Introduction: The article discusses the recent ruling by the Supreme Court of India to invalidate the Electoral Bonds Scheme, citing breaches in the right to information. The court’s decision, delivered by a five-member Constitution Bench, rebuffed the government’s arguments and stressed the Constitution’s obligation to address potential misuse.
Court’s Verdict and Directives
The five-member Constitution Bench, of Supreme Court (SC),In a unanimous verdict, the Supreme Court upheld challenges against every aspect of the Electoral Bonds Scheme, deeming it unconstitutional. Consequently, the court instructed the State Bank of India (SBI) to cease the issuance of electoral bonds immediately. Additionally, it mandated the submission of comprehensive information regarding the sold bonds, including the identities of donors and recipients, to the Election Commission of India (ECI).
Understanding the Electoral Bond Scheme
Electoral Bonds Overview:
Electoral bonds represent financial instruments akin to promissory notes. They are purchasable by both companies and individuals in India through the State Bank of India (SBI), enabling them to contribute to political parties. Subsequently, these bonds can be cashed by the respective political parties.
Redemption Restrictions:
The redemption of electoral bonds is exclusively limited to the designated accounts of registered political parties, ensuring transparency and accountability in the donation process.
Individual and Joint Purchase Options:
Individuals have the option to purchase electoral bonds either independently or jointly with other individuals, providing flexibility in the donation process.
Inception and Purpose:
The Electoral Bonds Scheme was introduced in 2018 with the aim of purifying political funding practices in India. It was conceived as a mechanism to enhance transparency in electoral funding processes.
Central Objective:
The primary objective of the electoral bonds scheme was to promote transparency in political funding within India. It was perceived by the government as a significant electoral reform initiative, particularly in a nation transitioning towards a cashless and digital economy.
Amendments Introduced in 2022
Extension of Bond Availability Period
Additional 15-Day Provision:
In 2022, amendments were made to the Electoral Bond Scheme to include a provision allowing for an extended period of fifteen days, to be determined by the Central Government. This extension is specifically applicable during general elections to the Legislative Assembly of States and Union territories with Legislature.
Previous Bond Availability:
Initially, when the Electoral Bond Scheme was launched in 2018, bonds were accessible for a duration of ten days each in January, April, July, and October, as per directives issued by the central government.
Further Extension During General Elections to Lok Sabha:
Additionally, during general elections to the House of People (Lok Sabha), the Central Government had previously specified an additional period of thirty days for the availability of electoral bonds.
Validity Period:
The Electoral Bonds remain valid for a duration of fifteen calendar days starting from the date of issuance. It is imperative that no payment be rendered to any recipient political party if the Electoral Bond is deposited after the expiration of this validity period.
Upon deposit, Electoral Bonds credited to the account of an eligible political party are processed on the same day, ensuring prompt transaction processing.
Criteria for Eligibility:
Political parties eligible to receive Electoral Bonds must fulfill the following conditions:
They must be registered under Section 29A of the Representation of the People Act, 1951 (RPA, 1951).
Additionally, these parties must have secured at least 1% of the votes polled in either the last General Election to the Lok Sabha or the State Legislative Assembly.
Basis for SC Strike Down the Electoral Bonds Scheme
Violation of Right to Information:
The Supreme Court deemed the Electoral Bonds Scheme as breaching the fundamental right to information guaranteed under Article 19(1)(a) of the Constitution. This infringement primarily stemmed from the scheme’s allowance of anonymous political contributions.
Importance of Right to Information:
The court emphasized that the right to information extends beyond facilitating freedom of speech and expression. It serves as a crucial mechanism for fostering participatory democracy and ensuring governmental accountability. Thus, it asserted that the right to information is not merely a means to an end but an intrinsic value in itself.
Economic Inequality’s Influence on Political Engagement:
Highlighting the correlation between economic inequality and political engagement, the court underscored the significant role of money in politics. It argued that varying levels of political engagement arise due to economic disparities, potentially leading to quid pro quo arrangements facilitated by financial contributions to political parties.
Lack of Proportional Justification for Combating Black Money:
In its decision to invalidate the Electoral Bonds Scheme, the Supreme Court referred to the proportionality test outlined in its 2017 verdict in the KS Puttaswamy case, which affirmed the right to privacy. It emphasized that the government failed to adopt the least restrictive means to achieve its objective of curbing black money.
Examples of Least Restrictive Measures:
Chief Justice cited specific examples, such as imposing a ₹20,000 cap on anonymous donations and implementing the concept of Electoral Trusts, which streamline the collection of political contributions from donors. These alternatives were deemed less intrusive compared to the Electoral Bonds Scheme.
Lack of Legitimate Purpose:
Furthermore, the court concurred with the petitioners’ arguments that the objective of combating black money did not align with any of the reasonable restrictions outlined under Article 19(2) of the Constitution. Consequently, it concluded that curbing black money did not constitute a legitimate purpose justifying the restriction of the fundamental right to information.
