Current AffairsIndia

Supreme Court dismisses ADR application seeking bar on sale of Electoral Bonds ahead of State Assembly Elections

The Supreme Court today dismissed an application seeking a bar on the sale of Electoral Bonds ahead of the upcoming State Assembly elections in West Bengal, Assam, Kerala, Tamil Nadu, and Union Territory of Puducherry in April 2020 [Association for Democratic Reforms v. Union of India].

A Bench of Chief Justice of India SA Bobde, AS Bopanna and V Ramasubramanian passed the order in an application filed by NGO Association for Democratic Reforms (ADR) seeking an interim direction to bar the sale of Electoral Bonds.

Pronouncing the verdict, CJI Bobde said,

“…In light of the scheme introduced in 2018 and the fact they have been released in 2018, 2019, and 2020 without impediment, we do not see any reason to stay the issuance at this stage.”

The application by the NGO apprehended that any further sale of Electoral Bonds before the upcoming State Assembly elections “would further increase illegal and illicit funding of political parties through shell companies.”

“The petitioner seeks that no further opening of window for the sale of EBs be allowed during the pendency of the instant writ petition,” the application stated.

ADR also informed the top court that the case was last heard in January 2020 and even after a similar application was filed on December 27, 2020 seeking urgent hearing of the case, the matter was not listed.

Electoral bonds were introduced through Finance Act 2017, which in turn amended three other statutes – the RBI Act, the Income Tax Act and the Representation of People Act – for enabling introduction of such bonds.

The Finance Act, 2017 introduced a system of electoral bonds to be issued by any scheduled bank for the purpose of electoral funding.

The Finance Act was passed as a money bill, which meant that it did not require the assent of Rajya Sabha. This, the petitioner submitted in the 2017 petition, was done to bypass the Rajya Sabha, where the ruling BJP government does not have a majority.

The petitioners also submitted that the consequence of the amendments was that annual contribution reports of political parties to be furnished to the Election Commission of India need not mention names and addresses of those contributing by way of electoral bonds, thereby killing transparency in political funding.

The removal of the cap on donations by the amendment to the Companies Act, 2013 and the amendments made to Section 236 of the Foreign Contribution (Regulation) Act, 2010 were also challenged as opening the avenues of foreign contribution to Indian political parties.

During the course of the hearings, Advocate Prashant Bhushan, appearing for ADR, had submitted that a letter written by the Governor of the Reserve Bank of India (RBI) in which it was stated that the Electoral Bonds scheme was fraught with risk and would impact India’s financial system.

“RBI said there may be use of these electoral bonds to fund shell companies etc. RBI said this will put them at reputational risk. Here, bribing has been made through government channels. Apart from the bank, no one will know who is the donor, not even ECI,” he added.

Attorney General KK Venugopal and Solicitor General Tushar Mehta had assured the Court that funds received through Electoral Bonds were white money that could only be issued through cheque and demand draft, and for which Know Your Customer (KYC) norms had to be followed.


Via Bar & Bench
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