With the General Elections in India are round the corner, the Supreme Court of India on Thursday delivered a landmark judgment in issuance of electoral bonds, striking down the scheme and terming it ‘unconstitutional’ and noted that electoral bonds are violative of right to information, Article 19(1)(a).

The apex court also held as invalid the amendments made in various laws, including the Representation of Peoples Act and the Income Tax laws.

Meanwhile, it has also issued certain guidelines for the issuing bank as well as the corporates.

Also Read: Electoral bond verdict: India will know all info about all donors and receivers, hidden so far, by March 31

For SBI:

The top court has asked the issuing bank, the State Bank of India, to stop rolling out bonds and that it has been directed to submit details of bonds purchased since April 2019 to this date to the Election Commission of India (ECI) by March 6.”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,” Chief Justice of India (CJI) D Y Chandrachud said. Further, the election body has been directed to make all information received from the SBI, public via its website, by March 13.

Also Read: Electoral bonds case: SC unanimously strikes down poll bonds scheme, terms it ‘unconstitutional’

“Electoral Bonds which are within the validity period of 15 days but which have not been encashed by the political parties yet shall be returned by the political party to the purchaser. The issuing bank shall then refund the amount to the purchaser’s account,” the court pronounced.

SBI is the sole entity authorized to issue and remit electoral bonds in its 29 authorised bank branches.

As for the corporates, the Supreme Court ruled that Electoral Bonds must be disclosed as the donations by companies are purely for quid pro quo purposes.

The bench, headed by CJI, also examined the removal of the corporate donation cap, which was previously set at a maximum of 7.5% of net profits.

“Amendment to the Companies Act (allowing blanket corporate political funding) is unconstitutional,” the CJI noted.

It is to be noted that data gathered by Association for Democratic Reforms (ADR) shows nearly 94.25 per cent or Rs 12,999 crore of the total value of bonds purchased were in the denomination of Rs 1 crore “indicating that these bonds are being purchased by corporates rather than individuals.”

“National parties have received corporate donations of Rs 881.26 cr in the FY 2018- 19. The amount was Rs 563.19 cr in FY 2016-17 and Rs 573.18 cr in the FY 2014-15 (during which the 16th Lok Sabha elections were held). Between FY 2012-13 and 2018- 19, donations from corporates to National parties increased by 974%.” the report said.

FAQs

1. What are Electoral Bonds and who can purchase them?

Electoral Bond are a bearer instrument in the nature of a Promissory Note and an interest free banking instrument, which can only be purchased by a citizen of India or a body incorporated in India. \\

2. Who issues electoral bonds?

The State Bank of India is the sole entity authorised to issue Electoral Bonds via its 29 specific branches.

3. What are the denominations of the electoral bonds?

Electoral bonds are issued/purchased for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1,00,000, Rs 10,00,000 and Rs 1,00,00,000.

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