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Trust Donations Surge Post Electoral Bond Ban: ECI Report

January 19, 2025, 4:01 pm

The Supreme Court’s ruling in February 2024 that declared the electoral bond scheme unconstitutional has redirected corporate political funding to electoral trusts. The Election Commission of India (ECI) reports a notable increase in contributions through these trusts in the last financial year.

Key Highlights from ECI’s Report

Prudent Electoral Trust Leads Contributions
- Total Donations: Rs 1,075.7 crore (Rs 797.1 crore after February 15, 2024).
- Year-on-Year Growth: A near threefold increase from Rs 363.16 crore in 2022-23.
- Top Donors:
  - ArcelorMittal Nippon: Rs 100 crore
  - DLF: Rs 99.5 crore
  - Maatha Projects: Rs 75 crore
  - Maruti Suzuki: Rs 60 crore
  - CESC: Rs 60 crore
- Beneficiaries:
  - BJP: Rs 723.8 crore
  - Congress: Rs 156.35 crore
  - Bharat Rashtra Samithi (BRS): Rs 85 crore
  - YSR Congress: Rs 72.5 crore
Triumph Electoral Trust Contributions Surge
- Total Donations: Rs 132.5 crore (Rs 130 crore post-ban).
- Year-on-Year Growth: From Rs 0.5 crore to Rs 132.5 crore.
- Top Donors:
  - Cholamandalam Investment: Rs 50 crore
  - CG Power Industrial: Rs 30 crore
  - Coromandel International: Rs 25.5 crore
- Beneficiaries:
  - BJP: Rs 127.5 crore
  - DMK: Rs 5 crore
Jayabharat Electoral Trust Sees First Donations
- Total Contributions: Rs 9 crore in 2023-24 (previously nil).
- Key Donors:
  - Lakshmi Machine Works: Rs 8 crore
  - Super Sales India: Rs 1 crore
- Beneficiaries:
  - BJP: Rs 5 crore
  - DMK: Rs 3 crore
  - AIADMK: Rs 1 crore

Impact of the Supreme Court’s Ruling

The Supreme Court’s decision on February 15, 2024, marked a turning point in political funding. With electoral bonds banned, electoral trusts have become the primary medium for corporate donations to political parties.

Supreme Court Rejects SIT Probe into Electoral Bonds Claims

August 2, 2024, 4:02 pm

On Friday, the Supreme Court denied a series of petitions seeking a Special Investigation Team (SIT) probe into alleged quid pro quo arrangements between corporates and political parties via Electoral Bonds donations.

A bench comprising Chief Justice of India DY Chandrachud, Justices JB Pardiwala, and Manoj Misra stated that forming an SIT headed by a former judge of this court is premature, as normal legal remedies have not yet been exhausted. The bench emphasized that Article 32 intervention must follow the pursuit of available legal remedies and should not replace them.

The court also dismissed requests to direct authorities to recover Electoral Bonds donations from political parties or to reopen their income tax assessments, deeming such actions premature without a factual conclusion.

Advocate Prashant Bhushan, representing one of the petitioners, argued that there was a quid pro quo between corporates who bought bonds and the political parties that received the funds. However, the bench questioned why normal legal processes, such as lodging FIRs or filing private complaints, had not been pursued for these claims.

The petitions, filed by NGOs Common Cause and the Centre for Public Interest Litigation (CPIL), sought investigations into the funding sources of shell and loss-making companies contributing to political parties, claiming this was evidence of illicit quid pro quo arrangements. They argued that a comprehensive investigation under Supreme Court supervision was necessary to uncover the alleged scam involving significant sums.

The petitioners argued that the Electoral Bonds scheme, which allowed anonymous donations to political parties, involved complex conspiracies among company officials, government officials, and political parties, requiring thorough investigation by agencies like the ED, IT, and CBI.

In February, the Supreme Court had ruled against the Electoral Bonds Scheme, which had enabled anonymous political funding. The court ordered the State Bank of India to halt the issuance of Electoral Bonds and invalidated amendments to the Income Tax Act and the Representation of the People Act that facilitated anonymous donations.

