oppn parties Electoral Bonds: It Was Never A 'Reform'

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Calcutta HC scraps 2016 teacher appointment process, 25757 teachers to lose their jobs, ordered to repay salaries withdrawn in 4 weeks
oppn parties
Electoral Bonds: It Was Never A 'Reform'

By Sunil Garodia
First publised on 2024-02-15 13:27:04

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

When the electoral bonds scheme was introduced in 2018, it was clear to all but the government that it was an opaque method of contribution to political parties which in no way improved the then existing system of funding. It was also clear that it would lead to quid pro quo. The Supreme Court has, in a historic judgment, declared electoral bonds unconstitutional in a unanimous decision although there were two separate judgments with different reasoning but same conclusion. A five-judge bench of CJI D Y Chandrachud and Justices Sanjiv Khanna, B R Gavai, J B Pardiwala, and Manoj Misra also said that amendments to the Companies Act, the Income Tax Act and the Representation of Peoples Act to facilitate the operation of the electoral bond scheme did not pass the Constitution test and struck them down. It also categorically said that electoral bonds were not the only way to curb black money in political funding.

The government had argued at the time of introducing the bonds that cash funding through 'black' money would stop since the bonds were to be purchased through banking channels. It has also amended the Income Tax Act and Companies Act to enable loss making companies (earlier, only companies that were profitable for three years were allowed to contribute to political parties). But the names of the donors were not to be disclosed by the recipients. Only SBI, the sole issuer of the bonds, was privy to the name of the buyer/donor.

The Supreme Court ruled that the scheme was unconstitutional as it violated the right to information of the public under Article 19(1)(a). It held that for making the right political choices, the public should have the information on funding of political parties. It also held that curbing black money could not be a valid reason under Article 19(2) to deny right of information and the scheme does not pass the proportionality test as laid down in KS Puttasway case.

The court also ruled that since companies can influence policy and seek quid pro quo, it was wrong to remove the cap (7.5% of average profit of last three years) in donations and also allow loss-making companies to donate as they would be more prone to seek favours for funding. It said the amendments to Section 182 were arbitrary for not making a distinction between profitable and loss-making companies. The court also said that Section 182(3) mandated disclosure by companies of how much and to which party they had donated for reasons of transparency and public information and removing it also violated right to information. Hence, it said that amendments to this effect in the Companies Act & Income Tax Act stood quashed.

The Supreme Court directed the government and the SBI to stop the sale of electoral bonds immediately. It directed the SBI to provide Election Commission of India (EC) with details of all such bonds purchased since April 2019 by March 6. It asked the political parties to return the bonds (if they are within the validity period of 15 days) that they have not cashed to the donors who will then return them to SBI. The SBI has been directed to refund the amount to such purchasers. The Election Commission has been directed to make publish all information it receives from the SBI on its website for public information by March 13.

With this, a black chapter in political funding comes to an end. In the name of reform on the (intentionally?) misguided plea of eradicating 'black' money from political funding, an avenue was opened for political parties (and the scheme was so designed that it would always favour the ruling dispensation) to amass funds from companies they could either arm-twist or lure with providing goodies in return and for companies to get into the good books of political parties by making unlimited donations whether they were profitable or not (and to hell with the shareholders and other stakeholders) without the need to disclose the name of the political party. Funding of political parties is a vexed issue that needs reform. But electoral bonds were not even near the best way to go about it. The Supreme Court has done well to do away with them.