S.C. Ruled : Electoral bonds programme was unconstitutional

Supreme Court ruled that the Electoral bonds programme was unconstitutional.

Electoral Bonds Scheme: In the 2017 Union Budget, electoral bonds were established as a means of improving political financial transparency. However, issues with donor anonymity and lack of disclosure emerged.

• The Electoral Bond is a bearer instrument in the nature of a Promissory Note & an interest free banking instrument.
• A citizen of India or a body incorporated in India will be eligible to purchase the bond.
• Electoral bond would be issued/purchased for any value, in multiples of Rs. 1,000, 10,000, 1,00,000, 10,00,000 & 1,00,00,000 from the specified branches of the SBI.
• It will not carry the name of payee. Anonymous.
• The buyer may only purchase electoral bonds if the present Know Your Client requirements are met and payment is made from a bank account.
• Electoral bonds shall be encashed by an eligible political party only via a designated bank A/c with the authorised bank.
• The current Supreme Court decision invalidates both the modifications to the Companies Act that allowed for limitless corporate contributions to political parties and anonymous political donations. Political donations are not unconstitutional, but the company making them must make sure they don’t deplete its resources and that the political donations are disclosed in a transparent manner in its financial statements for the benefit of the concerned shareholders and a wider range of stakeholders and voters.

CONSEQUENCES FOR DONOR COMPANIES

The Supreme Court’s decision states that the court alone should handle any implications; it does not deem “political donations” in and of themselves to be unlawful or unconstitutional.

Supreme Court has ordered SBI & Election Commission of India to provide the specifics of donations made via electoral bonds & to return uncashed funds to donors in current electoral bond scheme. Essentially, it doesn’t seem appropriate to impose any burdens on businesses for adhering to laws that were in effect until they were repealed. Therefore, the donating companies shouldn’t have any negative effects.

However, a corporation that has previously contributed may now make a disclosure in the upcoming annual report as part of its corporate duty. Therefore, companies in the financial statement for the Financial Year 2023–24 that disclose the specifics of political donations made along with the names of the political parties for each of the previous financial years, in addition to the current Financial Year 2023–24, may make up for the omission of disclosure of such details between Financial Year 2017–18 and Financial Year 2022–23.

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