Electoral Bonds Scheme Unconstitutional Says Supreme Court of India Explain

Sachin Pratap Singh The Daily Update TDU

• WHAT HAS HAPPENED?

The Supreme Court today struck down the electoral bonds scheme which had been brought in 2018,

As an alternative to cash donations made to political parties to bring transparency in political funding.

The top court held that the anonymous electoral bonds scheme is violative of the right to information under Article 19(1)(a).

• WHAT IS ELECTORAL BOND SCHEME?

The electoral bonds scheme allows corporations and individuals to anonymously donate money to political parties by purchasing electoral bonds from the State Bank of India (SBI).

Notably, the SBI has sole access to the details of those who purchased electoral bonds.

According to the scheme, the proceeds from any bonds, which are not encashed within 15 days of being issued, are to be deposited in the Prime Minister Relief Fund.

These bonds are issued by the State Bank of India (SBI) and are sold in multiples of ?1,000, ?10,000, ?1 lakh, ?10 lakh, and 1 crore.

The donations made under this scheme by corporate and even foreign entities enjoyed 100% tax exemption while the identities of the donors are kept confidential - both by the bank as well as the recipient political parties.

According to the provisions of the scheme, only the political parties registered under Section 29A of the Representation of the People Act, 1951 and, Which secured not less than 1% of the votes polled in the last elections to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds

In order to implement the scheme, the Centre carried out certain amendments to The Companies Act, Income Tax Act Foreign Contribution Regulation Act (FCRA), and the Reserve Bank of India Act

This scheme was challenged shortly after it was announced in January 2018, by a number of parties, including the Communist Party of India (Marxist), Common Cause and the Association for Democratic Reforms (ADR).

The case was heard by a 5-judge constitution bench of the Supreme Court led by Chief Justice of India for three days from October 31 to November 2 last year.

• WHAT WERE THE PETITIONERS ARGUMENT?

Advocate Prashant Bhushan, representing Common Cause and ADR, argued that citizens have a right to information about the parties and candidates seeking their votes.

Though financial statements of companies are available on the Ministry of Corporate Affairs websites, which could theoretically allow someone to glean the source of donations, Bhushan pointed out that there are roughly 23 lakh registered companies in India.

Figuring out how much each company had donated using this method would not be possible for an ordinary citizen, Bhushan argued.

Bhushan also argued that the scheme would distinctly favor the ruling government of the time, as the guarantee of anonymity would allow the government to provide concessions in the form of licenses, leases, policy changes and government contracts.

Senior Advocate Kapil Sibal highlighted further perceived gaps in the scheme.

He drew the court's attention to how the scheme could result in companies failing its duties towards its shareholders.

By allowing companies to "funnel money" to political parties without any oversight from shareholders, It denies the owners of said company the ability to decide how their company should act in the political sphere

Solicitor General Tushar Mehta argued that the focus of the scheme is not to ensure "anonymity", but to ensure "confidentiality".

Referring to the apex court's decision in 2019 to recognise the right to privacy as a fundamental right, he argued that donors have a right to privacy unless the information is a source of genuine public interest, in which case people can approach the court.

The Solicitor General also gave the court a detailed explanation of the ways in which Parliament, the government and the Election Commission had attempted to halt the circulation of black money in politics over the years.

The electoral bonds scheme, he claimed, was introduced after "experimenting" with a wide variety of schemes, amendments and policies.

Electoral bonds scheme has to be struck down as unconstitutional. It violates the right to information of citizens, about possible quid pro quo.

A company has graver influence on the political process than contributions by individuals. Contributions by companies are purely business transactions.

Amendment to Section 182 Companies Act is manifestly arbitrary for treating companies and individuals alike Before amendment, loss making companies were not able to contribute.

The amendment does not recognize the harm of allowing loss-making companies to contribute due to quid pro quo.

The amendment to Section 182 Companies Act is manifestly arbitrary for not making distincition between loss making and profit making companies

• DIRECTION TO SBI & EC

The Supreme Court on Thursday directed the State Bank of India to stop issuing electoral bonds immediately and submit all the details to the Election Commission by March 6.

The poll panel will make all the donations public within a week of the receipt of information.

"SBI shall submit details of electoral bonds purchased since April 12, 2019 till date to Election Commission," the top court said.

The Bharatiya Janata Party (BJP) received nearly 90% of all corporate donations worth ?680.49 crore that five national parties together gathered in 2022-23, according to a report by election watchdog Association for Democratic Reforms (ADR).

The report focuses on donations above ?20,000, received by the national political parties during the financial year 2022-23, as per details submitted by the parties to the Election Commission of India (EC).

The total donations declared by the national parties for 2022-23 was 850.438 crore.

A total of 719.858 crore was declared by the BJP, followed by 79.924 crore by the Congress.

The donations declared by the BJP are more than five times the aggregate declared by INC, AAP, NPP and CPI(M) for the same period.

BSP declared that the party did not receive any donations above 20,000 during this time period.

Source The Daily Update, National News