Electoral Bonds Scheme verdict: SC strikes down EBS, calls it ‘unconstitutional’

The Aam Aadmi Party on Thursday welcomed the Supreme Court’s decision on electoral bonds, saying it is an important step in ensuring transparency in election funding.

“We welcome this decision. This is an important step in the transparency of election funding. Otherwise through electoral bonds, it was not known which person was giving funds to which party. It is important for country’s democracy that it is known which person is giving how much money to which political party,” Delhi Cabinet minister Atishi said.

2017: The Electoral bond scheme was introduced in the Finance Bill

September 14, 2017: NGO ‘Association for Democratic Reforms’, lead petitioner, moves SC challenging the scheme.

October 3, 2017: SC issues notices to Centre and EC on PIL filed by the NGO.

January 2, 2018: The Central government notifies the Electoral Bond Scheme.

November 7, 2022: The electoral bond scheme was amended to increase the sale days from 70 to 85 in a year where any assembly election may be scheduled.

October 16, 2023: The SC bench headed by CJI DY Chandrachud refers pleas against the scheme to a five-judge Constitution bench.

October 31, 2023: A five-judge Constitution bench headed by CJI D Y Chandrachud commences hearing on pleas against the scheme.

November 2, 2023: Supreme Court reserves verdict

February 15, 2024: SC delivers unanimous judgment annulling the scheme

Congress Party President Mallikarjun Kharge welcomed decision of the Supreme Court on the electoral bonds.

“We welcome the decision of the Supreme Court today, which has struck down this ‘Black Money Conversion’ scheme of the Modi Govt, calling it “Unconstitutional”, Kharge wrote on the X platform.

“We hope that Modi Govt will stop resorting to such mischievous ideas in future and listens to the Supreme Court, so that Democracy, Transparency and level-playing field persists,” Kharge added.

The Supreme Court has directed the SBI to submit details of electoral bonds purchased since the interim order of the Court dated April 12, 2019.

The details to be included are-date of purchase of each electoral bond, the name of the purchaser of the bond, the denomination of the electoral bond purchased, and the details of the political parties which have received contributions through electoral bonds since the interim order dated April 12, 2019 till date to the ECI.

SBI must also disclose details of each electoral bond encashed by the political parties, the top court said.

Former Chief Election Commissioner of India SY Quraishi hailed the Supreme Court’s judgment on Electoral Bonds. He said, “It is the most historic judgment that we have got from the Supreme Court in the last 5-7 years. It is a great boon for democracy. We were all concerned about it for the last so many years…everyone who loves democracy was protesting about it. I myself wrote several articles and spoke to the media many times. And every issue that we had raised, has been tackled in this judgment”.

Trinamool Congress leader Saket Gokhale took a swipe at the ruling Bharatiya Janata Party (BJP) following the Supreme Court verdict on the Electoral Bonds Scheme.

The top court has directed the Election Commission to publish the list of all electoral bond donors and parties they donated to by mid-March.

TMC’s Gokhale wrote, “Most important to watch – how many of the donors who gave electoral bonds to the BJP are individuals and companies facing ED and CBI action”.

Senior advocate and Rajya Sabha MP Kapil Sibal has called SC’s verdict on the Electoral Bonds Scheme, a “huge ray of hope” for democracy.

“This whole scheme which was the brainchild of my late friend Arun Jaitley was in fact choreographed to enrich the BJP. Because everybody knew that the BJP was in power and that any donations through the electoral bond scheme would come to the BJP. But the interesting part is that this electoral bond scheme had nothing to do with elections. It was the bonding between the corporate sector and the BJP which received the largest number of donations. And the donations they received over the years amounted to about five to 6000 cores. Now with 5000 to 6000 cores in your kitty which is not to be used in elections at all. You can build your infrastructure as a political party. You can build the infrastructure for the RSS. You can set up your communication network throughout the country,” Sibal said.

Dr Jaya Thakur, one of the petitioners in the Electoral Bond Scheme case, said the Supreme Court’s verdict on scrapping the scheme is a ‘victory’ for her.

Dr Thakur added, “The Right to Information Act gives us the right to ask about the donation (fund) money and if it doesn’t get disclosed then it’s definitely a violation. It is a big victory for us. Our demand to cancel the electoral bonds has been fulfilled today”.

Prashant Bhushan, a lawyer representing one of the petitioners said that the “judgement which will have a long-term effect on our electoral democracy…All the provisions that were made to bring it into effect in the income tax act, in the companies act etc. everything has been struck down”.

Senior Congress leader Jairam Ramesh welcomed Supreme Court’s verdict on Electoral Bonds Scheme. The Congress leader wrote on the X platform, “The Supreme Court has held the much-touted Electoral Bonds scheme of the Modi Sarkar as violative of both laws passed by Parliament as well as the Constitution of India. The long-awaited verdict is hugely welcome and will reinforce the power of votes over notes”.

