Electoral Bonds Verdict: Supreme Court Strikes Down Scheme for Violating Right to Information - 2024-02-17

Electoral Bonds Verdict: Supreme Court Strikes Down Scheme for Violating Right to Information

A five-member Constitution bench of the Supreme Court on Thursday unanimously struck down the Centre’s electoral bond scheme which allowed political donations for being unconstitutional. It underscored that the scheme violates the right to information under Article 19(1)(a) of the Constitution.

Key Takeaways from the Verdict:

• Violation of the right to information: The court held that the scheme by permitting anonymous political donations infringed upon the fundamental right to information under Article 19(1)(a) of the Constitution. It pointed out that such a right is not only restricted to fulfilling the freedom of speech and expression but plays a key role in furthering participatory democracy by holding the government accountable.
• Not proportionally justified to curb black money in political financing: The court said that the government’s argument that the scheme curbs black money and its circulation does not justify the encroachment into fundamental rights. Relying on the proportionality test laid down in its 2017 judgment in the KS Puttaswamy case which recognized the right to privacy, it underscored that the government did not adopt the least restrictive method to achieve its objective.
• Right to informational privacy does not extend to contributions made as a pro-quid-quo measure: The court held that the right to privacy of political affiliation does not extend to those contributions, which may be made to influence policies. It only extends to contributions made as a genuine form of political support.
• Unlimited corporate donations violate free and fair elections: The court found that the amendment made to Section 182 of the Companies Act, 2013, permitting unlimited political contributions by companies, to be manifestly arbitrary. The provision allows Indian companies to make financial contributions to political parties under specific conditions. However, through the Finance Act, 2017, crucial changes were introduced including the removal of the prior cap on the amount that companies can donate to political parties — 7.5% of the average profits of the preceding three fiscal years.
• Amendment to Section 29C of Representation of the People Act quashed: The court also struck down the amendment to Section 29C of the Representation of the People Act, 1951, which created an exception to the requirement of disclosing donations received through electoral bonds.

Directions Issued by the Court:

• The SBI has been ordered to immediately stop the issuance of any further electoral bonds and disclose details of such bonds purchased by political parties since April 12, 2019, to the ECI by March 6.
• The ECI shall subsequently publish all such information shared by the SBI on its official website by 13 March 2024.
• Electoral bonds that are within the encashment period of fifteen days but have not yet been encashed by the political party will have to be returned following which the issuing bank will refund the amount to the purchaser’s account.

Reactions to the Verdict:

Former chief election commissioner S Y Quraishi said that the Supreme Court’s decision is a “great boon for democracy” and will restore people’s faith in the system.