Electoral bonds: Supreme Court says it will examine whether anonymous donation is to avoid ramifications to donors

The Supreme Court on Tuesday remarked that anonymity behind political donations under the Electoral Bonds Scheme could perhaps be aimed at preventing repercussions from parties to which a person or entity has not made donations [Association for Democratic Reforms and Anr vs Union of India Cabinet Secretary and ors]..A bench of Chief Justice of India (CJI) DY Chandrachud with Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra said that could be reason why the scheme makes such donations anonymous and added that the Court will examine this aspect. The Court was hearing the batch of pleas challenging the legal validity of the scheme that facilitates anonymous donations to political parties.During the course of the hearing, advocate Prashant Bhushan appearing for the lead petitioner, Association for Democratic Reforms (ADR), argued that the scheme makes it impossible for the common man to figure out which company has donated to which political party.CJI Chandrachud then remarked,"The reason why there could be anonymity for the persons who have donated is because - suppose a person who runs a business donates amount to a party different to the one who is the ruling party of his State then there could be ramifications."The hearing began today nearly six years after the petitions challenging the same were filed before the top court in 2017..Background.The Electoral Bonds Scheme allows donors to anonymously send funds to a political party after buying bearer bonds from the State Bank of India.On October 16, the Supreme Court of India decided to refer the challenge to the controversial scheme to a five-judge Constitution Bench, in view of a legal issue involved relating to the passage of laws as money bills.Money bills can be passed without the assent of the Rajya Sabha and the electoral bonds scheme was also introduced by way of a money bill..An electoral bond is an instrument in the nature of a promissory note or bearer bond which can be purchased by any individual, company, firm or association of persons provided the person or body is a citizen of India or incorporated or established in India.The bonds, which are in multiple denominations, are issued specifically for the purpose of contributing funds to political parties in its existing scheme.Electoral bonds were introduced through the Finance Act, 2017, which in turn amended three other statutes - the RBI Act, the Income Tax Act and the Representation of People Act - to enable the introduction of such bonds.The 2017 Finance Act introduced a system by which electoral bonds could be issued by any scheduled bank for the purpose of electoral funding.The Finance Act was passed as a money bill, which meant that it did not require the assent of the Rajya Sabha.Various petitions being heard by the top court challenge at least five amendments made to different statutes through the Finance Act, 2017 on the ground that they have opened doors to unlimited, unchecked funding of political parties.The petitions have also raised the ground that the Finance Act could not have been passed as a money bill.The Central government in its counter-affidavit has maintained that the electoral bonds scheme is transparent.The top court had in March 2021 dismissed an application seeking a stay on the scheme..Hearing todayAdvocate Prashant Bhushan, appearing for the Association for Democratic Reforms (ADR), began his arguments by stating that the issue goes to the root of the democracy.He explained that political parties under the scheme were exempt from disclosing the identity of the buyer of electoral bonds, and only the Central government knows who has donated to whom as the bearer bonds are issued by the State Bank of India.Bhushan alleged that the parties in power were receiving "kickbacks" through the bonds. He said the ruling party at the Centre alone had received more than 50 percent of the donations under the Scheme."Less than one percent is received by the opposition parties. It violates the level playing field between the ruling party and the opposition parties," Bhushan submitted. He added that while it was difficult for a common man to know which company had anonymously donated to which party, the Central government could easily put "pressure" on SBI for disclosure of the information it wants. "This defeats the citizens right to know who is funding these political parties.".Electoral Bonds: Attorney General tells Supreme Court citizens don't have right to know about funding of political parties.In the context of right to know, Bhushan contended that if a citizen has the right to know about criminal antecedents or assets and liabilities of electoral candidates, the same should extend to political funding also. Bhushan argued that a company "investing" in a particular political party does it with an expectation that when in power, that party will bring favourable polices or legislations and also grant it contracts. The counsel argued that there is circumstantial evidence that electoral bonds are used as kickbacks and possible quid pro quo, and questioned why a debt-ridden company like Vedanta was donating so much to parties."Elections have become a game of money because the perception that a party has a chance of winning is created with visibility and this visibility is because of money credit to rallies, paid workers," he said..Senior Advocate Kapil Sibal, appearing for another petitioner, submitted that capital and influence go hand in hand. In this context, he argued that the electoral process must provide a level playing field to all participants.When Sibal argued that shareholders money was being shared without their consent through this scheme, CJI Chandrachud said there obviously exists an element of quid pro quo when corporate donations are permissible. "What are you doing in this process is to not inform the shareholder as to how his money is going to be spent. I think that is a very serious issue because he is investing in a company not for the purpose of donating to X and Y," Sibal responded.The senior counsel also submitted that though the nomenclature may suggest that the scheme was for the purpose of elections, it allows the political party to spend the money in whatever way they like. "It is a means for political parties to be enriched," Sibal added.Sibal also said the scheme was meant to protect criminals from being prosecuted under Prevention of Corruption Act and even the Prevention of Money Laundering Act. "You don't know who bribed whom," he added..Advocate Shadan Farasat, appearing for the Communist Party of India (Marxist), submitted that the scheme does not remove black money. Instead, it anonymises donations through banking channels.Like Sibal, Farasat also contended that the scheme "violates the right to conscience under Article 25 of individual shareholders as they do not know what is happening."Advocate Nizam Pasha submitted that the electoral bonds scheme is manifestly arbitrary.The hearing is set to continue tomorrow..[Follow our live-coverage of today's hearing]