Important topics and their relevance in UPSC CSE exam for February 16, 2024. If you missed the February 15, 2024 UPSC CSE exam key from the Indian Express, read it here

FRONT PAGE

Upholding citizen’s right to know, court strikes down electoral bonds scheme, secret funding of polls

Syllabus:

Preliminary Examination: Indian Polity and Governance

Main Examination: General Studies II: Important aspects of governance, transparency and accountability

Key Points to Ponder:

• What’s the ongoing story- IN a historic verdict barely weeks before the Lok Sabha polls are set to be notified, the Supreme Court struck down Thursday the Narendra Modi government’s 2018 electoral bonds scheme of anonymous political funding. Highlighting that “the information about funding to a political party is essential for a voter to exercise their freedom to vote in an effective manner”, a five-judge Constitution bench, headed by Chief Justice of India.

• What exactly Supreme Court’s five-judge Constitution bench, headed by Chief Justice of India said?

• First of all, what are electoral bonds?

• Why and when electoral bonds were introduced?

• Electoral Bonds-Key Features

• Which Bank is the only bank authorised to sell Electoral Bonds?

• “Holding the scheme “violative” of the constitutional right to freedom of speech and expression and right to information, the court did not agree with the Centre’s contention that it was meant to bring about transparency and curb black money in political funding”- How it is “violative” of the constitutional right to freedom of speech and expression and right to information?

• What orders does the court issue to the SBI, the authorized financial institution under the scheme?

• Supreme Court’s Verdict-In its two separate but unanimous verdicts spanning 232 pages, the court directed the SBI, the authorised financial institution under the scheme, to submit by March 6 the details of electoral bonds purchased since April 12, 2019 till date to the Election Commission which will publish the information on its official website by March 13.

“SBI must disclose details of each electoral bond encashed by political parties which shall include the date of encashment and the denomination of the electoral bond,” the bench said. On April 12, 2019, the SC, in an interim order, had asked political parties to submit details of donations via electoral bonds to the EC in a sealed cover to be kept in the safe custody of the commission till further orders.

The SC also directed that electoral bonds which are within the validity period of 15 days but have not been encashed by political parties shall be returned by the political party or the purchaser — depending on who is in possession of the bond — to the issuing bank which shall refund the amount to the purchaser’s account.

The bench, also comprising Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra, struck down a set of amendments. “The Electoral Bond Scheme, the proviso to Section 29C(1) of the Representation of the People Act, 1951 (as amended by Section 137 of the Finance Act 2017); Section 182(3) of the Companies Act (as amended by Section 154 of the Finance Act 2017); and Section 13A(b) (of the Income Tax Act) (as amended by Section 11 of the Finance Act 2017) are violative of Article 19(1)(a) and unconstitutional,” the bench said.

It held that “the deletion of the proviso to Section 182(1) of the Companies Act, permitting unlimited corporate funding to political parties is arbitrary and violative of Article 14”. Section 29C of the RPA as amended by the Finance Act 2017 stipulated that the political party need not disclose financial contributions received through electoral bonds. Section 13A of the IT Act as amended said that the political party does not have to maintain a record of contributions received through electoral bonds. Section 182 of the Companies Act 2013 was amended by the Finance Act 2017 by which the earlier requirement of disclosure of particulars of the amount contributed by companies to political parties in their profit and loss accounts was deleted and donors were only required to disclose the amount contributed without disclosing particulars about the political party to which the contribution was made.

The court did not agree with the Centre’s submission that the political party which receives the contribution does not know of the identity of the contributor as neither the bond would have their name nor could the bank disclose such details to the party. The court argued that “de jure anonymity of the contributors does not translate to de facto anonymity.” Saying that the scheme is not fool-proof, the court said that there are “sufficient gaps” in the scheme which enable political parties to know who paid how much.

The government had argued that the scheme was intended to curb black money and ensure that contributions to parties flow through legitimate banking channels. But the bench held that the scheme does not satisfy the least restrictive test necessary for imposing curbs under Article 19(2) on the right to information under Article 19(1)(a) of the Constitution. “The purpose of curbing black money is not traceable to any of the grounds in Article 19(2)”.

The court added that the scheme “is not the only means for curbing black money in Electoral Financing” and “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”. For contributions below Rs 20,000, electronic transfer is the “least restrictive” and “Electoral Trust” for amounts above that, it pointed out.

