The Supreme Court on Thursday asked the Election Commission of India to collect data on electoral bonds till September 30, 2023, from the State Bank of India and political parties. It heard the submissions of Attorney General of India R Venkataramani and reserved its verdict on a batch of petitions challenging the validity of the electoral bonds scheme for funding political parties.
A five-judge constitution bench comprising Chief Justice DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra started hearing the matter on October 31. The four petitions included those filed by Congress leader Jaya Thakur, the CPI(M) and Association for Democratic Reforms (ADR).
Petitioners have argued that if the objective of the electoral bonds scheme is to end cash donations, it has not been achieved. The Centre through the solicitor general has argued that black money used in elections, a problem that countries around the world are grappling with, will be eradicated via digital payments.
On the last day of the hearing, Venkataramani argued that the electoral bonds scheme treats everyone equally. It will help in moving away from black money to a regulated system, which serves public interest. He said the confidentiality of a contributor is highly important, which is preserved under the scheme.
The scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring in transparency in political funding. According to its provisions, electoral bonds may be purchased by any Indian citizen or entity incorporated or established in India. An individual can buy electoral bonds, either singly or jointly with other individuals.
Only political parties registered under Section 29A of the Representation of the People Act, 1951, and which secured not less than 1 percent of the votes polled in the last election to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds.
The notification stated that electoral bonds shall be encashed by an eligible political party only through an account with an authorised bank. The apex court had, in April 2019, declined to stay the electoral bonds scheme and made it clear that it will accord an in-depth hearing on the pleas as the Centre and the Election Commission of India (ECI) had raised “weighty issues”, which had “tremendous bearing on the sanctity of the electoral process in the country”.
Here is all you need to know about the hearing in the electoral bonds matter before the SC:
What were the major questions?
- Was introducing the electoral bonds scheme as the Finance Act and, thereby bypassing Rajya Sabha, justified?
- Does the scheme facilitate unaccounted anonymous political donations by corporations?
What are the arguments put forth by petitioners?
Petitioners questioned the legal validity of the electoral bonds scheme and argued that through it the Centre has legalised kickbacks.
Arguing this point, advocate Prashant Bhushan said: “This anonymous instrument promotes corruption because there is good reason to believe that these bonds are being given by way of kickbacks to parties in power.”
Petitioners argued that the BJP received more than 60 percent of the contributions via electoral bonds while other parties received insignificant amounts.
The BJP received Rs 5,217 crore out of a grand total of Rs 9,191 crore. Rs 952 crore went to the Congress; Rs 767 crore to the Trinamool Congress; Rs 383 crore to the Bharat Rashtra Samithi; Rs 330 crore to the YSRCP; Rs 112 crore to the Telugu Desam Party; and Rs 63 crore to the NCP.
“The central ruling party got more than 60 percent of the total contributions; other parties received insignificant amounts,” Bhushan said.
Senior advocate Kapil Sibal argued that capital and influence go hand in hand, and more capital means more power. “…In fact, in the very concept of a market economy, capital symbolises power. And it may be in any sector of the economy as it is in politics,” he said.
He added: “The more capital you have, the more power you get. Second, the electoral process must be such that it provides a level playing field to all participants. Fair and free elections are the basic structure of the Constitution.”
The CPI(M) argued that it had not accepted a single penny through electoral bonds. “We’re the only political party here. Despite being a ruling party, we’ve taken a principled stance not to accept any electoral bond. We haven’t taken a single rupee in electoral bonds in the last five-and-a-half years, and at much cost to us,” it said.
The party, which is part of the ruling Left Democratic Front in Kerala, told the SC that the electoral bonds scheme is not in place to reduce black money. “The architecture and effect of the electoral bonds scheme is not to reduce black money but to reroute non-anonymous banking channel funding to anonymous electoral bonds,” argued advocate Shadan Farasat.
The CPI(M) also told the apex court that by way of electoral bonds, the Centre had created another white money channel and attached anonymity to it. “This scheme is an alternative white money channel created by the government. There was already a disclosure based channel – normal banking channels – RTGS, bank draft, cheques etc. This is a new channel and they’ve added anonymity to it,” it argued.
What are the arguments put forth by the Centre?
Solicitor General Tushar Mehta, arguing for the Centre, told SC that the electoral bonds scheme is not a standalone measure to tackle black money. “The use of unaccounted cash or black money in driving the electoral process of the country remains a matter of serious concern. This scheme cannot be taken as a standalone step to counter it, and there are many such schemes aiding political governance of this political structure,” he said.
Mehta further argued that if the element of anonymity goes away, the scheme goes back to the pre-era. “Every word of the scheme is rational… if the element of anonymity goes, the scheme goes back… What is anonymity or opaqueness, if nothing but confidentiality by design? If the element of confidentiality goes from the scheme, then the scheme goes,” he said.
Countering the “level playing field” argument put forward by the petitioners challenging the scheme, the Centre said it can be achieved if all political parties have faith in it. Mehta said a level-playing field can only be there when all parties have similar kinds of trust and faith.
“This is not as if I go and deposit some amount in the bank and someone calls the bank and gets to know Tushar Mehta has deposited it. It cannot be so when confidentiality is the heart of the electoral bonds scheme, and how we maintain secrecy cannot be a public debate,” he added.
Mehta also told the court that electoral bonds enhance the process of free and fair elections. He said the scheme shifts donations from cash to banking channels. “The ruling party is not getting the maximum amount because of the scheme. Even otherwise, the ruling party will get the maximum donations. The Biju Janata Dal (BJD) is the ruling party in one state (Odisha), and that is why they have the maximum from that state. It cannot be said there is no level-playing field because of this scheme,” he argued.
What are the observations of the SC bench so far?
During the course of the hearing, CJI Chandrachud observed that the electoral bonds scheme is “selectively anonymous”. “The problem with the scheme is that it provides selective anonymity, and not general… it is not qua the SBI or law enforcement agencies… a large donor will never buy the electoral bonds to grant it to the political parties,” he said.
The CJI further observed that the scheme does not provide a level-playing field, creating an “informational hole”. “The problem… is if it does not provide a level-playing field or leads to opacity. Maybe, the earlier scheme did not help curb that much black money but there was disclosure to whom the donations were being made. Now, in an attempt to have more black money into the official channel, there is an informational hole and the objective is laudable but we have to look at the means,” he said.
He also observed that the electoral bonds scheme should not become a legitimisation of kickbacks, and quid pro quo between the power centres and people who are benefactors of it.
“You can design another system that doesn’t have the flaws of this system; they put a premium on opacity,” he said.
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