The Supreme Court on Thursday struck down the electoral bond scheme that allows anonymous donations to political parties by purchasing electoral bonds from the State Bank of India (SBI), saying anonymous electoral bonds violated citizens’ right to information. A five-judge Constitution bench headed by Chief Justice DY Chandrachud delivered two separate but unanimous verdicts on pleas challenging the scheme.
Calling electoral bonds ‘unconstitutional’, the top court said, “Infringement of the voter’s right to know is not proportionally justified by saying black money is being curbed.”
Pronouncing the verdict, Chief Justice of India (CJI) DY Chandrachud said the scheme is violative of freedom of speech and expression under Article 19(1)(a) of the Constitution.
He explained, “Fundamental right to privacy includes citizen’s right to political privacy. Information about a citizen’s political affiliation can lead to subjecting a citizen to curbs or subjecting them to trolls. It can be used to disenfranchise voters through voter surveillance.”
“Electoral Bonds Scheme, proviso to Section 29(1)(c) as amended by Section 139 of Income Tax Act and Section 13(b) as amended by Finance Act 2017 is violative of Article 19(1)(a),” the judgment said. It also held that the amendment to Section 182 Companies Act, which allowed corporate political funding, was unconstitutional.
“Political parties are relevant units in the electoral process. Information about the funding of political parties is essential for electoral choices. In a democracy, the right to information includes the right to know the source of political funding. Unlimited political funding by corporates is violative of the fundamental right to free and fair elections,” the verdict said.
The other judges, including Justice Sanjiv Khanna, seconded the CJI’s remarks.
BANKS TO STOP ISSUING ELECTORAL BONDS: SUPREME COURT
The Supreme Court also directed banks to stop issuing electoral bonds. It asked the State Bank of India (SBI) to submit a report on the electoral bonds and details of the ones encashed by political parties to the Election Commission of India by March 6.
“SBI shall furnish the details of donations through electoral bonds and the details of the political parties which received the contributions by March 6,” the court said.
The apex court also asked the poll body to publish the data received on electoral bonds on its website by March 13. The apex court asked the political parties to refund the amount to the voters thereafter.
According to a report on Live Law, the court said, “SBI shall submit the details of electoral bonds purchased since the interim order of the Court dated April 12, 2019, till date to the Election Commission of India. The details shall include the date of purchase of each electoral bond, the name of the purchaser of the bond and the denomination of the electoral bond purchased.
“State Bank of India shall submit the details of the political parties which have received contributions through electoral bonds since the interim order dated April 12, 2019 till date to the ECI. SBI must disclose details of each electoral bonds encashed by the political parties, which shall include the date of encashment and the denomination of electoral bond,” it added.
“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’s account,” the court said.
A five-judge Constitution bench headed by Chief Justice DY Chandrachud, had, on November 2 last year reserved its verdict in the matter.
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 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.
Only the political parties registered under Section 29A of the Representation of the People Act, 1951, and which secured not less than 1% of the votes polled in the last elections to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds. According to the notification, electoral bonds shall be encashed by an eligible political party only through an account with an authorised bank.
In April 2019, the apex court had declined to stay the electoral bonds scheme and made it clear that it would accord an in-depth hearing on the pleas as the Centre and the Election Commission had raised “weighty issues” that had “tremendous bearing on the sanctity of the electoral process in the country”.
The Constitution bench, also comprising Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra, had on October 31 last year commenced hearing arguments on the four petitions, including those filed by Congress leader Jaya Thakur, the Communist Party of India (Marxist) and NGO Association for Democratic Reforms (ADR).
During the hearing in the matter, the apex court had underscored the need for reducing the cash component in the electoral process.
The petitioners in the case are the Association for Democratic Reforms (ADR), the Communist Party of India (Marxist), and Dr Jaya Thakur, who challenged the amendments introduced by the Finance Act 2017 which paved the way for the electoral bonds scheme.
The petitioners argued that the anonymity in the electoral bonds affects the transparency of political funding and infringes on the voters’ right to information, which is sacrosanct in a democracy.
The Modi government, on the other hand, is defending the scheme calling it a method to ensure that ‘white’ money is used for political funding through proper banking channels.
The Government further argued that anonymity in these bonds was necessary to keep the identity of donors confidential so that they would not face any retribution from political parties.
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