Electoral Bonds Scheme Deemed Unconstitutional by Supreme Court

• 15 Feb 2024

In a landmark ruling, on 15^th February, 2024, the Constitutional Bench of the Supreme Court, led by Chief Justice unanimously declared the electoral bonds scheme unconstitutional, citing a violation of Article 19(1) (a). Additionally, amendments allowing corporate political funding were deemed unconstitutional.

Key Points

• SBI Ordered to Disclose Donor Details: The Bench directed the State Bank of India, the exclusive issuer of electoral bonds, to cease issuance immediately and disclose donor details, along with the recipient political parties, by March 6, 2024.
• Transparency Mandated for Electoral Bond Information: The Election Commission was instructed to publish electoral bond details on its website by March 31, 2024, ensuring transparency in political funding.
• Refund for Unencashed Electoral Bonds: Political parties were directed to return unencashed electoral bonds to the bank for refunds to the purchasers.
• Key Amendments Struck Down: The court nullified significant amendments facilitating the introduction of the electoral bonds scheme, including those exempting political parties from maintaining detailed contribution records.
• Amendment to Companies Act Deemed Arbitrary: The amendment to Section 182 of the Companies Act, 2013, was found to be manifestly arbitrary, treating corporate and individual contributions equally, in violation of democratic principles.
• Background and Legal Challenges: The electoral bonds scheme, introduced in 2018, faced legal challenges from various quarters, including Congress, Communist Party of India (Marxist), and the Association for Democratic Reforms, arguing against anonymous political donations.
• Government's Defense: The government defended the scheme, asserting the necessity of anonymity to prevent retaliation and ensuring transparent funding through legitimate channels.