Electoral bonds are not election-centric but means to enrich the party in power, Supreme Court is told

The bench is hearing a batch of petitions challenging the Electoral Bonds Scheme, which allows anonymous funding to political parties.

ByParmod Kumar

Published Oct 31, 2023 | 8:12 PMUpdatedOct 31, 2023 | 8:12 PM

Supreme Court of India

The Supreme Court on Tuesday, 31 October, was told that the Electoral Bond Scheme are not election-centric but a means to enrich political parties in power — both the Union government and in the states — and their opacity chills the voters’ right to make an informed choice during elections.

A five-judge Constitution Bench comprising Chief Justice DY Chandrachud, and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra was told: “This is not electoral bonds but a means to enrich a political party, there is no mechanism to ensure that money (coming through electoral bonds) is used for election.

Related: ‘Citizens have no right to know the source of political party’s funds’

The hearing

The day-long hearing saw the petitioners assailing the Electoral Bond Scheme — described as being “laced with quid pro quo” — and contesting the Union government’s position that citizens don’t have a right to know the sources of the funding of the electoral bonds.

This position, articulated by Attorney General (AG) R Venkataramani in a brief written note, was submitted to the court on Monday.

The hearing on Tuesday saw a number of lawyers voicing views against the scheme, with senior advocate Prashant Bhushan, arguing for the NGO Association for Democratic Reforms (ADR), and senior advocate Kapil Sibal dealing with the opacity of the scheme.

Senior advocate Sibal stated that the “electoral bond scheme is wholly arbitrary, it has to be struck down, it has nothing to do with the election, and there is no accountability”.

He further told the Constitution Bench that, “There is no spending requirement. None, zero. You can build offices, launch advertisement campaigns, show the face 20 times a day (on the visual media).”

He further pointed to the nexus of corporates controlling media, and funding the political parties.

At the outset of the day, commencing the arguments for ADR, advocate Prashant Bhushan took the Constitution Bench through a slew of amendments that were brought in the Representation of People’s Act, Foreign Contribution Regulation Act, Income Tax Act and eventually the introduction of the Electoral Bond Scheme.

Also read: SC refers to 5-judge Bench pleas challenging electoral bond scheme 

Defeats the political rights of people

He said that no one, except the Union government and the State Bank of India, can know about the source of the funds coming via electoral bonds.

Speaking about the anonymity that surrounds the electoral bonds, Prashant Bhushan said, “They defeat the political right of the people to know the sources of the funding of the political parties. Right to Information is a fundamental right to know.”

Pointing to the quid pro quo element, Prashant Bhushan told the Bench that this opaque, anonymous instrument promotes corruption in the country.

He pointed out that almost all the bonds have gone to political parties ruling at the Centre and in the states, with the BJP alone getting 50 percent of the bonds — ₹50,000 crore.

He said that overwhelming donations going to ruling parties’ cuts at the root of free and fair elections, and it disturbs the level playing field.

Undermining the RBI

Pointing out the Constitution Bench that the money coming to the political parties through shell companies is black money or from foreign sources, Bhushan referred to the Election Commission of India (ECI) and the Reserve Bank of India (RBI) expressing their objection to, and disapproval of, the Electoral Bonds Scheme.

He referred to an instance when the government told Parliament that they had not received any objection from the ECI on electoral bonds.

Bhushan told the bench that RBI had told the government that the electoral bonds would undermine its position as a central bank on various counts and were contrary to established international practices bypassing the existing banking channels for routing the funds to political parties.

In the course of his arguments, Kapil Sibal said that a person is prosecuted in anticipation of a favour and not an actual act of favour, but the electoral bond scheme protects the criminal.

“Rather than furthering the rule of law, you are tying it. The quid pro quo — the capital and influence go together” and if a citizen makes a contribution of ₹20,000 to a political party, he is named, but if a corporation contributes ₹20 crore, it is kept anonymous,” Sibal told the Bench.

He added: “That is anonymous is not that anonymous as all the recipient political parties know who their big donors are. That is the practical politics.”

Chief Justice Chandrachud observed, “A large public limited company, when it makes political donations, is not for charity.”

Attorney general’s arguments

On Tuesday — October 30 — AG Venkataramani, speaking for the Union government, said that the citizens have no right to know the source of the funds of the electoral bonds.

Having stated that the citizens don’t have a right to know the source of the funds of the electoral bonds, the AG opposed the petitioners’ seeking a declaration that citizens have a right to know the contributions being made to a political party through electoral bonds as a facet of the right to freedom of expression and the confidentiality clothing the Scheme is impermissible.

Venkataramani found flaws with the petitioners’ plea seeking a declaration on two counts, stating that, “Firstly, there can be no general right to know anything and everything without being subjected to reasonable restrictions.”

He added, “Secondly, the right to know as necessary for expression can be for specific ends or purposes and not otherwise.”

Electoral bonds

The Constitution Bench is hearing a batch of petitions challenging the electoral bond 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.

The hearing will continue on Wednesday, 1 November.