Supreme Court reserves verdict in the challenge to the electoral bonds scheme

The Court orders the ECI to collect data on donations received by political parties through electoral bonds till September 30, 2023. The data is to be submitted to the Registrar General of the Supreme Court in a sealed cover within 2 weeks.

Advocate Shadan Farasat submits– ‘Public disclosure is the real check. In a democracy, it is the public that checks the parties every day....a corporation has no right of privacy, it is for natural persons.’

Refuting the submission of the Centre that the courts can be approached to obtain information on donations in the public interest, Sibal says–

‘You are giving protection to corrupt transactions by not putting that information in the public domain. I cannot file an FIR because I will get sued for defamation. I cannot go to court as I won’t have any data. So what court order are we talking about? This is the surest way to ensure political perpetuity.’

Senior advocate Kapil Sibal submits that the scheme is unconstitutional and destroys the basic structure of the constitution.

‘Free and fair elections are the basic structure. It is not free because industrialists cannot say no and it is not fair as the ruling party gets the most benefits’, he adds.

Bhushan argues that the scheme promotes corruption and allows companies to give anonymous kickbacks. He adds that there is considerable evidence to show that almost all the electoral bonds have gone to ruling parties.

Responding to this, Bhushan says– ‘Even the RBI, when it dealt with electoral bonds said, that if your object is to make political funding go through banking channels - there are existing instruments of cheques, drafts etc. Why are you introducing an anonymous channel? It is not that black money cannot come in through electoral bonds, though it will come in through banking channels.’

Addressing Bhushan, CJI Chandrachud says– ‘The object was to add some element of transparency....In the earlier regime, it was purely cash-based. A cash-based scheme proceeds on anonymity. According to you, they have continued anonymity. But there is one change, the electoral bonds have brought whatever is contributed in the form of accounted transactions within normal banking channels. Whether it reduces black money or not to my mind is irrelevant to the validity of the scheme. The scheme may be wholly unsuccessful but it may be a wholly valid scheme.’

Bhushan submits– ‘These changes defeat the citizens’ right to know who is contributing to the political parties. Because they introduce another anonymous source of funding...If the object was to choke out cash donations, that has not been met with.’

CJI Chandrachud– ‘We will not ask SBI to reveal the identity of donors at this stage. That nobody is interested in at the present stage but we would like to know the quantum.’

Elaborating on the objections raised by the ECI, Sharma says–

‘One concern we had, there are three categories - one is below Rs 2000, the other is between Rs 2000-20,000, and the third is above Rs 20,000. Above Rs 20,000 it is to be done mandatorily by way of DD/ECS. We are mostly concerned about the category between Rs 2000-20000. There is no provision whether it is to be done with cash/check etc. We wanted the same provision under the IT Act to be included in Section 29C of the Representation of the People Act. So there will be a proper quantification.’

CJI Chandrachud asks the ECI – ‘Now tell us what is the basis on which the Election Commission had raised objection to the scheme?’

Read The Hindu’s detailed explainer on the objections raised by the ECI.

The legality of the electoral bonds scheme | Explained

With the Supreme Court set to hear final arguments on the validity of the electoral bonds scheme on October 31, The Hindu looks at the contentious issues surrounding the legality of the scheme

Responding to the submission, Justice Khanna says– ‘You should have got the data when you were coming to the court...we read out that order that day. All of us expressed a view and we expected you to come back with that data.’

Sharma: ‘I will instruct the commission.’

Sharma: ‘It was not possible due to the order passed by this court subsequently on March 26, 2021.’

Read about the order referred to here.

Supreme Court refuses to stay sale of electoral bonds ahead of Assembly polls

No reason to do so now, says top court.

The ECI informs the court that it does not have updated data till March 2023 on the donations made to political parties through electoral bonds.

To this, the CJI says– ‘But we did not freeze the data which was to be maintained. You were to continue collecting the data.’

Note: Passing an interim order on April 12, 2019, a Bench led by former CJI Ranjan Gogoi refused to stay the operation of the scheme but directed all political parties to provide full information on each and every political donor and contributions made so far through electoral bonds to the ECI in a ‘sealed cover.’

Read about the order here: Give info to ECI on each donor, each electoral bond in sealed covers: SC orders political parties

Give info to ECI on each donor, each electoral bond in sealed covers: SC orders political parties

A Bench led by Chief Justice of India Ranjan Gogoi said the issue of electoral bonds and their lack of transparency is a "weighty" one and requires in-depth hearing.

