Electoral Bonds Not The Only Way To Curb Black Money, There're Alternative Means Which Are Less Restrictive : Supreme Court

The Supreme Court has observed that the purpose of curbing black money is not a sufficient justification to anonymise the identities of donors and the details of the contributions in the electoral bonds scheme.

A Constitution Bench of the Supreme Court held that the anonymous electoral bonds scheme violated the right to information of a voter guaranteed under Article 19(1)(a) of the Constitution and struck down the same as unconstitutional.

The Union Government defended the scheme on the grounds that it curbed black money as it ensured that the contributions were coming through banking channels.

However, the judgment authored by CJI DY Chandrachud noted that the "purpose of curbing black money is not traceable to any of the grounds under Article 19(2)."

The fundamental rights guaranteed under Article 19(1)(a) can be restricted only on the grounds specified under Article 19(2). Further, such restrictions must fulfil the judicially evolved test of proportionality.

Electoral Bonds scheme does not satisfy the test

The Court noted that in the financial year which immediately preceded 2016-17,  in which the Electoral Bonds was introduced,  81% of the contributions, Rs 580.52 crores were received by political parties through voluntary contributions. Since the amount of voluntary contributions is not regulated, it allowed the circulation of black money. However, after the introduction of the electoral bonds scheme, 47% of the contributions were received through EBs, which is regulated money.

The Union Government submitted that anonymity incentivises contributors to contribute through banking channels. Therefore, non-disclosure has a rational nexus with the purpose of curbing black money, it contended.

However, the Court opined that the third prong of the proportionality standard, which mandates that the restriction must be the least restrictive option, was not satisfied in the case of Electoral Bonds.

"The Electoral Bonds scheme is not the only means for curbing black money in electoral financing. There are other alternatives which substantially fulfil the purpose and impact the right to information minimally when compared to the impact of electoral bonds on the right to information," CJI DY Chandrachud stated in his judgment.

The Court observed that for contributions below Rs 20,000, contributions through other electronic means are the least restrictive means. For contributions above Rs 20,000, contributions through electoral trust are the least restrictive means.

The Court held that these alternative means have a less restrictive impact on the right to information while having the same ability to fulfil the purpose.

"Thus the infringement on the right to information is not proportionately justified for the purpose of curbing black money in electoral financing," the Court held.

Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra were the other members of the bench.

Detailed story about the judgment can be read here.

Other reports about the judgment can be read here.

Citation: 2024 LiveLaw (SC) 118