Electoral Bonds Scheme Unconstitutional: Supreme Court

Electoral Bonds Scheme Unconstitutional: The Supreme Court strikes down the anonymous poll funding system or the Electoral Bonds Scheme on 15th February 2024 at 10:30 AM. In this landmark verdict, the Supreme Court clearly states that the Electoral Bonds Scheme is “Unconstitutional” in nature as it violates the right to information under Article 19(1)(a). The particular scheme was announced in the Union Budget speech for the very first time by the Union Finance Minister Late Arun Jaitley in 2017.

In this verdict, Chief Justice of India D Y Chandrachud ordered that the banks should stop selling electoral bonds with immediate effect. They also told the State Bank of India to give a detailed report to the Election Commission of India detailing all the electoral bonds that were sold from April 12, 2019, till now.

In this article, we are going to discuss the Electoral Bonds Scheme with its history, features, and related loopholes in detail. We will also cover the news of the Electoral Bonds Scheme which is struck down by the Supreme Court of India.

What is the Electoral Bond Scheme?

The Electoral Bond Scheme is a financial instrument introduced by the Government of India in 2018 aimed at reforming political funding. Under this scheme, individuals and entities can purchase electoral bonds from authorized banks using legal tender. These bonds can then be donated to registered political parties.

Why it is in the News?

The Supreme Court of India declared the Electoral Bond Scheme unconstitutional because it violated the right to information under Article 19(1)(a) of the Constitution. This landmark judgment was made on February 15, 2024, striking down a scheme that had been in effect since its introduction by the Ministry of Finance in 2018. The scheme allowed individuals and corporations to donate anonymously to political parties through bonds purchased from specified branches of the State Bank of India. The anonymity clause of the scheme raised significant concerns regarding transparency and accountability in political funding, leading to legal challenges and public debate.

Electoral Bonds – Overview

Here is a general overview of the Electoral Bonds Scheme as mentioned below.

Electoral Bonds – Overview
Denominations Possible	INR 1,000, INR 10,000, Rs 1 lakh INR, Rs 10 lakh INR, and Rs 1 crore INR
Payable	To the bearer on demand, interest-free
Purchasers	Indian citizens or organizations established in India
Joint Purchase	Was Possible, with other individuals
Validity Period	15 days from the issue date
Authorized Issuer	State Bank of India (SBI)
Branches Issuing Bonds	Designated SBI branches
Eligible Political Parties	Those parties were already registered under Section 29A of the Representation of the People Act, 1951. Those who were secured not less than 1% of votes polled in the last general election to the House of the People or Legislative Assembly.
Purchase Methods	Digitally or through cheques only
Encashment	Only through the authorized bank account of that particular political party
Transparency Measures	Parties must share their official bank account with the Election Commission of India (ECI). Donations made through banking channels for transparency. Required to explain political fund utilization.
Benefits Were	Enhanced transparency, accountability in donation and their utilization, less dependency of cash transactions, preservation of donor anonymity.

Supreme Court struck down the Electoral Bonds Scheme

In this verdict, the Supreme Court said the electoral bonds scheme was violative in the prospect of the right to information that also impacts the free speech and expression of the citizens under Article 19(1)(a). Here we are going to break down the verdict for you in five major points. Let us discuss this in detail.

• The Electoral Bonds Scheme was unconstitutional as the scheme violated the right to information of the citizens of India. The scheme was not transparent and impacted the free speech and expression of the citizens under Article 19(1)(a) of the Indian Constitution.
• The Supreme Court ordered the State Bank of India to stop the process of issuing electoral bonds with immediate effect. The Supreme Court also asked the State Bank of India to furnish a detailed report by 6th March 2024 to the Election Commission of India detailing all the electoral bonds that were sold. Uncashed electoral bonds must be returned to the purchaser by political parties with an immediate effect.
• The Supreme Court also repealed all the amendments made to the Income Tax Act and the Representation of People Act. In the past, some amendments made the donations anonymous.
• In a crucial observation, the Supreme Court said that this particular scheme aided the political party that was in power based on financial means. The scheme can not be justified based on the consequences that it has the potential to track down the black cash flow in Indian politics. This scheme also created Economic Inequality in the different stages of administration like policy-making quid pro quo arrangements that were in favor of the leading party.
• The judgment also commented that the amended Companies Act was totally “unconstitutional”. This amendment allowed blanket corporate political funding that also violated the right to information of citizens about the possible quid pro quo.

Key Observations and Directions Of Supreme Court

Here are the major observations on which Electoral Bonds Scheme has been declared as Unconstitutional and we attached the orders by the Supreme Court to the different organizations.