SC to Review Plea for SIT Investigation into Electoral Bonds Quid Pro Quo Claims on July 22

July 19, 2024, 2:05 pm

The Supreme Court announced on Friday that it will hear petitions on July 22 seeking an investigation by a Special Investigation Team (SIT) into alleged quid pro quo arrangements between corporates and political parties through Electoral Bonds donations. Chief Justice of India DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, agreed to the hearing after advocate Prashant Bhushan requested an early date.

The petitions, filed by NGOs Common Cause and the Centre for Public Interest Litigation (CPIL), call for an investigation into the funding sources of shell companies and loss-making companies that have donated to political parties via electoral bonds. They also seek the recovery of these amounts from political parties if they are found to be proceeds of crime.

The petitioners allege a multi-crore scam involving Electoral Bonds, which they argue can only be exposed through an independent investigation overseen by the Supreme Court. They request an SIT probe supervised by a retired Supreme Court judge to unravel conspiracies involving company officers, government officials, and political party functionaries, along with officers from agencies like the ED, IT, and CBI.

The plea highlights that disclosed data, following the Supreme Court’s ruling against the anonymous Electoral Bonds scheme, shows that many bonds were part of quid pro quo arrangements by corporates to secure government contracts, licenses, protection from investigations, or favorable policy changes. Additionally, several pharmaceutical companies under regulatory scrutiny for substandard drugs also bought Electoral Bonds, allegedly violating the Prevention of Corruption Act, 1988.

In a February verdict, the Supreme Court struck down the Electoral Bonds Scheme, which allowed for anonymous donations to political parties, and ordered the SBI to stop issuing Electoral Bonds immediately. The court also nullified amendments to the Income Tax Act and the Representation of People Act that had permitted anonymous donations.

“Electoral bond was institutionalised corruption,” says Congress’ Manish Tewari

April 16, 2024, 11:13 am

Congress leader Manish Tewari criticized Prime Minister Modi’s defense of the Electoral Bonds scheme, calling it “the most institutionalised corruption” in a democracy. Tewari thanked the Supreme Court for striking down the scheme, stating, “When the electoral bonds were introduced in 2017, we completely opposed it because there was no transparency in it.

The Supreme Court’s decision confirms that the electoral bond scheme was opaque. In this case, both the person taking the money and the person giving it were not known. It has been proven by the decision of the Supreme Court that on one side go ED and CBI and on the other side come electoral bonds.” He added, “Electoral bond was the most institutionalised corruption that can be carried out in a democracy. I am thankful that the Supreme Court struck it down.”

Tewari also praised Rahul Gandhi, describing him as a serious leader targeted by the BJP out of fear. He mentioned Gandhi’s 3000 km foot journey from Kanyakumari to Kashmir in 1983, emphasizing his commitment to understanding the country’s issues. He said, “Someone has tried to understand the pain and suffering of this country by walking 3000 km. After Chandrashekhar, in 1983, Rahul Gandhi traveled on foot from Kanyakumari to Kashmir. If they target Rahul, it means they are afraid of him.”

Regarding the upcoming elections, Tewari confidently stated that the BJP would not win any seats in Kerala, Karnataka, Tamil Nadu, Andhra Pradesh, and Telangana.

In response, Prime Minister Modi defended the electoral bonds, stating, “I had never said that a decision taken cannot have a shortcoming.” He accused the opposition of spreading lies and claimed that when there is an honest reflection, everyone will regret the Supreme Court’s decision to strike down the scheme. He also mentioned that of the 16 companies who gave donations when action was taken by probe agencies, only 37 per cent of the amount went to the BJP and 63 per cent to opposition parties opposed to the BJP.

Rahul Gandhi Calls Electoral Bonds the Biggest Extortion Scheme, Masterminded by PM Modi

April 15, 2024, 11:28 pm

Congress leader Rahul Gandhi criticized the Electoral bonds as the “largest extortion scheme” globally, alleging Prime Minister Modi’s involvement. Gandhi’s comments followed PM Modi’s interview where he accused opposition parties of spreading falsehoods about the scheme, recently invalidated by the Supreme Court. Gandhi highlighted instances where donors received contracts or had inquiries withdrawn after contributing bonds, implicating PM Modi.

