In a significant verdict, the Supreme Court’s five-judge Constitution Bench unanimously struck down the Electoral Bonds scheme calling it unconstitutional. This verdict is crucial ahead of the upcoming general elections tentatively slated for April-May since it changes the way political parties can now accept donations for poll campaigns.
Non-disclosure of information is violative of one’s right to information and free speech under Article 19(1)(a), the Supreme Court said.
More significantly, the top court issued a series of directions including directions to the State Bank of India (SBI) to stop the sale of electoral bonds with immediate effect. The bank has been directed to make public by March 6 all details of political parties that received donations through Electoral Bonds. The Election Commission of India will then publish these details on its official website by March 13.
The bank has also been directed to refund uncashed bonds to the donors.
This verdict is crucial as it impacts financing to poll campaigns ahead of the upcoming Lok Sabha Elections.
Citizens have a right to know about political parties
Supreme Court said the Electoral Bonds (EB) scheme introduced in 2017 by way of amendments to the Finance Act is violative of one’s right to information and free speech under Article 19(1)(a). The court held that political parties are relevant units and one has a right to know who is funding them.
One’s right to information was not merely restricted to state affairs, but also to information that helped further participation of democracy. One’s right to information was also not limited to candidates, but also to the political parties they follow. Information on where the political party was getting its funding is important, the Supreme Court said.
The top court observed that electoral bonds were not the only scheme to curb black money. While privacy of donors was important, transparency in political funding could not be achieved by granting absolute exemptions.
Electoral Bonds lead to quid pro quo arrangements
The Court held that the Electoral Bonds scheme would help the political party in power to gain an advantage over its opposition.
“Economic inequality leads to differing levels of political engagements,” CJI DY Chandrachud said. “Access to information leads to influence in policy making and quid pro quo arrangements may also help a corporate by the party in power,” the court said.
The Supreme Court said there’s a difference between individual donations and unlimited corporate donations. An individual would donate to a party they follow, however, for corporates, donating to a particular political party was simply a business transaction.
Unlimited corporate donations are manifestly arbitrary because it is a purely business transactions aimed at getting favourable policies.
The top court in October 2023 had said it would decide on the legality of the electoral bond scheme before the country goes to polls this year. The top court, however, refused to stay the sale of bonds during the pendency of the matter.
In 2017, the Association for Democratic Reforms (ADR), the Communist Party of India (Marxist), Congress leader Dr Jaya Thakur challenged the amendments to the Finance Act 2017 which introduced electoral bonds scheme, that allow anonymous donations to political parties. The pleas were finally heard more than six years after they were filed.
Six years after the batch of pleas was filed, a five-judge bench comprising Chief Justice of India DY Chandrachud, along with Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra heard the matter over three days and reserved its verdict on November 2, 2023.