Electoral Bonds verdict: How the proportionality test was applied in the case

What is the proportionality test? How does the Court decide whether the state action is proportional?

A law passed by Parliament cannot interfere with Part-III of the Constitution that lists out the inviolable fundamental rights. The only interference with Article 19(1) — which guarantees the fundamental right to free speech — permissible is to the extent that the “reasonable restrictions” listed in Article 19(2) are not flouted. The test to decide whether an action is a reasonable restriction is the proportionality test.

In the 2018 SC ruling that upheld the Aadhaar Act, Justice Chandrachud in his dissenting opinion said that the proportionality test is “the dominant best practice judicial standard for resolving disputes that involve either a conflict between two rights claims or between a right and a legitimate government interest.” The test is deemed necessary to guard against arbitrary action, so that the state cannot extinguish the right entirely even in pursuance of a legitimate state interest. For example, the right to life cannot be taken away to ensure law and order.

The test was formally laid down as the best practice in the 2017 seven-judge Bench Puttaswamy ruling, which recognised the right to privacy as a fundamental right. Justice Sanjay Kishan Kaul in his concurring opinion stated the the state action to be upheld must show: (i) The action is sanctioned by law; (ii) The proposed action must be necessary in a democratic society for a legitimate aim; (iii) The extent of such interference must be proportionate to the need for such interference; and (iv) There must be procedural guarantees against abuse of such interference.”

The govt’s argument

In the electoral bonds case, the government had argued that curbing black money and protecting donor anonymity are both legitimate aims for the state. While tackling black money is fairly non-contentious, the government argued that donor anonymity is also a legitimate state interest since it seeks to give effect to a fundamental right — the right to privacy of the donor.

On the extent of interference with the voter’s right to know, the government argued that the right to information only operates against information in the possession or in the knowledge of the state. It cannot operate for seeking information not in the knowledge or possession of the state, Solicitor General Tushar Mehta argued.

Finally, on the issue of safeguards, Mehta said that on a court order, all the details can be furnished for a criminal investigation.

How the test was used

Justice Khanna, applying the proportionality test in his separate opinion, said that donor anonymity cannot be a legitimate state aim. He also held that voters’ right to know supersedes anonymity in political party funding.

CJI Chandrachud, however, applied the “double proportionality” test. Since the case involves balancing facets of two competing fundamental rights — the right to information and the right to privacy, the proportionality test would not be enough.

According to him, the proportionality test is for when a right is directly tested against state action, but for a “balancing” of rights, the court needs to go further. Essentially, the court will have to examine the matter from the perspective of both rights and decide if the state has adopted the “least restrictive” methods to realise both rights. Additionally, whether the measure has a disproportionate impact on any one of the two rights also has to be looked at.

The CJI in his opinion pointed out that there are less intrusive methods, such as the electoral trusts scheme, to achieve the objective of curbing black money and protecting donor anonymity.