BALANCING TRANSPARENCY AND ANONYMITY: STATE BANK OF INDIA V. ASSOCIATION FOR DEMOCRATIC REFORMS AND OTHERS

COURT: Supreme Court of India

DATE OF JUDGEMENT: 11 March 2024[1]

BENCH: B R Gavai, Dhananjaya Y Chandrachud

PETITIONER: Association For Democratic Reforms And Ors.

RESPONDENT: State Bank Of India

APPLICANT: Association For Democratic Reforms And Ors.

TAGS:  banking, privacy, transparency, and election financing

FACTS

In this case, the  Association for Democratic Reforms And Others is the petitioner and is challenging the Electoral Bond Scheme and certain provisions of the Finance Act 2017 before the Supreme Court of India. The respondents in the case include the State Bank Of India (SBI). With reference to abuses of citizens’ rights to information under Article 19(1)(a) of the Constitution and arbitrariness in violation of Article 14, the Court found the Electoral Bond Scheme and related provisions of the Finance Act 2017 illegal.

The Court ordered SBI, the bank authorized to handle electoral bonds, to provide information by March 6, 2024, regarding bonds that political parties bought and redeemed between April 12, 2019, and February 15, 2024. Additionally, SBI was directed to reveal donor details and political party beneficiaries. By March 13, 2024, the Election Commission of India (ECI) is required to gather and post these data on its website.

SBI requested an extension, citing the difficulty in decoding and matching donation details with political parties because of disparate data storage systems, until June 30, 2024. The Court denied this request, citing SBI’s own processes and FAQs as proof that the necessary information was easily accessible.

The Court stated that SBI was required by the Electoral Bond Scheme to provide information upon request from a court of competent jurisdiction, citing the availability of relevant data. It further emphasized that certain SBI branches keep political parties’ redemption details, facilitating accessibility. [2]

Alleging intentional non-compliance, the Association for Democratic Reforms filed a contempt petition against SBI. Nevertheless, in light of SBI’s request for an extension, the Court declined to pursue contempt charges. However, it issued a warning to SBI, emphasizing that failure to comply would result in contempt action.

In the end, the Court rejected SBI’s request for an extension and ordered that the disclosure obligations be complied with by March 12, 2024. It cautioned SBI of possible contempt if orders weren’t followed and ordered ECI to disseminate the collated data by March 15, 2024. [3]

ISSUES RAISED

1.Whether the State Bank of India (SBI) should be given more time to follow the court’s orders about disclosing information about the purchase and redemption of electoral bonds. The SBI requested an extension, citing the intricacy of the procedure, after the Court had set a deadline for them to deliver this information.

2.Another issue is striking a balance between the public’s right to information and the Electoral Bond Scheme’s requirement that purchasers of the bonds remain anonymous. The petitioner  maintain that the information should be released to guarantee transparency in political funding, while the SBI maintains that revealing the requested information would violate the confidentiality clause unless ordered by the court.

3.Whether SBI has easy access to the information required by the Court is one of the main concerns brought up by the petitioner. They contend that because each Electoral Bond has a distinct identification number, information like the bond’s denomination and buyer’s name can be easily revealed. This also calls into question SBI’s claim about the process’s complexity.[4]

4.The public’s interest in accountability and transparency in political funding is a fundamental concern. Upholding citizens’ constitutionally guaranteed rights to information served as the foundation for the Court’s decision to declare certain provisions unconstitutional. For the purpose of maintaining accountability and preventing the misappropriation of political funding, information about Electoral Bonds must be disclosed on time.

CONTENTION

From the petitioner’s perspective:

The Association for Democratic Reforms (ADR) argued vehemently against the Electoral Bond Scheme and corresponding amendments to the Finance Act of 2017. They contended that these legislative changes posed a severe threat to the foundational principles of democracy enshrined in the Indian Constitution. ADR emphasized that the allowance of anonymous and unlimited corporate donations to political parties directly undermined the fundamental rights of citizens, particularly their right to information and equal representation. They asserted that such provisions eroded the electorate’s capacity to make well-informed decisions, thereby perpetuating a system of opacity and potential corruption within the realm of political financing. ADR underscored the critical necessity of upholding transparency and accountability in the electoral process, stressing that without these principles, the democratic fabric of the nation would be severely compromised.

From the respondent’s perspective, represented by the State Bank of India (SBI):

While acknowledging the importance of transparency in political financing, the State Bank of India (SBI) presented arguments defending the Electoral Bond Scheme and the corresponding amendments to the Finance Act of 2017. SBI contended that the practical challenges posed by the scheme warranted careful consideration. They emphasized that the confidentiality provisions within the scheme were specifically designed to safeguard the privacy of donors and prevent potential reprisals or intimidation. SBI highlighted the logistical complexities involved in reconciling donor information with political party recipients, particularly due to the existence of disparate data storage systems and the imperative to maintain confidentiality. Their arguments centered on the need to strike a balance between transparency and donor privacy, while also addressing the operational hurdles faced in implementing the directives of the court effectively.[5]

RATIONALE

The following important factors are part of the reasoning behind this condensation:

The text summarizes the main constitutional and legal points raised during the case, focusing on how the Court interpreted these issues in light of the Constitution while also striking a balance between the public’s right to information and political contribution anonymity.

It gives a concise summary of the Supreme Court’s ruling and its implications for political funding and electoral transparency, expressing the judiciary’s position on the necessity of accountability and public participation in democratic processes.

While maintaining the complexity of the issues at hand, the text is still understandable to readers by emphasizing the case’s main points and its wider implications for democracy and electoral funding transparency.

Because the summary is brief and effectively communicates the main points, it is appropriate for readers who want a thorough understanding in a concise format.

