SC refuses interim stay on electoral bonds scheme
The application seeking a stay on the scheme was filed as part of a Public Interest Litigation filed in 2017 challenging the amendments to at least three major statutes to enable the introduction of the electoral bonds.Updated: Jan 21, 2020 05:13 IST
The Supreme Court on Monday declined an interim stay on the electoral bonds scheme first notified in 2018 and granted two weeks to the Election Commission (EC) to respond to the plea challenging it. The Association for Democratic Reforms (ADR), a non-governmental organisation, and the Communist Party of India (Marxist) or CPI (M) have challenged the scheme
“Stay was not granted before and we may not do it now,” Chief Justice of India S A Bobde, who heads the bench hearing the matter, remarked.
The court was initially inclined to grant four weeks to the EC to respond to the ADR and CPI (M) plea against the scheme. Advocate Prashant Bhushan, who appeared for the petitioners, opposed it saying that the Delhi assembly elections next month would be over by then and political parties would have received funds. He persuaded the court to hear the matter after two weeks.
“Initially the scheme was meant only for the Lok Sabha elections. But now every time there is an election, they open it [the scheme] and the ruling party gets thousands of crores,” Bhushan told the court as he urged it to stay the scheme.
The application seeking a stay on the scheme was filed as part of a Public Interest Litigation filed in 2017 challenging the amendments to at least three major statutes to enable the introduction of the electoral bonds.
A series of recent media reports by HuffPost India based on information obtained under the Right to Information Act had brought to light reservations expressed by the Reserve Bank of India (RBI) and the EC regarding electoral bonds. The RBI had opposed the scheme and repeatedly warned against it, saying it has the potential to increase black money circulation, money laundering, cross-border counterfeiting, and forgery. It had also raised concerns regarding the amendment to Section 31 of the RBI Act for enabling scheduled banks to issue Electoral Bearer Bonds.
The application stated that objections to the scheme by the RBI were summarily dismissed by the Union finance ministry in January 2017. Subsequently, repeated objections raised by the RBI were disregarded by the government, it added. Likewise, the EC had also opposed the introduction of the bonds through the amendment to the Representation of People Act, the petitioners stated.
The plea also alleged that the Prime Minister’s Office ordered the illegal sale of electoral bonds for state assembly elections on two separate occasions in violation of its own scheme.
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 they are citizens of India or have been incorporated or established in the country. The bonds are in multiple denominations and are issued specifically for the purpose of the contribution of funds to political parties.
The first issue of electoral bonds happened in March 2018. Electoral bonds worth more than Rs 6000 crore were sold between March 2018 and October 2019.
The scheme was introduced through the Finance Act, 2017, which amended various provisions of the Reserve Bank of India Act, the Representation of People Act, the Income Tax Act, the Companies Act, and Foreign the Contribution Regulation Act to enable the introduction of the bonds.
The Finance Act, which was passed as a money bill, meant that it did not require the assent of Parliament’s upper House or Rajya Sabha. This, the petitioner submitted, was done to bypass the Rajya Sabha where the ruling Bharatiya Janata Party does not have a majority.
The petitioners submitted that the consequence of the amendments was that annual contribution reports of political parties to be furnished to the EC need not mention names and addresses of those contributing by way of electoral bonds thereby killing transparency in political funding.
The removal of a cap on donations by the amendment of the Companies Act, 2013, and the amendments to Section 236 of the Foreign Contribution (Regulation) Act, 2010, were also challenged as opening the avenues of foreign contribution to political parties.