Supreme Court Verdict on Electoral Bonds: Analysis and Implications
- ByAdmin --
- 19 May 2025 --
- 0 Comments
The Supreme Court of India delivered a significant verdict declaring the Electoral Bonds Scheme unconstitutional. This landmark judgment marked a pivotal moment in the debate over transparency in political funding and reinforced the importance of the citizen’s right to know. The ruling not only reshapes the legal framework surrounding electoral donations but also upholds vital democratic principles.
What Were Electoral Bonds?
The Electoral Bonds Scheme was introduced in 2018 by the Union Government through amendments in the Finance Act, 2017. It aimed to formalize political donations by allowing individuals and corporations to purchase bonds from the State Bank of India and donate them to eligible political parties.
Key features of the scheme included:
- Issuance of bonds in denominations ranging from ₹1,000 to ₹1 crore
- Availability for purchase by any individual or corporate entity
- Anonymity of the donor maintained; political parties were not mandated to disclose donor identities
- Only political parties that secured at least 1% of votes in the previous election were eligible to receive bonds
Why Was the Scheme Challenged?
Several petitions were filed in the Supreme Court by civil society groups, activists, and opposition leaders, citing the following concerns:
- The scheme violated the right to information guaranteed under Article 19(1)(a) of the Constitution
- It enabled unrestricted and opaque corporate funding
- It eroded the principle of free and fair elections
The challenge also extended to a series of amendments made via the Finance Act, 2017, which:
- Modified the Representation of the People Act, 1951
- Altered the Companies Act, 2013, removing limits on corporate donations
- Affected the Income Tax Act, 1961 and Foreign Contribution (Regulation) Act, 2010
- Were passed as part of a Money Bill, effectively bypassing the Rajya Sabha
Supreme Court’s Observations and Verdict
A five-judge Constitution Bench headed by Chief Justice D.Y. Chandrachud unanimously struck down the Electoral Bonds Scheme. The key findings of the Court were:
- Violation of Fundamental Rights: The scheme infringed on the citizen’s right to information, which is essential to Article 19(1)(a) — the freedom of speech and expression.
- Failure of Proportionality: The restriction on the right to know was deemed disproportionate and unreasonable.
- Unlimited Corporate Donations: The amendment to the Companies Act was found to disproportionately favor large corporations and violated principles of electoral fairness.
- Misuse of the Money Bill Route: The Court emphasized that the Finance Act, 2017, was incorrectly categorized as a Money Bill under Article 110 to bypass scrutiny in the Rajya Sabha.
Legal Provisions and Acts Referenced
- Article 19(1)(a) – Freedom of speech and expression (right to information)
- Article 14 – Equality before the law (used to question unequal treatment through corporate funding)
- Article 110 – Definition and scope of Money Bills
- Representation of the People Act, 1951
- Companies Act, 2013
- Income Tax Act, 1961
- Foreign Contribution (Regulation) Act, 2010
- Finance Act, 2017
Implications of the Verdict
- Increased Transparency
Political parties will now be compelled to disclose the identities of donors, ensuring greater accountability in political funding.
- Restrictions on Corporate Influence
The decision reinstates limitations on corporate donations and seeks to prevent undue influence by business entities.
- Strengthening of Parliamentary Oversight
The judgment reinforces the constitutional role of the Rajya Sabha and warns against the overuse of Money Bills for bypassing democratic scrutiny.
- Empowerment of Voters
Citizens are now better equipped to make informed choices by knowing the sources of party funding.
Government’s Stand and the Court’s Rebuttal
The government defended the scheme, stating that it reduced cash donations and protected donor privacy. However, the Court held that transparency in electoral financing is a higher constitutional goal than anonymous giving, particularly when it involves corporations or foreign-linked entities.
The Road Ahead
The Supreme Court has directed the State Bank of India to disclose all details of past electoral bond transactions to the Election Commission of India. This data is to be published on the Commission’s website, ensuring public access.
This ruling sets a precedent for future electoral reforms. It is now expected that a broader legal framework will be introduced to ensure clean, accountable, and transparent political funding in India.
Conclusion
The Supreme Court’s ruling on electoral bonds is a major step toward restoring transparency in India’s electoral process. By prioritizing the citizen’s right to know and restoring limitations on corporate donations, the judgment reinforces the core democratic values of equality, accountability, and fair representation.
RELATED Blog
0 comments