SC Strikes Down Electoral Bonds Scheme, Calls It ‘Unconstitutional’

In a landmark verdict, the Supreme Court ruled unanimously on Thursday that the electoral bonds scheme must be deemed "unconstitutional." This verdict came in response to a series of petitions questioning the legal validity of the central government's scheme, which permitted anonymous funding to political parties.

A five-judge Constitution bench headed by Chief Justice D Y Chandrachud delivered two separate but unanimous verdicts on pleas challenging the scheme.

Pronouncing the verdict, the apex court stated that the anonymous electoral bonds scheme violates the right to information (RTI) under Article 19(1)(a).

In a landmark judgement that will have wide ramifications, it ordered the State Bank of India (SBI) to disclose to the Election Commission the names of the contributors to the six-year-old scheme.

The Top court said that political parties play a crucial role in the electoral process and that information regarding their funding is vital for making electoral decisions.The bench said the fundamental right to privacy includes citizens' right to political privacy and affiliation.

The bench said the fundamental right to privacy also includes citizens' right to political privacy and affiliation.

It also held as invalid the amendments made in various laws, including the Representation of Peoples Act and the Income Tax laws.

It directed that the issuing bank shall stop issuance of electoral bonds and the State Bank of India shall submit details of electoral bonds purchased since April 12, 2019 till date to the Election Commission. The top court had on November 2 last year reserved its verdict in the matter.

For the unversed, the 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 in transparency in political funding.

According to the provisions of the scheme, electoral bonds may be purchased by any citizen of India or entity incorporated or established in the country. An individual can buy electoral bonds, either singly or jointly with other individuals.

What is electoral bonds?

The electoral bonds scheme, implemented under the Finance Act of 2017, has sparked considerable debate in India. This scheme enables donors to contribute funds to a political party anonymously by purchasing bearer bonds from the State Bank of India (SBI). An electoral bond is a financial instrument akin to a promissory note or bearer bond that can be acquired by any individual, company, firm, or association of persons, provided they are Indian citizens or incorporated/established in India.