Landmark! SC Strikes Down Electoral Bonds Scheme As Unconstitutional

A unanimous decision was made on Thursday by a five-judge panel including Chief Justice of India DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, declaring the Electoral Bonds scheme as unconstitutional.

The court was making a decision on a group of requests that questioned the legal legitimacy of the Electoral Bonds Scheme established by the Central government, enabling undisclosed funding for political parties.

At the beginning of the ruling, Chief Justice Chandrachud stated that there are two perspectives, one from himself and the other from Justice Sanjiv Khanna, and both reach the same conclusion.

The court stated that the petitions brought up two primary concerns - whether the amendments breach the right to information as per Article 19(1)(a), and whether unrestricted corporate funding undermines fair and free elections.

The Chief Justice of India, in delivering the verdict, stated that the Supreme Court finds that anonymous electoral bonds violate the Right to Information and Article 19(1)(a).

The Supreme Court ruled that details of corporate contributors via Electoral Bonds should be revealed, as the donations from companies are solely for the purpose of quid pro quo.

The court ruled that the changes to the Companies Act allowing companies to make unrestricted political contributions are random and against the constitution.

The Supreme Court ruled that violating the Right to Information cannot be justified in order to combat black money.

The highest court directed banks to immediately cease the issuance of Electoral Bonds and mandated the State Bank of India (SBI) to provide information on Electoral Bonds cashed by political parties. The court specified that SBI must share the details with the Election Commission of India, and the ECI will then make these details public on its website.

A panel of five judges led by Chief Justice Chandrachud reserved its decision on the matter on November 2 of the previous year.

The government introduced the scheme on January 2, 2018, as a substitute for cash donations to political parties, aiming to enhance transparency in political funding.

Based on the rules of the program, only political parties that are registered under Section 29A of the Representation of the People Act, 1951 and have received at least 1 per cent of the votes in the most recent Lok Sabha or state legislative assembly elections can qualify for electoral bonds.

An Electoral Bond is a type of promissory note or bearer bond that can be bought by any individual, company, firm, or association of persons, as long as the purchaser is a citizen of India or is incorporated or established in India.

The bonds are specifically issued to contribute funds to political parties. The government, in a sworn statement, claimed that the Electoral Bonds scheme's process is entirely transparent and prevents the use of illicit or untraceable funds.

Several petitions were awaiting a ruling from the highest court, contesting changes made to various laws via the Finance Act 2017 and Finance Act 2016. The basis of the challenge was that these changes have allowed for unrestricted and unregulated financial support to political parties.

Also Read: SC to Pronounce Verdict on Validity of Electoral Bonds Tomorrow