New Delhi: The Electoral Bond Scheme (EBS) infringes upon a voter’s Right to Information (RTI), which includes information of financial contributions made to political parties. On this note, the Supreme Court Thursday struck down the seven-year-old scheme, which drew controversy for promoting anonymity and non-transparency in political funding.
A five-judge Constitution Bench led by Chief Justice D.Y. Chandrachud also declared as unconstitutional a raft of amendments that were made to a batch of laws to float the scheme
The laws modified via the Finance Act, 2017 were Section 29C of the Representation of People’s Act (RPA), which stipulated that the political party need not disclose financial contributions received through electoral bonds; Section 13A of the I-T Act that exempted a political party from maintaining record of contributions received through electoral bonds; and Section 182 of the Companies Act, 2013 that was changed to do away the earlier requirement of detailed disclosure of contributions by companies to political parties in their profit and loss.
The amended Section 182 required the companies to only disclose the total amount they contributed, without disclosing specific particulars about the beneficiary.
Through the unanimous verdict, the bench disagreed with the Centre’s argument that it was justified to infringe the voter’s Right to Information for a larger purpose of curbing black money in electoral financing.
According to the bench, the EBS was not the “least restrictive means” to impinge upon this right, which, it held, is “essential for a voter to exercise their freedom to vote in an effective manner.” This means it is not the only way to curb black money.
The top court mooted for an alternative system given under the Income Tax law, which provides for an electoral trust, to fulfil the purpose of eradicating black money from political funding. It said financing through electoral trust would have minimal impact on a voter’s Right to Information when compared to the impact of EBS on it.
The bench acknowledged informational privacy would include information about a citizen’s political affiliation. But EBS, it said, does not balance the two competing rights – Right to Information of a voter and Right to Privacy of a donor. Rather, it concluded, EBS tilted the balance in favour of the right to informational privacy.
While CJI Chandrachud wrote for himself and Justices B.R. Gavai, J.B. Pardiwala and Manoj Mishra, while Justice Sanjiv Khanna wrote for himself
“The Electoral Bond Scheme and the impugned provisions to the extent that they infringe upon the right to information of the voter by anonymizing contributions through electoral bonds are violative of Article 19(1)(a),” CJI Chandrachud said, reading out his opinion.:
Article 19 (1)(a) of the Constitution deals with freedom of speech and expression.
Also Read: 10 important observations SC made while striking down electoral bonds scheme as unconstitutional
Observations on EBS
Thursday’s judgement invalidating EBS furthers the Right to Information jurisprudence developed over years by the top court in the context of electoral politics. The verdict traces the two phases from which this jurisprudence emanated through judicial pronouncements.
It went on to hold that the RTI guaranteed under Article 19(1)(a) includes information of financial contributions made to political parties. Such funding details are essential information for the voter given that political parties are central to the electoral system, the bench held.
Existing legislations, it said, recognise the inextricable link between political party and candidate, as voters associate voting with political parties because of the centrality of symbols in elections, and the party that secures a majority forms the government.
Discussing the two phases of the RTI jurisprudence, the bench said it focussed on the close relationship between open governance and information in the first phase, premised on the principles that citizens have a duty to hold the government accountable for its actions and inactions. And, they can effectively do this only if the government is open and not closed in secrecy.
Importance of information to form views on social, cultural and political spaces was recognised in the second phase. This led the court to expand RTI’s ambit by not just limiting it to information about state affairs or public information, but extending to include information necessary for furthering “participatory democracy in other forms.”
Talking about the “nexus” between money and politics, the bench emphasised on the need for a voter to be informed about funding of political parties. A deep association between money and politics contributes to political inequality, which arises due to the difference in the ability of the people to influence political decisions owing to economic inequality, it said.
Political contributions give a “seat at the table to the contributor” as it enhances the latter’s access to legislators. This access can translate into influence over policy making, thus leading to quid pro quo arrangements in the form of introducing a policy change or granting a licence to a person who makes contributions to a ruling party, the court said.
It discussed the concept of electoral democracy and how the Constitution guarantees political equality through ‘one person, one vote’ principle and the SC/ST reservation in Parliament and State assemblies.
Information about political funding would “enable the voter to assess if there is a correlation between policy making and financial contributions”, the court held.
Applying the doctrine of proportionality (usually invoked to test constitutional validity of a law or policy), the court declared EBS to be violative of Article 19(1)(a).
It further noted that RTI can only be restricted based on the grounds that are spelled out in Article 19(2), which talks about reasonable restrictions on free speech and expression.
While the Centre had justified EBS saying that it would curb proliferation of black money, the court said its purpose cannot be traced to any of the grounds mentioned in Article 19(2).
Relying on earlier SC judgements, the bench said that “curbing black money” cannot be interpreted as maintaining “public order” – one of the grounds for imposing reasonable restrictions on free speech and expression. It added that public order means public safety and tranquility and “disorder involving breaches of local significance in contradistinction to national upheavals, such as civil strife, war, affecting the security of the State.”
Moreover, applying the principle of doctrine of proportionality, the bench opined there are other means to weed out black money such as banking channels and Electoral Trust. EBS, it said, is not the least restrictive means to achieve the purpose behind the scheme.
Also, the court said all contributions through cash cannot be assumed to be black money. Further, the existing legal regime itself provides other alternatives such as contributions through cheques, bank drafts, or electronic clearing system.
Touching upon Electoral Trust as another alternative for electoral funding, it said that the objective of curbing black money can be achieved through this process outlined in the I-T Act where a trust approved by the Board in accordance with central government schemes.
“In summary, an Electoral Trust is formed only for collecting political contributions from donors. An electoral trust can contribute to more than one party. In this manner, the purpose of curbing black money in electoral financing will be met. At the same time, there would be no fear of consequences from political opponents because the information as to which political party was made is not disclosed,” the top court said.
(Edited by Tony Rai)