Additionally, Gandhi claimed that significant contracts were awarded to donors shortly after the BJP received funds through electoral bonds, insinuating corruption. In response, PM Modi defended the scheme, stating its intent to curb black money in elections. He acknowledged the need for improvement but emphasized its role in transparent political funding.

He also mentioned the bipartisan support the scheme received during parliamentary debates. The Supreme Court had earlier deemed the electoral bonds unconstitutional, prompting the State Bank of India to halt their issuance. The Election Commission of India subsequently published data on electoral bonds as per the court’s directive.

Nation paid price for BJP’s compulsion to get donations: Congress on electoral bonds

April 4, 2024, 2:48 pm

The Congress has launched a fresh criticism against the Bharatiya Janata Party (BJP), alleging that the BJP’s eagerness to secure donations led it to implement the electoral bonds scheme despite warnings from the Reserve Bank of India (RBI). Jairam Ramesh, a Congress leader, took to X to claim that the ruling party received over Rs 430 crore in donations from 33 companies that reported negative or nearly zero profit.

Jairam Ramesh also criticized the BJP, stating that there are “four primary channels of corruption in the electoral bond scam.” He mentioned, “There are four primary channels of corruption in the #ElectoralBondScam, and with each passing day, more examples emerge to confirm the shocking reality of the corruption which has engulfed this country through Narendra Modi’s encouragement.”

According to a media report shared by the Congress MP on X, 33 loss-making companies contributed electoral bonds worth Rs 582 crore, with 75 percent of the funds going to the BJP.

Ramesh claimed that Rs 434.2 crore was donated to the BJP by 33 companies that recorded negative or near-zero profit after tax between 2016-17 and 2022-23. He highlighted that the combined net losses of these companies exceeded Rs 1 lakh crore and that 16 of them paid no or negative direct taxes. Ramesh suggested that many of these companies might be shell companies created for money laundering purposes. Additionally, he noted that Rs 601 crore was donated to the BJP by six companies with positive net profits during the same period, but their donations exceeded their profits significantly, indicating possible fronting for other companies.

Regarding the Electoral Bonds Scheme, Ramesh recalled that the RBI had initially expressed concerns about its potential for money laundering. He criticized the BJP for proceeding with the scheme despite these warnings, stating, “The BJP’s compulsion to get chanda at all costs saw it go ahead with this scheme without heeding this astute advice. The nation has paid the price!”

EC releases Electoral bonds data revealing amounts assigned to each party

March 18, 2024, 10:39 am

The Election Commission of India unveiled information obtained from political parties regarding electoral bonds, as mandated by the Supreme Court. These details are believed to pertain to transactions preceding April 12, 2019.

According to the commission’s data, the ruling Bharatiya Janata Party (BJP) received the highest amount through electoral bonds since their introduction in 2018, totaling ₹6,986.5 crore. Notably, Future Gaming and Hotel Services emerged as the primary purchaser of these bonds, contributing ₹509 crore to Tamil Nadu’s ruling party, Dravida Munnetra Kazhagam (DMK), through this now-defunct payment mechanism.

Key points from the election panel’s data on electoral bonds include the significant contribution by Future Gaming, associated with Santiago Martin under the Enforcement Directorate’s scrutiny, constituting over 77% of the disclosed ₹656.5 crore received by the DMK. However, the beneficiaries of the remaining ₹859 crore worth of bonds purchased by Future Gaming remain undisclosed due to incomplete donor information from most political parties.

Apart from the BJP, other major beneficiaries since the inception of electoral bonds include the Trinamool Congress of West Bengal with ₹1,397 crore, followed by the Congress with ₹1,334 crore, and the Bharat Rashtra Samithi with ₹1,322 crore. The Biju Janata Dal (BJD) of Odisha ranks fifth, having received ₹944.5 crore, followed by the DMK at ₹656.5 crore and YSR Congress of Andhra Pradesh at nearly ₹442.8 crore.

While some parties like the DMK have disclosed donor identities, others such as the BJP, Congress, and TMC have not fully revealed this information, now made public due to a Supreme Court directive.

