Supreme Court declares Electoral Bonds unconstitutional
By VAIBHAV AGRAWAL
Under the provisions of the scheme, only political parties registered under Section 29A of the Representation of the People Act, 1951, and those securing not less than 1 per cent of the votes polled in the last elections to the Lok Sabha or a state legislative assembly were eligible to receive electoral bonds.
In a landmark verdict, the Supreme Court, led by Chief Justice of India Chandrachud, has ruled that the Electoral Bonds scheme, introduced in 2018, violates the Right to Information. The five-judge constitutional bench, headed by CJI Chandrachud, proposed exploring alternative systems for political party funding amidst concerns over flaws in the existing scheme.
The Electoral Bonds scheme, touted as a measure to enhance transparency in political funding, allowed individuals and companies to purchase bonds from banks and present them to political parties for redemption as funds or donations. However, the scheme has faced scrutiny over its effectiveness in curbing black money and ensuring transparency.
Under the provisions of the scheme, only political parties registered under Section 29A of the Representation of the People Act, 1951, and those securing not less than 1 per cent of the votes polled in the last elections to the Lok Sabha or a state legislative assembly were eligible to receive electoral bonds.
During the verdict, Chief Justice Chandrachud emphasized that the Electoral Bonds scheme failed to satisfy the “least restrictive means test,” highlighting alternative methods such as contributions through electronic transfer and electoral trusts. He asserted that curbing black money alone is not a sufficient ground to justify the use of electoral bonds.
“We cannot turn a blind eye to the possibility of misuse,” stated CJI Chandrachud, underlining the importance of a double proportionality standard in evaluating such schemes. He pointed out that Clause 7(4) of the scheme, which grants anonymity to contributors, tilts the balance in favor of informational privacy without establishing a nexus to balancing measures.
While the Union Government defended the scheme as a means to ensure the flow of ‘white’ money into political funding via formal banking channels, the bench scrutinized its implications.
Of particular concern was the issue of “selective anonymity” within the scheme, with the bench questioning whether it inadvertently legalized kickbacks for political parties. Notably, the bench highlighted the potential for the ruling party to access donor identities while denying such information to opposition parties, raising questions about fairness and transparency.
Moreover, the bench questioned the removal of the condition limiting corporate donations to a maximum of 7.5% of their net profits to political parties, signaling concerns over potential influence peddling.
As the hearing drew to a close, the bench directed the Election Commission of India to furnish details of contributions received by all political parties through electoral bonds until September 30. This directive underscores the court’s commitment to transparency and accountability in political financing.
The Supreme Court’s verdict comes at a critical juncture, just ahead of upcoming elections, raising significant questions about the future of political funding in India. With the declaration that the Electoral Bonds scheme infringes upon the Right to Information, the court’s decision is expected to have far-reaching implications for political finance and transparency in the country.