Recently a five-judge bench of the Supreme Court consisting of CJI D.Y. Chandrachud, Justice Sanjiv Khanna, Justice B.R. Gavai, Justice J.B. Pardiwala and Justice Prashant Kumar Mishra unanimously declared electoral bond scheme as unconstitutional citing the violation of the right to information as enshrined in Article 19(1)(a) of the Indian Constitution. Electoral Bond Scheme (EBS) was introduced by the union government in 2017-18 in the Union budget.
Under this scheme, any individual who is a citizen of India or any entity incorporated or established in India can purchase the electoral bonds from the authorized SBI branches in India either individually or jointly with others and subsequently can donate to the political parties of their choice, which are registered under section 29A of the Representation of People Act, 1951 and secured at least 1% votes polled in the recent Lok Sabha and State Assembly election. Which the parties can encash them within 15 days and if failed to do so, the bonds will be deposited in the PMNRF. These bonds are the interest free bearer instrument akin to promissory notes, devoid of buyer or payee names, with no recorded ownership information, thereby presuming the holder (political parties) as its owner. There is no restriction on the number of electoral bonds that an individual can purchase and donate. The anonymity of the buyer and related information regarding the donations clearly violated Voter’s Right to information. The scheme was challenged in the apex court and during the course of hearing the Attorney General of India R. Venkataramani contended that citizens have no right to know the sources of electoral bonds funds. This argument interestingly started the whole debate of right to information vis-à-vis anonymous funding to the political parties.
The Right to Information of a Voter
The five-judge bench while tracing the voter’s right to information under Article 19 (1) (a) posed a broad question to itself. i.e. Whether the infringement of the right to information of the voter is justified while protecting the privacy of a donor?
The bench traced and divided the right to information to citizens into two phases. In the first phase, the court discussed the scope of the right to information in affirming the public interest and good governance. The Court referred to the State of Punjab v. Sodhi Sukhdev Singh case, which addressed the disclosure of documents concerning state affairs, highlighting the clash between public and private interests. In discussing the interpretation of Section 124 of the Indian Evidence Act, 1872, the apex court noted that when one party requests document disclosure and it’s denied citing potential harm to public interest, it underscores the tension between private and public interests. The disclosure of information aids the party to the proceedings. But beyond that, disclosure also serves the public interest in the administration of justice.[1]
Further court cited the State of Uttar Pradesh v. Raj Narain[2]where it was observed that “the people of this country have a right to know every public act, everything that is done in a public way, by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing. The right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary, when secrecy is claimed for transactions which can, at any rate, have no repercussion on public security” [3]
Therefore, in the first phase of the right to information it highlighted the close relationship between the right to information and open governance by which citizens have a duty to hold the government of the day accountable for their actions and inactions and this is possible only when the government is not clothed in secrecy.
In the second phase of tracing the right, court discussed the case of Union of India v. Association for Democratic Reforms[4] in which the court traced the right of voters under Article 19 (1) (a) to have information about the antecedents, including the criminal past of candidates contesting elections. In this case court held that voters have a right to be sufficiently informed about the candidates so as to enable them to exercise their democratic will through elections in an intelligent manner. Such information is necessary for elections to be conducted in a ‘free and fair’ manner.
An argument was made by the union that information about a candidate contesting elections cannot be compelled to be disclosed as it is not public information. This argument is more or less same as to the argument made by the AG in the case of challenge to EBS. This argument was outrightly rejected by the three-judge bench of the Supreme Court and held that information regarding the candidates is required to disclose is only limited to aiding voters in making an informed decision regarding the candidates in whose favor they can vote.
In addition to this, in PUCL v. Union of India[5] Justice M.B. Shah interpreted and held that the right to information of a voter is an important facet of Article 19 (1) (a).[6] Justice Venkataramana Reddi in his concurring opinion observed that there are two facets of the right to vote. First is the formulation of an opinion about candidates, and second is the expression of choice based on the formulation of the opinion about candidates by casting vote.
Thus, it can be deduced from both the judgments (ADR and PUCL) that the action of voting is a form of expression protected by Article 19 (1) (a) which can only be exercised freely when the voters possess the relevant information regarding the candidates contesting the election.
The one thing that should be noted is that both these judgments were related to the information about the candidates, but the focal point of the EBS was registered political parties. While noting this court observed that it cannot be concluded that the decision of voting is solely based on the capabilities of individual candidates and not the political parties. Voters cast their votes on two considerations: the capability of the candidate as a representative and the ideology of pollical party. The candidates are allotted the symbols of the political parties which distinguishes them from the independent candidates. Also, voter considers the electoral manifesto and other major policies of the political party which would be implemented if they win the election. Therefore, a political party is a relevant political unit in the democratic electoral process in India.
