Author: Ruchi Kol, University of Allahabad
ABSTRACT:
The funding of political parties is the lifeline of democracy, but when this funding becomes anonymous, it threatens the very foundation of free and fair elections. The Electoral Bonds Scheme, introduced by the Finance Act, 2017, allowed anonymous donations to political parties. The Government claimed it would bring transparency and curb black money. However, the scheme was challenged as unconstitutional for violating the citizen’s Right to Information under Article 19(1)(a). On 15th February 2024, a historic Constitution Bench of 5 judges headed by CJI Dr. D.Y. Chandrachud unanimously struck down the Electoral Bonds Scheme as unconstitutional in Association for Democratic Reforms v. Union of India. The Court held that anonymous political funding violates the right to information and is manifestly arbitrary. This article provides a detailed analysis of the Electoral Bonds Scheme, the Supreme Court’s reasoning, the doctrine of proportionality, and what will be the future of political funding in India.
To The Point :-
The issue is very simple and every law student must understand it.
What was Electoral Bonds Scheme?
Electoral Bond ek tarah ka Promissory Note tha, jise State Bank of India (SBI) issue karta tha. Koi bhi vyakti ya company SBI se Rs. 1000, Rs. 10,000, Rs. 1 Lakh, Rs. 10 Lakh, Rs. 1 Crore ka bond kharid sakti thi aur apni pasand ki political party ko de sakti thi. Sabse important baat – Bond par kharidne wale ka naam nahi hota tha. Party ko pata chal jata tha ki paise kisne diye, lekin public ko nahi pata chalta tha ki kaunsi company ne kaunsi party ko kitna paisa diya. Ye tha “Anonymous Donation”.
Government ka Argument kya tha?
Government ne kaha: “Pehle log cash me black money se donation dete the. Ab Electoral Bonds se banking channel se white money me donation hoga. Aur donor ki privacy bani rahegi, warna ruling party unko pareshan karegi.”
Petitioners (ADR & CPI(M)) ka Argument kya tha?
Association for Democratic Reforms (ADR) ne kaha: “Ye scheme voter ke Right to Know ka violation hai. Voter ko ye janne ka haq hai ki kaunsi company kaunsi party ko fund kar rahi hai, kyunki kal ko wahi company us party se favour legi. Ye Quid Pro Quo hai – Paise do, kaam lo. Anonymous hone se corruption badhega, kam nahi hoga.”
Final Verdict kya aaya?
15 February 2024 ko Supreme Court ne 5-0 se Electoral Bonds ko unconstitutional karar diya aur kaha:
1. Electoral Bonds Scheme, 2018 is unconstitutional and is struck down.
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3. SBI must stop issuing bonds immediately.
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5. SBI must disclose all data of who bought which bond and which party encashed it to Election Commission within 3 weeks.
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7. Election Commission must publish this data on its website.
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Ye judgment RTI (Right to Information) ki jeet thi.
USE OF LEGAL JARGON:
This judgment is full of important constitutional law doctrines. You must use these in your article to get good marks.
1. Right to Information under Article 19(1)(a): Article 19(1)(a) guarantees freedom of speech and expression. Supreme Court has interpreted this to include “Right to Know”. In this case, Court held that right to know about political funding is an essential part of freedom of speech, because without knowing who funds a party, a voter cannot vote effectively. This is called “Voter’s Right to Informed Decision”.
2. Doctrine of Proportionality: This is the main test used by the Court. To restrict a fundamental right (here Right to Information), the government must pass the proportionality test which has 4 steps: (a) Legitimate aim (b) Rational connection (c) Least restrictive means (d) Balancing. The Court held that Electoral Bonds fails on step 3. The government wanted to curb black money and protect donor privacy, but anonymous bonds were not the least restrictive means. There were other ways, like Electoral Trusts where donor name is disclosed but privacy is still protected from victimization.
3. Manifest Arbitrariness – Article 14: Article 14 guarantees equality and prohibits arbitrary laws. The Scheme allowed unlimited anonymous donation to only those parties which got 1% votes in last election. This classification was arbitrary. Also, it removed the cap on corporate donation (earlier companies could donate only 7.5% of profit, but Finance Act 2017 removed this cap), which allows shell companies to be created just to donate.
4. Quid Pro Quo and Kleptocracy: The Court observed that anonymous corporate donations lead to Quid Pro Quo – Companies donate to ruling party and get contracts, licenses in return. This creates a Kleptocracy where power of people is replaced by power of money.
