Is there a mechanism to check use of Electoral Bonds for illegal purposes, SC asks Centre

The Supreme Court on Wednesday sought to know from the Union government if there was a mechanism to check a political party from using the funds received through Electoral Bonds for illegal purposes, including violent protest and terrorist activities.

"We are sure there are political parties who have violence on their agenda. Can not a political party fund terrorist operations? We don't want to get into politics and not comment on any party, but can't a party receive bonds and then fund a protest which turns violent. What is the control of the government on what use the money is put to," a bench presided over by Chief Justice S A Bobde asked Attorney General K K Venugopal.

The A-G, for his part, responded that political parties, which were registered under Representation of Peoples Act and had secured not less than one per cent of votes can not encash the bonds received as donation.

He also pointed out the political parties can encash the bond only from the State Bank of India.

"If a party buys Electoral Bonds worth Rs 100 crores what is the assurance that it won't be used for illegal purposes or fund violence," the bench, also comprising Justices A S Bopanna and V Ramasubramanian, again asked.

The court also wondered if the bonds, sold in anonymity, helped in curtailing use of black money. Solicitor General Tushar Mehta, for his part, said only cheque and demand drafts were accepted for buying bonds after complying KYC norms.

The court reserved its order on a plea by advocate Prashant Bhushan on behalf of NGO 'Association for Democratic Reforms' for staying sale of Electoral Bonds before Assembly polls.

Responding to a different query from the court, the A-G said the permission from the Election Commission has been taken for opening sale of Electoral Bonds between April 1 to 10.

The Election Commission's counsel, for his part, said, "We are supporting Electoral Bonds and not opposing it. If disallowed, we go back to the period when there was unaccounted deposits. At least now, there is accountability." He said the EC just wanted transparency.

Bhushan said the RBI and the Election Commission had both raised strong reservations about the Electoral Bonds, which was unprecedented and had not happened anywhere in the world.

He claimed the EBs had opened the way of donations from large corporations through shell companies like bribes. "Nobody can come to know who is the last transferee and who are the initial subscribers of these electoral bonds," he said.

Bhushan also contended the ECI had called it "complete retrograde" amendment introduced through the Finance Act, 2017.

"If your argument is correct, we have to strike down the law in full. How do we decide this in an interim application," the bench said.