Power Play of Electoral Bonds

31st December, 2024 - 9:04 am Categories: News & Updates 0 Comments

Introduction

After 7 years of introduction of the electoral bonds schemesupreme courtstruck down the act on February 15th, 2024, it was brought down by the NDA government in 2018, former minister Arun Jaitley introduced the bill in the parliament by describing this scheme will provide confidentiality, privacy to the donor this bond din’t have any kind of personal information of thedonor on it , are salient features of the scheme and aim for the curbing of black money , Legalize and formalize the political donation by corporate entities and goal to bring that funds under the ambit of taxation and aim to eradicate illegitimate methods of political funding , cleansing of the political funding for the conducting of free and fair election Evolution of the funding to the political parties by corporate entities is the controversial matter, being criticized, improvised through various amendments in wide legislation Through Finance act 2016 , parliament allow the foreign companies , who having the majority share in the Indian companies to donate to the political parties .Later through the amendment of the Finance act , 2017 , parliamentarians had provided ultimate, absolute rights of privacy to the donors and donee , by the non disclosure of the donor name , amount they contributed , also gave a right of unconditional support i.e by uplifting the cap / upper limit for the donation, set aside the restrictions Section 135 of the Finance act , 2017 amended the section 35 of the RBI act allowed any authorized bank to circulate , sell electoral bonds .Section 137 of the same act , amended the section 29 C of Representation of peoples act that is, if the political fund received fund received by the political party is less than twenty thousand rupees in the same financial year , then the party is not compelling not disclose that funds which werereceived them in the , contribution report. Previously section 182 of the Companies act restricts the companies from donating more than the 7.5 percentage of three years net profit of the companies, this impliedly compel that the company should be existence for three years , should be in profits , that to only 7.5 percentage of net profit can be donate, now it has varies to unlimited donation. Also amended the section 13 A of Income tax act, that no donation more than 2000 will be allowed to give in the form of cash , political parties should file income tax under section 139(4B) .Now this restriction has been removed .By the way of amending this acts , legislative set a platform for the in institution of electoral bond scheme 2018 India is the first country to introduce electoral bond , the bonds should be issued in the bank with in the period of 15 days in order to encash the bond , other wise those funds will go to the P.M care fund. To qualify the party to with draw the funding it should be get atleast 1 percentage of votes in the last general elections either in the house of people or in the state assembly elections

ANALYSIS ON THE JUDGEMENT

Association for Democratic Reforms and Communist Party of India (Marxist) challenged those amendment through writ petition under article 32 of constitution as it violative of the voters fundamental right of right to information regarding the political funding, petitioners in this case argued that this amendments will increase the non transparency of the funding , Will leads to the increase of shell companies, leads to the quid pro quo agreement, hamper the free and fair election , domination of monetary or corporate hands in Indian politics, political inequality , one man one vote, corruption , legitimating the illegitimate in the huge scale.

Counsels on behalf of the Union of India argued that , this electoral bonds scheme will help in the curbing of black money, transparency in donation , where before corporate companies used to follow illegitimate ways to donate , and also contended disclosure of information leads to the violation of the privacy to the purchaser of the bonds That constitutional bench of supreme court includes of the.

• Y.Chandrachudu CJI
• Sanjiv Khanna J
• R.Gavai
• Manoj Mishra J
• B.Pardiwala J

Supreme court builds it’s judgement or conclusion on 2 major issuesWhether unlimited funding by the corporate entities violate the article 14 of the constitution or not,as it leads to the unfair election?

Whetheramendment tothesection 29(c) ofthe Representation of people’sact , section 182 (3) of the Companies act , section 13(b) of the Income tax act , as the non disclosure of the act leads to the infringement of fundamental right provided under section 19 (1) (a) of the Indian constitution In this case DY Chandra chud passed the judgement on behalf of the majority of the bench except Justice Khanna.By referring to the cases of union of India vs association for democratic reforms 2002 ¹and Pucl vs union of India 2003 ², in this cases court held that voters were empower to the information regarding the political leaders and candidates. In the present case DY Chandrachud describes that this right not only extends to the political candidate but this right also extended to the political parties as voters are associated to any political parties based on their ideology , also referred cases of State of U.P vs Raj Narayan³ , S.P .Gupta vs Union of India ⁴court held that right to information is essential element in framing of the views in politics , He framed this judgement for establishment of importance of the right to know information.

