The Supreme Court on Tuesday started hearing a batch of petitions challenging the validity of the electoral bonds scheme for funding political parties. The scheme, notified by the government in 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring in transparency in political funding.
The hearing on the four petitions, including those filed by Congress leader Jaya Thakur, the Communist Party of India (Marxist) and NGO Association for Democratic Reforms (ADR), commenced before a five-judge constitution bench headed by Chief Justice DY Chandrachud.
The SC bench is set to hear final arguments in the case today after a gap of more than two years, as the last effective hearing took place in March 2021. The case has been pending in the apex court for over eight years now and is expected to have a significant bearing on the upcoming Lok Sabha elections scheduled next year.
WHAT ARE ELECTORAL BONDS?
An electoral bond are money instruments similar to a promissory note, that is payable to the bearer on demand and without interest. It is a process by which an Indian citizen or a corporate entity can fund a political party, which can encash them later.
The government implemented the electoral bonds in 2018. It was introduced by the Narendra Modi-led NDA government in Gazette Notification No. 20 dated January 2, 2018 in order to “cleanse the system of political funding in the country.”
Electoral bonds, introduced to make political party funding more transparent, allow a political donor to purchase bonds from authorised banks and can only be redeemed by parties through registered accounts within a specified time frame.
HOW CAN ELECTORAL BONDS BE PURCHASED?
It can be purchased by any Indian citizen or a company registered in India. Electoral bonds can be purchased at any State Bank of India branch in one of the cities listed by the government.
The bonds are interest-free and people and corporations interested in purchasing them must first complete prerequisites such as KYC (Know Your Customer) with the bank for authentication. It can be purchased in multiple denominations ranging from Rs 1,000 to Rs 1 crore.
The bond would not carry the name of the payee and have a life of only 15 days, during which it can be used for making donations to political parties meeting certain criteria. The electoral bonds can be encashed only through designated bank accounts by the parties.
Political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than one per cent of the votes polled in the last election to the Lok Sabha or a state legislative Assembly are only eligible to receive electoral bonds.
BENEFITS AND CONERNS REGARDING ELECTORAL BONDS
The proponents of electoral bonds state that they promote transparency by ensuring that political parties receive donations through formal banking channels, which can be audited. Furthermore, the identity of the donors remains confidential, reducing the risk of retaliation or intimidation.
However, the critics have argued that the biggest drawback of the mechanism is the lack of transparency regarding the source of funds. The donor’s identity is not disclosed to the public or the Election Commission, which makes it difficult to track the origin of political contributions.
The critics have argued that the electoral bonds could be used to launder illicit money into the political system. They say that this undermines the principle of a level playing field in democratic elections.
WHAT HAS THE PETITIONS SOUGHT?
There have been two petitions filed in the Supreme Court- one filed by ADR and Common Cause in 2017 and another filed by the Communist Party of India (Marxist) in 2018. The Supreme Court, on October 10, took note of Advocate Prashant Bhushan’s submissions, who is representing ADR, that the matter needed adjudication before the electoral bonds scheme opens for the 2024 general election.
One of the PIL petitioners claimed in March that a total amount of Rs 12,000 crore has so far been paid to political parties through electoral bonds and two-thirds of it has gone to one major political party.
ADR, which filed the PIL on the issue of alleged corruption and subversion of democracy through illicit and foreign funding of political parties and lack of transparency in the bank accounts of all political parties, had moved an interim application seeking that the sale of electoral bonds not be reopened.
In a written submission filed in the apex court on behalf of intervenor “Citizens’ Rights Trust”, senior advocate Vijay Hansaria has said the electoral bonds scheme allows political parties to receive donations “behind an iron curtain away from the public gaze”. “The provisions of the amending Acts run counter to the purported objective to achieve transparency in electoral funding,” Hansaria, who is assisted by advocate Sneha Kalita in the matter, has said in his written submission.
He has said the scheme of making a contribution to a political party through electoral bonds is a “completely non-transparent mechanism” and is akin to a cash contribution. On October 16, the apex court said the pleas challenging the validity of the electoral bonds scheme for funding political parties will now be adjudicated upon by a five-judge bench for an authoritative pronouncement.
WHAT HAS GOVT SAID ON ELECTORAL BONDS
Attorney General (AG) R Venkataramani, in a statement filed before the top court in the matter, has said that citizens do not have the right to information under Article 19(1)(a) of the Constitution regarding the source of the funds.
Holding that the electoral bonds scheme for funding political parties contributes to clean money, Venkataramani has said there can be no general right to know “anything and everything”, without being subjected to reasonable restrictions.
“The scheme in question extends the benefit of confidentiality to the contributor. It ensures and promotes clean money being contributed. It ensures abiding by tax obligations. Thus, it does not fall foul of any existing right,” the AG has told the apex court.
The Centre and the EC had earlier taken contrary stands in the court over political funding, with the government wanting to maintain the anonymity of the donors and the poll panel batting for revealing their names for the sake of transparency.
The Supreme Court in April 2019 declined to stay the electoral bonds scheme and made it clear that it will accord an in-depth hearing on the pleas as the Centre and the EC had raised “weighty issues” that had “tremendous bearing on the sanctity of the electoral process in the country”.
On January 20, 2020, the apex court refused to grant an interim stay on the scheme and sought the responses of the Centre and Election Commission to an interim application filed by the NGO seeking a stay on the scheme.
(With inputs from PTI)
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