'Unconstitutional': SC scraps electoral bonds

Orders EC to disclose donors, amount and recipients by March 13

- BHAVINI MISHRA & ARCHIS MOHAN

The Supreme Court on Thursday struck down the electoral bonds scheme, calling it "unconstitutional" and "arbitrary".

It ordered State Bank of India (SBI), the issuing bank, to immediately cease issuing electoral bonds, share the names of the purchasers, value of the bonds and their recipients with the Election Commission, and asked the latter to disclose those details by March 13.

The court held that the scheme infringes on citizens' right to information about potential quid pro quo arrangements, and ruled that an amendment to Section 182 of the Companies Act, which permitted Indian companies to donate any amount to a politically, was unconstitutional. A five-judge Constitution Bench, led by Chief Justice of India D Y Chandrachud, unanimously ruled that the electoral bonds scheme and preceding amendments to the Representation of People Act, Companies Act, and the Income Tax Act violated voters' right to information about political funding under Article 19(1)(a) of the Constitution. It said that corporate contributions have a more profound impact on the political process than individual donations.

"Contributions by companies are purely business transactions. The amendment to Section 182 of the Companies Act is manifestly arbitrary for treating companies and individuals alike," it said.

The apex court also criticised the amendment for failing to distinguish between lossmaking and profit-making companies. "Before the amendment, loss-making companies were not able to contribute. The amendment does not recognise the harm of allowing loss-making companies to contribute due to quid pro quo. The amendment to Section 182 of the Companies Act is manifestly arbitrary for not making a distinction between lossmaking and profit-making companies," it said.