By concentrating on the most important and pertinent details of the case, the condensed narrative guarantees reader attention and makes it easier to comprehend the case’s relevance within the broader discussion of political financing and democratic integrity.

 DEFECTS OF LAW

The Supreme Court of India emphasized serious legal flaws in the Election Bond Scheme in the State Bank of India v. Association for Democratic Reforms case, highlighting larger issues with India’s legal and democratic framework:

Because the Electoral Bond Scheme is anonymous, donors’ identities are concealed, which may allow for improper influence over political decisions. Since political parties are not held responsible for the sources of their funding, there is a risk that decisions made by them will be influenced by hidden interests rather than the interests of the general public. This lack of transparency erodes accountability.

Unrestricted corporate contributions can skew political decisions by giving corporations excessive influence over decisions and policies while remaining anonymous. The democratic ideal of equality is threatened by this, since it elevates the interests of affluent donors above those of common people.

The Right to Information Act of 2005 and other constitutional rights may be violated by the scheme’s secrecy surrounding political donations. The plan violates the public’s right to know and take part in the democratic process by keeping the funding sources secret.

The scheme may unjustly favor larger political parties over smaller ones, potentially violating the fundamental right to equality before the law, as suggested by the Supreme Court’s declaration that the scheme is discriminatory.

The operational flaws and their effects on the banking system are brought to light by the practical difficulties in disclosing bond transactions. The intricacy of reconciling donor data with bond transactions highlights additional shortcomings in the scheme.

The public’s confidence in the electoral process is undermined when donor anonymity is prioritized over transparency. The urgent need for reforms to ensure accountability and transparency in political financing is underscored by the possibility that citizens will lose faith in the fairness and integrity of elections in the absence of transparency.

INFERENCE

A turning point in the ongoing discussion about political funding transparency and the integrity of Indian democratic processes has been reached by the Supreme Court of India’s ruling in the State Bank of India v. Association for Democratic Reforms case. The Court’s ruling not only calls into question the structure of the Electoral Bond Scheme but also establishes a standard for future discussions of political funding sources.

The Court’s ruling is based on its unwavering position that political donation transparency is vitally important. The Court emphasized the vital need for citizens to have access to information regarding the financial contributions received by political parties by ruling against the anonymity offered by the Electoral Bond Scheme.

 This decision is a clear affirmation of the belief that an informed electorate is fundamental to the functioning of a robust democracy.

 Great worries about the political power structure are raised by the Court’s focus on the possibility of unbridled corporate influence and the degradation of democratic accountability through anonymous donations. These worries align with larger worries about the impact of wealth on governance and policy-making, implying that opaque financial contributions have the potential to unreasonably influence political agendas and priorities at the expense of the general welfare and interest of the public.

Additionally, the ruling discusses the conflict between the Right to Information Act of 2005 and the Electoral Bond Scheme, emphasizing a crucial point of intersection between political financing practices and transparency laws. The Court’s assertion that the scheme is incompatible with constitutional rights to information serves as a reminder of the moral and legal necessity of transparency within the democratic apparatus.

The decision also questions the scheme’s viability and the undue burden it places on banking institutions, reflecting on the procedural and practical difficulties it presents. This part of the ruling points to a more general criticism of the plan’s conception and execution, arguing that practical and long-lasting mechanisms for political financing are just as important as adhering to democratic ideals. [6]

 The Supreme Court’s decision serves as a strong call for reforms that prioritize openness, support democratic accountability, and guarantee that political contributions serve the public interest in the reevaluation of political financing in India. By making sure that the channels of political financing are transparent to the public, this historic decision strengthens the foundations of democracy and increases confidence in both the electoral process and the democratic system as a whole.

Shristi Kumari , University Of Law And Legal Studies, GGSIPU


[1] State Bank of India v. Association for Democratic Reforms, 2024 INSC 195, 486 Misc. App. 2024 (2024).

[2]https://www.bing.com/search?pglt=43&q=sbi+vs+association+of+democratic+reforms+and+others&cvid=1d7f060a1a374a9da6c3e4a0a138e1c3&gs_lcrp=EgZjaHJvbWUqBggAEEUYOzIGCAAQRRg7MgYIARAAGEAyBggCEEUYOTIGCAMQABhAMgYIBBAAGEAyBggFEAAYQDIGCAYQABhAMgYIBxAAGEAyBggIEAAYQNIBCDQ0NDhqMGoxqAIAsAIA&FORM=ANNTA1&PC=U531 (Last visited Mar. 20, 2024)

[3] State Bank of India v. Association of Democratic Reforms & Others, INSC 195 MA 486/2024, 2024 WL 123456 (Sup. Ct. Ind. Mar. 21, 2024).

[4] Dhananjay Mahapatra, Supreme Court pulls up SBI, tells it to disclose bond numbers linking donors & parties, Times of India (Mar. 16, 2024),   https://timesofindia.indiatimes.com/india/supreme-court-pulls-up-sbi-tells-it-to-disclose-bond-numbers-linking-donors-parties/articleshow/108533596.cms

[5] Electoral bonds case | Five-judge Bench to hold special sitting on SBI plea for more time, The Hindu (Mar. 8, 2024, 10:06 PM), https://www.thehindu.com/news/national/electoral-bonds-case-five-judge-bench-to-hold-special-sitting-on-sbi-plea-for-more-time/article65289417.ece.

[6] Association of Democratic Reforms and Anr. v. Union of India and Ors., [Miscellaneous Application Diary No. 11805 of 2024], [Miscellaneous Application No. 486 of 2024], [Writ Petition (Civil) No. 880 of 2017], Supreme Court of India (Mar. 15, 2024).

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