Supreme Court Bans Electoral Bonds: Declares Scheme Unconstitutional

Before the Lok Sabha elections, the Supreme Court has made a significant ruling in the Electoral Bond case. On Thursday, the Supreme Court imposed a ban on receiving donations by the Election Bond. The court said that maintaining the secrecy of the bonds is unconstitutional. This scheme violates the right to information. Parties have to submit their accounts by March 6.

A bench of five judges unanimously heard the ruling. The Chief Justice said, “Political parties are a significant unit in the political process. Political funding is a process through which voters get the right choice to cast their votes. Voters have the right to know about election funding, which helps them make the right choice for voting.”

The Supreme Court has directed the State Bank of India (SBI) to stop issuing Electoral Bonds. Along with this, it was also stated that the SBI must provide information about the Electoral Bonds purchased until April 12, 2019, to the Election Commission within three weeks. This information must also be made public on the website.

During the hearing, the Chief Justice of India (CJI) stated that not disclosing information about political parties’ funding is against the principle. SBI has to disclose the information about Electoral Bonds purchased until April 12, 2019, and share it with the Election Commission. SBI has three weeks to provide this information.

The 5 major issues regarding Electoral Bonds are as follows:

1. SBI should disclose details of political parties receiving donations through Electoral Bonds since 2019.
2. SBI should provide details of each Electoral Bond received by political parties, including the date of receipt and deposit.
3. SBI must provide all information to the Election Commission by March 6, 2024, and the Election Commission must publish it on its website by March 13, 2024.
4. Concealing political donations for the sake of confidentiality is not a valid argument. Withholding this information violates the right to information.
5. The amendment in the Companies Act is arbitrary and unconstitutional. It opens the door for political parties to receive unlimited and undisclosed funding from companies.

The validity of the Electoral Bonds scheme came under scrutiny in the Supreme Court on Thursday (February 15). Following a three-day hearing by a bench of five judges after keeping its decision anonymous in this case on November 2, 2023.

During the hearing, the court expressed dissatisfaction before the Election Commission for not keeping the received funding data confidential. The court informed the bench that the information regarding how much funding political parties have received through Electoral Bonds must be disclosed. The court gave the Election Commission until September 30 to provide this information. The Chief Justice of India DY Chandrachud asked the government what is the need for Electoral Bonds. The government is aware of who has given how many donations. With the receipt of Electoral Bonds, the party also knows who has given how much.

Regarding this, Solicitor General Tushar Mehta said that the government is not asking who gave how much money. Donors want to keep their identity confidential. They do not want anyone else to know about it. If I donate to the Congress, I do not want the BJP to know about it.

Chief Justice DY Chandrachud, Justice Sanjeev Khanna, Justice BR Gavai, Justice Jyoti Singh, and Justice Manoj Mishra are hearing the validity of the Electoral Bonds scheme. Four petitions were filed in this regard. The petitioners include the Association for Democratic Reforms (ADR), Congress leader Jaya Thakur, and the CPI(M).

Attorney General R Venkataramani and Solicitor General Tushar Mehta were present in the Supreme Court. Senior advocate Kapil Sibal appeared for the petitioners.

In 2023, the issue of Electoral Bonds came up for hearing.

On November 1, the Supreme Court heard the case related to the Electoral Bonds scheme. Solicitor General Tushar Mehta, representing the central government, stated that transparency has been ensured in political donations through Electoral Bonds. Earlier, donations were made in cash, but now, efforts have been made to maintain the confidentiality of donors.

Donors do not want other parties to know about their donations. They do not want to invite the opposition’s displeasure. In this regard, the Supreme Court questioned why the ruling party should have access to the opposition’s donation information. How can the opposition not be able to obtain information about donations?

Attorney General R Venkataramani appeared in the Supreme Court on behalf of the central government, while senior advocate Kapil Sibal, Prashant Bhushan, and Vijay Hansaria represented the petitioners.

On October 31, on the first day of the hearing, Attorney General R Venkataramani appeared in the Supreme Court on behalf of the central government, while senior advocate Kapil Sibal, Prashant Bhushan, and Vijay Hansaria appeared for the petitioners.

Prashant Bhushan had said that these bonds are only launched, which affects the decisions of the government. Citizens have the right to know which party is receiving money from where.

The issue of Electoral Bonds came up for discussion.

This scheme was introduced in 2017 but the elections using these bonds started in 2019. On April 12, 2019, the Supreme Court directed all political parties to submit all relevant information related to Electoral Bonds to the Election Commission by May 30, 2019. However, the court did not halt the implementation of this scheme.

Later, in December 2019, the Association for Democratic Reforms (ADR) filed a petition to put the scheme on hold. It highlighted concerns about how the Electoral Bond scheme bypassed the Reserve Bank of India and concerns raised by the media about the government’s disregard for the scheme.

Former CJI SA Bobde had said that the hearing of this case would be held in January 2020. The hearing was postponed to allow the Election Commission to submit its response. Subsequently, no hearing took place in this matter.

What are Electoral Bonds? In the 2017 budget, then-Finance Minister Arun Jaitley proposed the Electoral Bond Scheme. The central government notified it on January 29, 2018. It is a kind of promissory note, which is also referred to as a banknote. Any Indian citizen or company can purchase it.

If you wish to buy it, you can get it from the branch of the State Bank of India that you prefer. The purchaser can donate this bond to the political party of their choice. However, the party should be eligible to receive such bonds.

The party to which you are donating must be eligible to receive such bonds. The process of knowing this is based on the fact that the party needs to secure at least 1% of the votes in the latest Lok Sabha or Vidhan Sabha elections. Once the donor has donated the bond, within 15 days, it will be verified by the Election Commission through the verified bank account of the party.

The controversy surrounding this issue is multifaceted.

Firstly, when it was proposed in 2017, Arun Jaitley claimed that it would bring transparency to political funding and election processes. The use of black money would be curbed. On the other hand, opponents argue that Electoral Bonds do not publicly disclose the identity of the purchaser, which could allow them to influence elections using unaccounted money.

Some accuse the scheme of favoring large corporate houses. With the help of this, these families can donate money without declaring their identity, allowing them to influence political parties without disclosing their identities, which could lead to corruption.

Details about Electoral Bonds:

• Any Indian can purchase them.
• By providing KYC details to the bank, bonds ranging from Rs. 1,000 to Rs. 1 crore can be purchased.
• The identity of the purchaser remains confidential.
• The purchaser also receives tax benefits.
• The bond remains valid for 15 days after its announcement.