The bench held that “the right to informational privacy extends to financial contributions to political parties which is a facet of political affiliation” but added that “the Constitution does not establish a hierarchy between the right to information guaranteed under Article 19(1)(a) and the right to informational privacy to political affiliation, traceable to Articles 19(1)(a), 19(1)(b), 19(1)(c), and Article 21”.

The SC said, “we are unable to see how the disclosure of information about contributors to the political party to which the contribution is made would infringe political expression. .. Under the current Scheme, it is still open to the political party to coerce persons to contribute. Thus, the argument of the Union of India that the Electoral Bond Scheme protects the confidentiality of the contributor akin to the system of secret ballot is erroneous”.

On the amendment to Section 182 of the Companies Act permitting unlimited political contributions by companies as manifestly arbitrary, the SC said “the ability of a company to influence the electoral process through political contributions is much higher when compared to that of an individual.” A company, the bench said, has a “much graver influence on the political process, both in terms of the quantum of money contributed to political parties and the purpose of making such contributions.” It added: “Contributions made by individuals has a degree of support or affiliation to a political association. However, contributions made by companies are purely business transactions, made with the intent of securing benefits in return. The amendment to Section 182 is manifestly arbitrary for treating political contributions by companies and individuals alike”.

The apex court said, “Companies before the amendment to Section 182 could only contribute a certain percentage of the net aggregate profits. The provision classified between loss-making companies and profit-making companies for the purpose of political contribution and for good reason.. the underlying principle of this distinction was that it is more plausible that law-making companies will contribute to political parties with a quid pro and not for the purpose of income tax benefits”.

“The provision as amended by the Finance Act of 2017 does not recognise that the harm of contributions by loss-making companies in the form of quid pro quo is much higher. Thus the amendment…is manifestly arbitrary for not making a distinction between profit-making and loss-making companies for the purposes of political contribution”.

The court pointed out: “The purpose of Section 182 is to curb corruption and electoral financing. For instance, the purpose of banning a government company from contributing is to prevent such companies from entering the political fray. Amendment to Section 182 by permitting unlimited corporate contributions authorises unrestrained influence of companies in the electoral process. This is violative of the principle of free and fair elections and political equality captured in the value of one person, one vote.”

The verdict said financial contributions to political parties are usually made for two reasons — they may constitute an expression of support to the political party or the contribution may be based on a “quid pro quo”. “The huge political contributions made by corporations and companies should not be allowed to conceal the reason for financial contributions made by another section of the population: a student, a daily wage worker, an artist, or a teacher. When the law permits political contributions and such contributions could be made as an expression of political support which would indicate the political affiliation of a person, it is the duty of the Constitution to protect them,” it said.

In October last year, the bench began hearing arguments on the four petitions, including those filed by Congress leader Jaya Thakur, the Communist Party of India (Marxist) and the NGO Association for Democratic Reforms (ADR).

• What has the ECI’s stance been?

• What has the Centre’s stance been?

• What Association for Democratic Reforms (ADR) data says about Electoral Bonds?

• Why are electoral bonds being so vehemently opposed by transparency activists?

• How popular are electoral bonds as a route of donation?

• What does the Supreme Court have to say on electoral bonds previously?

• What is the Election Commission’s stand on electoral bonds?

• Reserve Bank of India on electoral bonds scheme?

• Do you think that the Electoral Bond Scheme is arbitrary, unconstitutional and problematic?

Other Important Articles Covering the same topic:

????SC draws new red line: burden is on state to be ‘least restrictive’

????Money creates exclusionary impact on candidates, parties: SC

????How the verdict counters former FM Arun Jaitley’s arguments

????Unknown income of parties rose to 72% during 2018-’22: Data

????Objections that RBI, EC raised on the Electoral Bonds Scheme

GOVT & POLITICS

Ajit faction ‘real NCP’: Speaker dismisses pleas for disqualification

Syllabus:

Preliminary Examination: Indian Polity and Governance-Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues, etc.

Mains Examination: General Studies II: Parliament and State legislatures—structure, functioning, conduct of business, powers & privileges and issues arising out of these.

Key Points to Ponder:

• What’s the ongoing story-In a setback to the Nationalist Congress Party faction headed by Sharad Pawar, Maharashtra Assembly Speaker Rahul Narwekar on Thursday declared that the rival faction headed by Deputy Chief Minister Ajit Pawar is ‘the real political party’. The Speaker delivered his verdict on two petitions filed by both factions nearly six months after the party split into two groups.

• What was the Speaker deciding, and why?

