New Delhi:
In a landmark ruling, the Supreme Court today struck down the electoral bonds scheme for political financing, finding it violates citizens' right to information. The electoral bond scheme, Chief Justice of India DY Chandrachud said, was unconstitutional and arbitrary and could lead to a quid pro quo arrangement between political parties and donors.
The five-judge Constitution Bench held that the stated objective of combating black money and maintaining donor confidentiality cannot sustain the scheme. According to the court, electoral bonds are not the only way to curb dirty money.
The Chief Justice of India said that the State Bank of India will immediately stop the issuance of these bonds and provide details of the donations made in this way to the Election Commission of India. The poll body was asked to publish this information on its website by March 13.
The five-judge bench, which also consisted of Justice Sanjiv Khanna, Justice BR Gavai, Justice JB Pardiwala and Justice Manoj Misra, delivered a unanimous decision. “We have reached a unanimous decision. There are two opinions, one by myself and another by Justice Sanjiv Khanna. Both come to the same conclusion. There is a slight difference in the reasoning,” the Chief Justice of India said.
The electoral bond scheme was introduced in 2018 with the aim of preventing black money from entering the political system. The then Finance Minister Arun Jaitley had then said that the conventional practice of political financing in India was cash donations. “The sources are anonymous or pseudonymous. The amount of money was never disclosed. The current system ensures that unclean money comes from unidentifiable sources. It is a completely non-transparent system,” he had said at the time. On the confidentiality clause, he had said that disclosing the identity of the donors would ensure that they revert to the cash option.
Shortly after the scheme was implemented, several parties challenged it in court. These include CPM, Congress leader Jaya Thakur and the non-profit Association for Democratic Reforms. They argued that the confidentiality clause hindered citizens' right to information.
Advocate Prashant Bhushan, appearing for ADR, said the bonds promote corruption as they are opaque and anonymous. “The ties do not allow for a level playing field between political parties in government and political parties in opposition, or between political parties and independent candidates.” He also said that since the introduction of this scheme, contributions made through this donation method have surpassed all other forms.
In fact, the Electoral Commission had also opposed the plan when it was introduced, calling it a “step back” in terms of transparency of political financing. Later
The government had done everything it could to defend the plan in the Supreme Court. Solicitor General of India Tushar Mehta had said it was a deliberate attempt to ensure that the funding received by political parties was clean money. He had said that disclosing the identity of the donor could discourage the entire process. “Suppose that, as a contractor, I donate to the Congress Party. I don't want the Bharatiya Janata Party (BJP) to know about this because it might form a government,” he had said. When the court asked how this confidentiality can be reconciled with voters' right to information, Mehta responded that voters do not vote based on who finances which party, but based on a party's ideology, principles, leadership and efficiency.
Countering the right to information argument, Attorney General of India R. Ventakaramani had said that there “cannot be a general right to know anything and everything without being subject to reasonable restrictions”. “Second, the right to know what is necessary for expression may apply for specific purposes and not for other purposes,” he had said.
The Supreme Court also quashed the changes made to the corporate and tax laws to bring the scheme into effect. Previously, companies had to be at least three years old to donate and had to disclose the amount and name of the party being donated to. These conditions that guaranteed transparency in corporate donations were abolished under the new law.
“A company has a greater influence on the political process than contributions from individuals. Corporate contributions are purely business transactions. An amendment to Section 182 Companies Act is clearly arbitrary when it comes to treating companies and individuals equally,” the court said.
“Before the amendment, loss-making companies could not contribute. The amendment does not recognize the harm that it allows loss-making companies to contribute as a result of quid pro quo. The amendment to Section 182 Companies Act is manifestly arbitrary as it makes no distinction. between loss-making and profit-making companies,” the court said.