Supreme Court dismisses plea against sale of electoral bonds

A three-judge bench of the apex court headed by Chief Justice of India (CJI) SA Bobde noted that the sale of these bonds, which began in January 2018, have continued “without any impediment” in 2018, 2019 and 2020.

The Supreme Court on Friday cleared the sale of the electoral bonds ahead of elections in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry finding no justification to block their sale over concerns of anonymity in political party funding or apprehensions of their misuse. The 10-day sale window will open, as scheduled, on April 1.

The Supreme Court. (File Photo)

Dismissing two stay applications moved by NGO Association for Democratic Reforms, filed in 2019 and earlier this month, a three-judge bench of the apex court headed by Chief Justice of India (CJI) SA Bobde noted that the sale of these bonds, which began in January 2018, have continued “without any impediment” in 2018, 2019 and 2020.

In April 2019, the Court introduced an interim “safeguard” by directing all political parties to submit details of receipts of the electoral bonds to the Election Commission in a sealed cover. This was done as an interim measure till the pending petitions challenging the validity of these electoral bonds were decided. With this order still in vogue, the bench, also comprising Justices AS Bopanna and V Ramasubramanian, said, “certain safeguards have already been provided by this Court in its interim order of April 12, 2019, (and) we do not see any justification for the grant of stay at this stage.”

The Election Commission which supported the electoral bond policy in the top court said it has received sealed covers from various political parties (national, state, registered and unregistered) as per the April 12, 2019 order. The list of parties that submitted the covers were also furnished to the Court.

Further, the court held that this interim arrangement will now remain and no applications for stay will be entertained every time the window for sale of electoral bonds is opened.

ADR, in its application claimed that electoral bonds could be a channel for corporate bribes to be paid to political parties as a quid pro quo since the scheme envisaged anonymity for donors. The Centre, represented by Attorney General KK Venugopal submitted that the idea of introducing these bonds was to prevent black money holding sway over elections.

In support of his concerns, ADR’s counsel Prashant Bhushan relied on a letter written by Reserve Bank of India (RBI) way back in September 2017 (before introduction of the scheme) expressing serious reservations over it. The bench, after examining a series of letters written by RBI concluded that much of the banking regulator’s concerns were addressed in the final version of the scheme.

The judges noted that in one letter, RBI went to the extent of calling electoral bonds “an enduring reform consistent with the Government’s digitization push.” RBI’s only objection was to the issue of bonds in scrip form rather than in dematerialised (electronic) form. The bench held, “It is not correct to say that RBI and EC opposed the electoral bond scheme itself….RBI wanted to achieve the twin advantage of providing anonymity to the contributor and ensuring that consideration for transfers is through banking channels and not cash or other means. The concerns expressed by RBI to the form and not to the substance, cannot really advance the case of the petitioners.”

Bhushan further alleged that the bond could be purchased by a person using white money and later transferred to somebody in black. The Court ruled out the scope of such a transaction as purchasers of bonds will have to comply with KYC norms and their identities are anyway known to the State Bank of India, which issues the bonds. If a company makes a donation through electoral bonds, the Companies Act requires financial statements of registered companies to be filed with the Registrar of Companies. Further, the scheme also mandates political parties to file audited statements of accounts each year with the Election Commission.

“Therefore, it is not as though the operations under the scheme are behind iron curtains incapable of being pierced…All that is required is a little more effort to cull out such information from both side (purchaser of bond and political party) and do some `match the following’,” added the bench. Clause 14 of the Electoral Bond Scheme introduced by way of amendments to the Finance Act and Representation of Peoples Act in January 2018 specifically prohibits trading of bonds. The Court cited this clause to allay Bhushan’s fears of subsequent transfer of bonds.

Welcoming the order, Bharatiya Janata Party spokesperson Nalin Kohli said: “Now that the honourable Supreme Court has decided in favour of the electoral bonds one hopes there will be closure to what was an unnecessary controversy on a good decision with regard to electoral funding.”

Congress chief spokesperson Randeep Surjewala, however, termed the bonds a “dubious money laundering operation”. “SC must expose #ElectoralBonds for what they have become-: 1. A dubious money laundering operation to help one party. 2. A veiled mechanism to legitimize quid-pro-quo deals. 3. An untraceable funnel for black money payments. If not now, then when?,” he tweeted.

ADR Founder Jagdeep Chhokar said, “The judgment is disappointing. The interim arrangement on which the Court has relied is unworkable. The EC cannot know the donors of these bonds received by political parties. Further, the Court has said that information about the donors can be known by making a little effort. if this information can be found then why can’t it be made available in public domain. We hope this order does not impact our petition pending on the larger questions of law challenging these bonds.”