There is larger inequality exist in India that deep pockets will influence the policies taken by the government .Winning parties will make the policies in favor of the donation contributors to show their faithfulness and loyalty towards the donors, this will directly the Quid pro quo agreement, police will influenced by the the corporate bodies . Then governance hand over to private interest .If the voter know about the information of the donor then he can analyze the malicious intention of an political party in making any moves. He will be cautious while electing them Here supreme court applied double proportionality test as here the matter is of two rights , right to information and right to privacy .Central Public Information Officer, Supreme Court of India v Subash Chandra Agarwal in this cases court court laid down the three test for ensuring of the rights, If constitution don’t decides any right prevail over the other rights , then this test will be applicable

1. As the measure is suitablenexus in suitability of thetwo rights

2. Whether that right is less restrictive for the effective means of achieve goal of public welfare

3. Whether that measures had disproportionate impact on the both of the rights

But in the first test there is no reasonable nexus between the 2 rights as in the presence of one right achievement of the other will be impossible to sustain , as both the right cannot sustain at a time, if the information of the purchaser of the bond was published, privacy will be dismissed , both can’t sustain at same time. still thesupreme court had went with the remaining two tests There are less restrictive methods are there with the legislative ,but legislative choose this as ,if it is just to restrict the black money , then donation can be made through the cheques , DD , bank transfers. Though after the failure of the primary test of the double proportionality court had a opportunity to conclude their conclusion , but court still choose to explain the second part of the test.

Justice Khanna came to the same conclusion but with the different analysis , he stated that government who are in the governance will try to investigate the purchaser information through his power and authority this will leads to violation of the the main objective, purpose of the scheme that i.e transparency. There is allegation that each electoral bond had unique identity number , through this political parties may know the purchaser. Justice Khanna also stated that amendment of unlimited funding which allows through the section 182 of the companies act is arbitrary, which came from the test of proportionality than from the than test of arbitrary. He said that third and fourth test of the proportionality should read strictly, that are minimal restriction and balance test , thosewere not satisfied in this case.

He referred Shayara Bano v. Union of India ⁵, Joseph Shine v. Union of India ⁶, E.P. Royappa v. State of T.N⁷ and stated that ,Legislative provision will be examined on the ground of the manifested arbitrary . Arbitrariness will be one of the ground for the striking down the legislative provision , if it violative of the fundamental right under the article 14 of the constitution. Regarding the right of privacy , judge mentioned that public limited companies have less scope for the privacy as it functions and actives will be watched by it share holders , so there will no point in hiding the contributions of the companies , he also held that right to information of the voters will prevail over the privacy , individual can claim for the privacy but not the companies as a entity.

The Intention of corporate entities is must to earn profit or to establish their future growth but not to fund the political parties to the extent of their maximum , as this scheme permits the corporate entities to fund even if the company is in the losses , this might spoil the intention of the political funding that to show support to the political parties Funding beyond the capacity will leads to the corruption or illegitimate growth of the companies and even the share holders of the entities will be at risk .If the organization funding political parties even in its losses either it will be shell company i.e just to transfer the illegal money or giving bribe for unauthorized way of establishing their business growth.

There was a maximum spending limit of money on the election expenditure, then why there should be no limit on the funding , by what ways parties will utilize the money other than the election expenses, this unlimited way of funding leads to the opening doors for the unlawful means by the political parties for unstabilizing the government .Unlimited donation of funds leads to the Quid pro quo agreement will be made by the companies, it is legalization of the illegal things.

Prior to 2017 amendment under RoPA , there is the threshold set by the supreme court , if the donation worth is less than 20,000 then they will be exempted from the disclosure , now supreme might increase the amount of threshold for corporate entities and there should be restriction in showing the financial support to your favourite political party , if some one want to donate more than the threshold amount uplift the privacy , will be comes under the disclosure .Though it was developed for the legitimate goal and the purpose curbing black money ,but non disclosure will be leads to the non satisfying of the fundamental rights of the voter.

