This cartoon by Satish Acharya must have hurt, especially as it is covered under Article 19(1)(a) of our constitution, which was the apex court’s calling card for dumping the Modi government’s flagship electoral bond scheme.
The scheme was touted as the panacea for eradicating black money from elections, but was ironically seen in the Supreme Court judgement itself as a quid pro quo with corporates – a form of institutionalised corruption.
This humiliation comes on the heels of the complete failure to honour the promise, first made in detail on the February 12, 2014 episode of Chai Pe Charcha, of bringing back black-money not only from Swiss banks and tax free havens, but also, later, from domestic hoarders through the painful experiment of demonetisation.
Here are seven key takeaways from the court’s judgement and its immediate aftermath:
The government’s silence on the right to information being an end in itself
Perhaps the most powerful observation of the court was made in paragraph 65 of its judgement: “The right to information has an intrinsic constitutional value; one that recognises that it is not just a means to an end but an end in itself.”
The government’s deafening silence on the verdict, in contrast to the celebrations following the judgements on Rafale, Article 370 and the Ayodhya Ram Mandir, had ominous echoes of its swift undoing of the apex court’s constitution bench judgement of May 11, 2023, which had given control over Delhi’s civil ‘services’ to the Aam Aadmi Party government, by promulgating an ordinance on May 19, 2023.
However, as the electoral bonds judgement goes to the core constitutional values of free and fair elections and democracy, it would be hazardous for the government to annul, through an ordinance, the operative part of the judgement, which is as follows (paragraph 219):
“[The] SBI [State Bank of India] shall submit details of the Electoral Bonds purchased since the interim order of this Court dated 12 April 2019 till date to the ECI [Election Commission of India]. The details shall include the date of purchase of each Electoral Bond, the name of the purchaser of the bond and the denomination of the Electoral Bond purchased;
“SBI shall submit the details of political parties which have received contributions through Electoral Bonds since the interim order of this Court dated 12 April 2019 till date to the ECI. SBI must disclose details of each Electoral Bond encashed by political parties which shall include the date of encashment and the denomination of the Electoral Bond;
“SBI shall submit the above information to the ECI within three weeks from the date of this judgment, that is, by 6 March 2024.
“The ECI shall publish the information shared by the SBI on its official website within one week of the receipt of the information, that is, by 13 March 2024.”
Also read | Election Commission Has No Comments on Landmark Electoral Bonds Verdict: How it Changed its Stance
Nexus between basic structure, democracy and free and fair elections
The court has held that public knowledge of the contributions made by companies to political parties is necessary for a free and fair election to safeguard democracy, which is part of the ‘basic structure’ of the constitution.
Drawing a nexus between the basic structure, democracy and free and fair elections, it observed: “The democratic set up of government is a part of the basic features of the Constitution. Elections matter in democracy because they are the most profound expression of the will of the people … The integrity of the electoral process is a necessary concomitant to the maintenance of the democratic form of government.” (paragraph 202).
Then, in paragraph 203, it said: “This Court has also consistently held that free and fair elections form an important concomitant of democracy.”
Calling out institutionalised corruption and quid pro quo
For the court, the unveiling of opaque electoral bonds was necessary not only to ensure that voters had the right to information guaranteed under Article 19(1)(a) of our constitution, but also for unmasking institutionalised corruption.
It remarked: “The deletion of the mandate of disclosing the particulars of contributions violates the right to information of the voter since they would not possess information about the political party to which the contribution was made which, as we have held above, is necessary to identify corruption and quid pro quo transactions in governance.” (Paragraph 172)
The court repeatedly referred to quid pro quo between donors and the receiving political party which is in power. In paragraph 167, it referred to the “influence of money in electoral politics (through electoral outcomes) and governmental decisions (through a seat at the table and quid pro quo arrangements between the contributor and the political party)”.
In paragraph 201, the court bluntly said that “the reason for political contributions by companies is as open as day light [sic]. Even the learned Solicitor General did not deny during the course of the hearings that corporate donations are made to receive favours through quid pro quo arrangements”.