Limitations on Donor Privacy Regarding Contributions:
The Supreme Court highlighted distinctions in financial contributions to political parties, noting that they typically serve two purposes: as expressions of support or as quid pro quo arrangements. However, it emphasized the disparity between significant contributions from corporations and companies and those from individuals such as students, daily wage workers, artists, or teachers.
The Chief Justice asserted that the right to privacy regarding political affiliation does not encompass contributions made with the intent to influence policies. Instead, it extends solely to contributions made as genuine expressions of political support.
Challenges with Unlimited Corporate Donations and Impact on Electoral Fairness
The Supreme Court scrutinized an amendment to Section 182 of the Companies Act, 2013, which permitted unrestricted political contributions by corporations, deeming it inherently arbitrary. This amendment allowed Indian companies to donate to political parties without limitations. However, revisions introduced through the Finance Act, 2017, notably abolished the previous cap on corporate donations, which was set at 7.5% of the average profits over the preceding three fiscal years.
Moreover, the requirement for companies to disclose the recipient political parties’ names in their Profit and Loss (P&L) accounts was also eliminated, exacerbating transparency concerns.
The Chief Justice emphasized the disparity in treating political contributions by individuals and corporations equally. He noted that corporate donations often come with the expectation of reciprocal benefits, rendering them distinct from individual contributions.
Court Strikes Down Amendment to Section 29C of RPA, 1951
In a recent ruling, the court has struck down an amendment to Section 29C of the Representation of the People Act, 1951. Initially, this section mandated political parties to disclose all contributions exceeding ₹20,000 and specify whether they were from individuals or companies.
However, an amendment introduced through the Finance Act, 2017, exempted donations made through electoral bonds from this disclosure requirement. The court’s decision to quash this amendment was based on its observation that the original provision effectively balanced voters’ right to information with donors’ right to privacy, especially considering that contributions below ₹20,000 were less likely to influence political decisions.
Supreme Court Issues Further Directives on Electoral Bonds Management
In addition to the aforementioned directives, the Supreme Court has issued further instructions regarding the handling of electoral bonds. These directives aim to ensure transparency and accountability in the electoral process. One key directive requires the State Bank of India (SBI) to immediately halt the issuance of electoral bonds.
Furthermore, the SBI is mandated to furnish detailed information regarding electoral bonds purchased by political parties since April 12, 2019, to the Election Commission of India (ECI) by March 6, 2024. Such information should encompass crucial details such as the date of purchase, the name of the purchaser, and the denomination of the bond purchased. Following this, the ECI is tasked with the responsibility of publishing the provided information on its official website by March 13, 2024, ensuring public accessibility.
Additionally, Unclaimed electoral bonds within the fifteen-day validity period must be promptly returned by political parties. This prompts the issuing bank to initiate a refund process to the purchaser’s account. These directives underscore the court’s commitment to upholding transparency and fairness in the electoral system.
conclusion
Historic Verdict: February 15, 2024, is etched in India’s democratic history as the Supreme Court issued a momentous ruling, striking down the Electoral Bonds Scheme. In a unanimous decision, the Court upheld democracy as the fundamental structure of the Constitution and declared the scheme unconstitutional, addressing all challenges brought forth comprehensively.
Government Mandate: As per the Court’s decision, the government is mandated to halt the issuance of electoral bonds with immediate effect. Additionally, it must disclose all pertinent information related to the scheme to the Election Commission of India.
Constitutional Foundation: The Court’s ruling underscores the foundational principles of the Constitution, emphasizing the inherent right to information and transparency within a democratic framework. It unequivocally rejects the government’s assertions, affirming that the Constitution cannot condone any potential misuse of power or resources.
Supreme Court’s landmark decision on electoral bonds scheme
Frequently asked questions
What is the recent ruling by the Supreme Court of India regarding the Electoral Bonds Scheme?
The recent ruling by the Supreme Court of India declared the Electoral Bonds Scheme unconstitutional due to concerns over the right to information. The Court’s decision, delivered by a five-member Constitution Bench, invalidated the scheme in its entirety, citing breaches in transparency and accountability in political funding.
What were the directives issued by the Supreme Court regarding the Electoral Bonds Scheme?
The Supreme Court instructed the State Bank of India (SBI) to immediately halt the issuance of electoral bonds. Additionally, it mandated comprehensive disclosure of information related to the sold bonds, including the identities of donors and recipients, to the Election Commission of India (ECI). These directives aim to ensure transparency and accountability in the electoral process.
What is the Electoral Bonds Scheme and why was it introduced?
The Electoral Bonds Scheme, introduced in 2018, allows companies and individuals to purchase bonds from the State Bank of India (SBI) and donate them to political parties. The scheme was aimed at purifying political funding practices in India and enhancing transparency in electoral funding processes.
