20

Feb

Judgement on  Electoral Bonds Will Have Far-Reaching Impact

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Today’s Edition

New Delhi, 20 February 2024

Dr Satish Misra

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The Supreme Court’s landmark judgment on the ‘Electoral Bond Scheme’ on last Thursday(16 February)  declaring it “unconstitutional” and “violative of the Article 19 (1) (a) of the Constitution is historic as it goes a long way to strengthen the democratic structure of the country which has been under serious threat since the coming of the power of the BJP in 2014.  

 

Coming almost on the eve of the general elections, scrapping of the electoral bonds that allowed individuals and companies to make unlimited anonymous donations to political parties by the Supreme Court is in fact a slap on the face of Prime Minister Narendra Modi whose Finance Minister Arun Jaitley had worked out details of the scheme modelling in such a way that hugely benefitted the ruling party in the name of curbing the role of the black money in electoral funding. 

 

How the scheme benefited the ruling party can be easily seen from the data which tells that the BJP received over 60% of the donations made under the scheme since 2016 when it was launched till 2022.

 

According to Election Commission data, 28,030 electoral bonds worth Rs 16,437.63 crore were sold between 2016 and 2022. The BJP was the primary beneficiary of these donations and received Rs 10,122 crore, nearly 60% of the total donations. The main opposition Congress party came a distant second, receiving Rs 1,547 crore or 10 per cent in the same period, while West Bengal's ruling Trinamool Congress got Rs 823 crore or 8 percent of all electoral bonds.

 

Donations made to the BJP through electoral bonds were three times more than that of all other 30 parties combined on the list.

 

"It (Electoral Bonds Scheme) is violative of Article 19(1) (a)," said a five-judge Constitution Bench led by CJI DY Chandrachud, declaring it unconstitutional. The electoral bonds scheme, the Chief Justice said, was unconstitutional and arbitrary and may lead to a quid pro quo arrangement between political parties and donors.

 

The apex court of the land by its judgment endorsed the stand of the opposition parties particularly of the Congress which right from the beginning when the Modi government had introduced a bill on electoral bonds in 2017 that it was a scheme that would result in a nexus between the big business and the ruling party and therefore was not only undemocratic but also violated the Constitution. 

 

The Bench -- which also included Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra -- ordered the State Bank of India to stop issuing Electoral Bonds immediately and submit all details to the Election Commission by March 6. Justice Sanjeev Khanna delivered a separate but concurring judgment.

 

It ordered the Election Commission to make all donations public within a week of the receipt of the information. All Electoral Bonds within the 15-day validity period shall be returned by political parties to the purchasers, it ordered. It also struck down certain amendments to the Companies Act in this regard.

 

The only purpose of amending section 182(3) of the Companies Act becomes otiose after we hold that the EB scheme, IT Act making non- disclosures acceptable and RP Amendment as unconstitutional, it said.

 

Judgment clearly indicates that a “company has graver influence on the political process than contributions by individuals. Contributions by companies are purely business transactions. Amendment to Section 182 Companies Act is manifestly arbitrary for treating companies and individuals alike."

 

The top court said that curbing black money can't be accepted as a justified reason for lack of transparency in political funding. Electoral bonds scheme was not the only means available to curb black money in political funding, it said adding that the Electoral Bonds Scheme violated the voter’s right to know under Article 19(1) (a) of the Constitution.

 

Introduced through the Finance Act, 2017, an Electoral Bond is a bearer instrument like a Promissory Note which can be purchased by an Indian citizen or an Indian company whose identity would remain secret from everybody except the SBI from whom it has to be purchased. Once purchased, the buyer can give it to a political party, which can encase it using its bank account.

 

It was introduced through the Finance Act, 2017, which made amendments to several statutes, including the RBI Act, Representation of People Act, Income Tax Act and Companies Act to facilitate the scheme which was notified on January 2, 2018.

 

In its PIL filed in 2017, ‘Association for Democratic Reforms’ (ADR) alleged corruption and subversion of democracy through illicit and foreign funding of political parties and lack of transparency in their accounts. Besides ADR, CPI (M) and Common Cause have also challenged electoral bonds scheme.

 

  Maintaining that several constitutional issues having a tremendous bearing on the sanctity of electoral process were involved in the petitions challenging the validity of Electoral Bonds Scheme, the petitioners had earlier urged the Supreme Court to refer the matter to a Constitution Bench.

 

The Modi government vehemently maintained that the electoral bonds scheme was an “absolutely transparent” mode of political funding and it was impossible to get any black or unaccounted money through it.

 

The Congress while welcoming the judgment hoped that the Modi government would stop resorting to such "mischievous ideas" and listen to the Supreme Court so that democracy, transparency and level-playing field persisted.

 

In a post on X, Congress president Mallikarjun Kharge said the Congress had called the scheme "opaque and undemocratic" when it was launched. Subsequently, in the 2019 manifesto, the Congress promised to scrap the Modi government's "dubious scheme".

 

"We welcome the decision of the Supreme Court today, which has struck down this 'Black Money Conversion' scheme of the Modi government, calling it 'unconstitutional'.

 

"We remember how the Modi Govt, PMO and FM bulldozed every institution - RBI, Election Commission, Parliament and Opposition to fill BJP's coffers. No wonder, 95% of the funding under this scheme was received by BJP," Kharge said.

 

 

Former Congress president Rahul Gandhi, who had persistently opposed the opaque Electoral Bonds scheme right from the time the bill was introduced in the Lok Sabha, said: "Another proof of Narendra Modi's corrupt policies is in front of you. The BJP had made electoral bonds a medium for taking bribe and commission. Today a stamp has been put on this."

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