Electoral Bonds scheme has advantage of KYC, says SC

New Delhi: The Supreme Court on Thursday said the government being unable to dry up all cash sources of funding of political parties is not an answer or no ground to challenge the validity of the electoral bonds scheme.

Noting that the scheme has an advantage of KYC, a five-judge bench led by Chief Justice of India D Y Chandrachud said the scheme has brought one change, i e, whatever is contributed through electoral bonds in the form of accounted transaction is within the normal banking channels.

In his rejoinder arguments, advocate Prashant Bhushan for lead petitioner, NGO Association for Democratic Reforms said the scheme promoted corruption, and legalised corruption by allowing any company to anonymously give kickbacks to parties in power.

He said there is considerable evidence to show almost all electoral bonds have gone to the ruling parties, in the Centre and states, and 94 per cent of electoral bonds purchased are in the denomination of Rs 1 crore and the rest are in Rs 10 Lakh.

He said the right to privacy, argument raised by the government can't be extended to companies as it is an individual right. He questioned amendments made to the Income Tax Act and the Companies Act which anonymised donations from companies to political parties and removed the requirement for disclosure.

"A right to privacy can't override the right to information of citizens," he said.

Bhushan said the window of the electoral bonds scheme for the upcoming state assembly elections will open any day now and till March 2022, the electoral bonds purchased were over Rs 9,000 crore and under Rs 10,000 crore and till today the total might be close to Rs 13,000 crore.

He said the court should direct that these may be subject to disclosure, the court has the power to seek information from SBI.

On this, the bench asked Bhushan, "You are asking for quashing (of the electoral bond scheme) or do you want disclosure should be made? The scheme has one advantage: There is a KYC at least and you will accept that”.

Bhushan said, "That is alright if the anonymity is removed, I have no problem, remove the anonymity I have no problem with electoral bonds”.

Bhushan stressed that cash donations have not been choked so far.

The bench said that is not the object at all and cited the former finance minister’s statement that it is about having some element of transparency.

The bench said Arun Jaitley had said it would enhance transparency to a significant extent and the earlier regime was purely cash-based – voluntary contributions and electoral trusts – and the cash-based scheme proceeds on anonymity.

“But there is one change that the electoral bonds have brought whatever is contributed through electoral bonds in the form of accounted transactions within the normal banking channels," the bench noted.

The bench said whether the electoral bonds scheme reduced black money or not is irrelevant to the validity of the scheme, and the scheme may be wholly unsuccessful but it may be a wholly valid scheme.

Bhushan said one can still give cash, and there is no bar made on cash.

On this, the bench asked how one can impose a bar on cash as it is a third economy.

During the hearing, Solicitor General Tushar Mehta, for the Centre, made it clear that investigative agencies can only access details of donors pursuant to a court order and 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, Mehta said, adding 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 claimed that this reduced the possibility of kickbacks.

He maintained secrecy per se is not antithetical to free and fair elections.

Mehta said if there is a genuine public interest in the disclosure, one can go to the court but merely for curiosity, you cannot invade someone’s privacy.

Attorney General R Venkataramani submitted that the scheme treats all contributors equally and that the confidentiality of contributors is important. He emphasised that moving away from black money to a regulated scheme served the public interest.

The court reserved the judgment after a full three-day hearing.