Supreme Court's verdict in the Electoral Bonds Scheme case

SC strikes down electoral bonds scheme as ‘unconstitutional’: What grounds did the verdict rely upon?

On Thursday, the Supreme Court's Constitution Bench declared the electoral bonds programme to be "unconstitutional," invalidating it.

In Short

• Supreme Court scraps electoral bonds scheme, 7 years after introduction
• Five-judge Constitution Bench deems scheme "unconstitutional"
• Court directs SBI to not issue any more electoral bonds

The electoral bonds programme was declared "unconstitutional" by the Supreme Court on Thursday, setting in motion a historic ruling. A five-judge Constitution Bench rendered the decision, which comes only months before the Lok Sabha elections and ends a controversial political fundraising scheme that has been questioned from the start.

The State Bank of India (SBI), the bank issuing the bonds, was ordered by the Supreme Court to stop doing so immediately.

"The electoral bonds programme is unlawful and violates Article 19(1)(a). The Companies Act Amendment is unconstitutional. Election bonds would no longer be issued by the issuing bank, the Chief Justice of India, DY Chandrachud, declared in the ruling.

From the scheme's interim order in 2019 until the present, the top court has ordered SBI to give the Election Commission of India (ECI) comprehensive records of all electoral bond donations received by political parties.

Within three weeks, SBI is supposed to provide detailed data to the ECI. The Supreme Court has directed the ECI to post the information on its official website as soon as it is gathered, guaranteeing openness and public access to the data.

"SBI will provide information about electoral bond donations as well as information about the political parties that received the contributions. The SBI will provide information about the electoral bonds that the political parties have cashed. The Chief Justice stated the SBI would provide the information to the ECI within three weeks, and the ECI would then post the information online.

The goal of the 2018 introduction of the electoral bonds programme was to improve political donation transparency. Critics countered that the scheme's anonymity encouraged corruption and threw off the fair playing field for political parties.

The modifications made by the Finance Act 2017 that established the electoral bonds programme were contested by three petitioners who filed a case with the Supreme Court. They claimed that voters' right to know is violated and that the secrecy surrounding these bonds lessens transparency in political funding. They added that contributions from shell corporations are accepted under the plan.

The program's central government defended it, claiming that it makes sure that only legal funds are used to finance politics through the appropriate banking channels. They said that by keeping donors' identities a secret, political parties are prevented from taking revenge on them.

However, the court expressed reservations about the scheme's legalisation of party kickbacks and questioned the government about its "selective anonymity" during the hearing. The bench also questioned the removal of the cap on corporate donations to political parties, which allowed them to make larger contributions than they had previously.