Amendments to law which allowed companies to make unlimited financial contributions to political parties under the cover of absolute anonymity declared ‘manifestly arbitrary’
On February 15, the Supreme Court invalidated the electoral bonds scheme, deeming it unconstitutional and manifestly arbitrary. The scheme, designed to grant complete anonymity to financial contributions to political parties, along with amendments permitting wealthy corporations to make unrestricted political donations, was declared unconstitutional by the court.
A unanimous judgment from a five-judge Bench, led by Chief Justice of India D. Y. Chandrachud, declared that the electoral bonds scheme and the earlier amendments to the Representation of People Act, Companies Act, and the Income Tax Act infringe upon the voters’ right to information regarding political funding as outlined in Article 19(1)(a) of the Constitution.
The Supreme Court has instructed the State Bank of India to immediately cease the issuance of electoral bonds. Additionally, the bank is mandated to provide the Election Commission of India (ECI) with comprehensive details of bonds purchased from April 12, 2019, to the present date. This directive builds upon the court’s earlier order on April 12, 2019, instructing the ECI to submit, in a sealed cover, records of bonds purchased up to that point. The disclosed information is required to encompass the date of each bond purchase, the buyer’s name, and the bond denomination. The bank is further obligated to fully disclose to the ECI the political parties that received contributions and cashed the electoral bonds from April 12, 2019.
The State Bank of India has been directed to provide the Election Commission of India (ECI) with the required information by March 6, 2024. Subsequently, the ECI is mandated to publish the entirety of the furnished information on its website by March 13, 2024.
In cases where electoral bonds, having a validity period of 15 days, remain unencashed, political parties or purchasers are obligated to return them to the bank. The bank, in turn, must refund the amount to the respective purchasers’ accounts.
Chief Justice Chandrachud, in the lead opinion, emphasized that the complete non-disclosure of the source of political funding through electoral bonds fosters corruption and cultivates a culture of quid pro quo with the ruling party for influencing policy changes or securing licenses. The scheme and its amendments were deemed to permit an “unrestrained influence of corporates in the electoral process.”
The scheme facilitated significant contributions from companies and multinational corporations with substantial business interests in the country, overshadowing or even concealing the relatively modest financial contributions of ordinary Indians—such as students, daily wage workers, artists, or teachers—who align with the ideologies of a political party without expecting substantial favors in return.
Chief Justice Chandrachud raised a fundamental question about the essence of democracy, pondering whether democracy can endure if elected representatives do not heed the concerns of the needy. He further questioned the responsiveness of elected officials to the electorate when companies, bringing substantial finances and engaging in quid pro quo arrangements with parties, are permitted to contribute unlimited amounts.
On February 15, the Supreme Court declared the electoral bonds scheme, designed to provide anonymity to financial contributions to political parties, and the accompanying amendments permitting unlimited political donations by wealthy corporations, as unconstitutional and manifestly arbitrary.
Chief Justice of India D. Y. Chandrachud, leading a five-judge Bench, delivered a unanimous judgment, asserting that the electoral bonds scheme and the preceding amendments to the Representation of People Act, Companies Act, and the Income Tax Act violate voters’ right to information about political funding under Article 19(1)(a) of the Constitution.
As a result, the apex court directed the State Bank of India to cease the issuance of electoral bonds. The bank was instructed to submit details of bonds purchased from April 12, 2019, until the present date to the Election Commission of India (ECI). This information, including the date of purchase, buyer’s name, and bond denomination, is required to be disclosed to the ECI by March 6, 2024. Subsequently, the ECI is mandated to publish the complete information on its website by March 13, 2024.
Electoral bonds, which have a validity period of 15 days and remain unencashed, are to be returned by political parties or purchasers to the bank, and the bank must refund the amount to the respective purchasers’ accounts.
Chief Justice Chandrachud, in the lead opinion, emphasized that the absolute non-disclosure of the source of political funding through electoral bonds fosters corruption and cultivates a culture of quid pro quo with the ruling party for influencing policy changes or securing licenses. The scheme and its amendments were deemed to permit an “unrestrained influence of corporates in the electoral process.”
Furthermore, Chief Justice Chandrachud questioned the democratic foundation, raising concerns about elected officials not addressing the needs of the people and the responsiveness of elected officials if companies with significant finances are allowed to contribute unlimited amounts. He highlighted that the scheme and amendments promoted economic inequality by giving corporations an unsurpassable advantage over citizens in the electoral process, violating the principles of free and fair elections and political equality encapsulated in the value of ‘one person, one vote.’ The judgment shed light on the deep nexus between money and politics, characterizing contributions by companies as purely business transactions made with the intent of securing benefits in return.
The court rejected the government’s contention that the anonymity provided by electoral bonds encouraged financial contributions through banking channels. While acknowledging the fundamental right to privacy, particularly concerning an individual’s political affiliation, Chief Justice Chandrachud emphasized the need for a balance between informational privacy and the voters’ right to information.
Chief Justice Chandrachud made a distinct separation between corporate donations made in anticipation of favors and individual contributions, which are regarded as expressions of personal political beliefs. This distinction implies that while protecting privacy rights, there is also an acknowledgment of the importance of transparency regarding political funding to uphold the electorate’s right to information.
The court rejected the government’s contention that the anonymity provided by electoral bonds encouraged financial contributions through banking channels. While acknowledging the fundamental right to privacy, particularly concerning an individual’s political affiliation, Chief Justice Chandrachud emphasized the need for a balance between informational privacy and the voters’ right to information.
Chief Justice Chandrachud made a distinct separation between corporate donations made in anticipation of favors and individual contributions, which are regarded as expressions of personal political beliefs. This distinction implies that while protecting privacy rights, there is also an acknowledgment of the importance of transparency regarding political funding to uphold the electorate’s right to information.