New Delhi: More than three years after Narendra Modi government’s electoral bond scheme — meant for collection of funds by political parties — was first challenged in the Supreme Court, the case has made little headway.
Since it was filed in September 2017, the case — which eventually became a batch of four petitions — got listed on 15 dates, had two effective hearings and has seen only one interim order. The petitioners, including two NGOs and the CPI(M), want the scheme to be quashed on the ground that it legalises anonymous funding of political parties.
On 12 April 2019, a bench led by the then Chief Justice of India (CJI) Ranjan Gogoi had in an interim order directed all political parties, who received donations through these bonds, to submit particulars of donors against each bond to the Election Commission of India (ECI) in a sealed cover.
This order also noted that the issue with regard to validity of the scheme gave rise to “weighty issues which have a tremendous bearing on the sanctity of the electoral process in the country” that require an in-depth hearing.
The interim order followed two days — 10-11 April — of extensive arguments advanced by the petitioners, Centre and the ECI. While the central government opposed the petitions, highlighting the benefits of electoral bonds, the ECI said the bonds will impact transparency in funding of political parties.
Neha Rathi, lawyer of NGO Association for Democratic Reforms (ADR), which was one of the petioners, told ThePrint that after 12 April 2019, the matter got listed twice — once on 4 December 2019 and then on 20 January 2020.
In December, the matter was adjourned and on 20 January, the bench issued notices on ADR’s application to stay the scheme, asking the Centre and ECI to file their responses within two weeks.
“While this order is yet to be complied, the matter has been in the cold storage for 11 months. In October (2020), we moved an application for early hearing, which the registry has still not put up before the court,” Rathi said.
What is an electoral bond?
The Finance Act, 2017, which was tabled in the Parliament on 1 February 2017 to give effect to the financial proposals of the Union Government for the year 2017-18, introduced the use of electoral bonds.
An electoral bond is issued in the nature of promissory note, in the multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore. It may be purchased by a person who is a citizen of India or entities incorporated or established in India.
The law exempts donations made through electoral bonds or bearer bonds from being disclosed under the Representation of People’s Act, 1951.
Available at specified branches of State Bank of India, donors can donate the bonds to their party of choice, which can be encashed by the party’s verified account within 15 days.
The bond does not carry the name of the buyer or the payee. Also, according to the scheme, only eligible political parties with 1 per cent vote share are eligible to get funds through electoral bonds.
What is the challenge to the scheme?
The ADR, along with another NGO, Common Cause, had moved the first petition in 2017 against the scheme.
In their joint petition, the two NGOs challenged various amendments made through The Finance Act, 2016-2017, to Companies Act, Income Tax Act, Representation of People’s Act, Reserve Bank of India Act and Foreign Contribution Regulations Act.
The broad grounds of challenge were that the amendments affected transparency in political funding as it does not make it mandatory for political parties to reveal the identity of the donors to the ECI, and opened floodgates to unlimited corporate donations by Indian as well as foreign companies, which can have serious repercussions on the Indian democracy.
The top court issued notices on the petition on 3 October 2017 and tagged it with a 2015 petition filed by the ADR in which the latter sought directions to make political parties answerable under the Right to Information Act. This petition too is pending a final judgment.
Even as the legal validity of the electoral bond scheme was under judicial scrutiny, the government went ahead to notify it formally on 2 January 2018.
Another petition was filed before the apex court, this time by the CPI(M) in February 2018 and then by advocate Ashwini Kumar Upadhyay in April 2019, along with which an intervention application was also filed.
EC opposes electoral bonds, while Centre advocates its use
It took four dates and 17 months since September 2017 for the Supreme Court to receive a response from both the Centre and ECI.
The central government submitted two affidavits on 14 March and 3 April 2019 in support of the scheme, which, it asserted, was meant to eradicate black money and enhance accountability.
The identity of a buyer was kept anonymous to maintain his/her privacy, the Centre submitted.
Allegations that the amendments and subsequent notification seek to create an anonymous and secretive mechanism for increasing the wealth of political parties or bring in unreasonable restriction on the freedom of information regarding identities of the contributors were denied by the Centre.
Meanwhile, the ECI, in its affidavit to the court on 27 March 2019, raised apprehension over the scheme. It said the scheme allowed unlimited corporate funding, which would have a serious impact on transparency in funding of political parties.
The poll panel argued that it was not against the scheme as such, but opposed the anonymity attached to it from its inception. It claimed that electoral bonds made the commission’s job of tracking donations from overseas and government companies — both legally barred at present — rather difficult.
SC rejected plea to stay the scheme twice
According to the case record, between 11 March and 12 April 2019 when the interim order was pronounced, the petitions were taken on board seven times with two effective hearings.
Rathi said the ADR had pressed for a stay on the scheme during the arguments on interim order. However, this request was turned down by the bench.
“Despite the court noting the issue requires detailed deliberations, the matter has not got listed for final arguments,” Rathi said.
The ADR filed additional documents in November 2019 to show the government went ahead with electoral bonds, despite opposition from the Reserve Bank of India (RBI), ECI and the Law Ministry.
On the basis of “fresh evidence”, the ADR had insisted on a stay on the scheme during the last hearing held on 20 January 2020. But the plea was again rejected and, instead, the court asked the Centre and ECI to file their responses within two weeks. Rathi said there is no compliance to this order so far.
The ADR in October moved a fresh application before the SC, demanding an urgent listing of the matter. Though there is no formal intimation from the court registry on the next date of the hearing, the apex court website shows the case is tentatively listed on 8 January 2021.