What are electoral bonds? Electoral bonds are money instruments that act as promissory notes or bearer bonds that can be purchased by individuals or companies in India. The bonds are issued specifically for the contribution of funds to political parties.These bonds are issued by the State Bank of India (SBI) and are sold in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore. How are the donations made? The bonds can be purchased through a KYC-complaint account to make donations to a political party. Once the money is transferred, the political parties will have to encash the donations within a given amount of time.
Electoral bonds scheme and the case The electoral bonds scheme was first announced by former finance minister Arun Jaitley during the 2017 Budget Session. Later, it was notified in January 2018 as a source of political funding by way of money bills introducing amendments to the Finance Act and the Representation of the People Act. However, several petitions were filed in the Supreme Court, According to the petitioners, The scheme violates the right to information, opens doors to shell companies, and promotes corruption. Rajya Sabha MP and senior advocate Kapil Sibal had raised that a political party could use the donations for any other purposes than election.
Electoral bonds scheme: Supreme Court verdict. 1. A five-judge Constitution bench headed by CJI DY Chandrachud delivered two separate and unanimous verdicts on the pleas challenging the electoral bonds scheme, delivering a major blow to the central government. Pronouncing the verdict, CJI Chandrachud said the electoral bonds scheme is violative of freedom of speech and expression under Article 19(1)(a) of the Constitution.
2. The Supreme Court said infringement to the Right to Information is not justified to curb black money. The top court bench said the fundamental right to privacy also includes citizens’ right to political privacy and affiliation.
3. The bench also held as invalid the amendments made in various laws, including the Representation of Peoples Act and the Income Tax laws. The Supreme Court ordered the State Bank of India or SBI to disclose to the Election Commission the names of the contributors to the six-year-old scheme.
4. The bench directed that the issuing bank shall stop issuance of electoral bonds and the SBI shall submit details of electoral bonds purchased since April 12, 2019, till date to the Election Commission of India. The Supreme Court said information about corporate contributors through electoral bonds must be disclosed as the donations by companies are purely for quid pro quo purposes.
5. The court held that amendments in the Companies Act permitting unlimited political contributions by companies are arbitrary and unconstitutional. The electoral bonds scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring transparency in political funding.
The Supreme Court struck down the electoral bonds scheme - on grounds it violated citizens' right to information, was unconstitutional, and may lead to quid pro quo arrangements between political parties and donors .