Electoral bond scheme doesn’t violate any law or rights: Centre to Supreme Court
Attorney general R Venkataramani said the right to know as necessary for expression can be for specific ends or purposes and not otherwise
NEW DELHI: Judicial review is not about scanning State policies for the purposes of suggesting better or different prescriptions, the Union government has told the Supreme Court, as it defended the validity of the electoral bonds (EB) scheme and maintained that citizens do not have a fundamental right to be informed about the sources of political funding.
In a four-page written submission, attorney general (A-G) R Venkataramani emphasised that the EB scheme extends the benefit of confidentiality to the contributor.
“It ensures abiding by tax obligations. Thus, it does not fall foul of any existing right. A constitutional court reviews State action only if it impinges upon existing rights and not because State action has not provided for a possible right or an expectation howsoever desirable,” the A-G’s submissions filed before a five-judge constitution bench said.
The bench, headed by Chief Justice of India Dhananjaya Y Chandrachud and also comprising justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra, will begin hearing the case on October 31.
According to Venkataramani, the EB scheme does not impinge upon any existing right of any person and cannot be said to be repugnant to any right under Part III of the Constitution, dealing with fundamental rights. “In the absence of such repugnance, the Scheme will not be illegal. A law which is not so repugnant cannot be voided for any other reason… A law does not become void because it does not take cognisance of the possibility of an aspect being read into or treated as part of an enumerated right. Only existing rights need to be noticed,” said the A-G.
Responding to a bunch of public interest litigation (PILs) that have pressed for a right to have access to the details of contributions to political parties, the Centre said that there can be no general right to know anything and everything without being subjected to reasonable restrictions.
“The right to know as necessary for expression can be for specific ends or purposes and not otherwise. Democracy is a wide concept and comprehends many aspects. Right to know for the general health of democracy will be too over-broad,” said A-G’s submissions.
It added that the petitioners could not draw a parallel with the Supreme Court’s previous judgments on a voters’ right to know about the criminal antecedents of candidates or their assets because such information served a specific end of citizens’ choice of electing candidates free from blemish.
“From that, it cannot be said that the right to know for general or broad ends necessarily follows. Therefore, these judgments cannot be read as to suggest that a citizen has a right to information under Article 19(1)(a) regarding funding of political party,” it stated.
Stressing that the EB case was not the one for “court driven guidelines”, the A-G said that these are highly debatable matters and cannot be subjected to simplistic statements without Parliamentary debates.
“Contribution to political parties has democratic significance and a fit subject for political debate and demand of governance accountability free from influences does not mean that the court will proceed to declare on such matters in the absence of a clear constitutionally offending law… Additionally, even when the court proceeds to declare an aspect as part of a right for the first time, it will be in tune with separation of powers that the subject of reviewing or testing a law with the newly stated aspect of a right be relegated to public and parliamentary debates,” he said.
Free and responsive governance is premised on the role of political parties in the administration of the affairs of the community, said the A-G, calling it axiomatic that political parties receive all support including financial support and contributions.
“The scheme under challenge is regulatory within the scope of Article 19(2) of the Constitution. It facilitates transfer of funds to political parties of one’s choice through banking channels instead of direct inter-party transfer and ensures transfer by requiring tax abidance. In this way, it is a departure from prevalent modes of contributions which were not regulated,” he added. Article 19(2) enumerates reasonable restrictions on an array of fundamental rights.
On October 16, the court referred the matter to a constitution bench of five judges, underscoring that the importance of the matter calls for setting up a larger bench to deliver an authoritative verdict. On a previous date of hearing on October 10, the court fixed October 31 and November 1 to finally hear the matter, clarifying that the arguments in the matter will be wrapped up over the two dates being fixed and directed the Centre and other parties to submit their written submissions in the meantime. The assignment of dates for the final hearing had come after a gap of more than two years as the last effective hearing of the matter had taken place in March 2021.
