BREAKING: SC Strikes Down Electoral Bonds Scheme For Violating Citizen's 'Right to Information'

New Delhi: In a major ruling, a five-judge Constitution bench of the Supreme Court on Thursday delivered a unanimous verdict on a batch of pleas challenging the legal validity of the Central government’s Electoral Bond scheme which allows for anonymous funding to political parties.

The apex court noted that electoral bonds are violative of the right to information (RTI) and Article 19(1)(a) and held that such a scheme has to be struck down for being ‘unconstitutional.' 

Pronouncing the judgment, the Constitution bench comprising Chief Justice DY Chandrachud, Justices Sanjeev Khanna, BR Gavai, JB Pardiwala, and Manoj Mishra, pronounced that political parties are relevant units in the electoral process and information about the funding of political parties is essential for electoral choices.

“Political parties are relevant units in the electoral process. Information about funding of political parties is essential for electoral choices,” said CJI DY Chandrachud. “Financial support to political parties can lead to quid pro quo arrangements,” he added. 

He further noted that the Electoral bonds scheme is not the only scheme to curb black money as there are other alternatives. “Infringement to the right to information is not justified by the purpose of curbing black money.”

The Constitution Bench had reserved the decision on 2 November 2023 after a hearing for three days. 

SC Asks Bank to Stop Issue of E-Bonds 

The apex court, while pronouncing the order, directed the State Bank of India, the only authorized bank to issue or encash electoral bonds, to forthwith stop issuing any such bonds. 

It further ordered that SBI shall furnish the details of Electoral Bonds encashed by the political parties. “SBI shall submit the details to the Election Commission of India and ECI shall publish these details on the website,” ruled SC. 

By March 31, 2024, the Election Commission is bound to furnish the details on its website, according to the SC order. 

What Are E-Bonds? 

Introduced by the government on January 2, 2018, as a solution to replace cash donations and enhance transparency in funding to political parties, Electoral bonds are such financial instruments that individuals or corporate entities can purchase from a bank and present to a political party, which can subsequently redeem them for funds. 

Currently, the State Bank of India (SBI) is the only government-authorized bank that can issue or encash electoral bonds.

Notably, through electoral bonds, political parties can get funding discreetly without revealing the identity of the donor. Under provisions of the scheme, any citizen of India or entity incorporated or established in the country can purchase electoral bonds.

The electoral bonds are available in various denominations, ranging from ₹ 1,000 to ₹ 1 crore, and can be obtained at all branches of the State Bank of India (SBI). These donations are also interest-free.

One of the key features of electoral bonds is the anonymity they provide to donors. When individuals or organizations purchase these bonds, their identities are not disclosed to the public or the political party receiving the funds. However, the government and the bank maintain a record of the purchaser's details for auditing purposes, ensuring the legitimacy of funding sources.