SC rules against Electoral Bond Scheme

• A five-judge Constitution Bench of the Supreme Court unanimously struck down the Centre’s electoral bond scheme which facilitates anonymous political donations for being unconstitutional.
  • It underscored that the scheme violates the right to information under Article 19(1)(a) of the Constitution.
  • The court also struck down the amendments made to the Income Tax Act and the Representation of People Act which enabled such anonymous political contributions.
  • Amendments to Companies Act 2013 provision allowing unlimited corporate contributions were declared arbitrary and violative of Article 14.

DETAILS

1. Section 182 of the Companies Act, 2013 restricted corporate donations, imposing a cap (7.5% of the average profits of the preceding three fiscal years) and disclosure requirements.
   1. The Finance Act, 2017 Intervention removed the cap and disclosure obligations for corporate donations.
2. Section 29C of Representation of the People Act, 1951 mandated political parties to disclose donations exceeding Rs 20,000, balancing the right to information with donor privacy.
   1. Finance Act, 2017 introduced an exception exempting donations via Electoral Bonds from disclosure requirements.
3. Section 13A(b) of Income-tax Act, 1961 mandated the maintenance of records for contributions above Rs 20,000.
   1. Finance Act, 2017 exempted Electoral Bond contributions from record-keeping requirements.

DIRECTIONS ISSUED

• The SBI has been ordered to immediately stop the issuance of any further electoral bonds and furnish details of such bonds purchased by political parties since April 12, 2019, to the ECI by March 6.
• Such details must include the date of purchase of each bond, the name of the purchaser of the bond and the denomination of the bond purchased.
• The ECI shall subsequently publish all such information shared by the SBI on its official website by 13 March 2024.
• Electoral bonds that are within the validity period of fifteen days but have not yet been encashed by the political party will have to be returned following which the issuing bank will refund the amount to the purchaser’s account.