Electoral Bonds Struck Down Ahead Of Polls In Big Supreme Court Order

In a historic judgment, the Supreme Court today struck down the electoral bonds scheme for political funding, holding that it violates the citizens’ right to information. The electoral bonds scheme, Chief Justice of India DY Chandrachud said, was unconstitutional and arbitrary and may lead to a quid pro quo arrangement between political parties and donors.

The Constitution bench of five judges held that the stated objective of fighting black money and maintaining the confidentiality of donors cannot defend the scheme. Electoral bonds, the court said, are not the only way to curb black money.

The Chief Justice of India said State Bank of India shall stop issue of these bonds at once and provide details of donations made through this mode to the Election Commission of India. The poll body was asked to publish this information on its website by March 13.

The five-judge bench, also comprising Justice Sanjiv Khanna, Justice BR Gavai, Justice JB Pardiwala and Justice Manoj Misra, came up with a unanimous decision. “We have arrived at a unanimous decision. There are two opinions, one by myself and another by Justice Sanjiv Khanna. Both arrive at the same conclusion. There is a slight variance in the reasoning,” the Chief Justice of India said.

The electoral bonds scheme was introduced in 2018 with the stated objective of blocking black money from entering the political system. Then Finance Minister Arun Jaitley had then said the conventional practice of political funding in India was cash donations. “The sources are anonymous or pseudonymous. The quantum of money was never disclosed. The present system ensures unclean money coming from unidentifiable sources. It is a wholly non-transparent system,” he had then said. On the confidentiality clause, he had said the disclosure of the donors’ identity would make them go back to the cash option.

Soon after the scheme was implemented, multiple parties challenged it in court. These included CPM, Congress leader Jaya Thakur and non-profit Association for Democratic Reforms. They argued that the confidentiality clause came in the way of the citizen’s right to information.

Senior Advocate Prashant Bhushan, appearing for ADR, said the bonds promote corruption as they are opaque and anonymous. “The bonds do not allow a level-playing field between political parties which are ruling versus political parties which are in the Opposition or between political parties and independent candidates.” He also said ever since this scheme was introduced, contributions made through this donation method had exceeded all other modes.

In fact, the Election Commission, too, had opposed the scheme when it was brought, calling it a “retrograde step” with regard to transparency in political funding. Later

The government had gone all out to defend the scheme in the Supreme Court. Solicitor General of India Tushar Mehta had said it was a deliberate attempt to ensure that funding received by political parties was clean money. He had said disclosing the donor’s identity could disincentivise the whole process. “Suppose, as a contractor, I donate to the Congress Party. I do not want the Bharatiya Janata Party (BJP) to know because it might form a government,” he had said. When the court asked how this confidentiality can be reconciled with the voters’ right to information, Mr Mehta had replied that voters do not vote on the basis of who is funding which party but on ideology, principles, leadership and efficiency of a party.

Countering the right to information argument, Attorney General of India R Ventakaramani had said there “can be no general right to know anything and everything without being subjected to reasonable restrictions”. “Secondly, the right to know as necessary for expression can be for specific ends or purposes and not otherwise,” he had said.

The Supreme Court also struck down the amendments made to company and tax laws to bring the scheme into effect. Earlier, companies needed to be at least three years old to donate and had to disclose the amount and name of the party to which it was donating. These conditions that ensured transparency in corporate donations were done away with under the new law.

“A company has 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,” the court said.

“Before the amendment, loss making companies were not able to contribute. The amendment does not recognise 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 a distinction between loss making and profit making companies,” the court added.