• The Supreme Court has found that the Electoral Bonds Scheme and its certain provisions related to the Income Tax Act and Finance Act 2015 were the direct violation of Article 19(1)(a) of the Indian Constitution.
• State Bank of India (SBI) has been ordered to cease the process of issuing electoral bonds immediately.
• SBI is required to provide all details of the political parties that have received the electoral bonds. They need to provide the details of the particulars such as purchase dates, purchaser names, and bond denominations to the Election Commission of India by 6th March of this year.
• SBI must disclose all the details related to each encashed bond till now.
• The Election Commission of India has been ordered to publish the received information from SBI on its official website by March 13th of this year.
• Electoral bonds that are not encashed by different political parties need to be returned and refunded to the purchasers on an immediate effect.

Effects – Electoral Bonds Scheme Unconstitutional : Supreme Court

This historical judgment will have a long-term effect on our electoral democracy in India. As well as the judgment also proved that the Constitution is Supreme always and forever. Here are the major impacts of this judgement as mentioned below.

• Supreme Court ordered that the anonymous electoral bonds were violating the Right to Information under Article 19(1)(a). It proves that the Constitution is Supreme and beyond all types of powers.
• It will stop the quid pro quo arrangement in the Indian political system.
• Violation of the right to information is not justified. The judgment proved that the purpose of curbing black money was just an excuse.
• It will stop the involvement of the corporate giants in the electoral system and stop the unconstitutional blanket corporate political funding to any political party.
• The court condemned the government’s stance on denying voters the right to know the funding sources of political parties.
• The court addressed the Union government to design a new system that would balance the proportionality.
• Supreme Court directed the Election Commission of India to produce data on electoral bonds’ on their website to fulfill the Right to Information under Article 19(1)(a).

Concerns Related to the Electoral Bonds Scheme

Though the Electoral Bonds Scheme was made null and void on 15th February 2024; we need to know about the related concerns that led the Supreme Court to declare it as an Unconstitutional scheme. Here are some of them as mentioned below.

• The core criticism related to the electoral bonds scheme was that it did the exact opposite of what it was meant to do i.e. transparency to election funding was null and void in this scheme.
• The fact was that the bonds were sold by SBI leaves the door open for the government to know exactly who was funding its tough opponents. That means it also violated Article 21 which is personal liberty.
• The scheme was against democracy to balance the scheme, so many changes were made to the Finance Act 2017. In this amendment, the Union government exempted the political parties from the process of disclosing donations that were received through the electoral bonds.
• It opened an invisible gate to the corporates and anonymous foreign companies which can have serious repercussions on the Indian democracy.
• The foreign companies enjoyed a 100% tax exemption in this scheme.
• It violates the right to information under Article 19(1)(a) which is a fundamental right of Indian Citizens.
• The scheme was against free and fair elections.
• The scheme was a classic example of the Crony Capitalism that supports mutually advantageous relationships between business leaders and different government officials.

Transaction Toll Through Electoral Bonds Scheme – Party Wise 

Here in this table, we are going to show you the cash flow of every party through Electoral Bonds Scheme from 2019 – 2023 as mentioned below.

Bhartiya Janata Party

Here is the total income of the Bhartiya Janata Party through Electoral Bonds Scheme. (Amount: Crore in INR)

Fiscal Year	Income
2019-2020	2555.00
2020- 2021	22.385
2021-2022	1033.70
2022-2023	1294.1499

Congress

Here is the total income of the Congress through Electoral Bonds Scheme. (Amount: Crore in INR)

Fiscal Year	Income
2019-2020	317.861
2020-2021	10.075
2021-2022	236.0995
2022-2023	171.02

Trinamool Congress

Here is the total income of the Trinamool Congress through Electoral Bonds Scheme. (Amount: Crore in INR)

Fiscal Year	Income
2019-2020	100.4646
2020-2021	42.00
2021-2022	528.143
2022-2023	325.1

Electoral Bonds Scheme – Data Released by the Election Commission of India

On March 11, 2024, the Supreme Court instructed the State Bank of India to disclose the details of electoral bonds to the Election Commission of India (ECI) by the end of business hours the next day. This information was subsequently made public by the ECI on their website on March 15, 2024. It includes the details of all bonds cashed in between April 12, 2019, and January 24, 2024. Here are the details.