Advocate Prashant Bhushan said the Supreme Court’s scrapping the Electoral Bond Scheme is a ‘salutary judgment which will enhance our democratic process…”.

Supreme Court of India has directed the State Bank of India (SBI) to provide details of electoral bonds encashed by the political parties. The top court has asked India’s largest public lender to submit details to the Election Commission of India as well.

Besides, the Supreme Court has ordered Election Commission to publish the details on electoral bonds on its website by 31 March 2024.

Chief Justice of India DY Chandrachud said that the “issuing bank shall forthwith stop the issue of electoral bonds”.

The State Bank of India (SBI) used to issue electoral bonds.

“The State Bank of India shall furnish the details of donations through electoral bonds and the details of the political parties which received the contributions,” CJII added.

Supreme Court strikes down Electoral Bonds scheme. Supreme Court says Electoral Bonds scheme has to be struck down as unconstitutional.

CJI DY Chandrachud on the Electoral Bond Scheme said:

-Financial supports via electoral bond to political parties can lead to quid pro quo arrangement.

-Electoral bonds scheme is not the only scheme to curb black money. There are other alternatives.

-Infringement to the right to information is not justified by the purpose of curbing black money.

-Not all political contributions are made with the intent to alter public policy. Students, daily wagers etc also contribute. To not grant umbrella of privacy to political contributions only because some contributions are made for other purposes is not impermissible.

Supreme Court holds that anonymous electoral bonds are violative of right to information and Article 19(1)(a).

Chief Justice of India DY Chandrachud said, “This court recognised right to information about social,cultural, political and economical issues, and that it is not limited to state affairs but to further participatory democracy principle”.

CJI DY Chandrachud said that the 5-judge bench has arrived at a unanimous decision.

“There are two opinions, one by myself and another by Justice Sanjiv Khanna. Both arrive at same conclusion. There is a slight variance in the reasoning”.

Supreme Court’s five-judge CJI DY Chandrachud, and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra have started listening to the pleas challenging the Electoral Bond Scheme.

NGO Association of Democratic Reforms, CPI(M) party, Dr Jaya Thakur etc are the petitioners who have challenged the Electoral Bonds Scheme.

According to the petitioners, the scheme violates the right to information, opens doors to shell companies, and promotes corruption. Rajya Sabha MP and senior advocate Kapil Sibal had raised that a political party could use the donations for any other purposes than election.

However, the Centre has maintained that the scheme ensures “transparency” and is a “powerful check on the use of illicit money in elections”.

The electoral 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 are 100% tac exempted and the identities of the donors are kept confidential – both by the bank as well as the recipient political parties.

The State Bank of India (SBI) has issued Electoral Bonds worth ₹16,518 crore in 30 tranches since the inception of the scheme in 2018, Minister of State for Finance Pankaj Chaudhary said in a written reply in Lok Sabha during the recently concluded Budget Session.

Electoral Bonds scheme is a controversial funding instrument that allows donations to flow through the banking system but masks the identity of donors.

Various petitions are pending before the top court challenging the validity of the Electoral Bond scheme as they say it has opened doors to unlimited, unchecked funding of political parties.

NGOs Association of Democratic Reforms and Common Cause had said that the Finance Bill, 2017, which paved the way for the introduction of the Electoral Bond scheme, was passed as a money bill even though it wasn’t.

Introduced in January 2018, electoral bonds are monetary instruments that citizens or corporate groups can buy from a bank and give to a political party, which is then free to redeem the same for money.

The judges that will pronounce judgment on the validity of the electoral bonds are–Chief Justice of India DY Chandrachud, Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra.

A five-judge bench of the Supreme Court to shortly deliver its verdict in the case concerning the legal validity of the electoral bonds scheme that allows anonymous donations to political parties.

In January, Association for Democratic Reforms (ADR) published a report on the electoral bonds funding political parties in India in financial year 2022-23 (FY23).

According to the ADR report, that of the total ₹366.495 crore funding that political parties received, Bhartiya Janata Party (BJP) emerged as the recipient of the highest amount- ₹259.08 crore or 70.69 per cent. The report mentions, Prudent Electoral Trust donated ₹256.25 crore to BJP, in contrast to ₹336.50 in FY 2021-2022.

Communist Party of India (Marxist) general secretary Sitaram Yechury has likened the electoral bond scheme to the “legalisation of political corruption” and hoped that the Supreme Court would soon deliver its verdict on pleas to scrap 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 per cent of the votes polled in the last elections to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds.

The Supreme Court is scheduled to pronounce its verdict on Thursday on a batch of petitions challenging the validity of the Electoral Bond scheme, which allows for anonymous funding to political parties.