Context

• The Election Commission uploaded the data on electoral bonds on its website as received from the State Bank of India. 
• SBI provided the data about the electoral bonds to the Election Commission on the 12th of March in compliance with the Supreme Court’s directions. The data can be accessed at www.eci.gov.in/candidate-politicalparty.

SC Judgment

• In a unanimous judgment, a five-judge Bench the Supreme Court recently struck down the electoral bonds scheme as “unconstitutional and manifestly arbitrary”.
• The apex court held that the electoral bonds scheme, and preceding amendments made to the Representation of the People Act, the Companies Act, and the Income Tax Act, violated the voters’ right to information about political funding under Article 19(1)(a) of the Constitution.
• The Court also directed all donor and donee information (collected from 2019) to be made public within a month.  

Other Provisions

• Along with the Electoral Bonds Scheme, the Supreme Court struck down several amendments that the government made in key laws to facilitate corporate donations to political parties. These include: Section 29C of the Representation of People Act, Section 13A of the Income Tax Act, and Section 182 of the Companies Act.
• The court said that  prior to the amendments, these provisions had maintained the needed balance between donors’ privacy and voters’ right to know.
  • The original Section 29C required political parties to publicly disclose contributions in excess of ₹20,000, received even through cheques and the electronic clearing system. The amendment, however, allowed a complete exemption for political parties to publish contributions received through electoral bonds. 
  • The amended Section 13A freed parties from the obligation of keeping a detailed record of contributions received through electoral bonds.
  • Before the amendment, Section 182 had mandated that companies could donate only up to 7.5% of three years of their net aggregate income. The amendment lifted this cap and made room for unlimited and anonymous corporate donations to political parties.

Proportionality Test

• The court noted that for the scheme to be considered legitimate, the government scheme would have to essentially satisfy four aspects. This was based on the court’s proportionality test, laid down in its 2017 verdict in the KS Puttaswamy case over the right to privacy. 
• This test requires 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. 

• The court held that an infringement of the right to information is not proportionally justified to curb black money in electoral financing. 
• It also said that in implementing the electoral bonds scheme the state did not adopt the least restrictive method. It noted that mechanisms such as electronic transfers and electoral trusts offer less restrictive alternatives.