Electoral Bonds Scheme is Unconstitutional: Supreme Court

Introduction:

In a historic judgment delivered on February 15, 2024, the Supreme Court of India struck down the controversial electoral bonds scheme, asserting that anonymous electoral bonds violate the right to information under Article 19(1)(a) of the Constitution. The constitution bench, led by Chief Justice DY Chandrachud, heard a batch of cases challenging the scheme and delivered a unanimous decision with a concurring opinion by Justice Sanjiv Khanna.

Facts of the Case:

The case, Association for Democratic Reforms & Anr. v. Union of India & Ors. (Writ Petition (Civil) No. 880 of 2017), centered around objections to the electoral bonds scheme introduced through amendments in the Finance Act 2017.

Petitioners, including the Association for Democratic Reforms and the Communist Party of India (Marxist), argued that the anonymity associated with electoral bonds undermined transparency in political funding and encroached upon voters’ right to information.

Timeline of Events:

• Electoral bonds introduced through amendments in the Finance Act 2017.
• Association for Democratic Reforms and others filed a writ petition challenging the scheme.
• The constitution bench heard the case over three days, reserving the verdict in November.
• The Supreme Court delivered its judgment on February 15, 2024.

Key Issues Raised:

1. Whether the non-disclosure of information on voluntary contributions to political parties under the electoral bond scheme violates the right to information.

2. Whether unlimited corporate funding to political parties, as envisaged by amendments to various acts, violates the principles of free and fair elections.

Contentions of the Parties:

Petitioners argued that the scheme undermined transparency, facilitated contributions through shell companies, and raised concerns about accountability in electoral finance.

The Union Government defended the scheme, asserting its role in promoting the use of legitimate funds in political financing and the need for donor anonymity to protect contributors from potential retribution.

Observations and Judgment:

Chief Justice DY Chandrachud, delivering the lead judgment, emphasized the essential nature of information about funding for the effective exercise of voting rights. The court held that the electoral bonds scheme violated Article 19(1)(a) of the Constitution, as it anonymized contributions and infringed upon the right to information of voters.

The court applied a double proportionality standard, balancing conflicting rights to information and informational privacy. It concluded that the restrictive means test of the doctrine of proportionality was not satisfied, and alternative means existed to achieve the legitimate objective of curbing black money.

Court’s Directions and Implications:

The Supreme Court issued several directions, including the immediate cessation of electoral bond issuance by the issuing bank (State Bank of India), submission of purchase details to the Election Commission of India, and the disclosure of political party contributions through electoral bonds. The court declared the amendments to the Income Tax Act, Representation of Peoples Act, and the Companies Act unconstitutional.

Conclusion:

This landmark judgment marks a significant step towards ensuring transparency and accountability in political funding. By declaring the electoral bonds scheme unconstitutional, the Supreme Court has highlighted the importance of protecting citizens’ right to information in the democratic process. The directions issued to the State Bank of India and the Election Commission signal a commitment to restoring trust in electoral finance and upholding the principles of free and fair elections.