Political Party	Amount Encashed
BHARTIYA JANTA PARTY	₹60,60,51,11,000.00
ALL INDIA TRINAMOOL CONGRESS	₹16,09,53,14,000.00
PRESIDENT, ALL INDIA CONGRESS COMMITTEE	₹14,21,86,55,000.00
BHARAT RASHTRA SAMITHI	₹12,14,70,99,000.00
BIJU JANATA DAL	₹7,75,50,00,000.00
DMK PARTY IN PARLIAMENT	₹6,39,00,00,000.00
YSR CONGRESS PARTY (YUVAJANA SRAMIKA R	₹3,37,00,00,000.00
TELUGU DESAM PARTY	₹2,18,88,00,000.00
SHIVSENA (POLITICAL PARTY)	₹1,58,38,14,000.00
RASTRIYA JANTA DAL	₹72,50,00,000.00
AAM AADMI PARTY	₹65,45,00,000.00
JANATA DAL ( SECULAR )	₹43,50,00,000.00
SIKKIM KRANTIKARI MORCHA	₹36,50,00,000.00
NATIONALIST CONGRESS PARTY PARLIAMENT OF	₹30,50,00,000.00
JANASENA PARTY	₹21,00,00,000.00
ADYAKSHA SAMAJVADI PARTY	₹14,05,00,000.00
BIHAR PRADESH JANTA DAL(UNITED)	₹14,00,00,000.00
JHARKHAND MUKTI MORCHA	₹13,50,00,000.00
SHIROMANI AKALI DAL	₹7,26,00,000.00
ALL INDIA ANNA DRAVIDA MUNNETRA KAZHAGAM	₹6,05,00,000.00
SIKKIM DEMOCRATIC FRONT	₹5,50,00,000.00
RASHTRIYA JANTA DAL	₹1,00,00,000.00
SHIVSENA	₹1,00,00,000.00
MAHARASHTRAWADI GOMNTAK PARTY	₹55,00,000.00
NATIONALIST CONGRESS PARTY MAHARASHTRA PRADESH	₹50,00,000.00
JAMMU AND KASHMIR NATIONAL CONFERENCE	₹50,00,000.00
GOA FORWARD PARTY	₹35,00,000.00

Top 10 Regional Parties Income (₹) in FY 2021-22 (Unknown Sources)

In the list, we have found that there are 10 Regional Parties those received most of the money from unknown sources as mentioned below.

Party	Total Income	Unknown Sources	% Unknown Sources
Dravida Munnetra Kazhagam	318.745 crore	306.025 crore	96%
Biju Janata Dal	307.288 crore	291.096 crore	95%
Bharat Rashtra Samithi	218.112 crore	153.037 crore	70%
YSR Congress Party	93.724 crore	60.0168 crore	64%
Janata Dal (United)	86.555 crore	48.3617 crore	56%
Samajwadi Party	61.011 crore	3.66 crore	6%
Shiromani Akali Dal	25.414 crore	12.1987 crore	48%
All India Anna Dravida Munnetra Kazhagam	25.263 crore	nil	0%
Maharashtra Navnirman Sena	6.7683 crore	5.0762 crore	75%
Telugu Desam Party	6.028 crore	3.667 crore	61%

Conclusion – Electoral Bonds Scheme Unconstitutional : Supreme Court

The Supreme Court has struck down the electoral bonds scheme as it was “unconstitutional” in nature and violated the right to information of the citizens. The scheme once allowed anonymous corporate contributions to the different political parties. The court has ordered the State Bank of India (SBI) to stop issuing electoral bonds with immediate effect and to disclose details of all parties that received money through this scheme. The decision was made to conduct a free and fare Lok Sabha election with enhanced transparency in political funding. In this article, we have discussed the Electoral Bonds Scheme with its history, features, and related loopholes in detail.

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FAQs – Electoral Bonds Scheme Unconstitutional : Supreme Court

What was the Electoral Bonds Scheme ?

The electoral bonds were an infringement system that was introduced in 2017 as a way of a Finance bill. It was implemented in 2018 and repealed on 15th February 2024 at 10:30 AM by the honorable Supreme Court of India.

Why Electoral Bonds Scheme was Unconstitutional?

The Supreme Court has struck down the electoral bonds scheme as it was “unconstitutional” in nature and violated the right to information of the citizens.

When Soupreme Court repealed the Electoral Bonds Scheme?

The Electoral Bonds Scheme was repealed on 15th February 2024 at 10:30 AM by the honorable Supreme Court of India.

Who repealed the Electoral Bonds Scheme?

A five judges bench led by Chief Justice of India D Y Chandrachud repealed the Electoral Bonds Scheme.

When Electoral Bonds Scheme was came into force?

Electoral Bonds Scheme was came into force in 2018. The particular scheme was announced in the Union Budget speech for the very first time by the Union Finance Minister Late Arun Jaitley in 2017.