Considering all these, the court concluded that the information about the funding of the political parties is essential for a voter to exercises their right to vote in an effective manner. The EBS infringes the right to information of the voter under Article 19 (1) (a) by anonymizing the funding of the political parties through electoral bonds. The five-judge bench applied the proportionality test[7] to determine if the violation of the fundamental right is justifying. Proportionality test can be defined as follows.
- The measure restricting right must have a legitimate aim
- It must be a suitable means for achieving the aim.
- It must be least restrictive
- And it must not have a disproportionate impact on the right holder
Court concluded that EBS does not fulfil the least restrictive means test. It is not the only means to curb the black money in electoral funding. There are other means which are least restrictive which do not impact disproportionately on the right to information. Because the EBS anonymize the donor and the voter’s right to information regarding the candidates and political party is infringed.
Financing of the Political Parties
Political parties need money to reach out to the voters through campaign, road shows and other methods. For this they resort to the voluntary contributions made by the individuals. The Union government introduced the EBS and cited the reason for the introduction of this scheme was that a major portion of the contributions received by the political parties was from unknown sources. It resulted into the circulation of black money. This scheme was introduced to curb the black money and to regulated the financing of the political parties. But the scheme was challenged in the SC for the same reason it was introduced by the Union. i.e. anonymity of the donor.
EBS also lead to the unlimited corporate funding of the political parties. Although the Companies Act, 1956 does not have any provisions related to the political contributions by the companies but what was surprising that many companies made contributions to the political parties by amending their memorandum.
The Supreme Court highlighted that the electoral bond scheme violated citizens’ right to information regarding possible quid pro quo. The removal of limits on corporate contributions to political parties allowed corporations to conceal the reasons for their financial contributions.
The elimination of restrictions on corporate donations could lead to unlimited amounts being donated to political parties, providing corporations with a convenient channel for influencing policy-making and electoral processes. EBS has potential to provides pathways to shell companies to dilute the democratic electoral process.
An argument was made by the Union that Information about financial contributions to political parties is not disclosed to protect the contributor’s informational privacy to political affiliation. The Court dismissed this argument, emphasizing that “Without privacy regarding political affiliation, the freedom of political expression is compromised. Revealing one’s political beliefs can be exploited by the State to stifle dissent and by individuals to discriminate in employment or subject them to online harassment. Moreover, the absence of privacy regarding political affiliation would particularly harm those whose views diverge from the mainstream.” Safeguarding informational privacy concerning political affiliation is essential for preserving both the freedom to express political beliefs and the ability to participate in electoral processes.
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Court observed that we are unable to see how the disclosure of information about contributors to the political party to the contribution is made would infringe which political expression. Hence, Court concluded that disclosing the information about the contributors would not infringe the privacy of the donor. Rather not disclosing the information would hamper the right to make an informed decision while casting vote. Not disclosing the information will violate the voter’s right to information under Article 19 (1)(a).
Conclusion
Former Finance Minister Arun Jaitley’s assertion regarding electoral bonds as a transparent mechanism for financing political parties and a vital component for ensuring fair elections in the nation has failed to stand the test. Instead, it introduces an element of secrecy to donor transactions, contradicting its intended purpose. Moreover, the privilege of anonymity in electoral bonds was biased, restricted only to political parties.
Electoral bonds violated citizens’ fundamental right to information, imposing an unreasonable and irrational restriction on crucial public information at the expense of larger public interest. This undermined the fundamentals of transparency and accountability, making the political class less answerable and accountable. Withholding vital public information goes against the spirit of democracy and the rule of law.
The issue of anonymous funding to political parties still presents a complex challenge, as it intersects with concerns regarding electoral integrity, corruption, and the need for transparency in political financing but it cannot be tackled at the stake of the violation of other rights of a voter.
[1] See State of Punjab v. Sodhi Sukhdev Singh, (1961) 2 SCR 371 [Subba Rao J]
[2] (1975) 4 SCC 428
[3] Ibid, ¶74
[4] (2002) 5 SCC 294.
[5] (2003) 4 SCC 399
[6] (2003) 4 SCC 399 [18, 27]
[7] Modern Dental College & Research Centre v. State of Madhya Pradesh, (2016) 4 SCC 346
Author: Prachi
Juris Centre 