The court made it crystal clear in paragraph 212 that “contributions made by companies are purely business transactions made with the intent of securing benefits in return.”
Also read: ‘Quid-Pro-Quo’: How Revealing Electoral Bonds Will Clear Questions of ‘Len-Den’
Rubbishing the government’s claim of it not knowing the identity of donors
While holding, in paragraph 104, the electoral bonds scheme violative of Article 19(1)(a), the court systematically (in paragraph 103) rubbished the government’s claim that it did not know who the donors were. The court observed:
“The submission of the Union of India is that the political party which receives the contribution does not know of identity of the contributor because neither the bond would have their name nor could the bank discloses [sic] such details to the political party.
“We do not agree with this submission. While it is true that the law prescribes anonymity as a central characteristic of electoral bonds, the de jure anonymity of the contributors does not translate to de facto anonymity. The Scheme is not fool-proof. There are sufficient gaps in the Scheme which enable political parties to know the particulars of the contributions made to them.
“Clause 12 of the Scheme states that the bond can be encashed only by the political party by depositing it in the designated bank account.
“The contributor could physically hand over the electoral bond to an office bearer of the political party or to the legislator belonging to the political party, or it could have been sent to the office of the political party with the name of the contributor, or the contributor could after depositing the electoral bond disclose the particulars of the contribution to a member of the political party for them to cross-verify.
“Further, according to the data on contributions made through electoral bonds, ninety four percent of the contributions through electoral bonds have been made in the denomination of one crore. Electoral bonds provide economically resourced contributors who already have a seat at the table selective anonymity vis-à-vis the public and not the political party.”
Unless donor identities are blocked through an ordinance, this may be the first time the electoral narrative may be controlled not by Narendra Modi but by the fallout from the apex court direction on electoral bonds. Photo: X/@narendramodi.
Electoral bonds and shell companies
In his Independence Day speech in 2017, Prime Minister Narendra Modi claimed that his government had unearthed over 3,00,000 shell companies and that he had “waged a big war against corruption and black money”.
The Financial Express reported on September 20, 2020 that the Ministry of Corporate Affairs had removed the names of 3,82,581 companies from the official records following what the government called a “special drive for identification and strike off shell companies.”
On July 27, 2021, a junior Union corporate affairs minister informed parliament that the government had identified 2,38,223 companies as shell companies.
Yet one of the most damaging observations of the Supreme Court was about the possible mushrooming of shell companies because of the removal of limits to donations through electoral bonds.
In paragraph 208, the court observed as follows:
“If the ostensible object of the amendment, as contended by the learned Solicitor General, was to discourage the creation of shell companies, there is no justification for removing the cap on contributions which was included for the very same purpose: to deter shell companies from making political contributions.
“In fact, when the proposal to amend Section 182 of the 2013 [Companies] Act was mooted by the Government in 2017, the Election Commission of India opposed the amendment and suggested that the Government reconsider its decision on the ground that it would open up the possibility of creating shell companies. The relevant portion of the opinion of the ECI is reproduced below:
““Certain amendments have been proposed in Section 182 of the Companies Act, where the first proviso has been omitted and consequently the limit of seven and a half percent (7.5%) of the average net profits in the preceding three financial years on contributions by companies has been removed from the statute.
“This opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties with no other business of consequence having disbursable profits.””
Also read: The SC’s Electoral Bonds Judgement Affirms the Primacy of the Vote Over the Note
Bonds issue could upstage pre-election issues and the broader narrative
If indeed it is necessary to “identify corruption and quid pro quo transactions in governance”, and if the contributions are “purely business transactions made with the intent of securing benefits in return”, then the data on donors and donees must be closely examined by all stakeholders of democracy – the new government and Lok Sabha post the 2024 elections, the public, the media and most importantly, by the judiciary itself when the data is placed before it.
Unless the donors’ identities are blocked through an ordinance or by a review petition, it would be for the first time since the 2014 general elections that the electoral issues and narratives just before elections might be controlled not by Gujarat chief minister/PM Narendra Modi, but by the potentially explosive fallout of the Supreme Court’s direction to the SBI and the ECI to reveal who was funding political parties, especially the BJP, with the quid pro quo-tainted electoral bonds.
