In a significant judicial pronouncement on February 15, the Supreme Court of India delivered its judgment on the contentious electoral bonds scheme, which had been a subject of intense debate and scrutiny since its introduction through amendments in the Finance Act 2017. The five-judge constitution bench, led by Chief Justice DY Chandrachud and comprising Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, rendered a unanimous decision declaring the electoral bonds scheme as unconstitutional. This analysis delves into the intricate details of the case, exploring the facts, issues involved, arguments presented, the court’s reasoning, the judgment, and its potential implications.
Facts:
The electoral bonds scheme, introduced by the government in 2017, allowed individuals and corporations to make anonymous donations to political parties. The scheme came under scrutiny from various quarters, including the Association for Democratic Reforms (ADR), the Communist Party of India (Marxist), and Congress leader Jaya Thakur. The key bone of contention was the clash between the right to information, deemed essential for effective voting, and the anonymity of donors facilitated by the electoral bonds scheme. The petitioners argued that the lack of transparency undermined the democratic process, raising concerns about accountability and integrity in political financing.
Issues Involved:
=Right to Information vs. Anonymity of Donors: The primary issue before the court was the constitutional validity of the electoral bonds scheme in light of its impact on the right to information. The scheme allowed for the anonymization of political contributions, leading to a clash with the constitutional right to information, as enshrined in Article 19(1)(a).
=Unlimited Corporate Funding: Another critical issue addressed by the court was whether the amendments to the Companies Act, which allowed unlimited corporate funding to political parties, violated the principles of free and fair elections. The court examined the potential implications of removing the cap on corporate donations, previously restricted to a maximum of 7.5 per cent of net profits.
Arguments:
Petitioners (including ADR, CPI(M), and Jaya Thakur): The petitioners contended that the electoral bonds scheme undermined transparency in political funding. They argued that the anonymity of donors could lead to contributions through shell companies, creating a potential avenue for corruption and compromising the voters’ right to information. The petitioners sought the court’s intervention to strike down the scheme as unconstitutional.
Union Government: The Union Government defended the electoral bonds scheme, emphasizing its role in promoting the use of legitimate funds in political financing. The government asserted that the anonymity of donors was necessary to protect contributors from potential retribution by political entities. It argued that the scheme facilitated transactions through regulated banking channels, ensuring transparency in financial contributions.
Obiter – Dicta:
Chief Justice DY Chandrachud, delivering the lead judgment, set the tone by emphasizing the critical role of information about the funding of political parties in ensuring the effective exercise of the choice of voting. The court applied a meticulous analysis, scrutinizing the electoral bonds scheme in light of the right to information under Article 19(1)(a) of the Constitution.
The court held that the electoral bonds scheme violated the right to information as it anonymized contributions, hindering the voters’ ability to make informed choices. Chief Justice Chandrachud emphasized that political contributions provide a seat at the table to contributors, enhancing access to legislators and potentially influencing policymaking. The court expressed concerns about the close nexus between money and politics, highlighting the legitimate possibility of quid pro quo arrangements.
A crucial aspect of the court’s reasoning was the application of a double proportionality standard. It considered the conflicting rights to information and informational privacy, acknowledging the right of informational privacy extends to financial contributions, which is a facet of political affiliation. The court held that the restrictive means test of the doctrine of proportionality was not satisfied by the electoral bonds scheme. It asserted that there were alternative means to achieve the legitimate objective of curbing black money, rendering the infringement of the right to information unjustifiable.
The court rejected the Union Government’s argument that Clause 7(4)(c) of the scheme balanced the right to information and informational privacy. It held that the provision tilted the balance in favour of informational privacy, and the government failed to establish that the measure adopted in the scheme was the least restrictive.
Judgment:
In a decisive pronouncement, the court declared the electoral bonds scheme unconstitutional, including the amendments to the Income Tax Act, the Representation of Peoples Act, and the Companies Act. The court directed the State Bank of India (SBI), the issuing bank, to stop the issuance of electoral bonds. SBI was instructed to provide details of bonds purchased and encashed by political parties to the Election Commission of India (ECI). The ECI, in turn, was mandated to publish this information on its website by March 13, 2024.
While addressing the immediate concerns related to electoral bonds, the judgment went beyond and signalled a broader commitment to transparency and accountability in the political financing process.
Conclusion:
The Supreme Court’s decision in the electoral bonds case marks a significant milestone in the evolution of electoral reforms in India. By striking down the electoral bonds scheme, the court has reaffirmed the paramount importance of the right to information in a democratic setup. The judgment reflects a nuanced understanding of the delicate balance between transparency and privacy, with a clear preference for upholding the citizens’ right to be informed about the financial contributions to political parties.
Implications:
End of Electoral Bonds: The immediate consequence of the judgment is the discontinuation of the electoral bonds scheme, impacting the traditional dynamics of political funding.
Transparency in Political Funding: The court’s decision promotes transparency by requiring the disclosure of details of contributions. This aligns with the principles of a democratic society, where citizens have the right to know about the financial backing of political parties.
Potential Reforms:
The judgment may trigger discussions and deliberations on reforms in political financing. It could catalyse policymakers to revisit and re-evaluate existing mechanisms, ensuring a fair and transparent electoral process.
The case sets a precedent for future discussions on the intersection of political funding, transparency, and the right to information. It underscores the judiciary’s role in upholding the democratic values enshrined in the Constitution. It reinforces the principle that the right to information is fundamental for the effective functioning of a vibrant democracy. As the implications of this judgment unfold, it is likely to have a lasting impact on the landscape of political financing in India.
(The Author is a Final Year Law Student at HPNLU, Shimla).