The Supreme Court and a Grave of Electoral Democracy: On the Illustrative Case of Electoral Bonds

An Indian woman leaves the poling booth after casting her vote at a local polling station during Rajasthan’s Legislative Assembly election.

Vaidushya Parth

The Supreme Court, after a short hearing, refused to stay the sale of electoral bonds on March 26, ahead of the Assembly elections in some crucial parts of India. For nearly two and a half years, electoral bonds have been the major source of political party funding through the corporate lobbies in India. Behind the electoral bond scheme underlies the issue of corruption and subversion of democracy through illicit funding of political parties and opaqueness in the accounts of all political parties which eventually jeopardizes the very edifice upon which the Indian democratic set-up rests.

An electoral bond, like a promissory note, is a bearer instrument payable to the bearer on demand. It can be used by individuals and corporations incorporated in India to make donations to political parties. Bonds can be purchased in denominations ranging from Rs 1,000 to Rs 1 crore from the State Bank of India using a KYC-compliant bank account, with no upper limit on the donation amount. Political parties can encash the bond within 15 days. The details of donations made to the political parties are not reported or recorded. The identity of the donor is anonymous and only known only to the bank. This is the creation of an obscure funding system.

The structure of corporate funding has been translated into equally secretive by removing the requirement of disclosure of the names of political parties to whom funding have been made. To all intents and purposes, neither the contributor nor the recipient of the fund is supposed to reveal the identity of the other.

The inevitable consequences and cumulative effect of the aforementioned provisions is that any legal person, plus a company owned by a foreign corporation can finance a political party in India to a limitless range unaccompanied by either the name of the donor entity or the donee political party being disclosed to anyone in the public sphere. The Electoral Bond, therefore, is a mellowed and fitting way to ensure that all kinds of quid-pro-quo orchestration are made by the ruling party with all kinds of body without any public scrutiny.

The constitutional challenge to the Electoral Bonds is on the deck that it takes no notice and makes light of the “right to know” in parliamentary democratic set-up of the polity recognized under Article 19(1)(a) of the Constitution, is arbitrary and thus violative of Article 14 of the Constitution and has been passed by perpetrating ‘a fraud on the constitution’ by passing it as a money bill, even though it does not qualify as a Money Bill under Article 110 of the Constitution.

In defending the electoral bonds scheme, the government has argued that electoral bonds reduce the amount of ‘black’ (i.e. illicitly obtained) money in elections, as contributions are routed through the State Bank of India which performs ‘Know-Your-Customer’ checks on contributors. 

The government’s defence, however, falls short of the constitutional test of proportionality. Proportionality consists of four enquiries. First, is the State pursuing a legitimate aim? Second, is there a rational nexus between that aim and the infringing act? Third, can another, less restrictive, measure be used to achieve the State’s aim or purpose? Finally, is the infringement of the right too great in comparison to the public purpose?

Among the four-pronged proportionality test, the government’s defence of electoral bonds particularly fails the second-prong i.e., the rational nexus between the aim and action taken to achieve that aim. The only official reason given by the government in support of the electoral bonds is the elimination of black money. But what is the rational nexus between electoral bonds and curbing of black money? They have shown none.

The introduction of Electoral Bond does not bear a rational relationship to curbing “black money”, as the confluence of uncapped corporate funding to political parties will only result into cooperate interests taking precedence over the rights of the people in the policy considerations of the State, leaving citizens in the lurch.

It is established that the suitability prong of the proportionality standard requires at least prima facie evidence of a rational connection between the measure undertaken and the legitimate State goal. It is, however, clear that even under a deferential approach, this rational connection has not been made out on the record. The government’s defence of the electoral bonds is the replica of a general phrase  – ‘that of a doctor who sees a patient of high fever and says the only way to bring down the fever is to kill the patient’.

In any constitutional democracy, every decisions of any constitutional functionary must pass through the touchstone of the Constitution, and the body to adjudicate that is the judiciary. By adopting the way of Money Bill, the government already side-lined the role of Parliament to have a check upon its work. To make the situation worse, the Supreme Court has also given up its fundamental role of ‘sentinel on the qui vive’, and on several occasions it has only tried to maintain the status quo. 


The author is reading law at the School of Law, Narsee Monjee Institute Of Management Studies (NMIMS); he regularly writes on Indian Constitutional law and Economics.


Photo by: Chandan Khanna /AFP

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