65 cases across different Courts.

The corollary application of the harm test has broadened the burden on the state to prevent any law from being amended such that it derecognizes the harm which caused due to lack of classification.

The basic structure overlap is a part of the long battle of providing objectivity to the concept of Arbitrariness. Future judgements may rely on this rational to understand the circumstances in which an ordinary legislation should be weighed against the basic structure which serves as a threshold required for a legislation to be adjudged as arbitrary.

However, the questions which remains is whether such an application of a broadened state responsibility within the harm principle as well as the application of the basic structure would ultimately lead to the judiciary exceeding its powers beyond what has been enshrined on it.


  1. s.182.
  2. para-195.
  3. s. 497.
  4. para-202.

(This post has been authored by Vaibhav Tibrewal, a Second-Year law student at the West Bengal National University of Juridical Sciences.)

CITE AS: Vaibhav Tibrewal, ‘Electoral Bonds case: An Analysis of its contributions to the Test of Arbitrariness’ (The Contemporary Law Forum, 19 May 2024) <tclf.in/2024/05/19/electoral-bonds-case-an-analysis-of-its-contributions-to-the-test-of-arbitrariness/>date of access.

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