• Which three factors did the Speaker consider to decide the issue?

• Why the 1999 constitution?

• What did Narwekar say about the leadership structure of the Shiv Sena?

• Why did the Speaker hold that Uddhav did not have power to expel Shinde from the party?

• What did Narwekar say about legislative majority?

• What did the Speaker say on the Shinde faction MLAs’ disqualification plea?

• What was the political setup in Maharashtra before the crisis?

• Why was there a political crisis in Maharashtra in 2022?

• What Supreme Court said exactly?

• Where did the Speaker differ with SC findings?

• Supreme Court’s Verdict- In its judgement, the Supreme Court said the “floor test cannot be used as a medium to resolve internal party disputes or intra party disputes” and noted that “dissent and disagreement within a political party must be resolved in accordance with the remedies prescribed under the party constitution, or through any other methods that the party chooses to opt for”. In its judgement, the Supreme Court said, “Ultimately, the decision of the Speaker on the question of disqualification is subject to judicial review.” It asked the Speaker to decide the disqualification petitions “within a reasonable period”. The court also rejected the contention of the Thackeray camp that the validity of the proceedings in the House during the pendency of the disqualification petitions would depend on the outcome of the disqualification petitions.

• Supreme Court on the role of the Governor-The SC said the power of the Governor to summon the House under Article 174 must be exercised on the aid and advice of the Council of Ministers. Doing so without the aid of the Council of Ministers “has ramifications on parliamentary democracy”, it said, adding that “the discretion to call for a floor test is not an unfettered discretion but one that must be exercised with circumspection, in accordance with the limits placed on it by law”. On the Governor’s role, it said, “…He cannot exercise a power that is not conferred on him by the Constitution or a law made under it. Neither the Constitution nor the laws enacted by Parliament provide for a mechanism by which disputes amongst members of a particular political party can be settled. They certainly do not empower the Governor to enter the political arena and play a role (however minute) either in inter-party disputes or in intra-party disputes.”

• Supreme Court on the role of the Speaker and appointment of Whip-“The Speaker must only recognise the whip appointed by the political party,” the Supreme Court said. Accordingly, it termed the decision of the Speaker (Rahul Narwekar) recognising Gogawale as the Chief Whip of the SSLP “illegal because the recognition was based on the resolution of a faction of the SSLP without undertaking an exercise to determine if it was the decision of the political party”. “The Speaker must recognise the Whip and the Leader who are duly authorised by the political party with reference to the provisions of the party constitution, after conducting an enquiry in this regard and in keeping with the principles discussed in this judgement,” it said. Writing for the bench, the CJI said, “The plain meaning of the provisions of the Tenth Schedule, 1986 Rules, and Maharashtra Legislature Members (Removal of Disqualification) Act of 1956 indicate that the Whip and the Leader must be appointed by the political party.” “The Tenth Schedule was introduced to thwart the growing tendency of legislators to shift allegiance to another political party after being elected on the ticket of a certain political party… When the anti-defection law seeks to curb defections from a political party, it is only a logical corollary to recognise that the power to appoint a Whip vests with the political party,” it said.

“To hold that it is the legislature party which appoints the Whip would be to sever the figurative umbilical cord which connects a member of the House to the political party. It would mean that legislators could rely on the political party for the purpose of setting them up for election, that their campaign would be based on the strengths (and weaknesses) of the political party and its promises and policies, that they could appeal to the voters on the basis of their affiliation with the party, but that they can later disconnect themselves entirely from that very party and be able to function as a group of MLAs which no longer owes even a hint of allegiance to the political party. This is not the system of governance that is envisaged by the Constitution. In fact, the Tenth Schedule guards against precisely this outcome. That a Whip be appointed by the political party is crucial for the sustenance of the Tenth Schedule….,” the Supreme Court said.

• Supreme Court on the Election Symbols-The Election Commission and the Speaker were empowered to concurrently adjudicate on the petitions before them under the Tenth Schedule and under Paragraph 15 of the Symbols Order – to decide who is the real Shiv Sena, respectively. “This is because the decision of the Speaker and the decision of the ECI are each based on different considerations and are taken for different purposes. The decision of the ECI has prospective effect(s). A declaration that one of the rival groups is that political party takes effect prospectively from the date of the decision,” the SC said. “In the event that members of the faction which has been awarded the symbol are disqualified from the House by the Speaker, the members of the group which continues to be in the House will have to follow the procedure prescribed in the Symbols Order and in any other relevant law(s) for the allotment of a fresh symbol to their group,” it said.