On others side there will be the external pressure to the business entities due to the disclosing of the funding details to the public , will leads to the fluctuations in the functions, turn over of thecompanies , which are directly depend on the public get impacted, as we have saw mere anticipation of the election results leads to the speculation and crash of the securities markets majorly in particular companies .It shows that corporate entities will be seen as always as a supportive entity of some political parties. But as the matter of the publicwelfare voter rights will prevail Continuation of the this electoral bonds will spoil the transparency , like things which are illegalare now becamelegal. But restrictionthis willagainleads to the illegal way of funding. Though supreme court strike down the act , there will be higher chance of possibility that , corporate bodies will discover the innovative illegal method for the funding the political parties or they might discover traditional illegitimate ways to be hidden from the public. Before the 2018 , companies used to create the shell companies to make their donations because of the restrictions , but due to the disclosure of the funding details , again they will research the methods for the growth. Basically people cast their votes on the basis of the parties than the individual candidates. Even schedule X of the Indian constitution dint gave the individual candidate to change the parties under anti defection laws , which impliedly tells that candidate were elected because of their party reputation , image of the political parties will make a weak candidate win , still the candidates are used to disclose their assets and liabilities in the election affidavit, then the political parties who , play a prominent role in elections can’t be exempted from showing their assets and liabilities and funds they acquired. Should show the accountability for the donations received. Supreme court left the question on accountability of the funds which were received by the political parties till date . Investigation commission should be appoint on the malicious or doubtful transactions. Supreme court didn’t discuss an alternative solution in which sustainability of the both fundamentalright and it should be a ultimate method for curbing of theblack money

CONCLUSION

Supreme court by concluding to the judgement stated that , SBI can no more issue the electoral bonds and the bonds which were not encashed will be return back to the purchaser of the bond . Court order the State Bank of India to publish the data of the purchasers of the bonds in their website .Provide the same to the election commission of India .As the matter of right supreme court upheld the voters right that is public right over the corporate privacy right , it not only merely the upholding of the fundamental right, it is the witness of the democracy and power of the judicial review that no statue will be supreme than the fundamental rights of the citizens of the country and also up holds the faith , believe, trust on the apex court of the country. But it failed to come up with the alternative solution for the problem , secrate way of donations will start again, black money will rise to peaks , freedom of speech and expression of financially dominant individuals had be restricted. Even ultimate abolishment of political funding is also a considerable choice infront of the supreme court or Legislative should come come up with the sustainable idea

Author: BACHU AMITH, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

REFERENCES

9. Union of India Association for Democratic Reforms , (2002) 5 SCC 29
10. People’S Union Of Civil Liberties vs Union Of India & Anr , 2003 (4) SCC 399 3 State Of U.P vs Raj Narain & Ors,1975 (4) SCC 428
11. P. Gupta vs Union Of India & Anr ,1881 (4) SCC 87
12. Shayara Bano vs Union Of India And Ministry Of Women, 2017 (9) SCC 1
13. Joseph Shine vs Union Of India, 2019 (3) SCC 39
14. P. Royappa vs State Of Tamil Nadu ,1974 4 SCC 3
15. https://www.lextalk.world/post/supreme-court-s-electoral-bonds-judgment-an-analysis-on- the-scale-of-justice-tilting-towards-right
16. https://scobserver.in/journal/the-making-and-unmaking-of-the-electoral-bond- scheme-part-2/
17. https://scconline.com/blog/post/2024/02/20/analysis-and-anatomy-of-electoral-bond- judgment/
18. ¹ Union of India Vs. Association for Democratic Reforms and Another, (2002) 5 SCC 29
19. ² People’S Union Of Civil Liberties vs Union Of India & Anr , 2003 (4) SCC 399
20.  ³ State Of U.P vs Raj Narain & Ors,1975 (4) SCC 428
    ⁴ S.P. Gupta vs Union Of India & Anr ,1881 (4) SCC 87
21. ⁵ Shayara Bano vs Union Of India And Ors. Ministry Of Women, 2017 (9) SCC 1
22.  ⁶ Joseph Shine vs Union Of India, 2019 (3) SCC 39
23.  ⁷ E. P. Royappa vs State Of Tamil Nadu ,1974 4 SCC 3