Additionally, various parties redeemed electoral bonds, including the Telugu Desam Party (TDP), Shiv Sena, Rashtriya Janata Dal (RJD), Nationalist Congress Party (NCP), Sikkim Krantikari Morcha, Samajwadi Party (SP), Akali Dal, AIADMK, National Conference (NC), and Sikkim Democratic Front.

The Aam Aadmi Party (AAP), while not providing a consolidated donation figure, received ₹65.45 crore as per SBI records. After additional disclosures post-filing with the EC, the total sum received by AAP amounts to ₹69 crore.

The EC’s latest data release encompasses scanned copies of disclosures from political parties, spanning numerous pages.

SC issues notice to SBI for not sharing complete data on Electoral Bonds

March 15, 2024, 1:22 pm

The Supreme Court raised concerns on Friday regarding the State Bank of India (SBI) failing to provide Electoral Bonds data with unique alphanumeric numbers, essential for bond identification. Consequently, notice was issued to SBI, with a response sought by Monday.

A five-judge Constitution bench led by Chief Justice of India DY Chandrachud highlighted SBI’s non-compliance with its March 11 order, which mandated the disclosure of all Electoral Bonds details, including purchase date, purchaser name, and denomination. The bench directed the Registry to issue a notice to SBI, returnable on Monday.

Additionally, the bench granted the Election Commission of India’s request for the return of Electoral Bonds documents submitted to the court in sealed covers on two occasions. The Commission clarified that it retained no copies to maintain confidentiality and sought the sealed envelopes’ return to fulfill the court’s directive to upload data on its website.

The apex court instructed its Registrar Judicial to ensure the scanning and digitization of documents, with the originals to be returned to the ECI. The Commission would then upload the data by March 17.

During the hearing, the court emphasized SBI’s failure to disclose bond numbers and sought representation from the bank. Solicitor General Tushar Mehta urged the court to issue notice to SBI for its response.

In its February verdict, the Supreme Court invalidated the Electoral Bonds Scheme, which allowed anonymous funding to political parties, and directed SBI to cease issuing Electoral Bonds immediately. The court unanimously struck down the scheme and related amendments, requiring SBI to provide details of each Electoral Bond encashed by political parties, including encashment date and denomination.

An Electoral Bond, akin to a promissory note or bearer bond, is purchasable by individuals, companies, firms, or associations of Indian citizenship or establishment. These bonds are exclusively issued for funding political parties.

Several petitions were filed challenging amendments to different statutes, alleging they facilitated unchecked political party funding.

’60 percent of electoral bonds directed to BJP’ Congress leader Jairam Ramesh claims

March 15, 2024, 10:40 am

The Congress claimed on Friday that 60 percent of the electoral bonds had been directed to the Bharatiya Janata Party (BJP), following the publication of electoral bonds data by the Election Commission, as mandated by the Supreme Court.

Jairam Ramesh, the Congress’s general secretary in charge of communications, spoke to ANI during the Maharashtra leg of Bharat Jodo Nyay Yatra, stating, “I have analyzed it (electoral bonds)…The analysis shows how the electoral bonds were misused. 60 percent of the electoral bonds went to the BJP. I have shown through the analysis how the ED, CBI and Income Tax have also been misused…”

Ramesh further alleged, “Those who have donated were awarded contracts and other projects. It is a joint conspiracy.”

The electoral bond beneficiaries encompassed several prominent political parties, including the Bharatiya Janata Party, Congress, All India Anna Dravida Munnetra Kazhagam, Trinamool Congress, Telugu Desam Party, Bharat Rashtra Samithi (BRS), Shiv Sena, YSR Congress Party, Rashtriya Janata Dal, Biju Janata Dal (BJD), Aam Aadmi Party, and Jana Sena Party.

Earlier, on Thursday, the Election Commission uploaded the electoral bonds data on its website, sourced from SBI, with Future Gaming and Hotel Services and Megha Engineering and Infrastructures Ltd ranking among the top donors to political parties.

The disclosed data included donors such as Finolex Cables Ltd, Lakshmi Niwas Mittal, Edelweiss Housing Finance Ltd, GHCL Ltd, Jindal Poly Films Limited, ITC Limited, Vedanta Limited, and many others.

