The Supreme Court of India last week declared the Electoral Bonds Scheme as unconstitutional and directed the State Bank of India to stop issuing Electoral bonds with immediate effect.
Chief Justice of India DY Chandrachud along with Justices BR Gavai, JB Pardiwala, Sanjiv Khanna and Manoj Misra heard the petitions challenging the constitutional validity of the Electoral Bond Scheme which introduced anonymous financial contributions to political parties.
Transparency & Electoral Bonds Scheme
The Election and Other Related Laws (Amendment) Act 2003 amended the provisions of the Representation of People's Act. Section 29C of the said Act was introduced for requiring each political party to declare the details of the contributions received.
The treasurer of a political party or any other person authorized by the political party must in each financial year prepare a report in respect of the contributions in excess of twenty thousand rupees received by the party from a person or company other than Government companies in that financial year. The report prepared must be submitted to the Election Commission before the due date for furnishing a return of income of that financial year under the IT Act. A political party which fails to submit the report shall not be entitled to any tax relief as provided under the IT Act.
The above provision was amended by the Finance Act 2017 to include a proviso by which the political party was not required to disclose details of contributions received by electoral bonds.
Amendments To RP Act, IT Act, Companies Act & RBI Act By Finance Act 2017
Court noted that the effect of the amendments introduced by the Finance Act to the above legislations is that:
- A new scheme for financial contribution to political parties is introduced in the form of electoral bonds;
- The political parties need not disclose the contributions received through electoral bonds;
- Companies are not required to disclose the details of contributions made in any form; and
- Unlimited corporate funding is permissible.
Issues
The present batch of petitions gives rise to the following issues:
- Whether unlimited corporate funding to political parties, as envisaged by the amendment to Section 182(1) of the Companies Act infringes the principle of free and fair elections and violates Article 14 of the Constitution; and
- Whether the non-disclosure of information on voluntary contributions to political parties under the Electoral Bond Scheme and the amendments to Section 29C of the RPA, Section 182(3) of the Companies Act and Section 13A(b) of the IT Act are violative of the right to information of citizens under Article 19(1)(a) of the Constitution.
Conclusion and Directions
Following are our conclusions:
- The Electoral Bond Scheme, the proviso to Section 29C(1) of the Representation of the People Act 1951 (as amended by Section 137 of Finance Act 2017), Section 182(3) of the Companies Act (as amended by Section 154 of the Finance Act 2017), and Section 13A(b) (as amended by Section 11 of Finance Act 2017) are violative of Article 19(1)(a) and unconstitutional; and
- The deletion of the proviso to Section 182(1) of the Companies Act permitting unlimited corporate contributions to political parties is arbitrary and violative of Article 14.
Following directions are issued:
- The issuing bank shall herewith stop the issuance of Electoral Bonds;
- SBI shall submit details of the Electoral Bonds purchased since the interim order of this Court dated 12 April 2019 till date to the ECI. The details shall include the date of purchase of each Electoral Bond, the name of the purchaser of the bond and the denomination of the Electoral Bond purchased;
- SBI shall submit the details of political parties which have received contributions through Electoral Bonds since the interim order of this Court dated 12 April 2019 till date to the ECI. SBI must disclose details of each Electoral Bond encashed by political parties which shall include the date of encashment and the denomination of the Electoral Bond;
- dSBI shall submit the above information to the ECI within three weeks from the date of this judgment, that is, by 6 March 2024;
- The ECI shall publish the information shared by the SBI on its official website within one week of the receipt of the information, that is, by 13 March 2024; and
- Electoral Bonds which are within the validity period of fifteen days but that which have not been encashed by the political party yet shall be returned by the political party or the purchaser depending on who is in 151 possession of the bond to the issuing bank. The issuing bank, upon the return of the valid bond, shall refund the amount to the purchaser's account.
Court also directed the disclosure of information on contributions received by political parties under the Electoral Bond Scheme to give logical and complete effect to the said ruling.
Apart from the judgment authored by the CJI, Justice Sanjeev Khanna also authored his opinion concurring with him.
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