SC Verdict on electoral Bonds scheme

 

                                                  SC Verdict on electoral Bonds scheme

       SC Verdict on electoral Bonds scheme

Introduction

Electoral bonds were introduced by the Modi government as an alternative to cash donations made to political parties but the instrument is now at the center of a controversy over allegations that it is not only skewed towards the ruling party but flouts the concept of free and transparent elections. According to the report given by the Association for Democratic Reforms also known as ADR for the financial year 2019, political parties have declared income/donations worth Rs 1, 931 crores through these bonds. The Bharatiya Janata Party received around 75 percent of the donations which is Rs 1,451 crores while the congress received around 20 percent of the donations i.e. Rs 383 crore and TMC received 5 percent of the donations i.e. Rs 97 crore.

The donations and funds are the primary sources of income for the groups. The BJP and Congress registered a high concentration of donations in their profits, with donations accounting for nearly 97 per cent, 60.08 per cent respectively of their profits. The BSP stated that most of its revenue came from bank interest while the revenue from fees and subscriptions came from Communist Party of India’s (Marxist) interest. Research by ADR shows that income for BJP increased by 134.59 per cent during this time, while income for Congress increased by 360.97 per cent. TMC’s revenue soared by an incredible 3,628.47 per cent, which is the largest income rise for any party in the century.

Functioning of the Electoral Bond Scheme

 The State Bank of India (SBI) issues electoral bonds in the months of January, April, July and October.

The electoral bonds are available in denominations from Rs 1,000 to Rs 1 crore. The donors can buy electoral bonds and transfer them into the accounts of the political parties as a donation. The name of the donor is kept confidential.  Political parties create a specific account. This account is verified by the ECI. The political parties encash the electoral bonds only in this verified account. The bonds remain valid for 15 days. Within that time, the political parties have to encash the electoral bond in the designated accounts.

SC Verdict 

The electoral Bonds scheme was held as “unconstitutional” in a unanimous judgment by the five-judge bench of Supreme Court (SC) headed by the CJI, which was examining the legality of the electoral bonds scheme. SC held that anonymous electoral bonds are violative of right to information and Article 19(1)(a).

Along with the Electoral Bonds Scheme (EBS), the Supreme Court struck down amendments in the The Representation of the People Act, 1951 (RPA), The Income-tax Act, 1961, and The Companies Act, 2013, which were brought to facilitate corporate donations to political parties.

Issues

Issue 1: Impact of Electoral Bond Scheme on Right to Information

Supreme Court’s Decision: The Supreme Court determined that the electoral bond scheme undermines the right to information protected under Article 19(1)(a), which upholds the freedom of speech and expression.

Court’s Reasoning: The court recognized a significant link between financial contributions and political influence. Since monetary donations can lead to increased access to lawmakers and the potential for reciprocal agreements, such as policy favors, the court emphasized that economic disparities can lead to political imbalances. Consequently, transparency in political party financing is crucial for informed voting decisions.

Issue 2: Limiting Black Money vs. Right to Information

Supreme Court’s Verdict: The Supreme Court clarified that the right to information can be limited only for reasons listed under Article 19(2), which outlines acceptable constraints on freedom of speech and expression. The article does not consider the reduction of black money in electoral funding as a valid restriction.

Court’s Logic: The court found that the limitations imposed by the electoral bonds scheme on the right to information did not pass the proportionality test established in the KS Puttaswamy verdict concerning the right to privacy. The court held that curtailing the right to information to combat black money in electoral funding was not a justified trade-off.

Issue 3: Donor Privacy vs. Right to Information

Supreme Court’s Ruling: The court ruled that the right to privacy regarding political donations does not cover corporate contributions that might be made with the intent to sway policy-making. This right is reserved for donations that represent genuine political support.

Court’s Explanation: The court argued that substantial corporate donations should not obscure the motives behind financial support from other segments of society, ensuring that the reasons for such contributions remain transparent.

Issue 4: Whether unlimited political contributions by companies are unconstitutional

SC Verdict-The court held that the amended section 182 (3) of the companies act 2013 as unconstitutional, as it is violative of Art 14. This amended section permitted unlimited political contributions by companies.

SC Rationale- Contributions made by companies are purely business transactions made with the intent of securing benefits in return. The ability of companies to influence the political process through contributions is much higher compared to individuals.

Why Are Electoral Bonds Unconstitutional?

The court held that the scheme violates:

The right to information: By hiding the source of funding from the public, it infringes upon the fundamental right under Article 19 (1) (a).

The principle of equality: It discriminates between political parties based on their vote share, favoring ruling and major opposition parties while excluding smaller and regional ones.

The constitutional aim of curbing corruption: The scheme goes against the goal of transparency and disclosure in political funding

Conclusion

A clean & transparent electoral funding process is vital to ensure a fair electoral democracy. Most developed countries in the West have robust mechanisms to ensure transparency in their political systems. As India aspires to emulate the West by setting the ambition of achieving developed country status by 2047, it must aspire for similar standards of transparency in the political sphere. Cleaning up electoral finance can be the first step in this regard.  Political parties has created a negative effect over the Electoral Bond Scheme, as the general public would never know about who is donating and who is not.

But if the Identities are disclosed, then it will become a danger for the Donors as they might face problems from the opposite parties who they did not donate to. Now the main thing the government needs to examine is the effect of keeping the Electoral Bond Scheme. If the Electoral bonds are well regulated and do not tilt towards  one political party or are free from any other problem, then this Scheme will be deemed successful, but if there happens to be such acts like illegal lobbying or corruption, this will make the regulation of donations given in elections worse than before. The government has to think about a new scheme which would not only help in transparent political elections but also go hand in hand with democracy and in the interest of the general public as the elections are held to form a government for the welfare of the general public of the country.

Refrences

1. https://forumias.com/blog/electoral-bonds-scheme-explained-pointwise/

2. https://timesofindia.indiatimes.com/india/lok-sabha-elections-2024-electoral-bonds-explained-transparency-and-anonymity-in-political-funding/articleshow/108646815.cms

3. https://blog.ipleaders.in/legality-electoral-bonds/

Yours in logic and legalese,

Pratyush Pratap Singh

Contact me.

pratyushpratapsingh36@gmail.com