5. Doctrine of Unconstitutional Conditions:Government said donor has right to privacy. Court said Right to Privacy of donor cannot override Right to Information of voter, because donation to a political party is a public act, not a private act.
THE PROOF – How the Data Proved the Scam:
When SBI data was published on 14th March 2024 on ECI website after Supreme Court order, the proof became clear.
Proof 1: Top Donors were Companies under Investigation: Data showed that many companies which bought Electoral Bonds worth 100s of crores were under ED, CBI, IT raid at the same time. For example, a company gets ED raid in January, buys Electoral Bonds worth Rs. 100 crores in February, and gets relief in March. This is called “Extortion through Electoral Bonds”.
Proof 2: 60% Donations went to One Party: Data showed that ruling party got almost 60% of total bonds worth Rs. 16,000 crores. This proved that anonymous system favours ruling party because companies donate to ruling party out of fear.
Proof 3: Violation of Section 29C of Representation of Peoples Act, 1951: Section 29C says political parties must disclose all donations above Rs. 20,000. But Electoral Bonds made disclosure impossible. Court held that Finance Act 2017 which amended Section 29C to exempt Electoral Bonds is unconstitutional.
This data is now the biggest proof for future law students to show how anonymous funding corrupts democracy.
CASE LAWS:
1. Association for Democratic Reforms v. Union of India, (2024) SCC OnLine SC 150 – The Electoral Bonds Judgment: This is the main case. A 5-judge bench of CJI D.Y. Chandrachud, Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra unanimously held that Electoral Bonds violate Article 19(1)(a) and Article 14. The Court applied proportionality test and held that information about political funding is essential for voters. The Court also struck down amendments made in Finance Act 2017 to Companies Act, Income Tax Act and RP Act.
2. Union of India v. Association for Democratic Reforms, (2002) 5 SCC 294 – The First ADR Case: This is the mother of all judgments on electoral reforms. In this case, Supreme Court held for the first time that voters have a Right to Know about criminal antecedents, assets, and educational qualifications of candidates under Article 19(1)(a). Electoral Bonds judgment is an extension of this same logic – now voters have right to know about funding also.
3. PUCL v. Union of India, (2003) 4 SCC 399: Supreme Court held that right to vote includes right to know and right to informed voting. Without information, voting is meaningless.
4. Indian National Congress v. Institute of Social Welfare, (2002) 5 SCC 685: Supreme Court held that political parties are essential to democracy and their functioning must be transparent.
5. Common Cause v. Union of India, (2017) Electoral Trusts Case: Delhi High Court had earlier upheld Electoral Trusts Scheme where donations are made through trusts but donor names are disclosed to ECI confidentially. Supreme Court in 2024 judgment said Electoral Trusts is a better and less restrictive alternative than Electoral Bonds.
CONCLUSION:
The Electoral Bonds judgment of 15th February 2024 is not just a judgment, it is a milestone in Indian democracy. It has re-established the principle that “Democracy does not mean rule of people, it means rule of informed people.”
By striking down anonymous funding, the Supreme Court has saved India from becoming a plutocracy (rule of money). The Court has correctly held that transparency is the best disinfectant against corruption.
But the question remains – What is the future? The Court has not suggested an alternative model. The future models could be:
1. State Funding of Elections: As recommended by Indrajit Gupta Committee 1998, government should fund parties from public exchequer.
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3. Regulated Electoral Trusts with Disclosure: Donor names must be disclosed to ECI and public above a threshold, say Rs. 20,000.
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5. Cap on Corporate Donations: Re-introduce 7.5% profit cap which was removed in 2017.
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7. National Electoral Fund: A fund where all donations go and then are distributed proportionally.
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As law students, we must remember what Justice Brandeis of US Supreme Court said: “Sunlight is the best disinfectant.” Electoral Bonds judgment has brought that sunlight into political funding.
FAQ:
Q1. What was the total amount of Electoral Bonds sold?
From 2018 to 2024, bonds worth approx Rs. 16,518 crores were sold, out of which BJP got approx Rs. 8,250 crores (50%), Congress got approx Rs. 1,750 crores, and TMC got approx Rs. 1,700 crores as per ECI data.
Q2. Why did Supreme Court say Electoral Bonds violate Article 19(1)(a)?
Because Article 19(1)(a) includes Right to Information. Voters have right to know who funds political parties to check quid pro quo and corruption. Anonymous bonds violate this right.
Q3. Can Electoral Bonds come back?
No, unless Parliament makes a new law with full transparency and passes proportionality test. Anonymous bonds can never come back after this judgment.
