What is Electoral Bond
Giving money to a political party anonymously is possible using electoral bonds. It is comparable to a bearer bond or promissory note that you can purchase from a bank and deliver to the recipient of your choosing. After then, the party can cash the bond and utilize the proceeds for their own projects. In order to decrease the use of illicit money in elections and increase the transparency of political finance, the government implemented this program in 2018.The Supreme Court, however, recently outlawed this plan, citing violations of the rights to information and expression. Additionally, the bank was mandated by the court to cease issuing these bonds and provide the Election Commission with the donor’s information.
Background of Electoral Bond
At the heart of the petitions lie objections to the electoral bonds scheme, introduced through amendments in the Finance Act 2017. The petitioners, including the Association for Democratic Reforms (ADR), the Communist Party of India (Marxist), and Congress leader Jaya Thakur, argued that the anonymity associated with electoral bonds undermines transparency in political funding and encroaches upon voters’ right to information.
They further contend that the scheme facilitates contributions through shell companies, raising concerns about accountability and integrity in electoral finance bearer bond or promissory note that you can purchase from a bank and deliver to the recipient of your choosing. After then, the party can cash the bond and utilize the proceeds for their own projects. In order to decrease the use of illicit money in elections and increase the transparency of political finance, the government implemented this program in 2018.The Supreme Court, however, recently outlawed this plan, citing violations of the rights to information and expression. Additionally, the bank was mandated by the court to cease issuing these bonds and provide the Election Commission with the donor’s information.
In defence of the scheme, the union government had asserted its role in promoting the use of legitimate funds in political financing, ensuring transactions occur through regulated banking channels. Additionally, the government cited the need for donor anonymity to shield contributors from potential retribution by political entities.
Arguments Against Electoral Bond
- NO SINGLE DONATION LEVEL DATA HAS TO BE SHARED BY THE PARTY
- NO INFORMATION ON WHICH PARTY RECEIVES FUNDING .
- NO CAP ON NET PROFIT SIPHON FOR BLACK MONEY
- 2 NO TRACKING OF SALE OF BONDS SIPHON FOR BLACK MONEY
PUBLIC DOES NOT KNOW - BANK KNOWS FINANCE MINISTRY KNOWS
- RULING PARTY KNOWS WHO DONATED WHO FUNDS
- AMENDMENT IN INCOME TAX ACT PARTY DOES NOT NEED TO FILE THIS FOR IT RETURNS
Why supreme court remove electoral Bond
In past years, political parties introduced a new policy known as the Electoral Bond. Under this policy, any company or individual could contribute money to the government without disclosing the information to anyone else. The issue of Electoral Bonds was brought before the Supreme Court, with the first case heard in November 2023 by a bench comprising five judges. During the hearing, the CPIM leader expressed concern that Electoral Bonds seemed to favor the ruling party exclusively, rather than being applicable to all parties.
On February 15, 2024, the five-judge bench of the Supreme Court declared Electoral Bonds unconstitutional. They instructed the State Bank of India (SBI), which oversaw the Electoral Bond scheme, to provide details about its implementation. The Supreme Court highlighted several laws that were violated by the Electoral Bond scheme, including Section 13A and Section 29C of the Income Tax
Act, as well as Section 182(3) of the Companies Act. Additionally, the court noted that the Electoral Bond scheme infringed upon Article 19(1)(a) of the Constitution, which guarantees the fundamental right to freedom of speech, as it created a non-transparent system of political funding. Moreover, the provision in Section 182(1) allowing companies to donate to any political party raised concerns about potential corrupt practices.
As a result, the Supreme Court invalidated the Electoral Bond scheme, emphasizing the need to uphold democratic principles and transparency in political funding.
Decision of supreme court regarding electoral Bond
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. The electoral bond scheme and the impugned provisions to the extent that they infringe upon the right to information of the voter by anonymizing contributions through electoral bonds are violative of Article 19(1)(a).
Supreme court order to SBI regarding electoral Bond
Accordingly, the amendments to the Income Tax Act, the Representation of Peoples Act, the Companies Act have been held to be unconstitutional. SBI asked to give details to ECI, ECI to publish the details on its website:Â
The Court issued the following directions:
- Â The issuing bank shall herewith stop the issuance of electoral bonds.
- The State Bank of India shall submit the details of electoral bonds purchased since the interim order of the Court dated April 12, 2019 till date to the Election Commission of India. The details shall include the date of purchase of each electoral bond, the name of the purchaser of the bond and the denomination of the electoral bond purchased.
- State Bank of India shall submit the details of the political parties which have received contributions through electoral bonds since the interim order dated April 12, 2019 till date to the ECI. SBI must disclose details of each electoral bonds encased by the political parties, which shall include the date of encashment and the denomination of electoral bond SBI shall submit the above information to the ECI within three weeks from today, i.e. by date March 6.
- ECI shall publish the information received from the SBI on its website by March 13, 2024.
- Electoral Bonds which are within the validity period of 15 days but which have not been encashed by the political parties yet shall be returned by the political party to the purchaser. The issuing bank shall then refund the amount to the purchaser’s account.
Senior Advocates Kapil Sibal, Advocate Prashant Bhushan, Advocate Shadan Farasat, Advocate Nizam Pasha, Senior Advocate Vijay Hansaria appeared for the petitioners. Attorney General for India R Venkataramani, Solicitor General of India Tushar Mehta appeared for the Union Government.
Conclusion
The Supreme Court’s decision to abolish electoral bonds marks a significant step towards transparency and accountability in Indian democracy. By striking down this opaque funding mechanism, the court upholds the principles of fairness and integrity in the electoral process, fostering public trust and democratic values.