During the brief proceedings on October 10, advocates Prashant Bhushan and Shadan Farasat highlighted the chief grounds of challenge to the EB scheme, arguing that the funding is anonymous at various levels: the identity of donors is not known; the amount donated by each of such donors is kept under wraps; and even the shareholders are not apprised of the details of their company’s donation to the political parties. Bhushan appeared Association for Democratic Reforms (ADR) and non-profit Common Cause, which jointly filed the petition in 2017, while Farasat represented the Communist Party of India (Marxist).
According to Bhushan and Farasat, EBs reek of secrecy that violates the people’s right to know, besides promoting corruption in elections that go to the root of democratic functioning in the country. Bhushan, during the hearing, also urged the bench to decide the matter as early as possible and preferably before the EB window for the 2024 Lok Sabha elections opens.
To bring in the EB scheme, the Centre had made multiple amendments by way of two Finance Acts — Finance Act, 2017 and Finance Act, 2016, which were passed as money bills without the oversight of the Rajya Sabha. The petitioners challenged the amendments as being “unconstitutional”, “violative of doctrines of separation of powers” and violative of an array of fundamental rights. The passage of the amendments as money bills were also challenged.
The EB scheme was first announced by former finance minister Arun Jaitley during the 2017 budget session and was notified in January 2018 as a source of political funding by way of money bills introducing amendments in the Finance Act and the Representation of the People Act. Certain amendments were also carried out in the Companies Act, Income Tax Act Foreign Contribution Regulation Act (FCRA) and the Reserve Bank of India Act, to implement the EB scheme.
These bonds are issued by the State Bank of India and donations made under this scheme by corporate and even foreign entities enjoy 100% tax exemption while the identities of the donors are kept confidential both by the bank as well as the recipient political parties.
Under the scheme, bonds are available for purchase at any SBI branch in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh and ₹1 crore and can be bought through a KYC-compliant account. There is no limit on the number of electoral bonds that a person or company can purchase.
Every party registered under section 29A of the Representation of the People Act and having secured at least 1% of the votes polled in the most recent Lok Sabha or state election has been allotted a verified account by the Election Commission of India. The donor can donate the bond to a party of their choice, which can cash it within 15 days, only through the allotted account.
The bonds go for sale in 10-day windows at the beginning of every quarter -- in January, April, July and October, besides an additional 30-day period specified by the central government during the years when the Lok Sabha elections are scheduled to be held.
In March 2021, the top court dismissed two stay applications moved by the ADR to stop the sale of the electoral bonds ahead of elections in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry. It held that there was no justification to block their sale over concerns of anonymity in political party funding or apprehensions of their misuse and that the sale had continued “without any impediment” in 2018, 2019 and 2020 as well.
Earlier, in April 2019, the top court introduced an interim “safeguard” by directing all political parties to submit details of receipts of the electoral bonds to the Election Commission of India (ECI) in a sealed cover. This was done as an interim measure till the pending petitions challenging the validity of these electoral bonds were decided.
At that time, the ECI supported the existing system of political party funding through EBs although the constitutional body flagged a lack of transparency which it said could be considered at a later stage.
The Centre has however maintained that the EB scheme ensures transparency and is a powerful check on the use of illicit money in elections.
In October last year, solicitor general Tushar Mehta, appearing for the Centre, told the court that the methodology of receiving money through EBs was “transparent”, adding it is impossible to get any money in black anymore.
The September 2017 petition by ADR and Common Cause claimed that such an anonymous route of funding amounted to legitimizing bribery as corporates could fund the party in power in a state or Centre as a matter of quid pro quo. These donations enjoy 100 per cent tax exemption and even foreign companies can donate through Indian subsidiaries, they 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 ADR claimed, 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.
Petitions by CPI(M) and advocate Ashwini Upadhyay have also raised issues pertaining to electoral bonds and have been tagged with the ADR’s plea, which is the lead matter in the case.
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