Citation: (2024) 5 SCC 1 Case Type: Civil writ Petition Bench Strength: 5
Bench: Justice D.Y. Chandrachud (CJI), Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala and Justice Manoj Misra.
Case Brief
According to the petition filled by Association of Demographic Reforms (ADR) in the case “Association of Democratic Reforms & Anr. vs. Union of India & Ors. (2024) 5 SCC 1”, questions the constitutionality of “Electoral Bonds Scheme” as proposed by the government in January 2018 as well as the laws which were amended to introduce this scheme like Companies Act, etc.
According to the “Electoral Bonds Scheme” of the government introduced by the Finance Act 2017 by amending various laws like RBI Act (1934), Representation Of People Act (1951), Companies Act (2013), etc. So, what is this scheme all about ?. The answer is , these bonds are the instruments through which an individual or an enterprise can donate funds to an political party anonymously. These bonds are available for subscription in the multiples of 1 Thousands, 10 Thousands, 1 Lakhs, 10 Lakhs and 1 Crores. These bonds can been purchased by any Indian and can do it through any SBI branch. Any person who purchases these bonds can give to any party and the party can cash these bonds to meet their electoral expenses within 15 days after receiving it.
Facts
This case is initiated through a petition filled by the “Association of Demographic Reforms (ADR)” to challenge and question the constitutionality of the Electoral Bonds Scheme introduced by the government in January 2018. Electoral Bond is a bond issued like a promissory note which is a bearer banking instrument and does not carry the name of the buyer. This anonymity of the buyer of bonds raised concerns about potential quid pro quo arrangements and the undue influence of corporate money in politics.
According to Association of Demographic Reforms (ADR), Electoral Bonds Scheme violates the fundamental right of “Right To Information (RTI)” as vested or protected by the constitution of India and according to Election Commission of India this scheme will allow unlimited corporate funding and which will lead to lack of transparency in the funding of political parties. But Union of India denied all of these allegations. To resolve this issue a five-bench judges constitutional bench was formed on 16th October 2023 having “Justice D.Y. Chandrachud (CJI), Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala and Justice Manoj Misra”.
Issue
There are two issues involved in this case: –
- Whether this anonymity of the buyers of electoral bond scheme and the amendments made in Companies Act, etc violates the fundamental right of right to information under Article 19(1)(a) of the Constitution.
- Whether this scheme violates the rights of voters (right to information).
Contention
- Arguments Presented by Petitioners:
- The counsel on the behalf of petitioners argued that there was no need for the introduction of this scheme and the cash donations are still allowed even after the introduction of scheme which somewhat shows how undesirably this scheme works.
After that the counsel explained about the legal aspects of this scheme which has led to this writ petition. These aspects are the amendments made to some laws like
Representation of Peoples Act, Income Tax Act, etc., which they have observed and find them unconstitutional. The reason behind this is like the amendment was made in Representation of Peoples Act and introduced Section 29C, which has led to backwardness of its objective of inducing transparency and there are more such amendments in other laws too like in Companies Act, etc.
Afterwards, the counsel pleaded that the anonymity of the information of buyers of these bonds, was violating the fundamental right of right to information and has also mentioned that this scheme has a potential to facilitate corruption.
Also, a Senior Counsel Mr. Kapil Sibal said that this scheme manipulates free and fair election which was unconstitutional.
- Arguments presented by Respondents:
- The arguments presented by the counsel on the behalf of respondents was like they have denied all the allegations made by the petitioners and said that this scheme promotes confidentiality to contributors and ensures that no black money is being used to fund political parties. He further stated that this scheme is been introduced to curb the infusion of black money as before this scheme the process of funding political parties was entirely based on cash which promotes the infusion of black money in political parties.
Rationale
The legal principles involved in this case are as follows:
- Judicial Review:
- Judicial review refers to the power of a higher court to examine the actions done by the legislation and executive to ensure they comply with constitution. In another words, it is the power of a higher court to examine the constitutionality of legislative enactments and executive orders of both the Central and State governments and declare them unconstitutional, null and void, if it violates as provision as given in the constitution. So, the Supreme Court has elaborated the role or scope of judicial review in this case. The court relied two judgements relating to economic policy. These are Swiss Ribbons
v. UOI and the case of Pioneer Urban Land and Infrastructure Limited v. Union of India, were the questions raised on the constitutionality of the Insolvency and Bankruptcy Code of 2016.
But in this case Supreme Court has observed that the arguments of the petitioners which says that laws which deal with electoral processes cannot be accepted but to support this, the petitioners have to prove that the law violates fundamental rights of citizens, upon which the liability would shift towards the State to justify the violation.
- Right to Information:
- Right to Information (RTI) is a fundamental right given to citizens to access information held by government bodies. It is a tool for promoting transparency, accountability, and good governance in a democratic society. RTI is governed by Right to Information Act 2005 which mandates timely responses to citizens requests for government information. The right to information includes the right to seek any information from the Government, inspect any Government documents and seek certified photocopies thereof.
So, in this case the court held that Right to information plays a vital role during the election process, court said that every voter has a right to access detailed information about the candidate participating in elections. The information could be anything like his past criminal records, assets, educational qualifications, etc.
According to the court it promotes transparency and informed decision-making in the electoral process. But the scheme of electoral bonds, violates the same because of the anonymity of the buyers of such bonds.
Judgement of Court
On 15th February 2024, Supreme Court Of India has declared Electoral Bonds Scheme unconstitutional, on the grounds of violation of Article 19(1)(a), citizen’s right to information and stated that the political party funding through electoral bonds must be transparent and donor details should be disclosed and provided directions for the same.
Defects of Law
The reason or the vulnerabilities of this scheme was that it violates the fundamental right of voters as well as the rights of citizens of the nation of right to information as provided and protected under Article 19. Also, this scheme promotes or encourages more foreign funding in political parties and the anonymity attached with it may lead to the flow of black money in the funding of political parties. Furthermore, this scheme’s lack of accountability erodes public trust in the integrity of the electoral process. This opacity in political financing disrupts the balance of free and fair elections, creating an uneven playing field where money and clandestine contributions eclipse democratic principles. The scheme undermines the transparency that would prevent excessive influence by unknown donors, thus undermining the independence of political decision-making. It also weakens the ability of voters to make decisions based on appropriate information about financial backers and their possible interests. Ultimately, the weaknesses in this scheme dilute the strength of democracy by letting money power overshadow good governance.
Inference/Conclusion
The inference that can be drawn from the case highlights the constitutional, legal, and ethical inadequacies of the scheme in question. The most obvious vulnerability of this scheme is that it violates the fundamental rights of voters and citizens, specifically the right to information guaranteed by Article 19 of the Constitution. By restricting transparency, the scheme, in effect, takes away from citizens their due right to know about political funding and where it comes from.
Moreover, the scheme encourages the inflow of foreign funds into political parties, which is an act that undermines the credibility of democratic institutions. The anonymity that it encourages also increases the possibility of unaccounted funds or black money finding their way into political financing and thereby undermining the very sanctity of electoral processes. This twin threat—constitutional right violation and aiding corrupt practices—poses big challenges to the doctrine of democracy and transparency, which the Constitution guarantees.
Name: Suresh Mandi Course: BBA,LL.B(Hons.)
University: Lovely Professional University