Electoral Bonds Scheme Violates Citizens' Right to Information, Rules Supreme Court

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Electoral Bonds Scheme Violates Citizens’ Right to Information, Rules Supreme Court

| Updated: February 15, 2024 12:03

The Supreme Court has struck down the Electoral Bonds scheme, calling it unconstitutional. The SC has said that the Electoral Bonds scheme is violative of Article 19(1).

The Chief Justice of India has said: “The only purpose of amending section 182(3) of the companies act becomes otiose after we hold that EB scheme, IT act making non disclosures acceptable and RP Amendment as unconstitutional. “

According to media reports, the SC ruled that:

“1.) EB Scheme, proviso to section 29(1)(c) as amended by section 139 of IT Act and Section 13(b) as amended by Finance act 2015 is violative of article 19(1)(a).

2.) The issuing bank shall herewith immediately STOP issuing electoral bonds.  SBI shall issue details of the political parties which received electoral bonds and all the particulars received and submit them to ECI by March 6.

3. By March 13 ECI shall publish it on official website political parties to thereafter refund the Electoral bonds amount to the purchasers account.”

It may be recalled that the Constitution bench, headed by Chief Justice DY Chandrachud, had reserved the decision on the electoral bonds scheme on November 2, 2023.

Attorney General R Venkataramani had said that “citizens do not possess a general right to know the sources of electoral bonds.”

The Bharatiya Janata Party (BJP) reported to the Election Commission that it received approximately Rs 1,300 crore in electoral bonds in 2022–2023; this information is based on their annual audited report. In the fiscal year 2022–2023 the party received contributions totalling Rs 2,120 crore, of which 61% originated from electoral bonds.

In April 2019, the Supreme Court refused to stay the electoral bonds scheme, stressing the need to cut down on cash elements in the electoral process.

The Constitution bench, including Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, heard the arguments on October 31 last year, media houses reported.

The scheme, notified by the government on January 2, 2018, offered money instruments, which allowed companies and people in India to donate to political parties without revealing their identities.

Consequently, Congress leader Dr. Jaya Thakur, the Communist Party of India (Marxist) and the NGO Association for Democratic Reforms (ADR) contested the scheme, saying that such anonymous political donations infringed upon the voters’ right to information.

Introduced in the 2017 Union Budget, the bonds were meant to enhance transparency in political funding amid concerns of lack of disclosure.

The cash donation limit was limited to Rs 2000 from Rs 20,000 earlier, while mandatory disclosure remained at Rs 20,000. People could privately purchase and transfer these bonds to political parties.

According to the representation of the People Act, 1951, those who secured at least 1%of the votes in the last general election to the Lok Sabha or state legislative assembly are eligible to receive electoral bonds.

The Ministry of Finance says, “The purchaser would be allowed to buy an electoral bond(s) only on due fulfilment of all the extant KYC norms and by making payment from a bank account. It will not carry the name of the payee. Electoral Bonds would have a life of only 15 days during which they can be used for donating only to the political parties registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last general election to the House of the People or a Legislative Assembly.”

The corporate contribution cap and disclosure requirements were eliminated through amendments. These are promissory notes exclusively offered by the State Bank of India, with denominations ranging from Rs 1,000 to Rs 1 crore. The bank is the only entity that knows the identity of the donors. Political parties having bank accounts registered with the Election Commission are able to cash bonds.

Regarding political funding, the government and the Election Commission took opposing positions in court. The EC promoted transparency by disclosing donor names, while the government sought to preserve donor anonymity.

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