In a landmark judgment, the Supreme Court of India has declared the electoral bonds scheme unconstitutional, citing violations of the right to information under Article 19(1)(a) of the Constitution. The verdict, delivered by a constitution bench led by Chief Justice DY Chandrachud, marks a significant victory for transparency in political financing.

Unanimous Decision and Key Rulings

The constitution bench, comprising Chief Justice Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, unanimously held that the anonymity of electoral bonds undermines the voters’ right to information. The judgment, delivered after three days of hearings and reserved in November, addresses two critical questions: the non-disclosure of information on political party contributions and the unlimited corporate funding allowed by recent amendments.

Chief Justice Chandrachud emphasized the importance of transparency in political funding, stating that it is essential for informed voting. The court ruled that the electoral bonds scheme and related amendments violate Article 19(1)(a) of the Constitution, as they anonymize contributions and potentially lead to quid pro quo arrangements.

Proportionality Test and Privacy Concerns

The court rejected the government’s argument that the scheme balances the right to information with privacy concerns. Chief Justice Chandrachud noted that the measure fails the proportionality test and that there are alternative means to curb black money. He highlighted the importance of balancing conflicting rights, such as the right to information and informational privacy, applying a double proportionality standard.

Directions Issued by the Court

In its directions, the Supreme Court ordered the immediate cessation of electoral bond issuance by the issuing bank, State Bank of India (SBI). Additionally, SBI must provide details of all electoral bonds purchased and encashed since April 12, 2019, to the Election Commission of India (ECI). The ECI is tasked with publishing this information on its website by March 13, 2024. Electoral bonds within the validity period but not yet encashed by political parties must be returned to the purchaser, with refunds issued by SBI.

Background and Petitioners’ Arguments

The petitions challenging the electoral bonds scheme, including those by the Association for Democratic Reforms (ADR) and political parties such as the Communist Party of India (Marxist) and Congress leader Jaya Thakur, highlighted concerns about transparency and accountability in political funding. They argued that anonymity facilitates contributions through shell companies, raising integrity issues in electoral finance.

Government’s Defence and Bench’s Scrutiny

The government defended the scheme as a means to promote legitimate political financing through regulated banking channels. It cited donor anonymity as necessary to protect contributors from potential retribution. However, the bench raised questions about the scheme’s selective anonymity and its potential to institutionalize kickbacks. Concerns were also raised about unequal access to donor information, with implications for political parties’ accountability.

Conclusion

The Supreme Court’s verdict on the electoral bonds scheme is a significant step towards transparency in political funding. By striking down the scheme and ordering transparency measures, the court reaffirms the importance of informed voting and accountability in democracy. The decision underscores the judiciary’s role in upholding constitutional values and ensuring the integrity of electoral processes.

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