SBI informed the Supreme Court that the data covered bonds purchased and redeemed between April 12, 2019, and February 15, 2024. During this period, a total of 22,217 bonds were purchased.

Electoral bonds were described as instruments akin to promissory notes or bearer bonds, available for purchase by individuals, companies, firms, or associations of persons, provided they were citizens of India or incorporated/established in India. These bonds were exclusively issued for the purpose of contributing funds to political parties.

The issuance and purchase of these bonds were permitted for various denominations, ranging from Rs 1,000 to Rs 1,00,00,000, through specified branches of the State Bank of India.

Multiple petitions were presented before the apex court challenging amendments made to different statutes through the Finance Act 2017 and Finance Act 2016, arguing that they facilitated unchecked funding of political parties.

Supreme Court Bar Association strongly criticizes chief’s letter to President Murmu regarding verdict on electoral bonds

March 13, 2024, 10:21 am

The executive committee of the Supreme Court Bar Association (SCBA) distanced itself from the letter written by SCBA chief Adish C Aggarwala, urging a presidential reference for the electoral bonds scheme case verdict. The committee condemned the letter, describing it as an “attempt to overreach and undermine the authority” of the Supreme Court.

Aggarwala, also the chairperson of the All India Bar Association, wrote to President Droupadi Murmu, requesting a presidential reference for the electoral bonds scheme case verdict and advising not to enforce it until the top court rehears the matter.

In his letter, Aggarwala argued against revealing the names of contributing corporates, stating that it could make them vulnerable to victimization. He expressed concern about corporates being singled out and harassed by parties that received fewer contributions from them. He emphasized that disclosing such sensitive information retrospectively would have a chilling effect on corporate donations and participation in the democratic process.

While the letter bore the letterhead of the All India Bar Association, Aggarwala’s designation as President of the SCBA was noted below his signature. The SCBA’s executive committee clarified that it had not authorized the President to write such a letter, and its members did not endorse his views. The committee viewed the act and its contents as an attempt to undermine the authority of the Supreme Court and unequivocally condemned it.

SBI gets time till March 12 to disclose details of electoral bonds after SC rap

March 11, 2024, 4:33 pm

The State Bank of India’s (SBI) request to extend the Superme Court deadline until June 30 to provide the Election Commission of India with information about its electoral bonds was denied by the apex court on Monday. Instead, the bank was instructed to provide the information by March 12. The order came during the hearing on the SBI petition before the five-judge Constitution bench headed by Chief Justice of India DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra.

The top court further ordered the Election Commission of India to gather the data that needs to be provided by the SBI and post the information by 5 pm on March 15, 2024, on its official website.

The bench issued the following order regarding SBI’s appeal today: “SBI’s submissions in the application show that the information requested is easily accessible. Consequently, the SBI’s motion for a time extension till June 30 is denied. SBI has been instructed to release the information by March 12, 2024, at the latest, during business hours.”

“As regards the Election Commission of India, we direct them to compile the information and publish the information on their website no later than by 5 pm on March 15, 2024,” it stated.

If the SBI fails to adhere to the latest order, the Constitution bench further threatened to hold it in contempt of court. “Though we are not exercising the contempt jurisdiction, but we place SBI on notice that this court will proceed against it for wilful disobedience if it does not comply with the timelines indicated in this order,” instructed the bench.

The Communist Party of India (Marxist), Common Cause, and the Association for Democratic Reforms (ADR) have filed a contempt petition against the bank for failing to disclose information about electoral bonds in defiance of orders from the top court.

The bank stated that there are various practical issues with the decoding exercise and the scheduled time for it.

The Chief Justice of India (CJI) retorted that the court’s orders only required the bank to reveal the information, not to carry out a “matching exercise,” and that the bank possessed the required data, as shown by its KYC records.

You are stating that there are two distinct information silos, and it would take a lot of work to match them. However, as you can see from the instructions we provided, you were not asked to do this matching task. All we’ve done is order clear transparency. The justifications you provide for asking for more time are completely at odds with the instructions we gave.”

