The Supreme Court of India.
Credit: PTI Photo
The Supreme Court on Tuesday decided to begin the final hearing from October 31 to adjudicate upon the validity of the Centre's electoral bonds scheme as a source of funding for political parties.
A bench of Chief Justice of India D Y Chandrachud and Justices J B Pardiwala and Manoj Misra said it will begin the final hearing on the matter on October 31 and would continue on November 1, if there is a spillover during the hearing.
Advocate Prashant Bhushan, for NGO ADR, submitted that the electoral bonds scheme was challenged for the fact that it was passed as a money bill; secondly, it is anonymous funding which violates the right to information of citizens; and, it also promotes corruption, as a large amount of funding come to political parties from companies which have received some benefits from them.
"It is a device which promotes corruption in the country,” he said.
On this, the bench asked, "Does the source of funding take place through banking channels? How does the scheme work? Purchase of an electoral bond happens through a bank transfer or cash?"
Bhushan said both are allowed.
“That is critical, because if it is through bank transfer…..purchaser is treated as anonymous,” the bench said.
Bhushan said the source is known to the State Bank of India (SBI) and they will not disclose, and the total amount can be from Rs 10,000 to Rs 1 crore.
Advocate Shadhan Farasat, representing another petitioner, said the purchase usually does not take place through cash and “you will have to have an account in a certain designated bank account and only from bank transfer it can be done”.
He said the identity of the purchaser of the electoral bonds is kept anonymous and the real anonymity is when the money is transferred to a political party, who has transferred to which political party is anonymised from the public domain, and that is the real challenge.
The bench asked if the electoral bond is like a bearer bond or if it is the bond in a person’s name or if, just like a bearer bond the person can transfer to anybody.
Bhushan said it is transferred to political parties. Farasat said the party which is entitled to encash electoral bonds has to be a recognised political party.
The bench noted the donor’s name is kept anonymous, and the quantum of amount is not anonymous.
“When political party encashes, the bond does not have to disclose the name of the donor; merely say this is the quantum received,” the bench noted. Farasat said the information of donation from the public domain is sanitised.
Senior advocate Sanjay Hedge, representing a petitioner, gave an example saying that Tiger Investments may have several companies upstream and downstream and one may not know who is controlling that, and they get money from abroad through various round-tripping routes. Hedge argued that Tiger Investment is an Indian company, it buys electoral bonds and donates. The source of donation is not known and “whichever political party gets it, says thank you very much”.
The bench said, “in such example, Tiger Investments buys the electoral bonds. There is anonymity but regarding the source of funding, it has to explain in its tax”.
The bench said, “suppose, it is contributing Rs 1 crore. First, it transfers a crore through normal banking channels to SBI, and now Tiger in its assessment has to disclose to IT department where did that Rs 1 crore come from?” Hedge insisted on round-tripping.
The bench asked Bhushan, “What about the money bill issue, are you pressing it here and we do not want to compel you to give it up because that is pending before seven-judge…all seven-judge and nine-judge matters are listed for directions on October 12. Would you like us to hear this, minus the money bill?”
Farasat said, “The court may consider hearing it de hors money bill issue".
Bhushan said that the challenge to the electoral bonds scheme should be decided before the general election scheduled next year. He asked the court to allow petitioners to argue on issues other than money bills.
The bench fixed the matter for hearing on October 31, arising out of petitions filed against the scheme by the Association for Democratic Reforms, Communist Party of India (Marxist), Dr Jaya Thakur (Congress leader), Spandan Biswal, and others.