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Opening Political Coffers

The apex court’s verdict on the electoral bonds scheme has the potential to cleanse the electoral system, but a viable alternative political funding model needs to be devised

By Sanjay Raman Sinha

In a unanimous verdict, the Supreme Court bench abrogated the electoral bonds scheme, calling it unconstitutional. The five-judge bench of Chief Justice of India (CJI) DY Chandrachud and Justices Sanjeev Khanna, BR Gavai, JB Pardiwala and Manoj Misra decided on issues like right to information, donor privacy, black money and political contributions by companies. These issues directly impact the scheme.

The bench held that anonymity of the scheme violates the citizens’ right to information. The bench also observed that unlimited corporate contributions influence government policymaking. The bench further said that this is a matter of infringement of the fundamental rights as well and struck down amendments to the IT Act, Companies Act and the Representation of People’s Act which were enacted to make way for the current model of the scheme.

The bench also instructed the Election Commission of India to give details of all bonds encashed since April 12, 2019. This is to include the name of bond buyers, name of the beneficiary party, amount and date of purchase. Anonymous donations up to  Rs 20,000 will continue. 

Speaking to India Legal, Major General (retired) Anil Verma, head of Association for Democratic Reforms (ADR), said: “The Court has said that permitting unlimited contributions violates free and fair polls. ADR welcomes the judgment as a step towards enhancing the purity of elections and strengthening of our democracy.” 

In examining the scheme’s constitutionality, the bench held: “Court has in numerous judgments held that the effect and not the object of the law on fundamental rights and other constitutional provisions must be determined while adjudicating its constitutional validity. The effect of provisions dealing with electoral finance cannot be determined without recognising the influence of money on politics.”

The bench examined threadbare all the relevant issues, exploring its linkages with the scheme and decided on its constitutionality.

The bench referred to the Dinesh Trivedi vs Union of India (1997) where the apex court had observed that unfettered information of “sunlight is the best disinfectant.” The government should be open and not clothed in secrecy. The Court had also recognised that freedom of speech and expression includes the right to acquire information. The Court held that information on the funding of political parties is essential for voting, and hence the scheme is violative of Article 19(1)(a) which guarantees freedom of speech and expression. With proper knowledge of election funding, the voter can make informed choices.

The government cited action to curb black money and political vendetta towards donors as a reason to restrict the Right to Information (RTI). It was seen as an affront to RTI. The Court examined this issue through the lens of proportionality. In the KS Puttaswamy case, the top court had developed a triple test to check proportionality in the infringement of fundamental rights cases. The first being that there should be a law, second that there should be sufficient nexus between the law and the object to be achieved by law, which being curbing black money and protecting the privacy of the donors. Thirdly, whether the curb on fundamental rights is proportional to the end sought to be achieved. The CJI held that in this case this is not so. For a mere Rs 20,000 or more, the privacy rights of a citizen can’t be extinguished. Infraction of RTI is not proportionally equal to curbing of black money in electoral financing.

In passing, it must be mentioned that Justice Chandrachud was part of the Puttaswamy case bench which had deduced right to privacy from the fundamental rights and where he had given his jurisprudence of informational privacy. Proportionality means balancing fundamental rights with state interests in a way that least restrictive choices are made to achieve the object of any legislation.

In the Aadhaar case, Justice Chandrachud had turned down the government’s defence of Aadhaar, and in his historic dissenting verdict, had termed it as violative of the right to privacy and thus unconstitutional. 

In the Puttaswamy case and Aadhaar case, the Supreme Court had created a roadmap for privacy of citizens and had defined obligations of the State to protect such privacy. Given this background, it was no surprise that the CJI demolished the government’s encroachment on individual’s right to know in the electoral bonds case. 

The government argued that anonymity of the donor is essential to protecting them from political revenge. However, Justice Sanjeev Khanna countered the argument. He said: “It is the case of the Union of India that parties in power at the Centre and State are the recipients of the highest amounts of donations through Bonds. If that is the case, the argument of retribution, victimisation and retaliation is tempered and loses much of its force.”

The bench opposed unlimited political donations by companies. It held that allowing loss-making companies to donate limitlessly encourages quid pro quo. With big donations, companies can influence government policies. Contributions are not altruistic, but are done with an eye for benefits in return. The bench quoted Indira Nehru Gandhi vs Raj Narain wherein Justice HR Khanna wrote: “The integrity of the electoral process is a necessary concomitant to the maintenance of the democratic form of government.”

The bench further stated: “Is not the sole duty of the Election Commission to secure the purity and integrity of the electoral process. There is also a positive constitutional duty on the other organs of the government, including the legislature, executive and the judiciary, to secure the integrity of the electoral process.” 

TS Krishnamurthy, former chief election commissioner, told India Legal: “I welcome the decision. It is a great step towards transparency. I have myself criticised the bond scheme due to its lack of transparency. In the interest of free and fair elections, I have already suggested the creation of a National Election Fund as an alternative whereby corporate and other donors can contribute with 100% tax relief. That fund can be used for public funding of elections without any nexus between corporate and political parties. It will prevent corporate from influencing policymaking.”

The verdict on the electoral bonds scheme has the potential to cleanse the electoral system, but a viable alternative political funding model needs to be devised. Further, it is now quite clear that we have a very strong and workable privacy jurisprudence which can counter any government misadventures in the realm of fundamental rights.  

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