An unconstitutional bond unravels in a big win for the right to information

The SC judgement striking down electoral bonds as violative of Article 19(1)(a) of the Constitution will be a shocker to political parties, though not entirely unexpected. Replacing cash donations with a bank-issued bond that did not have details of payer and payee was hardly a transparency enhancement and always ran the risk of being shot down. This is exactly what the SC did when it adjudged the bonds to be violative of the right to information and thereby the principles of free and fair elections, notwithstanding the objective of curbing black money.

Also struck down as ultra vires, were the amendments to the Representation of Peoples Act(which exempted such bonds from being reported), the Companies Act (which overrode the ceiling imposed by Sec 182 on political donations) and the amendment to Sec 13A of IT act (which gave tax exemption to purchasers for such donations). The immediate onus is on SBI which has to not only stop further sales but also reveal details of all the bonds issued and encashed since April 2019 (the extent of detail remains to be seen). For the beneficiaries they would need to return unencashed bonds to the purchasers.

It was always a test between the Government’s stand of the bonds’ twin objectives (curbing the use of black money in elections and protecting the identities of parties in the interests of safety) and the  superiority of the right to information and transparency. That the latter prevailed is a triumph of the constitutional rights but the taint of unconstitutionality hangs over the monies collected since 2019.

The donations made in excess of permitted limits, the income tax breaks availed by purchasers, the non-disclosure in annual reports and financial statements are issues that could crop up in the light of its being declared unconstitutional. With SBI being the sole bank tasked with collecting electoral bonds, the job of transparency is perhaps easier but clearly the need is for a clean and transparent way to finance electoral campaigns, perhaps on the lines that the USA has.