SC Bench Strike Down Electoral Bonds Unanimously As Unconstitutional, Violative Of Right To Information Under Article 19 (1) (a) Of The Constitution

Before the announcement of General Election, the Supreme Court pronounced its highly anticipated verdict on Thursday (February 15) in the electoral bound case, holding that anonymous electoral bonds are unconstitutional, a violation of the right to information under Article 19 (1) (a) of the Constitution. As a result the top court unanimously struck down the Electoral Bond Scheme.

The Constitution bench of the Supreme Court comprising of Chief Justice D.Y Chandrachud and Justice B.R Gavai, Justice Sanjiv Khanna, Justice Manoj Misra, and Justice J.B Pardiwala heard the batch of cases challenging the controversial Electoral Bond Scheme over three days in October, before reserving the order on 2^nd November 2023. The Judgment was delivered on Thursday morning.

While announcing the Judgment, the Supreme Court said it had arrived at a unanimous decision. “There are two opinions, one penned by CJI DY Chandrachud and another by Justice Sanjiv Khanna. Both arrive at the same conclusion. There is a slight variation in the reasoning” CJI said.

A total of four petitions were filed in the Supreme Court questioning the validity of electoral bonds.  The following are the important observations of the Supreme Court while delivering the verdict.

1. The Supreme Court said Political parties are relevant units in the electoral process and information about funding of political parties is essential for electoral choices.
2. The Supreme Court announced that an anonymous electoral bond is Violative of the Right to Information under Article 19 (1) (a). It observed that the infringement of the Right to Information is not justified to curb black money. There are other ways to curb black money besides electoral bonds.
3. The Supreme Court said that information about corporate contributors through Electoral Bonds must be disclosed as the donations by companies are purely quid pro quo purposes.
4. The Supreme Court said that amendments in the Constitution Act permitting unlimited political contributions by companies are arbitrary and unconstitutional.
5. Supreme Court held that Electoral Bonds Scheme has to be struck down as unconstitutional.
6. Supreme Court ordered banks to forthwith stop issuing Electoral Bonds.
7. Supreme Court ordered that State Bank of India (SBI) shall furnish the details of Electoral Bonds encased by the Political Parties and submit these details to Election Commission of India by 6^th March. And ECI shall publish these details on its website.
8. Supreme Court struck down all the amendments which had been brought to make the Electoral Bonds effective such as Income Tax Acts 1961, Companies Acts 2013 and Representation of the People’s Act 1951, Foreign Contribution Regulation Act 2010.

What are Electoral Bonds?

The Scheme of Electoral Bond was introduced in the Finance Bill, 2017 during the Union Budget 2017-2018 when the maximum limit of cash donation to political parties was capped at Rs 2000/ by Union Minister for Finance and Corporate Affairs Late Arun Jaitely in a move to enhance the transparency in political funding and curb black money in electoral democracy.

Electoral Bonds could be purchased by any person who is citizen of India or by the Business Houses, Associations, and Institutions incorporated or established in India from the authorized branches of SBI. All over India 29 branches of State Bank of India were authorized to issue and encash electoral bonds. These branches were located in New Delhi, Mumbai, Kolkata, Chennai, Gandhinagar, Chandigarh, Patna, Ranchi, Guwahati, Bhopal, Jaipur and Bangaluru. Electoral Bonds were sold in multiples of Rs 1,000, Rs 10,000, Rs One Lakh, Rs 10 Lakh and Rs One Crore. The bonds were issued four times a year- January, April, July and October.

They could be purchased through KYC- Compliant account for donating to a Political Party

Political Parties had to encash them within a fortnight of buying the bonds. The party concerned was required to deposit them in his registered bank account. If the party failed to deposit, the bond was redundant and ineffective. The name and other details of the donor were not recorded through electoral bonds, thus making the donor confidential. There was no cap on the number of electoral bonds that can be purchased by an individual or a company. The Centre had amended the Representation of People Act 1951, Income Tax Acts 1961, Companies Acts 2013 and Foreign Contribution Regulation Act 2010 to introduce the electoral bond scheme.

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Which Parties could avail the donation through Electoral Bonds?

The Political Parties registered under section 29A of the Representation of the People Act 1951, were eligible to accept electoral bonds. The only condition was that they should get at least one percent of the votes in the last election of Lok Sabha or Assembly.

BJP received highest donations amounting to ₹719.858 cr in 2022-23: ADR report

The BJP received electoral donations worth around Rs 720 crore in 2022-23. This figure is more than five times the total electoral donations received by four other national parties — Congress, Aam Aadmi Party, CPI-M and National People’s Party combined. The Association for Democratic Reforms (ADR) has presented these figures in one of its reports.

According to ADR, in the financial year 2022-23, national parties received a total of 12,167 donations (above Rs 20,000) amounting to Rs 850.438 crore.

The country’s sixth national party, the Bahujan Samaj Party (BSP), announced that it did not receive any donation of more than Rs 20,000 during the financial year 2022-23.

It is mandatory for a registered political party with the Election Commission to disclose electoral donations in excess of Rs 20,000 received by it in a financial year.

The BJP said it received Rs 719.858 crore from 7,945 donations. According to the Congress, it received Rs 79.924 crore from 894 donations.

The ADR report also revealed that national parties received a total of Rs 276.202 crore from Delhi, followed by Gujarat (Rs 160.509 crore) and Maharashtra (Rs 96.273 crore).

During the financial year 2022-23, the total donations of national parties increased by Rs 91.701 crore, which is 12.09 percent more than the previous financial year 2021-22?

According to ADR, the BJP received election donations of Rs 614.626 crore during the financial year 2021-22, which increased to Rs 719.858 crore during the financial year 2022-23. Thus, he received 17.12 percent more donations in comparison to last financial year.

Also read: Supreme Courts Puts Full Stop On Electoral Bonds Calling It ‘Unconstitutional’

However, there was a 41.49 per cent decrease in the party’s donations during the financial year 2020-21 as compared to the financial year 2019-20. Donations received by the Congress declined from Rs 95.459 crore during FY 2021-22 to Rs 79.924 crore during FY 2022-23 — a decline of 16.27 per cent.

According to ADR, there was an increase of 28.09 per cent in Congressional electoral donations between FY 2020-21 and FY 2021-22. According to the ADR, compared to the previous financial year, the donations received by CPI(M) decreased by 39.56 percent (Rs 3.978 crore) and by 2.99 percent (Rs 1.143 crore) in the donations received by Aam Aadmi Party.