Other Important Articles Covering the same topic:

????Sena vs Sena: Speaker says Shinde Sena ‘real party’, dismisses all pleas for disqualification

THE EDITORIAL PAGE

Democracy’s guardian angel

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Salient features of the Representation of People’s Act.

Key Points to Ponder:

• What’s the ongoing story- February 15, 2024 will go down in India’s history as a golden day. The Supreme Court has struck a decisive blow on behalf of democracy, which it has held as the basic structure of the Constitution. The five-member Constitution Bench, in a unanimous verdict, upheld every challenge to every aspect in the electoral bonds case, declaring the scheme unconstitutional. It ordered the SBI to stop issuing electoral bonds immediately and submit all information of the bonds sold, and the names of all the donors and recipients, to the Election Commission of India (ECI).

• “The Court said the scheme violates the right to information”-Discuss

• “In retrospect, the launch of the scheme through the Union budget of 2017 was itself intriguing”-Comment

• “The Finance Act of 2017 introduced amendments to several laws, including the Reserve Bank of India Act, Companies Act, Income Tax Act 1961, Representation of the People Act, and Foreign Contribution Regulation Act, to pave the way for electoral bonds”-Know in detail

• “Three significant changes did not receive adequate attention”-How

• For Your Information-In 2017, the ECI in its letter to the law ministry warned that electoral bonds would help in hiding illegal donations and lead to mushrooming of shell companies to turn their black money to white. The government brushed off its concerns. It is important to remember that citizens’ right to know was settled by the apex court in 2003 when it mandated candidates to declare their financial dealings and criminal cases while filing nominations. The Supreme Court ruled that the right to know about public officials is derived from the constitutional right to freedom of expression. Now that we are back to square one, let’s look at the available options to cleanse electoral funding. One option is to eliminate private funding altogether and introduce public funding for political parties. Another option would be to establish a National Election Fund to which all donors could contribute. The funds could be allocated to parties based on their electoral performance. This would eliminate the so-called concern about donors’ reprisals. During the hearing, the apex court, however, flagged a new issue — the possibility of misuse of money received by political parties for activities like funding terror or violent protests, and asked the Centre whether it has any control on the end use.

On two occasions, however, the Supreme Court had refused to stay the electoral bonds scheme as requested by a plea filed by the Association for Democratic Reforms. This had created despondency and apprehensions about the course the case would take. There were disturbing moments when constitutional bodies like the ECI and RBI took a u-turn on their earlier opposition to the scheme. I was appalled to hear the argument of the Solicitor General that citizens have no right to know the identity of donors/recipients. The Attorney General told the SC, in his written submissions, that the citizens’ right to know is subject to “reasonable” restrictions. How can keeping the potential quid pro quo between donors and the government a secret from the public be a “reasonable” restriction? These statements would behove a banana republic, not the world’s largest democracy.

• Why this is a very significant judgment on electoral democracy?

Other Important Articles Covering the same topic:

????Re-energising RTI

ALL THAT IT HOLDS

Syllabus:

Preliminary Examination: History of India

Mains Examination: General Studies I: Indian culture will cover the salient aspects of Art Forms, literature and Architecture from ancient to modern times.

Key Points to Ponder:

• What’s the ongoing story- Narayani Gupta Writes: A century and a half ago, the people of Shahjahanabad used to climb the southern ramparts of the city wall between Turkman Gate and Dilli Gate, to look at the Khandrat Kalan (the great ruins). These were the vestiges of earlier Delhis. The domed buildings afforded waterproof shelter for village populations. From the 1920s, the khandrat were mapped and identified by the Archaeological Survey of India (ASI).

• What are the problems with restoration activities?

• What are centrally protected monuments?

• What is a national monument?

• Archaeological Survey of India (ASI)-Powers, Functions, Role and Mandate

• “Archaeological Survey of India (ASI) failed to act as guardian of India’s heritage” once observed by Supreme Court in the context of Taj Mahal-Do you think that ASI has failed to preserve other monuments and Heritage of India?

• Archaeological Survey of India (ASI)-Significance

• Do you Know-A ‘monument of national importance’, if designated by the Archaeological Survey of India (ASI), authorises the central government to “maintain, protect and promote the site”, which may be considered of significant historical importance, as mandated by the Archaeological Sites and Remains Act, 1958. Currently, there are around 3,600 monuments of national importance being protected by the ASI.

