SC to hear final arguments in electoral bonds case on October 31

Petitioners want a verdict before the Lok Sabha election in 2024; Attorney General says the govt. too does not want any delay

October 10, 2023 07:37 pm | Updated 07:37 pm IST - NEW DELHI

Representational image.

Representational image.

The Supreme Court on Tuesday fixed October 31 for hearing a slew of petitions challenging the electoral bonds scheme.

“We are here to decide the case,” Chief Justice of India D.Y. Chandrachud observed.

He was responding to submissions by advocate Prashant Bhushan, for petitioner-NGO Association for Democratic Reforms, that the legality of the scheme should be decided by the top court before the 2024 general election.

Having this timeline in mind, the court agreed to the petitioners’ urging to focus primarily on two issues concerning the electoral bonds scheme, that is, the legalisation of anonymous donations to political parties and the violation of citizens’ right to information about the funding of political parties, promoting corruption. The two issues concern violation of Articles 19, 14 and 21 of the Constitution.

When given a choice by the court during the hearing, Mr. Bhushan said he would go ahead with the hearing on these two substantial issues rather than await a seven-judge Bench judgment on the legal question as to “when a Bill could be designated a Money Bill”. The electoral bonds scheme was passed as a Money Bill, circumventing the Rajya Sabha. Mr. Bhushan apprehended that the seven-judge Bench may not be able to deliver its judgment ahead of the Lok Sabha poll likely to be scheduled in May.

Attorney General R. Venkataramani said he did not want the government to be seen trying to delay the hearing in the case, and agreed for an early hearing of the case. “I just want to get along,” he said.

The hearing saw Chief Justice Chandrachud ask the petitioners certain preliminary questions in order to ascertain the contours of the legal challenge.

For one, the Chief Justice asked whether a person could “walk into a bank with a bag containing ₹1 crore in cash and purchase electoral bonds”.

“If you want to purchase electoral bonds, can you do it by cash or only through bank transfer,” the Chief Justice asked.

Purchaser’s anonymity

Advocate Shadan Farasat, for a petitioner, explained that purchase of the bonds could be done only through bank transfer and not by paying cash.

“But the point is the purchaser of the bonds enjoys anonymity. The purchaser can then transfer the bonds to a recognised party anonymously… So, who has transferred how much to a political party is anonymised from the public domain. Who is donating to which political party is not known. There is a complete sanitisation of information to the public,” Mr. Farasat submitted.

He said even amendments were introduced in the Companies Act by which a company could throw a cloak of anonymity on its donations to political parties via purchase of electoral bonds.

“A shareholder will know how much a company donated to political parties, but will not know how much was given to each political party,” Mr. Farasat distinguished.

Tax exemption

At one point, the court asked whether the donor enjoyed tax redemption by buying electoral bonds. “If there is tax deduction availed by the donor, then it [electoral bonds scheme] may be a Money Bill… we are not saying anything now. This is only a discussion,” Chief Justice Chandrachud remarked.

The court said it would hear final arguments on October 31 and continue on November 1 if the submissions spill over.

The petitions have been in limbo for about eight years.

Mr. Bhushan has argued that amendments made via Finance Acts of 2016 and 2017, both passed as Money Bills, have through the electoral bonds scheme, “opened the floodgates to unlimited political donations”.

“The amendments have removed the caps on campaign donations by companies and have legalised anonymous donations. The Finance Act of 2017 has introduced the use of electoral bonds which are exempt from disclosure under the Representation of the People Act, 1951, opening doors to unchecked, unknown funding to political parties,” Mr. Bhushan has argued.

Foreign contribution

The Finance Act, 2016 has also amended the Foreign Contribution Regulation Act, 2010, to allow foreign companies with subsidiaries in India to fund political parties in India, effectively exposing Indian politics and democracy to international lobbyists,” the petitioners have contended.

Response received from the Department of Economic Affairs on January 27 to a Right to Information application filed by Commodore Lokesh Batra (retired) showed that electoral bonds were sold from March 2018 to December 2022 in 24 phases at a total cost of ₹10.23 crore to the taxpayer.

The expenses include ₹8.33 crore in bank commission and ₹1.90 crore in printing charges. While ₹6.74 lakh electoral bonds were printed, bonds worth ₹11,699.84 crore were sold, the RTI response had shown.

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