In a landmark decision, the Supreme Court of India has unanimously declared the Electoral Bonds scheme unconstitutional, citing violations of the right to information (RTI) and Article 19.

Chief Justice of India (CJI) DY Chandrachud emphasized the unity among the five-judge bench, with slight differences in reasoning between himself and Justice Sanjiv Khanna.

5-judge Constitution Bench led by Chief Justice D.Y. Chandrachud unanimously strikes down the electoral bonds scheme. Directs that the issuance of bonds be stopped with immediate effect.#ElectoralBonds #SupremeCourt #SupremeCourtofIndia pic.twitter.com/YhloWhgcBm

— Supreme Court Observer (@scobserver) February 15, 2024

The ruling

The bench, comprising the CJI, Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, presided over the matter.

CJI Chandrachud contended that anonymous electoral bonds undermine the right to information and freedom of expression (Article 19(1)(a)), expressing concerns about transparency in political funding.

The court ruled the amendment to the Companies Act, allowing unrestricted corporate political funding, as unconstitutional.

It highlighted the potentially greater influence of corporate contributions on the political process compared to individual donations.

The state bank

The State Bank of India, the bonds' issuer, was directed to cease issuing electoral bonds. Additionally, it must provide details of bond donations and their respective political recipients to the Election Commission by March 6.

The Election Commission was instructed to disclose all electoral bond details on its official website by March 13. Unused bonds will be refunded to the purchaser's account following this disclosure.

The court rejected claims that the electoral bonds scheme combats illicit funds flow, stressing the need to balance privacy and transparency in political contributions.

Electoral Bonds Scheme

Introduced on January 2, 2018, the scheme allowed anonymous contributions to political parties through bearer bonds from the State Bank of India.

These interest-free bonds, available in denominations from Rs 1,000 to Rs 1 crore, were established via the Finance Act of 2017, amending various statutes.

"At a primary level, political contributions give a seat at the table to contributors, i.e., it enhances access to legislators. This access also translates to influence over policymaking. There is also a legitimate possibility that financial contributions to a political party would lead to quid pro quo arrangement because of the close nexus between money and politics," Jurist.org reported.

Petitioners argued the scheme compromised citizens’ right to information about political funding sources under Article 19(1)(a). Senior advocate Prashant Bhushan claimed the opaque nature of the instrument facilitated corruption.

Attorney General R Venkataramani defended the scheme, asserting Article 19(1)(a) does not guarantee absolute right to fund source information. He argued the scheme promoted transparency, clean funds, and tax compliance, asserting its compatibility with existing rights.