SC warns SBI, asks it to submit details of electoral bonds by March 12

March 11, 2024, 12:52 pm

Coming down heavily on the State Bank of India (SBI), the Supreme Court on Monday warned the public sector bank while directing it to submit all the details of the electoral bonds purchased from April 12, 2019 till date to the Election Commission of India by March 12. Issuing its final warning, the five-judge constitution bench headed by headed by Chief Justice DY Chandrachud asked the SBI to inform the honourable court of the steps taken by it to disclose details of electoral bonds encashed by political parties before the scheme was scrapped in February 2024.

Asked the SBI to do a “plain disclosure” as per the court’s judgment, the apex court also ruled that after the SBI submits details of the donors by March 12, the Election Commission should release the same for public by 5 pm on March 15. In its ruling the court also warned the SBI that if the orders were not followed, then contempt of court proceedings would be initiatied against the bank.

In a strongly worded order, the courets asked the SBI, “In the last 26 days, what steps have you taken? Your application is silent on that.” The other judges on the bench are justices Sanjiv Khanna, B R Gavai, J B Pardiwala, and Manoj Misra.

A five-judge Constitution bench of the Supreme Court had on February 15 scrapped the Centre’s electoral bonds scheme. Under this scgheme anonymous political funding was allowed. The court in its order called the electoral bonds scheme “unconstitutional” while directing the Election Commission to reveal details of donors as well as the amount donated by them and the political parties which received them by March 13.

In its order, the SC stated that SBI has all the information in a sealed cover which needs to be collated and then handed over to the Election Commission.

While seeking more time to reveal the details till June 30 to disclose the details, the SBI has moved a petition.

Electoral bonds: SC to hear SBI plea today

March 11, 2024, 7:41 am

A five-judge constitution bench of Supreme Court is scheduled to hear on Monday an application submitted by State Bank of India (SBI) seeking an extension of time until June 30 to disclose details of each electoral bond en-cashed by political parties before scheme was annulled last month.

The bench, headed by Chief Justice D Y Chandrachud, will also address a separate plea which alleges contempt against SBI, claiming it ‘wilfully and deliberately’ disregarded apex court’s directive to submit details of contributions made to political parties through electoral bonds to Election Commission (EC) by March 6, 2024. In a groundbreaking verdict delivered on February 15, a five-judge constitution bench nullified the Centre’s electoral bonds scheme of anonymous political funding, deeming it “unconstitutional” and mandating disclosure by the Election Commission of the donors, the donated amounts, and the recipients by March 13.

Directing the immediate cessation of the scheme, the apex court ordered the SBI, the designated financial institution under the scheme, to furnish by March 6 the specifics of the electoral bonds purchased from April 12, 2019, onwards to the Election Commission, which was directed to publish the information on its official website by March 13.

On March 4, the SBI petitioned the apex court seeking an extension of time until June 30 to divulge the details of the electoral bonds encashed by political parties. In its application, the SBI argued that retrieving information from “each silo” and matching the data from one silo to another would be a time-consuming process.

Congress leader Mallikarjun Kharge slams BJP; says ‘links SBI electoral bond move to Lok Sabha polls’

March 5, 2024, 1:53 pm

Reacting to the State Bank of India’s request for an extension to disclose details about electoral bonds, Congress chief Mallikarjun Kharge accused the Modi government of utilizing the bank to conceal its alleged “dubious dealing.”

Following a Supreme Court order for SBI to reveal bond details by March 6, the bank sought an extension until June 30. Kharge criticized the electoral bonds scheme, calling it opaque and undemocratic, and accused the BJP of benefiting the most. He claimed the government was hiding questionable dealings, questioning the need for a 4-month extension to collate donor information. Kharge alleged the Modi government bulldozed institutions to fill BJP’s coffers and is using SBI to undermine the Supreme Court’s judgment.

Kharge asserted, “Congress party was crystal clear that the Electoral Bonds scheme was opaque, undemocratic and destroyed the level playing field. But the Modi government, PMO and FM bulldozed every institution – RBI, Election Commission, Parliament and Opposition to fill BJP’s coffers.”

Congress MP Manish Tewari urged the Supreme Court not to let SBI escape accountability on Electoral Bonds, emphasizing the public’s right to know before the General Elections. Rahul Gandhi questioned why the SBI resisted making information public, especially when the Supreme Court emphasized the people’s right to know about electoral bonds.

