Supreme Court flags possibility of electoral bonds being used to trade favours

Advocates for petitioners said the electoral bonds scheme facilitated “legalised kickbacks” and set up a “legally directed informational blackhole” which skew the electoral playing field

October 31, 2023 08:31 pm | Updated November 01, 2023 10:22 am IST - NEW DELHI

A Constitution Bench led by CJI D.Y. Chandrachud hears the electoral bonds case on October 31, 2023. Photo: YouTube/@supremecourtofindia5950

A Constitution Bench led by CJI D.Y. Chandrachud hears the electoral bonds case on October 31, 2023. Photo: YouTube/@supremecourtofindia5950

A Constitution Bench on October 31 raised the scenario of influential entities covertly setting up persons with verified accounts to purchase electoral bonds for them through the regular banking route in order to curry favour or anonymously enter into a quid pro quo with ruling political parties.

“Suppose ‘A’, a person, purchases electoral bonds worth ₹100 crore. ‘A’ is only put up by ‘B’ for the purchase as he has a [verified or know-your-customer] KYC account. It is ‘B’ who actually gives the donation to the political party… ‘B’ can also be an aggregator of electoral bonds by having a 100 people buy bonds worth ₹1 crore each,” Chief Justice of India D.Y. Chandrachud, heading a five-judge Bench, observed orally on the first day of hearing the challenge to the electoral bonds scheme.

Senior advocate Kapil Sibal, for a petitioner, said: “The Indian mind can be ingenious in these matters… We control the economy of the world in many ways.”

‘Voters kept in the dark’

Justice Sanjiv Khanna said that buying bonds through KYC account holders maintains a curtain of anonymity about the actual donor, with “no questions asked about any quid pro quo”.

Mr. Sibal said that in “practical politics”, the donor would anyway inform the political party about his donation.

Also read | Electoral bonds case: Live updates from Supreme Court | Day 1

“The source of the donation is anonymised not for the political party, but only for the public,” the Chief Justice said.

Advocate Shadan Farasat termed the electoral bonds scheme a “legally directed informational blackhole which violates the very principle of an informed electorate”.

“The scheme is not meant to reduce the black money funding of political parties, but to re-route the non-anonymous banking channel funding to anonymous electoral bonds,” Mr. Farasat submitted.

‘May aid Opposition’s donors’

On the other hand, the court mused that anonymity aided those who want to donate to Opposition parties without fearing repercussions from the ruling regime.

“There is also an assumption that if you disclose the name of the donor, there will be other political parties who will know that you have contributed to one particular party… Suppose you are contributing to a party not in power… suppose the donor is carrying on business in the State and his name is made available to all… There is logic there; whether it is valid or not, we have to decide,” the Chief Justice said.

‘90% of donations to ruling parties’

But advocate Prashant Bhushan, who opened the arguments for the petitioners side, reasoned that the “right to know the funding of a political party is a fundamental right”. He termed electoral bonds as “legalised kickbacks”, which destroy democracy and skew the level playing field during elections. Over 90% of the donations go to ruling parties, making it apparent that they are meant for favours done or anticipated, he contended.

Mr. Sibal said that “the more the capital, the more the power”. He argued that amendments allow the corporate sector to conceal individual political donations from their own shareholders.

“Shareholders are not consulted. They did not invest their money for the company to make anonymous donations to political parties to do what they like… Electoral bonds are a means for political parties to become enriched… The political party can give the money to a media house to air its propaganda or pay for advertising campaigns by which you can show your face 20 times a day. There is no accountability,” Mr. Sibal said.

Mr. Farasat attempted to persuade the court that such corporate donations violated the “right to conscience” — under Article 25 — of the shareholders, who may not support the political party which benefited from the contribution.

Mr. Sibal and Mr. Bhushan said that the scheme promoted corruption. Mr. Sibal noted that the donations could even be kickbacks from criminals seeking to avoid prosecution.

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