The court has imputed knowledge to the ruling party about who the donors were and are. So if indeed there are or were shell companies that were funnelling money/black money to political parties, the blame would squarely fall on the government or the ruling parties.
The data would indicate whether companies or persons being investigated, raided or prosecuted for corruption, money laundering and the like were donating money to the ruling party at the Union government or in the states, and what happened after they donated or re-donated, as the case may be.
It would also indicate whether the companies that donated to opposition parties and not to the ruling party were in any way targeted by states governments or the Union government, and what, if any, benefits especially accrued to companies that made large contributions to the ruling parties in the states and in the Union government.
Of special interest would be contributions made by the print and electronic media, and if they did, the spotlight would be on them and on the credibility of their reporting.
In short, issues like the Ram Temple, a uniform civil code, Article 370, a five-trillion dollar economy, ration to 80 crore people, the BJP’s other welfare schemes on the one hand and issues like raging unemployment, farmers’ distress, inflation, the alleged misuse of investigating agencies like the ED, CBI and Income Tax department, the alleged engineering of political defections through money power and Chinese aggression in Eastern Ladakh on the other hand, could all be eclipsed by allegations and counter-allegations of a possible assault on democracy by opaque electoral bonds, not only by the BJP, but also by other parties.
The independence of the judiciary
Sitting judges of the Supreme Court had made avoidable adulatory statements about PM Modi, such as: “I am proud and privileged to participate in the function to celebrate [the] diamond jubilee of [the] Gujarat High Court and that too in the presence of our most popular, loved, vibrant and visionary leader, Prime Minister Narendra Modi” by Justice M.R. Shah.
Here is Justice Arun Mishra: “India is a responsible and most friendly member of the international community under the stewardship of internationally acclaimed visionary Prime Minister Shri Narendra Modi. We thank the versatile genius who thinks globally and acts globally, Shri Narendra Modi, for his inspiring speech…”
A number of decisions by the Supreme Court in favour of the government have raised eyebrows, not just of reputed senior advocates of the top court, but also of its eminent retired judges.
The court itself had come under unprecedented attack by no less a person than a Union law minister and the vice president of India, not just because the apex court had set aside the National Judicial Appointments Commission, but also because the Supreme Court was exercising the power of judicial review!
On January 11, 2023, Vice President Jagdeep Dhankhar attacked the Supreme Court’s stand on the basic structure doctrine, on the supremacy of the constitution and on its power of judicial review in these words:
“In democratic society, the ‘basic’ of any ‘basic structure’ has to be the supremacy of [the] mandate of [the] people. Thus, the primacy and sovereignty of parliament and legislature is inviolable … The power of parliament to amend the constitution and deal with legislation is not subject to any other authority. This is [the] lifeline of democracy.”
In a speech on January 21, 2023, Chief Justice of India D.Y. Chandrachud responded thus:
“The basic structure of the constitution, like the North Star, guides and gives certain direction to the interpreters and implementers of the constitution when the path ahead is convoluted …
“The basic structure or the philosophy of the constitution is premised on the supremacy of the constitution, rule of law, separation of powers, judicial review, secularism, federalism, freedom and dignity of the individual and integrity of the nation.”
But last week, he along with his colleagues spoke from the bench and, in the context of the vice president’s remarks, was saying that the power of parliament to deal with legislation is subject to the supremacy of the constitution and that amendments to the Representation of the People Act, Income Tax Act and Companies Act to accommodate the opaque electoral bonds scheme had breached Article 19(1)(a) of the constitution.
He added that the opacity of electoral bonds had clogged the lifeline of democracy by denying ordinary citizens the right to lift the veil of secrecy over the quid pro quo between corporates and the governments.
In doing so, the Supreme Court has once again restored the people’s faith in the judiciary.
Rahul Singh is a former civil servant who retired from the Ministry of Defence, Government of India.