Addressing Mr. Sharma, the CJI asks–

‘Mr Sharma, how much have you collected? You are not the SBI but in terms of the records you have what is the extent of the total quantum of electoral bonds which have been subscribed?’.

In response, Mr. Sharma states– ‘That is in a sealed cover. We have not opened that cover at all. My lords can peruse it but we cannot open it.’

‘If the court were to lay down a legislative remedy, that impinges on separation of powers. Finding a right in the Constitution we can...We have a framework today. We are not creating a framework. We are testing the validity of the framework’, the CJI adds.

Outlining that there has been an evolution in the law, CJI Chandrachud says–

‘This logic has undergone a change after Puttaswamy. Puttaswamy is of 9 judges. There is no right to privacy expressly recognised under the Constitution but we read it in the Right to life, dignity, preambular values etc....Declaring an aspect as a part of a declared right does not impinge on the separation of powers. For instance, we have said that sexual orientation is implicit in Article 15. That does not impinge upon the separation of powers.’

Also Read: Right to privacy is “intrinsic to life and liberty,” rules SC

Right to privacy inherently protected under fundamental freedoms in Constitution: Supreme Court

The judgment will have a crucial bearing on the government’s Aadhaar scheme that collects personal details, biometrics to identify beneficiaries for accessing social benefits and government welfare scheme.

The AG refers to the Supreme Court’s judgment in Maneka Gandhi v. Union Of India (1978).

[We cannot, therefore, accept the theory that a peripheral or concomitant right which facilitates the exercise of a named fundamental right or gives it meaning and substance or makes its exercise effective, is itself a guaranteed right included within the named fundamental right”. [Text from the judgment].

The AG submits– ‘An isolated understanding of each legislation is fundamentally wrong. The one common thread in all is confidentiality. The scheme does not violate any existing right of any person.’

The AG says that the restrictions imposed under the scheme are in consonance with reasonable restrictions under Article 19(2) of the Constitution.

‘I am sure no court will say that I will postulate a right but not any restrictions’, he adds.

AG says that an online news portal has reported that he said that citizens do not have a right to know – ‘I don’t know where I said it in my submissions, let me read it out.’

What do the written submissions of the Attorney General say? Read here.

Electoral bonds promote ‘clean money’ donations to political parties: Attorney General tells SC

Attorney General of India R. Venkataramani has backed the government’s electoral bonds scheme in the Supreme Court, extolling it as a measure which promotes contribution of “clean money” to political parties. He said the scheme ensured that “tax obligations” were met. Besides, the Attorney General argued that citizens could not have a “general right to know anything and everything without being subjected to reasonable restrictions [Article 19(2)]”.

The Attorney General submits that the scheme treats all contributors equally and that the confidentiality of contributors is important. He underscores that moving away from black money to a regulated scheme serves the public interest.

CJI Chandrachud declines to hear the officials by saying– ‘We will be averse to hearing them in camera because we don’t put that to the other side.’

SG Mehta: ‘I understand. But as I said, if I start discussing in public the purpose is lost.’

CJI Chandrachud: ‘There is a methodology of decoding... ‘

SG Mehta: ‘It is very complicated and detailed and it leaves several digital footprints.’

CJI: ‘We will leave it at that as submissions.’

[Note: Electoral bonds can be bought by companies and individuals in India from authorised branches of the SBI]

SG Mehta appearing virtually requests the court– ‘Senior officials of the SBI (State Bank of India) are here at my request. If your lordships want to be assisted on camera. If your lordships do not wish, they can leave.’

Outlining the ambit of challenge against the scheme, the AG argues–

‘This scheme is not concerned with political contributions per se. That is why the court will not get into the larger question of where should political contributions come from. All those questions are completely alien to this challenge. What is the end that I would put to use by way of accessing this information? General political debate or determining which party would do better? What concrete purpose would this information be relevant for?’

The Attorney General (AG) submits– ‘The global canvas on election funding, party funding, and campaign funding is like a kaleidoscope. It presents very interesting items, experiments made etc.....a very broad brush has been stated in this case. It is said that the scheme violates Articles 14,19,21 and also undermines the basic structure of the Constitution. The Constitution Bench looks at substantial questions of interpretation of the Constitution. There has to be something very precise, direct, and not broad statements which may resemble a political debate.’

‘If the number of electoral bonds will increase, the number of voluntary contributions that are less than Rs 20,000 which are dubious transactions will decrease. The only political party for which it has not decreased is the party that said that it won’t take. So obviously that is a political party that is continuing in the older regime’, Agrawal says further.

