In January 2018, the Government of India had notified the Electoral Bonds Scheme 2018. It was touted as means for anonymous donation to political parties in India. The bonds were to be issued by the State Bank of India (SBI) in multiples of INR 1,000, INR 10,000, INR 1 lakh, INR 10 lakhs and INR 1 crore, and could be purchased by any Indian citizen or entity. The buyer could then donate the bond to any registered political party, which could encash it within 15 days. The identity of the donor and the recipient were not disclosed to the public, the Election Commission or the Income Tax Department.
The scheme was introduced to promote formal channels of political contribution by making such contributions routed through banks, rather than through cash which could be subject to misuse. The scheme provided for complete anonymity of both the donor and the receiver- the political parties.
Recently, in a landmark judgment dated February 15, 2024 in the mater of Association for Democratic Reforms & Anr. v. Union of India & Ors., the hon’ble Supreme Court of India (Supreme Court) declared the said scheme unconstitutional. The Supreme Court held that anonymity of donor and beneficiaries infringes the fundamental right to information guaranteed under Article 19(1)(a) of the Constitution. The Supreme Court also held that the right to privacy of political affiliation does not extend to contributions which may be made for political influence as a quid pro quo measure, rather than genuine support to any political ideology. The scheme has also been struck down for being arbitrary by removing any limits on the quantum of contribution by an entity and by removing the distinction between profit-making and loss-making entities.
The Supreme Court directed the SBI India to immediately stop issue of electoral bonds and submit to the Supreme Court all details including identity of the purchaser of the bond and the denomination of the electoral bond purchased and details of political parties which have received contributions through electoral bonds. The said details would be collated by the Election Commission and published on its website.
The matter has been listed on various dates in order to ensure compliance with the directions in the judgment dated 15.02.2024. Notably, Saraf & Partners filed an intervention application on behalf of an industry body at this stage, seeking protection from the grave prejudice which would be caused to industry bodies from the disclosure of bond details. However, the Court did not hear applications from the industry bodies and proceeded to order disclosure of the relevant bond details. The Election Commission regularly publishes various electoral bond data on its website which has been filed by SBI in the Supreme Court.