Historic judgement on the Electoral Bond Scheme is unconstitutional

This historic judgement was delivered on Electoral Bond on February 15, 2024, by the constitution bench headed by CJI DY Chandrachud and follows the 2:1 majority which decrees that the Electoral Bond Scheme is unconstitutional and the very method of political funding abolished in 2018. Thus decided, this is the more notable precedent to Justice Chandrachud’s string of transformative judgments: The people have a right to know, voters’ rights matter, and quid pro quo deals between corporations and partisan actors are unconstitutional.

Electoral Bond Scheme, which forms the background of this work.

The Electoral Bond Scheme was initially proposed as part of the Finance Bill, 2017 by the then Finance Minister, Mr. Arun Jaitley, who proffered that it is necessary for ‘purification’ of political funding. But since it was classified and processed as a Money Bill it escaped rigorous parliamentary debates and the Indian constitution Article 110 raise serious doubts were raised. The Finance Bill expressing electoral bonds as a legal and acceptable form of anonymous political contribution aimed at preventing free cash funding of political parties.

After the issuance of formal notification by the Department of Economic Affairs on 2nd January 2018, donors including body corporate and any individual was enabled to purchase electoral bonds from the State Bank of India for the financing of the political parties. Of them, the scheme until 2022 allowed bond sales for only 70 days a year but officially increased to 85 days in an election year, as Gujarat and Himachal Pradesh went for polls.

Organizational change and transformation stipulated that:

The introduction of electoral bonds was not welcomed by anyone on the political map right from the start. In 2019, the Congress Party declared that if it came into the power eliminating the scheme is on its policy due to lack of transparency. At the same time, the Communist Party of India (Marxist) remained the only national party denying electoral bonds as a form of funding at all, stating that it is an attempt at ‘dark money’ circulation that goes in the opposite direction of the main democratic values.

Supreme Court’s Verdict

The constitution bench of five judges headed by CJI Sharad Arvind Chandrachud held that the scheme undercut provisions under the RTI Act and Article 19(1)(a) of the Constitution that guarantees voters the right to access information about political contributions. Lack of identification deprived voters of important information thus causing tilt in the democratic processes of the country stated the court. Additionally, it was said in the judgement that such scheme creates climate that would make corruption in form of favours exchanges between business companies and political parties possible.
The judgement also quashed certain amendments to statutes such as the Representation of People Act, Companies act and Income Tax Act S), which dealt with the modality to issue electoral bonds under the Electoral Bond Scheme.

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The judgement also mandated that both the donors to and the recipients from the State Bank of India report their identities to the ECI by March 6, 2024, to be published online by the ECI by March 13, 2024.

Implementation Difficulties and SBI Success Story & Law Compliance

Here, SBI faced challenges in delivering donor details to the ECI as per their deadline of March 6, and for this the Supreme Court asked for the extension of the time. But the bench, which wanted to be transparent for the people, denied this demand. SBI then compiled and the ECI published the information on 13 March, for the first time since donor and recipient information was disclosed the scheme’s inception.

About Justice DY Chandrachud’s Legacy

This judgement on electoral bonds is one of many significant judgements delivered in the court having 27th Chief Justice of India Dattu Ramachandrudu Chandrachud as the chief justice of India from 9th November 2022. In his career, Justice Chandruchud has been particularly active in delivering path breaking decisions like – the Ram Janambhoomi-Babri Masjid case, the case determining right to privacy, decriminalization of Section 377, allowing women into the Sabarimala temple and abrogation of Article 370 of the Indian Constitution.