SBI defended the delay, citing the anonymous nature of donations and the need to retrieve information from separate silos. Last month, the Supreme Court declared the scheme violated the right to information and freedom of speech and expression.

State Bank of India requests SC to extend deadline to give information on electoral bonds

March 5, 2024, 8:38 am

The State Bank of India (SBI), a public-sector bank, has requested the Supreme Court to extend the deadline for revealing the identities of buyers of electoral bonds from March 6 to June 30. This move has significant political implications as a June 30 deadline would result in disclosures after the general election. The CPM general secretary, Sitaram Yechury, raised concerns about the potential motive behind the extension, suggesting it might be aimed at protecting Prime Minister Modi and the BJP.

A constitution bench had earlier invalidated the electoral bonds scheme of 2018, which allowed anonymous donations to political parties. The Supreme Court instructed the SBI, issuer and redeemer of the bonds, to disclose the names of bond buyers to the Election Commission by March 6 for public release by March 13.

The SBI argued that decoding the electoral bonds and matching donors to donations would be a complex process due to stringent measures ensuring donor anonymity. Yechury expressed skepticism about the extension request, stating that in the digital age, obtaining such information should be easily accessible, raising suspicions about the bank’s intentions.

The SBI highlighted its adherence to a standard operating procedure (SOP) to protect donor anonymity, emphasizing the separation of data related to bond issuance and redemption. Each political party, according to the SBI, must maintain a designated account in authorized branches for depositing and redeeming electoral bonds. Upon redemption, the original bond and pay-in slip are sent to the SBI Mumbai Main Branch in a sealed cover.

Supreme Court Declares Electoral Bonds Scheme Unconstitutional, Orders Cessation and Disclosure of Details

February 15, 2024, 1:01 pm

On Thursday, the Supreme Court delivered a unanimous verdict declaring the changes made to the law to introduce the electoral bonds scheme as unconstitutional. The ruling came in response to a series of pleas challenging the legality of the scheme, which allowed for anonymous funding to political parties.

The five-judge Constitution Bench, led by Chief Justice of India D Y Chandrachud, directed the cessation of electoral bond issuance by the issuing bank and instructed the State Bank of India (SBI) to provide details of all electoral bonds purchased since the court’s interim order dated April 12, 2019, to the Election Commission of India (ECI).

The bench found various sections of the Representation of People Act, 1951, and the Companies Act, as amended by the Finance Act of 2017, to be in violation of Article 19(1)(a) and hence unconstitutional. Specifically, the deletion of the proviso to Section 182(1) of the Companies Act, allowing unlimited corporate funding to political parties, was deemed arbitrary and violative of Article 14.

The court reasoned that the distinction between profit-making and loss-making companies for political contributions, present prior to the amendment, served the purpose of curbing corruption and electoral financing. However, the amendment allowing unlimited corporate contributions disregarded this distinction, permitting unrestrained influence in the electoral process, contrary to principles of free and fair elections and political equality.

Furthermore, the court mandated the submission of detailed information by SBI regarding electoral bond purchases and encashments by political parties to the ECI. This information, including dates, purchasers’ names, and bond denominations, must be shared within three weeks, with the ECI directed to publish it on their official website within one week thereafter.

In summary, the Supreme Court’s ruling declared the electoral bonds scheme unconstitutional, emphasizing the need to uphold the integrity of the electoral process and prevent undue influence by corporations.

Electoral bonds in the politico-legal landscape and change in dynamics of elections

