The Case of Electoral Bonds - Conflict Between Electoral Politics & Right to Privacy

The Indian constitution was made to proliferate democracy in the country by proliferating transparency among people and those who are chosen to govern and serve the people as their representatives. However, all of this came into question in a current case before the Supreme Court where the Finance Act, 2017 was put to a constitutional test.

Illustration by The Geostrata

The scheme in contention was the Electoral Bond scheme 2018 that brought a novel method of taking donations from individuals and corporations through bonds issued of any numerical denomination by the State Bank of India (SBI), which was given the proprietary rights of this scheme, by making it the singular banking company that could issue the electoral bonds.  

This electoral bond was challenged by a political leader Dr. Jaya Thakur of the Indian National Congress (INC), who pointed out that the anonymity provided by political funding infringes the Right to Information (RTI) of the people.

Herein, understanding the policy of Electoral Bonds is highly imperative to break down the verdict of the Supreme Court, and then understand it through the prism of Constitutional law.

ELECTORAL BONDS - THE BONE OF CONTENTION

An electoral bond is a type of promissory note that was issued through SBI bank in the multiple of 1000 i.e 1000, 10000, 100000 with no end limit by an individual or company to contribute funds to their respective political party. This scheme was applicable from 2018 by the ruling Government of India, formed by Bharatiya Janata Party.

THE SUPREME COURT VERDICT ANALYSED

A five-judge bench composed of CJI DY Chandrachud, Justice Sanjiv Khanna, Justice BR Gavai, Justice JB Pardiwala, and Justice Manoj Mishra heard the matter. While Chief Justice Chandrachud emphasised the fundamental right to privacy, including political privacy and affiliation, stating that disclosing such information could lead to curbs or trolling, he argued that when the law permits political contributions, the constitution must protect citizens' rights.

The court suggested alternative measures to curb black money, deeming the infringement on the right to information unjustified. It also noted that the electoral bond scheme could advantage the party in power.

As RBI has recommended Electoral Bond should be issued electronically but centre has rejected the same to protect the corporate donor’s identity. The government in power has collected more than 6,000 crore money through electoral bonds. The bench also raised questions about the removal of the condition that companies can only donate a maximum of 7.5% of their net profit to political parties.

Furthermore, the judgement highlighted how economic inequality affects political engagement and the potential for quid pro quo arrangements. The apex court directed the State Bank of India to disclose details of electoral bonds received by political parties to the Election Commission of India, to be published on the ECI website by March 13th.

Additionally, the court ordered political parties to return electoral bonds that have not been encashed within the 15-day validity period to the purchaser and made the electoral bond and its process unconstitutional.

ELECTORAL BOND - A PROJECTED DISASTER TO DEMOCARACY

“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we cannot have both,” American Supreme Court judge Justice Louis Brandeis once wrote. The growth of economic inequality fuels the growth of political inequalities and vice versa, resulting in a dangerous vicious cycle. 

Democracy across the world is being undermined by money, most worryingly so was in India. With the introduction of electoral bonds, India was the most unregulated country with regards to electoral funding in comparison with other similar democracies.

The greater the inequality of political funding, the greater the chances that public policy is tilted towards the interest of the super rich, ignoring the interests of the majority, particularly the poor and the vulnerable.

As electoral Bond violates the principle of election in means like equality, fairness, reasonableness, and democracy. Article 19(1)(a) of the people granted by the constitution of India was infringed as taxpayers don’t know the source of funding of the leader, whom they are choosing. 

As the policymakers become corrupt by influencing through corporate funding then the citizens will be in great trouble and it would be a disaster for the country and its democracy.

The government asserts that it promotes transparency by utilising the banking channel, but this claim falls short as it does not disclose the source of funds or the identity of the donor. Consequently, the legitimacy of the money intended for political use remains uncertain, leaving it unclear whether it is obtained through lawful means or illicit sources.

CONCLUSION

The anonymity maintained by the political parties by non-disclosure of information on voluntary contributions to political parties, as per the electoral bond scheme and the amendment to various sections of the Representation of the People's Act, 1951, the Companies Act, 2013, and the Income Tax Act, 1961, constitutes a violation of the fundamental right enshrined in Article 19(1)(a) of the Constitution of India, 1950, as the freedom to openly express one's views and opinions is safeguarded by Article 19(1)(a).

Regarding political funding, this right includes the capacity for citizens to ascertain the sources of funding for political parties or candidates, so empowering them to make knowledgeable decisions during election cycles.

Electoral bonds, on the other hand, give donors the option to maintain their anonymity and hide their identities from the public. The electorate's capacity to hold politicians and parties accountable for their policies and conduct is hampered by the lack of openness in political funding. Additionally, because there is a lack of transparency regarding the financing sources and possible quid pro quo agreements between contributors and officials, it fosters corruption.

Secondly, Unlimited corporate funding to political parties, as envisaged by the amendment to section 182(1) of the Companies Act 2013, violates the principle of free and fair elections.

In applying the doctrine of proportionality, the top court held that the object of the said scheme and the means employed to achieve such an object are not proportional. There are other means to achieve the purpose of black money, even assuming it to be a legitimate objective.

Thus, the decision made by the Supreme Court to make electoral bonds unconstitutional is one of the great as well as necessary decisions to save the fundamental rights of the people.

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BY ADARSH TRIPATHI

CENTER FOR LAW AND POLITICS, TEAM GEOSTRATA

info@thegeostrata.com