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‘Unconstitutional, arbitrary’: Supreme Court junks electoral bonds 5-0



Supreme Court

on Thursday struck down as


the electoral bond scheme introduced by BJP govt in 2018 that allowed big-ticket

anonymous corporate contributions


political parties

, directed State Bank of India to immediately stop issuing bonds and furnish up-to-date details of such contributions since April 2019 for publication on the Election Commission’s website by Mar 13.

A bench of CJI D Y Chandrachud and Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra unanimously rejected the central rationale of the electoral bond scheme – need to protect the identity of donors to save them from possible harassment – and ruled that voters could not be kept in the dark about huge donations to political parties when money played a significant role in elections. The bench held that secret corporate funding of political parties, possibly for a quid pro quo, breached voters’ right to information, adversely impacted purity of free and fair elections and polluted democracy by disturbing political equality in polls. Amendments enacted to ensure the anonymity and non-disclosure were arbitrary, it ruled.

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Though unanimous in their rejection of the bond scheme, the bench put across its stand through two separate but concurring verdicts – one written by the CJI and the other by Justice Khanna.

The order did not interfere with the existing scheme of allowing anonymous donations to political parties up to an amount of Rs 20,000 by any individual or company. Contributions made through cheques, drafts and bank transfers by corporate entities and duly reflected in the party’s statement to EC would not be affected by this ruling, the court clarified.
What it stopped was the unlimited anonymous contributions by companies. Apart from the full disclosure mandate, the court also brought back the 2013 cap of 7.5% of average net profit of a company in the last three years on corporate donations. From 1985 to 2013, it was 5% of the average net profit.

Justice Chandrachud, writing the judgment for himself and Justices Gavai, Pardiwala and Misra, and Justice Khanna in a concurring judgment invalidated the electoral bond scheme and the enabling amendments carried out in the Finance Act, 2017, Representation of the People Act, Companies Act and Income Tax Act.
Stop issuing electoral bonds forthwith, apex court tells SBI
SC ordered SBI, which alone can issue electoral bonds, to forthwith stop issuing bonds, a blow to many parties, especially BJP as it got the lion’s share of corporate donations, and asked the bank to “submit details of electoral bonds purchased since the April 12, 2019, interim order of the court till date to the EC. The details shall include date of purchase of each electoral bond, name of the purchaser and denomination of the bond purchased”.
On April 12, 2019, apex court had refused to stay the electoral bond scheme but had asked political parties to give details of contributions received by them through this method.
“SBI must disclose details of each electoral bond encashed by political parties which shall include the date of encashment and denomination of the electoral bond. EC shall publish the information shared by SBI on its official website within one week of the receipt of the information, that is, by March 13, 2024,” ordered the bench in what can bring the issue of big money in politics to the centre of the Lok Sabha campaign.

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How it could play out was seen immediately after the SC verdict, with opposition parties calling it a setback for BJP govt and accusing it for using electoral bonds to collect money from corporates in exchange of favours.
BJP expressed respect for the verdict but stood by electoral bonds, saying they were introduced with an objective to reduce the role of black money in politics.
Interestingly, the bench ordered political parties to return un-encashed electoral bonds. “Electoral bonds which are within the validity period of 15 days but that which have not been encashed by political parties yet shall be returned by the political party or the purchaser depending on who is in 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,” it said.

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