Historical ruling ahead of the polls: Supreme Court strikes down the Electoral Bonds scheme...What's in the verdict?

Astonishing the political parties, particularly the BJP, the Supreme Court has on Thursday - February 15 delivered a unanimous ruling of striking down the Electoral Bonds Scheme, an opaque funding channel that greatly benefitted the BJP for half-a-decade in amassing more and more funds to its coffers. BJP is the richest political party in India and this scheme played a vital role behind the financial fortune of the Hindutva party. 

Months ahead of the general elections, the Supreme Court has pronounced the verdict of declaring that the Electoral Bonds Scheme is unconstitutional. The five-judge Constitution bench of the apex court had repealed the scheme that was introduced by the Modi regime. The Electoral Bonds had nullified transparency and legal ambit and gave the political parties a liberty of concealing the data of the people who had funded to them through this scheme. 

The Modi regime, which rhetorically claim to be a champion of eliminating black money, purpotedly plunged into action of building a channel to receive funds by earthing transparency. Although various parties had received funds through the Electoral Bonds scheme, it was BJP that banked more within a few years. This Electoral Bond has long been under public scrutiny where several opposition parties and activists had challenged it both legally and politically. 

Several petitions challenging the constitutional validity of the Electoral Bond scheme were filed before the Supreme Court and they were heard by a constitution bench comprising Chief Justice DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra. After hearing these petitions, the bench reserved the verdict in November 2023. 

Nearly four months after reserving the verdict, the apex court has delivered its ruling on Thursday only to give a major shock to the BJP. Interestingly, the bench delivered an unanimous verdict and in his observation, Chief Justice Chandrachud said, "Information about funding of political parties is essential for the effective exercise of the choice of voting." The apex court had also rejected the argument from the BJP government that the citizens don't have the right to know the funding of political parties. 

The bench held that electoral bonds are violative of right to information and Article 19(1)(a), which is the right to freedom of speech and expression. The court has also revoked the amendments made to the Information Technology Act, Companies Act, and Representation of People Act by declaring that they were unconstitutional. According to Live Law, the apex court also held that the restrictive means test of the doctrine of proportionality is not satisfied and that there are other means other than electoral bonds to achieve the purpose of curbing black money, even assuming it to be a legitimate objective. 

The Chief Justice noted, "At a primary level, political contributions give a seat at the table of contributions, i.e., it enchances access to legislators. This access also translates to influence over policymaking. There is also a legitimate possibility that financial contributions to a political party would lead to quid pro quo arrangement because of the close nexus between money and politics. The electoral bond scheme and the impunged provisions to the extent that they infringe upon the right to information of the voter by anonymising contributions through electoral bonds are violative of Article 19(1)(a)."

The apex court has issued an order to the State Bank of India (SBI) to immediately stop issuing electoral bonds. Furthermore, the court has also asked SBI to disclose the details of the political parties that received electoral bonds and all the particulars received to the Election Commission of India (ECI) by March 6. After receiving these details, the ECI has to publish them on its official website by March 13. 

The court further said, "Electoral Bonds which are within the validity period of 15 days but which have not been encashed by the political parties yet shall be returned by the political party to the purchaser. The issuing bank shall then refund the amount to the purchaser's account." While the Chief Justice delivered the lead judgement, Justice Sanjiv Khanna has penned a concurring opinion with a different reason.

The short life of the Electoral Bonds Scheme

The short-lived Electoral Bonds had extensively transformed the fashion of political funding and transparency. They have also erratically instilled a system where individuals can donate to the political parties without revealing their identities and the source of income. These loopholes have opened a debate that several businessmen can donate to a particular party without revealing them and can receive a reward in return from the ruling government in form of tax relief and exemptions. 

The petitioners had also alleged that the Electoral Bonds would give a surge to the black money. The Electoral Bonds were introduced in 2017 through the Finance Act, which was enacted as a money bill without getting passed in the Rajya Sabha. With the view of introducing the electoral bonds, the Finance Act had amended the Reserve Bank of India Act, Companies Act, Income Tax Act, Representation of People Act, and the Foreign Contributions Regulation Act (FCRA). 

The donors, both the citizens and bodies incorporated in India, can buy these bonds from the stipulated branches of the SBI and can donate anonymously to political parties. The bonds were available in multiple denominations from Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh to Rs 1 crore. These bonds won't carry the names and identities of the donors and the political parties are free from the requirement of disclosing the source of these bonds. 

Under this Electoral Bond scheme, BJP has earned more than any other parties as the saffron camp made thousands of crores and whenever an election nears, the BJP's graph of fund through electoral bonds would surge. In the wake of its opaqueness, the scheme didn't earn a nationwide audience and was scathingly challenged by the pro-democracy activists and organisations. 

The petitioners including the Association for Democratic Reforms (ADR) had approached the Supreme Court and argued that the electoral bonds are against fundamental principles of the Indian Constitution. They also argued that electoral bonds would eliminate the people's rights to be informed and that it doesn't curb the flow of black money. Shockingly, while countering these pleas, the Modi regime claimed that the citizens do not have the right to know the funding of a political party. Eventually, rejecting the latter, the Supreme Court has now delivered a historical ruling of striking down the Electoral Bond scheme and declaring it as unconstitutional.