Advocate Kanu Agrawal appearing on behalf of the Union says–

‘There is something else that will come- the political party which took the stance of not accepting electoral bonds is still accepting those less than Rs 20,000 as voluntary contributions’.

CJI: CPI(M)

Read submissions on behalf of the CPI(M) here.

The Union government submits a compilation before the Court highlighting how political contributions above Rs 20,000 have gone down and contributions through electoral bonds have increased.

[Note: Prior to the introduction of the scheme, political parties were required to make only donations above Rs 20,000 public]

Defending the scheme, SG Mehta contends– ‘The legislature has a right of trial and error unless it is so abhorrently arbitrary that it can never satisfy the conscience of the court.’

Responding to Justice Khanna’s query on how the scheme does not encourage a level-playing field for political parties, the Solicitor General submits–

‘The average Indian voter, be it corporate or an illiterate voter- is a very intelligent decision maker. A ruling party in 2013, though a ruling party may not get maximum contributions because the voter knows that in 2014 the wind is somewhere else. Secrecy per se is not antithetical to free and fair elections. Sometimes it enhances free and fair elections.’

Referring to the right to informational privacy propounded in the Supreme Court’s judgment in Justice K.S. Puttaswamy v. Union of India (2017), the Solicitor General submits–

‘Your Lordships have devised the concept of informational privacy (in Puttaswamy). Your lordships were examining two competent interests- one, the right to know and the right to have informational privacy. You have held informational privacy to be a fundamental right. Your Lordships can accept my right to informational privacy as against the general right to know. If there is a genuine public interest in the disclosure, you go to the court. But merely for curiosity, you cannot invade someone’s privacy.’

Also Read: A historic moment

A historic moment

The Supreme Court’s landmark judgment elevating the right to privacy as a fundamental right is a significant reminder of India’s republican values and their relevance to all classes of people.

‘When investigative agencies want the details, they can get only if there is an order. The purpose is not that the party in power knows who paid whom. No one can argue that there has to be a level playing field- every party cannot get an equal contribution. Every party will have to rise and get more contributions’, the Solicitor General says.

SG Mehta points out that electoral bonds are valid only for 15 days which acts as a check to ensure that it does not become a currency or a bearer bond that can be traded. He adds that this reduces the eliminates the possibility of kickbacks.

CJI Chandrachud says– ‘This is not a scheme only for elections.’

SG Mehta responds by saying– ‘It is for running the party. I am not feeling shy saying that. This is not for elections. When we think of elections we think of general parliamentary elections. When a political party is running, it contests parliamentary elections, assembly elections, and local authority elections. It has campaigns, rallies, think tanks, salaries, offices, etc. Nobody has so far heard that bungalows are being built for leaders. They are building offices.’

Outlining the safeguards in the scheme, the Solicitor General points out that only a political party registered under the Representation of the People Act, 1951, and has secured at least 1% of the votes polled in the most recent Lok Sabha or State elections is eligible for electoral bonds.

‘To ensure that there is no fake party, we did this. There cannot be an anonymous donation. I will have to give my KYC, Aadhar number, address etc. Not anyone can just go buy the bonds’, he adds.

Also Read: What are electoral bonds?

What are electoral bonds?

To this, CJI Chandrachud asks– ‘Would that be valid- if a company were to donate even 100% of its revenue? Is that guided by altruistic motives?’

‘To start with a presumption that every contribution should necessarily be a part of corruption may be a wrong way to look at it. In some cases, it may be quid pro quo. But in most cases whoever donates- they donate for what kind of government they want’, the Solicitor General argues.

CJI Chandrachud says– ‘We do not have to go into motives of the government at all. We entirely respect that process. The point is not that. We do not want to go back to a cash-only system. All we are saying is that do it in a proportional, tailor-made manner which takes care of the serious deficiencies of this.’

In response, the Solicitor General says– ‘Experience had shown that in a given sector, some companies wanted to donate 10-15%. There was a cap of 7.5%. So that company would make shell companies...and donate 7.5% from shell companies. To discourage shell companies we did this.’

Also Read: Electoral funding norms for corporates eased

Electoral funding norms for corporates eased

Changes introduced by government in amendments to the Finance Bill of 2017 cleared on Wednesday by Lok Sabha.

Enumerating why caps were previously introduced to limit political funding by companies, the CJI says– ‘The reason why these caps were introduced and they stood the test of time was for a very legitimate reason- because you are a company, your purpose is to carry business, not to donate to political parties. And if your purpose is not to donate, you must donate a small amount.’

