Electoral Bonds: Supreme Court Orders Immediate Disclosure by SBI in Landmark Transparency Case (11 March 2024)

Date of the Judgment: 11 March 2024
Citation: 2024 INSC 195
Judges: Dr Dhananjaya Y Chandrachud, CJI, Sanjiv Khanna, J, B R Gavai, J, J B Pardiwala, J, Manoj Misra, J
Can a bank refuse to disclose information about electoral bonds, citing the need for secrecy? The Supreme Court of India recently addressed this crucial question, reaffirming the public’s right to information about political funding. The Court directed the State Bank of India (SBI) to immediately disclose details of electoral bonds purchased and redeemed, rejecting SBI’s request for an extension. This order reinforces the importance of transparency in political finance.

Case Background

The Supreme Court, on 15 February 2024, declared the Electoral Bond Scheme unconstitutional, citing violations of the right to information under Article 19(1)(a) and Article 14 of the Constitution. The Court had directed the State Bank of India (SBI), the authorized bank for the scheme, to submit details of electoral bonds purchased and redeemed since 12 April 2019 to the Election Commission of India (ECI) by 6 March 2024. This information was to include the date of purchase, the name of the purchaser, the denomination of the bond, the date of encashment, and the political party that redeemed it. The ECI was then directed to publish this information on its website by 13 March 2024.

On 4 March 2024, just two days before the deadline, SBI filed a Miscellaneous Application seeking an extension until 30 June 2024 to comply with the order. This application was contested by the Association for Democratic Reforms (ADR) and the Communist Party of India (Marxist), who filed contempt petitions against SBI for willful disobedience of the Court’s order.

Timeline

Course of Proceedings

The State Bank of India (SBI) filed a Miscellaneous Application seeking an extension of time to comply with the Supreme Court’s order dated 15 February 2024. The Association for Democratic Reforms (ADR) and the Communist Party of India (Marxist) filed contempt petitions against SBI for not adhering to the Court’s directive. The Supreme Court heard the arguments of both sides and passed the order on 11 March 2024.

Legal Framework

The Supreme Court’s judgment was based on the following legal principles:

• Article 19(1)(a) of the Constitution of India: This article guarantees the right to freedom of speech and expression, which the Court interpreted to include the right to information about the funding of political parties.
• Article 14 of the Constitution of India: This article ensures equality before the law. The Court held that the amendments introduced by the Finance Act 2017, allowing unlimited funding of political parties by corporate entities, were arbitrary and violated this principle.
• Electoral Bond Scheme: The scheme was designed to allow individuals and corporations to donate money to political parties anonymously through the purchase of electoral bonds. The Court found this scheme to be unconstitutional due to its lack of transparency.
• Clause 7(4) of the Electoral Bond Scheme: This clause stipulated that information furnished by the buyer of an Electoral Bond shall be treated as confidential by the authorized bank and shall be disclosed only when called upon to do so by a competent court or upon the registration of an offence by a law enforcement agency.

Arguments

Submissions by SBI:

• SBI argued that the information was maintained in two separate silos to ensure the secrecy of the scheme.
• SBI contended that while the information on bond purchases and redemptions was available, matching the donor details with the recipient details was a complex and time-consuming process.
• SBI stated that the information was not available in a digital format and that the donor details were kept in sealed covers at designated branches, which were then sent to the main branch in Mumbai.
• SBI claimed that a total of 22,217 bonds were purchased between 12 April 2019 and 15 February 2024, resulting in 44,434 data sets across the two silos.

Submissions by Petitioners (ADR and CPI(M)):

• The petitioners argued that the information was readily available with SBI and that the bank was deliberately delaying the disclosure.
• They pointed out that each electoral bond has a unique identification number, which could facilitate the matching of donor and recipient details.
• They contended that the SBI’s FAQs on Electoral Bonds indicated that KYC documents were submitted by the purchaser each time a bond was purchased, making the information easily accessible.
• They also argued that political parties could only open current accounts for electoral bond redemption in designated branches, making the recipient information easily traceable.

Issues Framed by the Supreme Court

The Supreme Court did not frame explicit issues in this order. However, the core issue before the Court was:

• Whether SBI’s application for an extension of time to disclose electoral bond details should be granted.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court relied on its previous judgment dated 15 February 2024, which declared the Electoral Bond Scheme unconstitutional. The relevant legal provisions considered by the Court were:

• Article 19(1)(a) of the Constitution of India: Right to freedom of speech and expression.
• Article 14 of the Constitution of India: Equality before the law.
• Clause 7(4) of the Electoral Bond Scheme: Confidentiality of information furnished by the buyer of an Electoral Bond.

Judgment

How each authority was viewed by the Court?

• The Supreme Court relied on its previous judgment dated 15 February 2024, which declared the Electoral Bond Scheme unconstitutional, to emphasize the importance of transparency in political funding.
• The Court reiterated that the right to information under Article 19(1)(a) of the Constitution of India is a part of the freedom of speech and expression.
• The Court relied on Article 14 of the Constitution of India to reiterate that the amendments introduced by the Finance Act 2017 were arbitrary and violated the principle of equality.
• The Court noted that even under Clause 7(4) of the Electoral Bond Scheme, SBI was mandated to disclose information when demanded by a court.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to uphold the principles of transparency and the public’s right to information. The Court found that SBI’s reasons for seeking an extension were not justified, as the information was readily available. The Court emphasized that the Electoral Bond Scheme was deemed unconstitutional due to its lack of transparency, and any further delay in disclosing the details would undermine the purpose of the judgment. The Court also considered the fact that the SBI’s FAQs indicated the systematic collection and storage of information, which contradicted its claims of difficulty in disclosure.

