The Union government said that confidentiality was essential to the scheme to protect corporate donors from victimisation and disincentivise the creation of shell companies.
Published Nov 02, 2023 | 8:30 PM ⚊ Updated Nov 02, 2023 | 8:46 PM
The Supreme Court of India. (iStock)
On Thursday, 2 November, the Supreme Court reserved judgement on a batch of petitions challenging the validity of the 2017 Electoral Bonds Scheme, with petitioners stating that maintaining the confidentiality of corporate donors cannot override the right of 140 crore people to know the source of the funding political parties receive through these bonds.
A Bench, comprising Chief Justice DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, reserved the judgement as it asked the government if it would consider restoring the cap on corporate funding that was earlier at 7.5 percent of the company’s profit.
The Union government claimed that disclosing the identity of the donors would forestall the scheme, adding that they would not find the scheme attractive if there was no confidentiality.
Stating that the bonafide of the government was writ large on the scheme, Solicitor General (SG) Tushar Mehta said that the purpose of removing the cap of 7.5 percent on donations by corporates was to disincentivise the creation of shell companies.
However, pointing out that the corporates donating a large part of their profits to political parties were not doing it for “altruistic purposes”, Chief Justice Chandrachud said, “Do it in a proportionate, tailored manner, addressing the serious issues that have been raised.”
As SG Mehta said that the choice is either an electoral bond or cash flow-driven elections with black money, Chandrachud said, “It cannot be either this or go back to cash flow.”
He added, “There could be an alternate scheme addressing the issues and also addressing the five points — reduced cash flow, routing donations through banking channels, confidentiality, need for transparency, and there should not be any quid pro quo between the donors and the recipient party.”
As the solicitor general hammered on about maintaining the confidentiality of corporate donors, Justice Khanna said, “Everybody knows about it, donor knows, recipient party knows, only the voter does not know.”
Chandrachud added, “You know anyway what has been donated to you — as a party. The assumption is that all the mighty know about all the donors.”
The hearing on the third day saw Attorney General (AG) R Venkataramani and his deputy, Mehta, defending the scheme and stating that it was done to bring clean money through banking channels in politics with reduced cash inflow — which was a norm prior to the introduction of the scheme.
The petitioner — Association of Democratic Reforms (ADR) — said that its core objection was to the anonymity or the confidentiality of the corporate donors. The Union government said that confidentiality was essential to the scheme to protect corporate donors from victimisation and retribution with the change of party in power.
The hearing on the third day saw Mehta locking horns with senior advocate Kapil Sibal on the topic of black money.
While Sibal said, “It is impossible to eradicate black money from the economy” and referred to other countries to back his position, the solicitor general said that he was not “pessimistic” and added that “digitalisation” has reduced the operation of black money.
Sibal and other advocates appearing for the petitioners in their rejoinder arguments wondered how giving a shield of confidentiality to corporate donors served the larger public interest.
Sibal questioned the argument advanced by the solicitor general, equating the secrecy of the right to vote with the secrecy of the right to funding by corporates. He said that voters had a right to know who had given money to different political parties so that they could make an informed choice at the hustings.
In the rejoinder arguments, the advocates, insisting on making public the source of funding of political parties, quoted former American president Thomas Jefferson who said, “Information is the currency of democracy and non-disclosure is suspect”.
Referring to its 12 April, 2018, order, the court asked the Election Commission of India (ECI) to furnish details about electoral bonds till 30 September, 2023.
The Constitution Bench reserved its verdict on a batch of petitions, including one by ADR, challenging the Electoral Bonds Scheme, which allows anonymous funding to political parties, which was brought as a money bill — part of the Finance Acts of 2016-2017.
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 the person is a citizen of India or the body is incorporated or established in India.
The bonds are issued specifically for the purpose of funding political parties.