Note: Prior to the amendment, under the Companies Act, donations to a political party by a corporation could not exceed the ceiling limit of 7.5 percent of the average net profit during the three immediately preceding financial years.

CJI Chandrachud outlines the considerations that must be kept in mind while implementing an electoral bonds scheme.

1. The need to reduce the cash element in the electoral process 2. The need to encourage the use of authorised banking channels 3. Incentivising the use of banking channels 4. The need for transparency. 5. The scheme should not legitimise kickbacks and quid pro quo between the power centres and the people who are benefactors of that power.

Justice Khanna asks– ‘ If this is so, why not make it open? As it is, everyone knows. The only person who is deprived is the voter.’

Addressing this submission, the CJI enquires– ‘Is it your contention that under this scheme, the ruling party does not know who the donors are?’

In response, the Solicitor General says– ‘Every party knows who their respective donors are. Confidentiality is for other parties. Technically any party can feign ignorance that someone came and in my postal box there was an envelope with Rs 100 crores. Nobody donates like that. We donate like that in pilgrimage.’

‘I will explain the scheme. You will see that the bonafide of government is writ large. One or two suggestions I will give - your Lordship’s conscience would be satisfied that the scheme is not designed to ensure that the ruling party knows. It not even the intention’, the Solicitor General adds.

In response, the Solicitor General says– ‘Purity of election is supreme over the right to vote. Voter votes not based on which party is funded by whom, voter votes based on ideology, principle, leadership, and efficiency of the party...It is a foolproof scheme. There may be some lacuna here and there and we are ready to improve.’

Addressing the Solicitor General, Justice Gavai asks – What about voters’ rights? (vis-a-vis the donors’ right to confidentiality)

Responding to this, CJI Chandrachud says– ‘But Mr Solicitor, you know anyway who has donated what amount. The moment the electoral bond is tendered to a party by a constituent, the party knows it.’

SG Mehta says– ‘I have some solutions to offer so your Lordships’ concerns are addressed. You will see the bonafide of the government- we do not want to know who donated what amount to whom. Let that confidentiality remain completely except under the court order.’

SG Mehta says that the moment the disclosure of the donor is mandated, the scheme fails and that is why donors were incentivised to donate through cash previously in order to retain their confidentiality.

“If I want to disclose my identity, I can pay by cheque. I still have that option. I do not have to pay by Electoral Bonds”, he adds.

Solicitor General (SG) Tushar Mehta refers to an article written by Former Union Finance Minister Arun Jaitley on the necessity of Electoral Bonds.

“I do believe that donations made online or through cheques remain an ideal method of donating to political parties. However, these have not become very popular in India since they involve disclosure of donor’s identity. However, the electoral bond scheme, which I placed before the Parliament a few days ago, envisages total clean money and substantial transparency coming into the system of political funding.” [Text from the article].

A five-judge Constitution Bench comprising Chief Justice of India (CJI) DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra will continue hearing submissions from the Union government. The proceedings can be watched here–

In an affidavit filed before the Supreme Court in 2019, the ECI said that electoral bonds would wreck transparency in political funding and invite foreign corporate powers to impact Indian politics.

Here is The Hindu’s detailed explainer on the reservations expressed by the ECI and the RBI against the scheme.

The legality of the electoral bonds scheme | Explained

With the Supreme Court set to hear final arguments on the validity of the electoral bonds scheme on October 31, The Hindu looks at the contentious issues surrounding the legality of the scheme

As per an affidavit filed in the Supreme Court, the BJP has received over Rs. 5,271 crores as donations through electoral bonds, so far (Rs. 5271,97,58,000), while the Congress has received over Rs. 952 crores (Rs. 952,29,56,000).

Among regional parties, Biju Janata Dal received over Rs 622 crores, while YSR Congress got over Rs. 330 crores (Rs. 330,44,00,000).

The Supreme Court on Wednesday said that the electoral bonds scheme only offered a “selective confidentiality”, which does not prevent the ruling party from unearthing the identities of donors to Opposition parties and then hounding them through its investigative agencies.

“There are ways and means for the ruling party to get information about contributions to the Opposition. The Opposition, on the other hand, may not be able to know who your [party in power] donors are, but you will know about their donors. It is easier for the party or person in power to get the information. The Opposition is at a disadvantage to question your donations, but the ruling party is not… That is the grey area here,” Justice Sanjiv Khanna, who is a member of the Constitution Bench headed by Chief Justice of India D.Y. Chandrachud, addressed the Union government, represented by Solicitor-General Tushar Mehta.