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Supreme Court scraps electoral bonds scheme ahead of polls

SC tells SBI to halt issuing electoral bonds and submit records of contributions since April 2019 to poll panel by 6 March

Supreme Court scraps electoral bonds scheme ahead of polls
[Source photo: Chetan Jha/Press Insider]

The Supreme Court of India on Thursday struck down the electoral bond scheme, a political funding tool that allowed anonymous donations to parties, calling it a violation of freedom of speech and expression enshrined in the Constitution.

The apex court ordered State Bank of India, the nodal bank that issued the bonds, and provide details of the contributions made in the scheme to the Election Commission. 

Notified by the central government on 2 January 2018, the scheme allowed any citizen or entity incorporated in India to buy electoral bonds without disclosing their identity.

Although the government pitched the scheme as a more transparent alternative to cash donations, critics argued that it made electoral funding more opaque. 

A batch of petitions was filed, challenging both the scheme and the manner in which the amendments in the various laws, including the Representation of Peoples Act and the Income Tax laws, were passed in the Parliament. 

The Supreme Court quashed the amendments that made anonymous contributions to political parties through the scheme possible.

A five-judge Constitution bench headed by Chief Justice of India (CJI)  D. Y. Chandrachud delivered two separate and unanimous verdicts on the pleas challenging the scheme. 

Holding the scheme violative of freedom of speech and expression, the judgment said, “Electoral Bonds Scheme, proviso to Section 29(1)(c) as amended by Section 139 of Income Tax Act and Section 13(b) as amended by Finance Act 2017 is violative of Article 19(1)(a).” 

Agreeing with the pleas that the scheme benefits the party in power, the judgment said, “Economic inequality leads to differing level of political engagements. Access to info leads to influencing policy making and also leading to quid pro quo arrangements may also help a party by the party in power.”

A five-judge Constitution bench of  Chief Justice Chandrachud and justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra had in November reserved its verdict in the matter.

Two concurring judgments were delivered by the bench, one authored by CJI Chandrachud and the other by Justice Khanna.

Holding that the fundamental right to privacy also includes citizens’ right to political privacy and affiliation, the top court said that while the privacy of donors is important, transparency in political funding cannot be achieved by granting absolute exemptions, legal news platform Bar and Bench reported.

The electoral bonds scheme cannot be justified by saying that it will help curb black money in politics, the court said. 

It also directed SBI to stop issuing electoral bonds and asked it to submit details of such bonds purchased since 12 April 2019 to the Election Commission by 6 March.

The Election Commission will publish the details on its official website by 13 March. 

The ruling Bharatiya Janata Party (BJP) received nearly ₹1,300 crore ($156 million) through electoral bonds in 2022-23, the Press Trust of India reported. 

Nearly 61% of the BJP’s overall ₹2,120 crore ($255 million) contributions in the 2022-23 fiscal came from electoral bonds, the party’s annual audited report submitted to the Election Commission showed. 

The principal opposition Congress party, on the other hand, earned ₹171 crore ($20.6 million) from electoral bonds in the same period.

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