Supreme Court says electoral bonds unconstitutional, asks SBI to submit all details [15.2.2024]

Electoral bonds are violative of the Right to Information and Right to Freedom of Speech and Expression and need to be struck down as unconstitutional, the Supreme Court said on Thursday while delivering its judgement on several pleas challenging the validity of these instruments. 

While delivering the judgement, Chief Justice of India DY Chandrachud said that the decision was unanimous. A five-judge Constitution bench headed by Chandrachud had on November 2 last year reserved its verdict in the matter.

The SC also asked the banks to stop issuing electoral bonds. It also ordered the State Bank of India to furnish all details of donations received by the political parties to the Election Commission of India (ECI). 

The ECI has been asked to publish all details on their website by March 31. 

While delivering the judgement, CJI Chandrachud said that the citizens have a right to know about the funding of political parties and it is essential for the electoral process. 

He added that financial support to a political party can lead to quid pro quo arrangement. 

Chandrachud said that a company has a "more graver" influence on the political process than individuals adding that These transactions may only be for business purposes. He said the amendment to Section 182 of the Companies Act is also unconstitutional. 

Under the amendment, the Centre removed the limit on the maximum amount a company can contribute to a political party. 

"Before the amendment, loss-making companies were not able to contribute. The amendment does not recognise the harm of allowing loss-making companies to contribute due to quid pro quo," CJI said, according to Live Law. 

"The amendments to Section 182 of the Companies Act are manifestly arbitrary for not making a distinction between loss-making and profit-making companies."

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 transparency to political funding.

According to the provisions of the scheme, 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.

An Electoral Bond is an instrument like a promissory note or bearer bond which can be purchased by any individual, company, firm or association of persons provided the person or body is a citizen of India or incorporated or established in India. 

The bonds are issued specifically for the contribution of funds to political parties. 

16 Feb 2024