Logical Reasoning:

The Court rejected SBI’s arguments for an extension, stating that the information was readily available and that the bank was obligated to disclose it. The Court emphasized that the SBI’s own FAQs indicated that the information was collected and stored systematically. The Court also noted that even under Clause 7(4) of the Electoral Bond Scheme, SBI was mandated to disclose information when demanded by a court. The Court stated:

“The operative directions of this Court directed the SBI to disclose the transactions as set out in direction (b) and direction (c) extracted above. The SBI submits in its application itself that the donor details and redemption details are available, albeit in separate silos. In other words, the directions which have been issued by this Court require the SBI to disclose the information which is readily available with it.”

The Court further added:

“Thus, the details of the Electoral Bonds which have been purchased and which have been directed to be disclosed by this Court are readily available.”

The Court also noted:

“Irrespective of whether the unique identification number which is not discernible to the naked eye will enable the disclosure of details, the submissions of SBI in the application sufficiently indicate that the information which has been directed to be disclosed by this Court is readily available.”

The Court did not exercise its contempt jurisdiction at this stage but placed SBI on notice that it would be inclined to proceed against it for willful disobedience if the bank did not comply with the directions by the new deadline.

Key Takeaways

• The Supreme Court has reaffirmed the importance of transparency in political funding.
• The State Bank of India (SBI) is required to disclose all details of electoral bonds purchased and redeemed since 12 April 2019.
• The Court dismissed SBI’s application for an extension, emphasizing that the information was readily available.
• The Election Commission of India (ECI) has been directed to publish the information on its website by 15 March 2024.
• The Court has placed SBI on notice for potential contempt proceedings if it fails to comply with the directions.

Directions

The Supreme Court issued the following directions:

• The Miscellaneous Application filed by the SBI seeking an extension of time for the disclosure of details of the purchase and redemption of Electoral Bonds until 30 June 2024 is dismissed.
• SBI is directed to disclose the details by the close of business hours on 12 March 2024.
• ECI shall compile the information and publish the details on its official website no later than by 5 pm on 15 March 2024.
• ECI shall forthwith publish the details of the information which was supplied to this Court in pursuance of the interim orders on its official website.
• The SBI shall file an affidavit of its Chairman and Managing Director upon compliance with the directions.

Development of Law

The ratio decidendi of this case is that the State Bank of India (SBI) must disclose all details of electoral bonds purchased and redeemed since 12 April 2019 to the Election Commission of India (ECI) immediately. This order reinforces the previous judgment of the Supreme Court which declared the Electoral Bond Scheme unconstitutional, emphasizing the importance of transparency in political funding. There is no change in the previous position of law.

Conclusion

The Supreme Court’s order on 11 March 2024 is a significant step towards ensuring transparency in political funding. By dismissing SBI’s application for an extension and ordering immediate disclosure of electoral bond details, the Court has upheld the public’s right to information and reinforced the principles of accountability and transparency in the electoral process.

Category

Parent Category: Constitutional Law

Child Categories: Right to Information, Article 19(1)(a), Article 14, Electoral Bonds, Political Funding, Transparency, Supreme Court Orders

Parent Category: Election Law

Child Categories: Electoral Bonds, Political Funding, Representation of People Act, 1951

Parent Category: Finance Act, 2017

Child Categories: Amendments, Electoral Bonds

Parent Category: Companies Act, 2013

Child Categories: Amendments, Political Funding

Parent Category: Income Tax Act, 1961

Child Categories: Amendments, Political Funding

FAQ

Q: What was the Supreme Court’s order regarding electoral bonds?
A: The Supreme Court ordered the State Bank of India (SBI) to immediately disclose all details of electoral bonds purchased and redeemed since 12 April 2019 to the Election Commission of India (ECI). This includes the date of purchase, the name of the purchaser, the denomination of the bond, the date of encashment, and the political party that redeemed it.

Q: Why did the Supreme Court order this disclosure?
A: The Supreme Court had previously declared the Electoral Bond Scheme unconstitutional due to its lack of transparency and violation of the public’s right to information. The Court ordered the disclosure to ensure that the public has access to information about who is funding political parties.

Q: What was SBI’s argument for seeking an extension?
A: SBI argued that the information was maintained in two separate silos and that matching the donor details with the recipient details was a complex and time-consuming process. They also claimed that the information was not available in a digital format.

Q: Why did the Supreme Court reject SBI’s request for an extension?
A: The Supreme Court found that the information was readily available with SBI and that the bank’s reasons for seeking an extension were not justified. The Court pointed out that SBI’s own FAQs indicated that the information was collected and stored systematically.

Q: What is the deadline for SBI to disclose the information?
A: The Supreme Court directed SBI to disclose the details by the close of business hours on 12 March 2024.

Q: What is the deadline for the Election Commission of India (ECI) to publish the information?
A: The ECI has been directed to publish the information on its official website no later than by 5 pm on 15 March 2024.

Q: What are the implications of this order?
A: This order reinforces the importance of transparency in political funding and ensures that the public has access to information about who is funding political parties. It also places SBI on notice for potential contempt proceedings if it fails to comply with the directions.