The unanimous decision by the Constitution Bench of the Supreme Court, written by Chief Justice D Y Chandrachud (with Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra), is a landmark decision for Indian democracy.
The outcome renders unconstitutional the Electoral Bond Scheme (EBS) introduced by the Finance Act, 2017, which removed the cap on donations to political parties, enabled donations through anonymous promissory notes issued by recognised banks, and released corporate donors from any duties to disclose the donations in their balance sheets. The verdict underscores the need for disclosure in corporate election funding by recognising the rights enshrined in and flowing from Article 14 (right to equality) and Article 19 (1)(a) (right to information). Further, under the EBS, political parties were released from any obligation to maintain a record of contributions thus received, thereby accentuating the asymmetry of information and facilitating the deeper penetration of big money into electoral politics.
The issue of whether the Speaker of the Lok Sabha may characterise just any Bill as a “money bill”, thus disempowering the Rajya Sabha from voting, is still to be decided. But considerable guidance now flows from the EBS decision’s insistence that not every legislative determination becomes a “financial” or “economic development” decision, thereby attracting the presumption of constitutionality and a relaxed constitutional judicial review. The individual voter’s right to equality of information and influence repels the astonishing argument of the learned Attorney General, who insisted that democratic citizens have no right to know how parties are funded.
As per the verdict, the issuance of electoral bonds is discontinued with immediate effect and the interim order passed on April 12, 2019, shall be in full force since that date. Further, all agencies — political parties, the State Bank of India, the Reserve Bank of India and the Election Commission of India — were directed to follow disclosure of information since that date. The SBI moved the Court to extend the deadline for the disclosure from March 6 till the end of June, citing various difficulties in data collection. This is despite the Court reiterating that its remedies for the violation of fundamental rights begin from the day it passed the interim orders. The petitioners have now moved a contempt petition against the SBI. The Court has not asked for any complex details, merely directing that the SBI must disclose the date of purchase of each electoral bond, name of the purchaser and denomination of the electoral bond purchased, as well as details of each electoral bond encashed by political parties, date of encashment, and denomination of the bonds. It remains to be seen whether the Court will resile from the proposition that the judgment is a self-contained law, declaring as null the non-disclosure of all relevant information about corporate funding of elections.
The power of imposing reasonable restrictions is well analysed under the newly-fangled doctrine of proportionality. The doctrine evolves from case to case, but its principal function is to impose self-discipline on constitutional judicial review as a prelude to constitutional discipline binding all other institutions of governance. A clear distinction exists between “manifest” arbitrariness and a “reasonable” use of power; it has long been recognised that the power to “restrict” a right does not extend to the power to altogether abrogate the right. Further, it has been held that the law should have some reasonable “nexus” with its stated objectives. What is “reasonable” is now adjudged by the proportionality test ascertaining that the measure taken to restrict a fundamental right (a) has a legitimate goal, (b) is a suitable means of reaching that goal, (c) creates the least amount of restriction possible on the fundamental right, and (d) does not have “a disproportionate impact on the right holder.” According to the Court, curbing black money was not a specific ground in Article 19 (2). The beauty of this is that even if the Article is amended to include restriction on the grounds of black money, the restriction on voting equality fails when tested on other proportionality criteria.
Merely having a constitutionally legitimate goal is not enough; and the state should make the showing that out of a range of alternatives, measures that are least restrictive to constitutional rights have been adopted. The Justices suggested some other less restrictive measures to achieve the legislative goals, such as setting up an electoral trust, or putting a cap on funding of elections by corporate power, but did not develop alternative policies, thus fully respecting the autonomy and the power of the executive and legislative branches of the government.
The Court went further to speak of the double proportionality test, which signifies a conflict between two equal rights — in this case, the donor’s right to privacy and the voter’s right to equality of information and influence. It required the Court to conduct a second proportionality test. On this score, the Court (per CJI Chandrachud) clearly observed that to not grant the “umbrella of informational privacy to political contributions only because a portion of the contributions is made for other reasons would be impermissible. The Constitution does not turn a blind eye merely because of the possibilities of misuse”. However, what the Court found equally impermissible, as not being “least restrictive”, was the “blanket non-disclosure” involved here. The scheme further suffered from the constitutional vice of being “manifestly arbitrary” because the “claim of donor privacy ends when that of equal right of information and influence begins”.
CJI Chandrachud also recalls that as early as 1958, Chief Justice M C Chagla cautioned against the influential role of “big business” and “money bags” in choking democracy and urged the Courts to prevent any “improper” or “corrupt” influence. Critics of the decision should ask themselves: Could the Supreme Court of India have done any less now?
The writer is professor of law, University of Warwick, and former vice chancellor of Universities of South Gujarat and Delhi
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It has long been recognised that the power to “restrict” a right does not extend to the power to altogether abrogate the right
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11.03.2024
The unanimous decision by the Constitution Bench of the Supreme Court, written by Chief Justice D Y Chandrachud (with Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra), is a landmark decision for Indian democracy.
The outcome renders unconstitutional the Electoral Bond Scheme (EBS) introduced by the Finance Act, 2017, which removed the cap on donations to political parties, enabled donations through anonymous promissory notes issued by recognised banks, and released corporate donors from any duties to disclose the donations in their balance sheets. The verdict underscores the need for disclosure in corporate election funding by recognising the rights enshrined in and flowing from Article 14 (right to equality) and Article 19 (1)(a) (right to information). Further, under the EBS, political parties were released from any obligation to maintain a record of contributions thus received, thereby accentuating the asymmetry of information and facilitating the deeper penetration of big money into electoral politics.
The issue of whether the Speaker of the Lok Sabha may characterise just any Bill as a “money bill”, thus disempowering the Rajya Sabha from voting, is still to be decided. But considerable guidance now flows from the EBS decision’s insistence that not every legislative determination becomes a “financial” or “economic development” decision, thereby attracting the presumption of constitutionality and a relaxed constitutional judicial review. The individual voter’s right to equality of information and influence repels the astonishing argument of the learned Attorney General, who insisted that democratic citizens have no right to know how parties are funded.
As per the verdict, the issuance of........
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