Electoral Bonds: A Landmark Judgment in the Direction of Free and Fair Elections

A momentous Supreme Court judgment declaring the electoral bond scheme unconstitutional exposes Modi regime’s compromising free and fair electoral process and voter’s right to information, opines S.N. Sahu.

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A landmark judgment of the Supreme Court has declared the opaque electoral bond scheme of the Narendra Modi-led government as unconstitutional on the ground that it was framed by committing multiple illegalities by erroneously amending the Representation of the People Act, (RPA)1951; Income Tax Act, 1961; the Companies Act, 2013 and the Foreign Contribution (Regulation) Act, (FCRA) 2010 and above all, by violating the right to information and freedom of expression guaranteed by Article 19(1) of the Constitution.

Checking corruption and upholding the free and fair electoral process

The judgment delivered by a Constitution Bench comprising the Chief Justice of India (CJI) Dr D.Y. Chandrachud and Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala and Manoj Misra is truly momentous. It will go a long way in curbing corruption which, right from the 1964 Santhanam Committee report on prevention of corruption, has been attributed to minting election expenditure of political parties.

Because it has put a lid on the unrestricted access of political parties, especially of the ruling BJP, to funds of corporates, who under the Companies Act 2013 contributed limited amounts to the tune of 7.5 percent of profit registered in the preceding three years.

The judgment will go a long way in curbing corruption which, right from the 1964 Santhanam Committee, has been attributed to minting election expenditure of political parties.

That limit was removed by amending the said Act and it led the corporates to contribute unlimited amounts through electoral bonds sold through the State Bank of India (SBI).

The Representation of People Act of 1951, mandating disclosure of details of funds in access of more than ₹20,000 received by political parties was amended to exempt disclosure of money obtained through the electoral bond scheme.

The ruling BJP, which got almost ₹5,200 crore through electoral bonds, could easily know from the SBI the names of corporates and the details of their funding to political parties, crucially the opposition parties.

Most importantly, the voter had no access to those details. In comparison to the BJP, the opposition parties got much less money and so the electoral bonds considerably skewed the playing field and put opposition parties in an extremely disadvantageous position.

The scheme excluded the opposition parties and the voter from knowing the names of the corporates and the amount they are contributing to scores of political formations.

The unrestricted contributions of corporates to political parties means they could pull the strings of the ruling party and prevail on it to frame policies in their favour. This vitiates the electoral process and tilts it in favour of the ruling party.

It has been held by the Supreme Court that conduct of free and fair elections is part of the basic structure of the Constitution. Any compromise on the integrity of the electoral process strikes at the very root of the Constitution itself.

Therefore, declaring the amendment to Companies Act for removing limits for corporate funding as unconstitutional, the Supreme Court Bench has sharply observed, “[P]ermitting unlimited corporate contributions authorises unrestrained influence of companies in the electoral process, which is violative of the principles of free and fair elections and political equality captured in the value of ‘one person, one vote’.”

The Supreme Court judgment, therefore, is a huge step in protecting the electoral process from adverse consequences caused by money power which were multiplied after the introduction of the electoral bond scheme.

Government’s defence of the scheme rejected

The defence of the scheme by the Union government that it paved the way for use of legitimate funds in political financing by ensuring transactions and securing anonymity of the donors so that they could be protected from imminently possible retribution by political entities was rejected by the Supreme Court.

The court did not accept the argument of the Modi government that voters have no right to know the contributions of corporates as the privacy of corporates assumes primacy over the right to information of the voter.

The Supreme Court also dismissed the argument that the contributions under the scheme coming through a banking channel would curb black money.

Issue of black money

The Supreme Court held that the purpose of curbing black money is not a sufficient justification to restrict the right to information under Article 19 (1)) of the Constitution by keeping opaque the identities of donors and the details of the contributions in the electoral bonds scheme.

The ruling BJP, which got almost ₹5,200 crore through electoral bonds, could easily know from the SBI the names of corporates and the details of their funding to political parties, crucially the opposition parties.

The CJI noted that the “purpose of curbing black money is not traceable to any of the grounds under Article 19(2)”.

In other words, the specious grounds of the Modi government that the electoral bond scheme has curbed black money has been rejected.

Judgment in line with the 1964 Santhanam Committee recommendations

It is instructive that the Supreme Court judgment that all money received by political parties through electoral bond scheme should be disclosed by the Election Commission of India upholds the cause of transparency on the issue of funding of election expenditure.

It is illuminating to note that the observations of the Supreme Court in this regard is in line with the recommendations of the aforementioned Santhanam Committee.

It is illuminating to note that the observations of the Supreme Court in this regard is in line with the recommendations of the aforementioned Santhanam Committee.

The committee had stated that “[A]ll political parties should keep a proper account of their receipts and expenditure and publish annually an audited statement of such accounts giving details of all individual receipts.”

This was done in 1964. Those words are of monumental significance in the context of the judgment of the Supreme Court.

The Santhanam Committee also made the far-reaching recommendation that the Parliament should enact a legislation mandating political parties to disclose the details of the funds received.

It observed, “We do not see why any political party should object to this provision, and as it may not be easy to ensure compliance through voluntary agreement, simple legislation obliging the keeping of such accounts and its publication may be necessary.”

While the Santhanam Committee upheld in the early 1960s that there should be legislation requiring political parties to put an account of money received in the public domain, the Modi regime defended an opaque electoral bonds system through the instrumentality of law and denied the right of the people to know about the funds which political parties use for participating in elections to get access to power.

The Santhanam Committee also made the far-reaching recommendation that the Parliament should enact a legislation mandating political parties to disclose the details of the funds received.

It is heartening that the Supreme Court judgment nullifying the electoral bond scheme has upheld the free and fair election process and adjudicated for transparent processes of funding for political parties to put money power under scanner and accord primacy to voters’ right to information.

The author was Press Secretary to President of India late KR Narayanan.