The Election Commission on Wednesday told the Supreme Court that it supports the existing system of political party funding through electoral bonds, although it added that it would like the process to be more transparent, a concern that it said could be considered later.
The submission of the poll body came at a crucial juncture during the court’s hearing of a plea moved by NGO Association for Democratic Reforms seeking stay on sale of electoral bonds from April 1 to 10 ahead of the Assembly elections in West Bengal, Tamil Nadu, Kerala, Assam and union territory of Puducherry.
Senior advocate Rakesh Dwivedi appearing for EC said, “The Commission is supporting electoral bonds and not opposing it. If we don’t support it we will go into a pre-existing system of receiving donations through cash. Electoral bonds goes one step forward as all bonds have to be obtained from the bank only. This way there is accountability. But we are also asking for transparency. That can be considered later by the Court.”
The EC’s reference to transparency is significant because currently, electoral bonds promise anonymity, with only the issuing bank, the state-owned State Bank of India being aware of the identity of the purchaser. Electoral bonds were notified by the government in January 2018 and were first issued in March 2018.
{{/usCountry}}The EC’s reference to transparency is significant because currently, electoral bonds promise anonymity, with only the issuing bank, the state-owned State Bank of India being aware of the identity of the purchaser. Electoral bonds were notified by the government in January 2018 and were first issued in March 2018.
{{/usCountry}}A three-judge bench headed by Chief Justice of India (CJI) SA Bobde recorded the submission of EC and reserved orders on the application filed by ADR. While doing so, the Court raised an apprehension of a possible misuse of these bonds and the mechanism available with the Centre to remedy the situation. To be sure, this was not the main objection of the petitioner -- who was objecting to the very use of the bonds, not their misuse.
The bench, also comprising Justices AS Bopanna and V Ramasubramanian said, “What if a political party has got ₹100 crore worth bonds and it intends to finance protests? What is the control that the Government has on the use of this money by parties for terrorist purposes, illegal activities or for purposes outside their political agenda? ”
Attorney General KK Venugopal appearing for Centre referred to certain checks and balances. He said that parties are required to file their income tax returns each year showing how they have expended the money. The political party can face deregistration if it is found to indulge in anti-national or illegal activities. Venugopal said that the use of bonds is essential for the country as it has curbed black money being used in elections.
For the petitioner, advocate Prashant Bhushan submitted that there was complete anonymity about who purchases these bonds and to whom it is subsequently transferred. He read out an earlier affidavit filed by Election Commission in March 2019 where it raised concerns over lack of transparency in tracking political party donations.
Although the petition by ADR was filed in Supreme Court in September 2017, arguments have not concluded and from time to time, the NGO has approached the Supreme Court to stall issuance of these bonds till the matter is finally decided. Bhushan said that during the proceedings of this case, the Supreme Court in April 2019 directed political parties to submit receipts of electoral bonds in a sealed cover to the Election Commission. On Wednesday, EC told the court that all major political parties had filed their receipts.
Bhushan said that even this would not help as EC would not know the identity of the donor. “Why should there be anonymous funding to political parties when past judgments of the Supreme Court have held that transparency in elections is a right of voters not under the Right to Information Act but as a matter of right in a democracy?” Bhushan asked,
Venugopal said that bonds cannot be subsequently traded. The process follows KYC norms and anonymity of the donors is maintained in order to prevent their victimization, he explained.
The electoral bonds system was introduced by way of a money bill introducing amendments in the Finance Act and the Representation of Peoples Act. ADR claimed that such anonymous route of funding amounted to legitimizing bribery as corporate could fund the party in power in a state or Centre as a matter of quid pro quo. These donations enjoy 100% tax exemption and even foreign companies can donate through Indian subsidiaries, the petition added.
“The Electoral Bonds Scheme has opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies which can have serious repercussions on the Indian democracy,” the application filed by ADR stated, adding that the Finance Act of 2017 exempts contributions by way of electoral bonds to be disclosed to the EC under Section 29C of the Representation of Peoples Act.