In a landmark ruling, a five-judge bench of the Supreme Court unanimously declared the central government's electoral bonds scheme as "unconstitutional" on Thursday.
Chief Justice of India DY Chandrachud, heading the bench which included Justices Sanjiv Khanna, B R Gavai, J B Pardiwala, and Manoj Misra, delivered two separate and unanimous verdicts on the pleas challenging the controversial scheme.
Electoral Bonds, financial instruments purchasable by individuals and corporations through designated banks, are exclusively redeemable by political parties registered under Section 29A of the Representation of the People Act, 1951.
To qualify, a party must have garnered at least one percent of votes in the latest general or state legislative assembly elections. The SBI is the exclusive seller, offering bonds ranging from ₹1,000 to ₹1 crore. Amendments eliminated the cap on corporate donations and exempted donor identity disclosure, aiming to enhance accountability and prevent fund misuse in political financing.
Despite it's objectives, the scheme has faced significant criticism for potentially eroding transparency and accountability in political donations. Critics argue that anonymity permits undue influence over policy by major donors and could foster corruption and money laundering by enabling unlimited, undisclosed contributions from corporate entities, including those facing legal challenges.
NGO's like the Association for Democratic Reforms(ADR) and political entities such as the Communist Part of India(Marxist) have challenged the scheme, asserting that it renders political funding opaque and could worsen corruption.
"Political parties are relevant units in the electoral process. Information about the funding of political parties is essential for electoral choices. Thus, the electoral bonds scheme is a violation of the right to information and Article 19(1)(a)," remarked Chief Justice Chandrachud.
He further said, "Financial support to political parties can lead to a quid pro quo arrangement," while pointing out that there are alternative methods to curb black money in political funding.
"The right to privacy of political affiliation does not extend to contributions made to influence public policy and applies only to contributions below the threshold," he added.
Justice Sanjiv Khanna echoed the sentiments of the Chief Justice, stating, "I agree with the judgment of the CJI. I have also applied the principles of proportionality but with slight variation, though the conclusions are the same."
The Supreme Court issued three significant directions in the matter, first it said, All electoral bonds within the 15-day validity period shall be returned by political parties to the purchasers. Second, The Election Commission of India (ECI) will make all donations public within one week of the receipt of information and lastly, the SC said "The State Bank of India (SBI) should stop issuing electoral bonds immediately and submit all details to the ECI by March 6"
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