Arun Jaitley, former union finance minister in the year 2017 – 18, proposed that there must be a transparent and fair method of funding for the political parties. As a result , the electoral bonds scheme was proposed , it was said to be an act that would pave way for new method of funding for political parties that would cleanse the system of any corruption .
An electoral bond acts like a promissory note. Promissory notes (like cheques) are payable to the payee by the payer on demand and it contains details of the payer and payee. However electoral bonds are anonymous, they don’t have any details of the payer or payee. The Finance Act, 2016 empowered other acts to bring about amendments. Political parties were not required to keep an accurate record of the contributions made through electoral bonds, and foreign companies were no longer prohibited from making donations to them. Two non- governmental organizations – Association for Democratic Reforms (ADR) and the Communist Party of India (Marxist) challenged and opposed thesew these amendments back in 2017 and 2018.The petitioners submitted their petition to eh Court on October 16, 2023, requesting that the case be heard prior to the 2024 General Election.
ISSUES RAISED
- Is the electoral bond scheme constitutional?
The court had come to the decision that the electoral bonds scheme is unconstitutional as it goes against article 19 (1) (a) – constitution of India, stating that tall citizens have the freedom of speech and expression. By not revealing your sources of donors, the public will not be able to point out the flaws of this system, thereby restricting their freedom of speech and expression. The supreme court further requested on a hol on the sale of electoral bonds. The State Bank of India was requested to disclose all the information to the election commission of India about all of the electoral bonds after April 12, 2019
- Can the Scheme allow anonymity with the view to protect donors’ right to privacy?
A supreme court five bench- judge consisting of justice Saniv Khanna, B. R Gavai, J,B Pardiwala and Manoj Misra and the leading justice being CJI Chandrachud heard argument of the petitioners for three days from Oct 31st – Nov 2nd, 2023 . The petitioners stated that the scheme of electoral bonds had and will further lead to increase in corporate funds, flow of illicit money and corruption. They had also argued that by not revealing the sources and making them anonymous the public at large will not be able to know who are influencing the political parties’ policies and viewpoints.
The union further argued that the electoral bonds scheme anonymity clause meant to protect the anonymity and right to privacy, otherwise they would have face further retribution from political parties they did not support.
On 2nd November, the bench reserved the judgement.
- Does the electoral bond scheme threaten the democratic process of free and fair elections ?
The electoral bonds scheme does threaten the democratic process for free and fair elections by maintain secrecy and anonymity, the right to information gets violated and they won’t be able to access who is donating to these parties, the public won’t know who is indirectly influencing these big corporation and it can lead to a whole new corruption base being built under the system. It would allow foreign companies to build open pathways for money laundering and soliciting black money, thereby breaking the trust of the public . it would also be impossible which companies are receiving favorable treatment in return for their financial support. This scheme just allows the rich to get away with anything and it creates a playing field that is rigged and not equal.
CONTENTION
Two governmental organization, Communist party of India (Marxist party) and Association for democratic reforms (ADR), after being dissatisfied opposed the Supreme Court amendments that were introduced in September 2017 and January 2018. To avoid the examination of the parliament or Rajya Sabha, they hastily approved the finance acts and simply claimed it to be money bills. Additionally, the petitioners also claimed that the electoral scheme mainly authorized the non- transparency in political funding and paved way for electoral corruption on a huge scale.
One of the respondents, the Election Commission of India (ECI), submitted an affidavit on March 25, 2019, opposing to the Electoral Bond Scheme. The statement claims that the proposal is in complete contradiction to the goal of transparent political financing. In addition, it also mentioned that the Election Commission forewarned the Union Government in a letter dated May 26, 2017, of the possible consequences or influence the scheme would have. They further argued that keeping political parties’ contribution information secret would prevent them from disclosing information about foreign funding.
The EBS was “a pioneer step in bringing electoral reforms, to ensure that the spirit of transparency and accountability in political funding is maintained,” according to a response filed by the Union government on April 1, 2019. The Union asserted that there was a “unregulated flow of black money” into political organizations because the groups mostly received cash donations. The State Bank of India is the only authorized bank that is permitted to issue these bonds, therefore the Union guaranteed that these problems would no longer impede the funding of politics. Moreover, revealing KYC information guarantees accountability.
RATIONALE
The five-bench judge struck down the scheme and declared it be unconstitutional on the 15th of February 2024. Just months before the Lok Sabha election the judgement declared that the electoral bonds scheme was against the fundamental right to freedom of speech and expression. Chief Justice Chandrachud stated that it is essential for the political parties to disclose their funding to the public so that it would not hinder the efficiency of the voting process or the choice to vote.
The Election Commission then asked the state bank of India to submit a report on all the funds and bonds that the political parties have received from various corporations since 2019.
DEFECTS OF LAW
The major defect of the electoral bonds scheme case was that it promised to be completely transparent and cleanse the system on how the political parties are funded, however by not revealing the donors and maintaining anonymity of the donors leads to a lot of corruption and other illegal activities like money laundering and soliciting black money. Allowing foreign companies to participate in donating this scheme can lead to favoring large donors over public interest, thereby shattering the principles of fairness and equal representation as said by the petitioners in this case.
INFERENCE
As citizens of India, we have a right to information and violating or any obstruction to the right of information is delaying the principles of justice. The electoral bonds scheme had seeked to provide transparency and fairness of political parties, but it backfired and just maintained the anonymity of big donors or companies and let companies and corporations influence policies and contracts, which goes against public interest and just allows more corruptions to be take place in the country. The recent updates are that SBI (State bank of India) had been asked to disclose all the reports of donations to the political parties. The scheme was declared unconstitutional and was overturned. The scheme may have been designed to make political party raising funds more transparent, but it instead served as a lighthouse for further corruption. The case should serve as a reminder that keeping information about large-scale financial transactions hidden from the public creates additional opportunities for corruption rather than curbing it. To ensure that elections are free and fair, the public has to be informed about the actions of political parties and corporations.
Israa Zaidi
Amity University, Dubai