.png)
Petitions challenging the scheme had been pending before the Apex Court of India for over five years. The judgment pronounced a fivejudge Constitution Bench presided by the Chief Justice of India D Y Chandrachud on February 15, 2024 is a historic and unprecedented one by all measures. For one, the Supreme Court has not gone the way of the US Supreme Court which in Citizens United (2010) held that corporate donations to political causes constituted the exercise of "free speech" under the American Constitution. That decision legitimised the use of huge corporate money through Political Actions Committees, which significantly impact the course of elections at the Presidential and Congressional levels. The Court has not only struck down the legislation but has also in its operative directions, lifted the veil upon past transactions by directing the SBI to inform the Election Commission of India details of the Electoral Bonds purchased since the Court's interim order dated April 12, 2019. Further, the ECI has been directed to place these details on its official website. This will prove to be extremely valuable data to those who chart the course of Indian politics. It may well be that some governments at the Center or state level received significant donations which impacted the course of policy-making post elections. Now, all parties are likely to be aware of those who are donating significantly to their opponents. One man one vote, one vote one value is the basis of our Parliamentary democracy. However, the electoral bonds scheme, where anonymous big money talked, could tilt the electoral discourse. The petitioners have requested the court to focus mainly on two issues concerning the scheme. One is the legalisation of anonymous donations, and the other is the violation of citizens’ right to information about the funding of parties. The two issues concern violation of Articles 19, 14 and 21 of the Constitution. Several questions have been raised about the scheme ever since its inception. It ensures the flow of money to political parties through the banking channel but without disclosure of the donor’s identity. The legalisation of anonymous donations would amount to facilitation and legitimisation of corruption. In a democracy, the public have the right to know who funds parties because the funding may be used to influence policies. Indeed, more than 95% of the donations through Electoral Bonds have been in denominations of Rs 1 crore and above, suggesting that these are donations by either corporates or rich individuals. There is also the concern that the Bonds facilitate money-laundering, though the government has claimed that its purpose is the opposite. Essentially, the Scheme meant that anybody could buy electoral bonds whenever they were issued and then give them to a party of their choice to be encashed. The identity of the donor was thus kept anonymous but was known to the issuing bank i.e., the State Bank of India and quite obviously, to the receiving parties. The scheme was propounded by the late Finance Minister of India Arun Jaitley in his Budget speech of 2017-18, pitching it as an alternative to cash donations made to political parties as part of efforts to bring transparency to political funding. "If you ask people to disclose that (identity of a donor) also, then I am afraid the cash system will be back," Jaitley had said in April 2019, adding people will find fault with the scheme but have not come up with any alternative to check the use of black money in the electoral process. The Supreme Court in its judgment made it clear categorically, that the voter's right to access information can't be curtailed on the pretext of privacy and the desire to check the flow of unaccounted money to the political parties, as the right to know is paramount for free and fair elections. Justice Sanjiv Khanna, one of the members of the hearing five-judge Bench, rejected the Union Government's argument in defence of Electoral Bonds Scheme that the donor may like to keep his identity anonymous, holding it as a mere ipse dixit assumption. "The plea of infringement of the right to privacy has no application at all if the donor makes the contribution, that too through a banking channel, to a political party. It is the transaction between the donor and the third party person," the Judge said. Under the Scheme, Justice Khanna noted the political parties in power may have asymmetric access to information with the authorised bank. They also retain the ability to use their power and authority of investigation to compel the revelation of Bond-related information. "Thus the entire objective of the scheme is contradictory and inconsistent," he said, adding that the confidentiality of the voting booth does not extend to the anonymity in contributions to political parties. It has been noted that the BJP has received the lion’s share of the donations. Ruling parties have an advantage in the matter of political donations but the system should not institutionalise the bias in their favour. Since the funding is done through the State Bank of India, the government has access to the identity of donors. It can use this knowledge to ensure that opposition parties do not get funds. The Electoral Bonds scheme thus not only creates an uneven playing field for political parties but is a danger to our democracy. By striking down the Electoral Bonds scheme as unconstitutional, the Supreme Court has delivered a victory to the people of India on a core principle of electoral democracy — that the voter has the right to, and should, know who is funding political parties and their election machines. All the criticism and apprehensions about the Electoral Bonds scheme that have been voiced have been validated by the Supreme Court, which has comprehensively struck it down in a unanimous five-judge bench verdict. The court has declared the scheme violative of the right to information under Article 19(1)(a) of the Constitution. The arguments advanced by the government in defence of the scheme have all been found untenable by the court. The Union Government had introduced the Electoral Bonds scheme in the 2017 Union Budget, passing it off as part of the Finance Bill with the claim that it would enhance transparency in political funding. It has since been the instrument through which the ruling dispensation has collected the lion’s share of over Rs 13,000 crore donated by companies and rich individuals anonymously. The amendments that were made to the Income Tax Act, the Representation of Peoples Act and the Companies Act to enable the unlimited anonymous donations to political parties, while giving tax exemption to both donor and receiving party, have all been held to be unconstitutional. The lack of transparency was the main criticism about the bonds and the court has found the argument to be valid. In a democracy, people have the right to know who makes contributions to which political parties because parties function in the public realm. They form governments and frame public policy. Even when they are in the Opposition, they represent public opinion and influence policy. The court has recognised this by stating that financial support to political parties can lead to quid pro quo arrangements. People need to know whether the policies and decisions made by governments are in public interest or are linked to donations by private parties to the ruling party. The denial of that information violates the principle of transparency to voters that is key to electoral democracy. This has been raised in public fora, but the government had chosen to remain deaf. The court also dismissed the argument that the scheme helped to curb black money in politics. The scheme was also inherently built and designed to give advantage to the ruling dispensation over the Opposition in receiving funds. While the government could possibly access information about the donors and donations through the SBI, the Opposition could not. Though the ruling party usually has an advantage in political donations, the heavily lopsided nature of the donations shows the unfair advantage the BJP has enjoyed. The court has directed the SBI to stop issuing Electoral Bonds, and to disclose all details of donations made so far to the Election Commission, which has been directed to publish the same on its website by March 31. It is a historic judgement which affirms the need for transparency and fair play in a democracy. While the judgement may or may not impact the fortunes of political parties in the coming Lok Sabha elections, the moral authority of the present central government has been brought into question. In the words of the Hon'ble Justice Khanna, "While quid pro quo and clientelistic corruption erodes quality and integrity of government decision making, the power of money may also pose a threat to the electoral process itself." Deep words that are relatable to the present day political process indeed By: Adithya Paul Ambrose, Legal Attorney at NKP Empire Ventures Pvt. Ltd.
Follow LexTalk World for more news and updates from International Legal Industry
Comments