Other Important Articles Covering the same topic:

????Protecting protected monuments

Previous year UPSC Mains Question Covering similar theme: ????The rock-cut architecture represents one of the most important sources of our knowledge of early Indian art and history. Discuss. (GS 1, 2020) ????Safeguarding the Indian Art Heritage is the need of the moment. Discuss. (GS 1, 2019)

EXPLAINED

Proportionality in Electoral Bonds case

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Structure, organization and functioning of the Executive and the Judiciary—Ministries and Departments of the Government; pressure groups and formal/informal associations and their role in the Polity.

Key Points to Ponder:

• What’s the ongoing story- Underlining that the restrictions on free speech by the electoral bonds scheme are not “proportional” to its goal, a five-judge Constitution Bench of the Supreme Court, headed by Chief Justice of India (CJI) DY Chandrachud, unanimously struck down the scheme.

Essentially, the judicial review of the electoral bonds scheme involved examining whether the extent of the state’s encroachment into the rights of individuals was proportional to achieve its objectives — curbing black money and protecting donor privacy.

• What is the proportionality test? How does the Court decide whether the state action is proportional?

• What are govt’s argument?

• How the test was used?

• For Your Information-A law passed by Parliament cannot interfere with Part-III of the Constitution that lists out the inviolable fundamental rights. The only interference with Article 19(1) — which guarantees the fundamental right to free speech — permissible is to the extent that the “reasonable restrictions” listed in Article 19(2) are not flouted. The test to decide whether an action is a reasonable restriction is the proportionality test.

In the 2018 SC ruling that upheld the Aadhaar Act, Justice Chandrachud in his dissenting opinion said that the proportionality test is “the dominant best practice judicial standard for resolving disputes that involve either a conflict between two rights claims or between a right and a legitimate government interest.” The test is deemed necessary to guard against arbitrary action, so that the state cannot extinguish the right entirely even in pursuance of a legitimate state interest. For example, the right to life cannot be taken away to ensure law and order.

The test was formally laid down as the best practice in the 2017 seven-judge Bench Puttaswamy ruling, which recognised the right to privacy as a fundamental right. Justice Sanjay Kishan Kaul in his concurring opinion stated the the state action to be upheld must show: (i) The action is sanctioned by law; (ii) The proposed action must be necessary in a democratic society for a legitimate aim; (iii) The extent of such interference must be proportionate to the need for such interference; and (iv) There must be procedural guarantees against abuse of such interference.”

Justice Khanna, applying the proportionality test in his separate opinion, said that donor anonymity cannot be a legitimate state aim. He also held that voters’ right to know supersedes anonymity in political party funding. CJI Chandrachud, however, applied the “double proportionality” test. Since the case involves balancing facets of two competing fundamental rights — the right to information and the right to privacy, the proportionality test would not be enough.

According to him, the proportionality test is for when a right is directly tested against state action, but for a “balancing” of rights, the court needs to go further. Essentially, the court will have to examine the matter from the perspective of both rights and decide if the state has adopted the “least restrictive” methods to realise both rights. Additionally, whether the measure has a disproportionate impact on any one of the two rights also has to be looked at.

The CJI in his opinion pointed out that there are less intrusive methods, such as the electoral trusts scheme, to achieve the objective of curbing black money and protecting donor anonymity.

Other Important Articles Covering the same topic:

????Regulating political funding: Rules around the world, India’s challenge

Amendments in 3 key laws that SC struck down, restored status quo

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies II: Structure, organization and functioning of the Executive and the Judiciary—Ministries and Departments of the Government; pressure groups and formal/informal associations and their role in the Polity.

Key Points to Ponder:

• What’s the ongoing story- Along with the Electoral Bonds Scheme (EBS), the Supreme Court on Thursday (February 15) struck down several amendments that the government made in key laws to facilitate corporate donations to political parties. The amendments were made through The Finance Act, 2016, and The Finance Act, 2017, before the EBS was introduced in January 2018.

• What Representation of the People Act, 1951 says?

• What Finance Act, 2017 did?

• What the SC said?

• The Companies Act, 2013-Know key features

• The Companies Act, 2013 and the Electoral Bonds Scheme (EBS)-Connect the dots

• What Income-tax Act, 1961 said about the Electoral Bonds Scheme (EBS)?

• What the SC said about Income-tax Act, 1961 and the Electoral Bonds Scheme?

Other Important Articles Covering the same topic:

????Why did the Supreme Court strike down the Electoral Bonds Scheme?

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