Supreme Court Declares Electoral Bonds Scheme Unconstitutional, Arbitrary, and in Violation of Article 14

In a landmark verdict, the Supreme Court of India has deemed the electoral bonds scheme unconstitutional, citing it as arbitrary and violative of Article 14 of the Constitution. The scheme, which allowed for anonymous funding to political parties, has been struck down unanimously by a five-judge Constitution Bench, presided over by Chief Justice of India D Y Chandrachud.

The court has directed the issuing bank to immediately cease the issuance of electoral bonds and has instructed the State Bank of India (SBI) to furnish details of all electoral bonds purchased since the interim order of the court dated April 12, 2019, to the Election Commission of India (ECI).

The ruling pertains to several changes made in the law to introduce the electoral bonds scheme, including amendments to the Representation of People Act, 1951, and the Companies Act. The bench highlighted that these amendments, particularly Sections 29(c)(1), 182(3), and 13A(b), were in violation of Article 19(1)(a) and, therefore, unconstitutional.

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One of the key reasons cited by the court is the disproportionate influence that companies wield in the political process compared to individuals. The bench emphasized that while contributions made by individuals often have some degree of ideological support, corporate contributions are primarily driven by business interests and the expectation of favorable returns.

The deletion of the proviso to Section 182(1) of the Companies Act, which previously limited corporate funding to political parties, was also deemed arbitrary and in violation of Article 14. The court noted that the distinction between profit-making and loss-making companies for political contributions served a valid purpose in curbing corruption and ensuring fair elections.

The amendment, as introduced by the Finance Act of 2017, failed to recognize the heightened risk of quid pro quo associated with contributions from loss-making companies. By allowing unlimited corporate contributions without differentiation, the amendment facilitated unrestrained corporate influence in the electoral process, undermining the principles of free and fair elections and political equality.

In conclusion, the Supreme Court’s ruling on the electoral bonds scheme marks a significant step towards safeguarding the integrity of the electoral process and upholding democratic values. The decision reaffirms the principle that every vote must count equally and underscores the importance of transparency and accountability in political financing.

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Details of electoral bonds

In a significant development, the Supreme Court has directed the State Bank of India (SBI) to submit detailed information regarding political parties that have received contributions through electoral bonds since April 12, 2019, to the Election Commission of India (ECI). The court has mandated that SBI must provide information such as the date of purchase of each electoral bond, the name of the purchaser, and the denomination of the bond.

Furthermore, the court has instructed SBI to disclose details of each electoral bond encashed by political parties, including the date of engagement and the denomination of the bond. This information must be submitted to the ECI within three weeks from the date of the judgment, by March 6, 2024.

Emphasizing transparency and accountability, the court has directed the ECI to publish the information shared by SBI on its official website within one week of receiving it, by March 13, 2024.

This directive underscores the court’s commitment to ensuring transparency in political financing and upholding the integrity of the electoral process. By requiring disclosure of electoral bond details, the court aims to enhance public scrutiny and awareness regarding contributions to political parties, thereby promoting greater accountability in the democratic process.