Case title:
State Bank of India v. Association for Democratic Reforms and Ors
Date of Order:
11th March, 2024
Bench:
Hon’ble Mr. Chief Justice Dr. Dhananjaya Y Chandrachud
Hon’ble Mr. Justice Sanjiv Khanna
Hon’ble Mr. Justice B.R. Gavai
Hon’ble Mr. Justice J.B. Pardiwala
Hon’ble Mr. Justice Manoj Misra
Parties:
Applicant: State Bank of India
Respondent: Association for Democratic Reforms and Ors
SUBJECT:
The Hon’ble Supreme Court of India (hereinafter referred to as ‘the Supreme Court’ or ‘the Court’) dealt with a miscellaneous petition filed by SBI and a Contempt petition filed by ADR & others together in the instant case revolving around the legality of non-disclosure of details of the electoral bonds purchased to fund political parties. The Supreme Court had previously passed an order directing SBI to disclose said information, against which SBI filed the petition seeking more time for complying with the order 2 days before the deadline. The Respondents alleged that the Applicant was deliberately trying to evade disclosure of said information, questioning the legality of the Electoral Bonds as a whole. The Court disposed of the petitions and mandated SBI to comply with the orders promptly.
IMPORTANT PROVISIONS:
The Constitution of India, 1950:
- Article 14
- Article 19(1)(a)
The Finance Act, 2017
The Representation of People Act 1951
The Income Tax Act 1961:
- Section 80GG
- Section 80 GGB
The Companies Act, 2013
OVERVIEW
- The Government of India introduced the Electoral Bond Scheme (EBS) in 2018, allowing companies and individuals to purchase bonds from authorized banks and donate them to political parties anonymously.
- Several individuals and companies came forward to contest the Scheme. Concerns were raised regarding the transparency and accountability of political funding under this scheme. It was argued that the anonymity of the donors could lead to corruption and undermining of democratic principles.
- The matter was presented before the Apex Court by way of filing several petitions by several parties challenging the constitutionality of the EBS and other related amendments to laws governing political funding.
- The Constitution Bench issued interim orders authorizing the State Bank of India (SBI) to provide details of the Electoral Bonds purchased by contributors and redeemed by political parties from 12.04.2019 to 15.02.2024 by 6th March, 2024 and struck down the EBS as unconstitutional on 15.02.2024.
- The Election Commission of India (ECI) was directed to collect said information from SBI and publish it on its official website by 13.03.2024.
- Several directives in regard to the Scheme were laid down by the Supreme Court, including (i) Stooping the issuance of Electoral bonds; (ii) Requiring the State Bank of India (SBI) to disclose details of Electoral Bonds purchased and redeemed by political parties since 12.04.2019; (iii) Providing guidance on the handling of unused Electoral Bonds that remain valid but have not been encashed by political parties.
- A Miscellaneous Application was filed in the Supreme Court by SBI which sought an extension till 30.06.2024 for compliance of the Court’s directives, 2 days prior to the expiry of the deadline.
- The Association for Democratic Reforms (ADR) and the Communist Party of India (Marxist), filed a contempt petition against SBI on 07.03.2024 in the Supreme Court, alleging that it was willful disobedience on SBI’s part.
- Both petitions are being heard together in the instant case.
ISSUES RAISED:
- Whether SBI possesses relevant data regarding the Electoral Bonds?
- Whether concealment of the information about the electoral bonds is violative of Article 19(1)(a) of the Constitution?
- Whether SBI’s plea for extension of deadline was a deliberate move to delay disclosure of information?
ARGUMENTS ADVANCED BY THE APPLICANT:
- Collating information where the bonds had to be decoded and match donors to the donations as was asked by the Court was a very time-consuming task.
- Plenty of technical challenges were faced by SBI in procuring asked information.
- Between 12th April 2019 to 15th February 2024, a large number of bonds were purchased. At least over 20 thousand.
ARGUMENTS ADVANCED BY THE RESPONDENT:
- Non-disclosure of Electoral bond details is violative of the provisions of the right to information under Article 19(1)(a) of the Indian Constitution, and paves way for increased chances of corruption.
- If the details of electoral bonds are public knowledge, it will increase accountability among political parties.
- The Supreme Court in its order had explicitly instructed SBI to disclose the details without delay.
- SBI had intentionally filed the miscellaneous application to delay disclosure, willfully disobeying the Court’s directives.
- The information in question was with the SBI and could be easily provided by citing the unique identification number of each electoral bond.
JUDGEMENT ANALYSIS:
- SBI’s chief argument is matching the donor to the donation is a time-consuming process as the relevant data is stored in 2 different ‘silos’, i.e., a separate and distinct storage system or database where information is kept isolated from other databases.
- While the Court acknowledged that collating the 2 silos was logistically challenging, it was clear that SBI was in possession of the data, albeit in different silos.
- It was noted by the Court, referring to the FAQs on Electoral Bonds published by SBI, that the purchase of the bonds required submission of KYC Documents each time someone purchased a bond, regardless of whether they held a KYC-verified SBI account.
- This ensures that one set of documents inclusive of the bond application forms, KYC documents, and pay-in slips can only be utilized to purchase a single Electoral Bond.
- It was further observed that as per SBI’s FAQs in regard to the redemption of the bonds, every political party is permitted to open only one current account for this specific purpose, which can only be established in one of the 29 designated branches in the country.
- The information related to the redemption of electoral bonds by a political party would rest exclusively with the authorized branches, ensuring accessibility.
- It was emphasized that SBI was following the protocol diligently, indicating the adoption of a systematic and structured approach.
- The Court laid down directives for SBI to disclose the details by 12.03.2024 and for ECI to compile received information and publish them on the official website no later than 5 pm on 15.03.2024.
- During the pendency of the instant application, ECI submitted its statements in compliance with the interim orders of the Court, which were kept in the Court’s custody.
- SBI was instructed to submit an affidavit signed by its Chairman and Managing Director upon compliance with the Court’s orders.
- While the Court refrained from exercising its powers in the contempt petition, it warned SBI that it would do so if SBI failed to follow up on the Court’s orders.
CONCLUSION:
The Supreme Court held that the transparency of the Electoral bonds is just as significant as the compliance with its directives regarding the disclosure of information related to the bonds. The extension sought by SBI was rejected and SBI was mandated prompt compliance of the Court’s orders disclosing the said information. However, the Court did not exercise immediate action on the contempt petition and warned SBI of potential consequences for non-compliance instead.