June 28, 2023, 9:08 pm

A bull may have good qualities, but you will never bring them out by waving a red flag in the face. This is often suited most to the precarious situation of expecting the national or state legislature (read it as a tag team of political parties) to self-tighten the noose of political funding and ensuring the elections in most idealistic ways. Consequent to this, it is also not possible to expect the class of T.N. Sheshan at display in regulatory bodies. Therefore, we often find election funding instruments as a major grey area in our politico-legal landscape.
Taking a cue out of this, and of course to declare a transparency and fairness in our election funding, a new instrument named Electoral Bonds was introduced in 2018. They allow individuals and corporate entities to make donations to political parties anonymously. These bonds can be purchased from authorized banks and are then submitted to political parties, which can encash them within a specified period. The identity of the donor remains confidential, creating a veil of secrecy around political funding. A report suggests that over a period of 2018-2022, massive chunk of money amounting to Rs 9,208 crore was generated through these bonds. The lack of disclosure requirements regarding the identity of donors stands out to be its most prominent feature out of all for this substantial source.
Furthermore, electoral bonds have led to a shift in the dynamics of election campaigning and has opened the door ajar for diverse funding options. With the availability of large sums of money through these bonds, political parties may have an advantage over smaller parties or independent candidates who do not have access to similar funding sources.
Any innovation brings along with it certain positive factors and ease of life as well. The electoral bonds provide anonymity to donors, protecting them from potential backlash or reprisals for their political contributions. This can encourage individuals and corporate entities to participate in political funding without fear of retribution. The electoral bonds have consistently helped to shift political donations from cash-based transactions to a more formalized system. By channelling funds through authorized banks, electoral bonds aim to encourage legitimate and transparent sources of funding.
Furthermore, electoral bonds provide a streamlined process for making political donations. They can be easily purchased from authorized banks, making the transaction more convenient for donors. This can potentially increase the ease of political funding, encouraging more individuals and corporate entities to contribute. Consequent to this, the proponents highlight that electoral bonds can contribute to political stability by ensuring a steady flow of funds to political parties. This can enable parties to focus on their ideological objectives and policymaking rather than constantly seeking funds for electoral campaigns. Regional parties, especially those with limited access to traditional sources of political funding, can see electoral bonds as an opportunity to compete on a more level playing field with national parties. The availability of funds through electoral bonds can help regional parties bridge the financial gap and effectively challenge larger political entities during elections.
However, the USP of electoral bonds of anonymity brings in certain doubts about their actual effectiveness. We can gauge that this secrecy can lure the inflow of illicit funds into the political system, undermining transparency, and accountability in political funding. Electoral bonds raise concerns about the potential for corruption and the influence of undisclosed corporate interests on political parties. Without knowing the identity of donors, it becomes difficult to assess any potential quid pro quo arrangements or undue influence on policy decisions.
The constant monitoring of money inflow from clean source and the regularization of undisclosed funds pouring in chunks in our political system may cripple the hands of agencies due to lack of any direct evidence establishing a money trail. Without information about the funding sources of political parties, citizens may find it challenging to assess the financial interests and potential conflicts of interest that parties may have. Keeping the eyes closed doesn’t take away the danger. The rapid advancement of financial technology poses challenges for the implementation of election laws. As new digital platforms and tools emerge, election authorities need to adapt and update their regulations to address issues such as online campaigning, cyber-security, and the use of social media. Keeping pace with technological advancements requires constant monitoring and periodic updates to the laws.
Electoral bonds and election laws in India are interconnected, shaping the landscape of political funding and electoral campaigns. It is crucial to strike a balance between promoting legitimate sources of funding and ensuring transparency, accountability, and fairness in the electoral system. Continued discussions, reforms, and public participation are essential to address these concerns and strengthen the integrity of India’s election laws. India’s election laws form the backbone of its democratic system, aiming to ensure a level playing field, fair competition, and transparent governance.
The introduction of electoral bonds has brought a new dimension to the political funding landscape. It has brought all the major players like corporate entities, authorized banks, political parties etc in a common circular loop, with the aim of preserving donor anonymity while facilitating legitimate contributions. The underlying principle was to encourage clean and accountable funding, thereby reducing the influence of black money and illegal donations. But what remains to be seen is that in the face of challenges, does our system have the stamina within to take the bull by its horns or else allegations remain the soup of primetime TV debates.

Dr Deepankar Sharma works as an Assistant Professor of Law (Senior Scale) at Manipal University Jaipur and as an Honorary Fellow at Asian Institute of International Financial Laws at University of Hong Kong. He is a member of Network of Indian Competition Experts at Competition Commission of India. Dr Vini Kewaliya is working as an Assistant Professor of Law (Senior Scale) and as Assistant Controller of Examinations at Manipal University Jaipur.