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Electoral bonds scheme is unconstitutional, rules Supreme Court in its big verdict ahead of Lok Sabha polls

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.

Edited By: Nivedita Dash @Nivedita0503 New Delhi Updated on: February 15, 2024 12:09 IST
Supreme Court
Image Source : FILE Supreme Court

In a landmark decision, the Supreme Court on Thursday struck down the electoral bonds scheme as unconstitutional in a unanimous verdict on a batch of pleas challenging the legal validity of the central government's scheme which allows for anonymous funding to political parties. A five-judge Constitution bench headed by Chief Justice DY Chandrachud had on November 2 last year reserved its verdict in the matter.

Chief Justice of India DY Chandrachud said, "There are two separate judgements - one penned by him and the other by Justice Sanjiv Khanna and both the verdicts are unanimous." The Supreme Court added political parties are relevant units in the electoral process and information about funding of political parties is essential for electoral choices.

Violates Rights

Pronouncing the verdict, the CJI said the scheme is violative of freedom of speech and expression under Article 19(1)(a) of Constitution. 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 said, "Infringement to the Right to Information is not justified for the purpose of curbing black money."

SC directs SBI

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.

What are electoral bonds?

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.

Only the political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than 1 per cent of the votes polled in the last elections to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds. According to the notification, electoral bonds shall be encashed by an eligible political party only through an account with an authorised bank.

In April 2019, the apex court declined to stay the electoral bonds scheme and made it clear that it would accord an in-depth hearing on the pleas as the Centre and the Election Commission had raised "weighty issues" that had "tremendous bearing on the sanctity of the electoral process in the country".

The Constitution bench, also comprising Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra, had on October 31 last year commenced hearing arguments on the four petitions, including those filed by Congress leader Jaya Thakur, the Communist Party of India (Marxist) and NGO Association for Democratic Reforms (ADR). During the hearing in the matter, the apex court had underscored the need for reducing the cash component in the electoral process.


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