Opinion SC judgment in Electoral Bonds Scheme case upholds rule of law

The scheme announced in 2017, and notified in 2018, introduced a new financial instrument called the electoral bond, which could be purchased by anyone including companies, from the State Bank of India (SBI), and handed over to any political party that had polled more than one per cent of the vote in the previous election. The receiving party was to deposit the bond in a pre-designated bank account within 15 days of issue. The key, according to the scheme, was that no one except the SBI was supposed to know who had given how much money to which party.

Even before its introduction, constitutional authorities such as the Election Commission of India (ECI) and Reserve Bank of India (RBI) opposed the scheme but their opposition was overlooked. As the details of the scheme emerged when it was implemented, it became clear that all the apprehensions that were anticipated came true. The political party in power, through the government of the day and the Finance Ministry, could easily access the information with the SBI and choke the flow of funds to Opposition parties. This became clear when declarations by political parties on receipt of contributions through electoral bonds to the ECI showed that the ruling party had received 60 to 90 per cent of the total money donated.

The scheme amended several other laws such as the Representation of the People Act, the Companies Act, the Income Tax Act, and the Reserve Bank of India Act, making it impossible for citizens to know which corporate was donating how much to which political party.

In two separate but concurring judgments, a five-judge constitution bench of the SCI declared not only the electoral bonds scheme but also all the corresponding amendments unconstitutional. It also directed the SBI to communicate details of all the electoral bonds sold, including who purchased the bonds and which party they donated to, to the ECI within three weeks of the date of the judgment. It further directed the ECI to post these details on their website within a week of receiving them from the SBI.

Thus, we can now expect that by March 15, 2024, everyone who is interested should be able to know which corporate house or individual has donated how much money to which political party between 2018 and 2023. This information has the potential to uncover the real reasons for several policy decisions and actions of the government during this period, and that should provide a rationale for voters to make their decisions in the forthcoming elections.

The Court has also nullified the government decision that companies can donate any amount of money to political parties, removing the earlier ceiling of 7.5 per cent of the average profits of the company for the last three years. This had opened the floodgates for all companies, whether profit-making or loss-making, to donate all that they wanted to, to political parties.

Another issue that stands out relates to all the political parties. Though many political parties often spoke against the electoral bonds scheme and some also expressed opposition in Parliament, several of them accepted donations through the bonds. Only one political party, the CPI(M), filed a petition challenging the scheme. It seems most Opposition parties were ambivalent towards the scheme, hoping that as and when they became a ruling party even in a state, they may reap some benefits.

Another feature of the hearing was that though the ECI had written a very strong letter to the Finance Ministry opposing electoral bonds, during the hearings in the court, it made seemingly confusing statements.

Also, several averments made by the government about the scheme turned out to be wrong and some were violated by the government itself. For example, it was claimed that the physical bonds issued did not have any individual identifying characteristics. Journalists discovered that a unique alpha-numeric number was visible under ultraviolet light on the bond. Also, the original scheme as announced by the government said that it was meant for only Lok Sabha elections but very soon, for the immediately following Karnataka assembly elections, the government asked the Finance Ministry to open another window of sales of EBs opened. The Finance Ministry reminded the government that the scheme was meant exclusively for Lok Sabha elections. It was reported that the government asked the Finance Ministry to make an exception for Karnataka Assembly elections.

The work of activists and journalists in unearthing file notings and other information which showed the lengths the government went to suppress the views of its officials and other constitutional authorities must also be commended.

This is a landmark judgment which will help restore people’s faith in democracy, in the rule of law, and the Supreme Court of India. While we justifiably celebrate the judgment, in our euphoria, we must not overlook the ground reality of several pre-2017 infirmities in our electoral system. Work on those must continue.

The writer is a concerned citizen, and a founder-member of the Association for Democratic Reforms (ADR), one of the petitioners in the Supreme Court