In a big verdict, the Supreme Court on Thursday struck down the electoral bonds scheme as “unconstitutional”. A five-judge bench of the Apex Court said the scheme violates the right to information and freedom of speech and expression under the Constitution. The court asked the issuing bank–SBI– to stop issuing the electoral bonds and furnish the details of all donations made under the scheme to the Election Commission of India.
A five-judge Constitution bench headed by Chief Justice DY Chandrachud also asked the poll body to publish the data about the domination by March 13, 2024.
The court delivered two separate but unanimous verdicts on pleas challenging the scheme.
Pronouncing the verdict, the CJI said, “Petitions raise the following issues — Whether amendments are violative of right to information under Article 19(1)(a) and whether unlimited corporate funding violates principles of free and fair elections.”
“Courts have held citizens have right to hold govt to account. The crucial aspect of the expansion of the right to information is that it is not confined to state affairs but also includes information necessary for participatory democracy,” the CJI said.
He observed that political parties are relevant units in the electoral process and information about the funding of political parties is essential for electoral choices.
“Political contributors get access…this access leads to policy making…because of nexus between money and voting…,” he observed.
Supreme Court held that anonymous electoral bonds are violative of the right to information and Article 19(1)(a).
“Financial support to political parties can lead to quid pro quo arrangement. The electoral bonds scheme is not the only scheme to curb black money. There are other alternatives. Infringement to the right to information is not justified by the purpose of curbing black money. Financial contributions to political parties are made for two parties – for support to a political party, or contribution may be way of quid pro quo,” the CJI said.
The bench further noted that not all political contributions are made with the intent to alter public policy.
“Students, daily wagers etc also contribute. To not grant an umbrella of privacy to political contributions only because some contributions are made for other purposes is not impermissible… Informational privacy is applicable to political contributions too…Right to privacy of political affiliation does not extend to contributions made to influence public policy and applies only to contributions below the threshold,” the judgement said.
The court observed that the Union has been unable to establish the measure adopted in clause 7(4)(1) of the electoral scheme is the least restrictive measure.
“Amendments to the Income Tax Act provision and the Sec 29C of the Representation of Peoples Act are declared to be ultra vires… The electoral bonds scheme has to be struck down as unconstitutional,” the CJI said.
Calling the Amendment to the Companies Act (allowing blanket corporate political funding) as ‘unconstitutional’, the CJI said it violates the right to information of citizens, about possible quid pro quo.
“Amendment to S 182 of Companies Act become otiose in view of our finding that electoral bonds scheme is unconstitutional. A company has more graver influence on the political process than contributions by individuals. Contributions by companies are purely business transactions. Amendment to Section 182 Companies Act is manifestly arbitrary for treating companies and individuals alike,” he added.
The court also observed that before the amendment to the Companies Act, the loss-making companies were not able to contribute.
“The amendment does not recognize the harm of allowing loss-making companies to contribute due to quid pro quo. The amendment to Section 182 Companies Act is manifestly arbitrary for not making distincition between loss making and profit making companies,” the court added.
The top court asked the issuing bank– The State Bank Of India– to forthwith stop the issue of electoral bonds.
“The State Bank of India shall furnish the details of donations through electoral bonds and the details of the political parties which received the contributions…SBI shall furnish the details of electoral bonds encashed by the political parties… SBI shall submit the details to the Election Commission of India (ECI). ECI shall publish these details on the website by March 13, 2024,” the CJI said.
The court further added, that Electoral Bonds which are within the validity period of 15 days but which have not been encashed by the political parties yet shall be returned by the political party to the purchaser. The issuing bank shall then refund the amount to the purchaser.
Reaching his judgement, Justice Sanjiv Khanna said, “I agree with the judgment of CJI. I have also applied the principles of proportionality but with slight variation. But the conclusions are the same.”
The scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring in transparency in political funding.
According to the provisions of the scheme, electoral bonds may be purchased by any citizen of India or entity incorporated or established in the country. An individual can buy electoral bonds, either singly or jointly with other individuals.
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