Disclose All Donations Received Via Electoral Bonds by May 30: SC
April 12, 2019
The Supreme Court on Friday, April 12, directed all political parties to disclose details of the donations received by them through electoral bonds to the Election Commission of India (ECI) by May 30.
The disclosure of these particulars have to be made in sealed covers and the same has to be furnished by May 30, the apex court said. The particulars to be furnished pertain to all the donations received by the parties till date and shall include details of the donors, bank accounts and other relevant particulars, it added.
The order was passed by a bench comprising Chief Justice of India Ranjan Gogoi and Justices Deepak Gupta and Sanjiv Khanna on petitions filed by Communist Party of India (Marxist) and NGOs Common Cause and Association for Democratic Reforms(ADR), which termed it "an obscure funding system which is unchecked by any authority".
The bench also wanted the Finance Ministry to modify its recent notification allowing the purchase of electoral bonds for an extra five days over and above the stipulated 10 days in January, 10 days in April and additional 30 days allowed in an election year.
The Centre and the Election Commission (EC) had taken contrary stands in the Supreme Court on Wednesday over political funding. While the government wanted to maintain anonymity of donors of electoral bonds, the EC was in favour of revealing the names of donors for transparency.
On Thursday, the apex court had observed that if the identity of the purchasers of electoral bonds meant for transparent political funding was not known, then the government’s efforts to curtail black money in elections would be “futile”.
Electoral bonds were introduced by the Narendra Modi government after making amendments through the Finance Act 2017 to the Reserve Bank of India Act 1934, Representation of Peoples Act 1951, Income Tax Act 1961 and Companies Act. On January 2, 2018, the Centre notified the scheme under which electoral bonds, in the nature of bearer instruments like a promissory note, can be purchased by any Indian citizen or a body incorporated in India. The identity of the donor will be known only to the bank, which will be kept anonymous.
The petitioners had voiced apprehension that the amendments to Section 182 of the Companies Act, which earlier provided for a cap on donations made by companies to political parties, will lead to "private corporate interests taking precedence over the needs and rights of the people of the State in policy considerations".
The petitioners had sought an immediate stay on the scheme, stating that 95% of electoral bonds sold so far have been in favour of one political party, that is the current ruling party– the Bharatiya Janata Party (BJP).
They also stated that most of the bonds that have been purchased since 2018 have been of the denominations of Rs 10 lakh and Rs 1 crore, indicating that it is not common citizens but corporates that have been purchasing these bonds while enjoying complete anonymity.
The Election Commission’s Stand
The EC filed a counter-affidavit stating that the scheme was a "retrograde step as far as transparency in political funding is concerned". It said that it had expressed concerns way back in May 2017 itself, immediately after the passage of the Finance Act 2017, which had brought in the crucial legislative amendments for laying the foundation for the scheme.
By virtue of the amendment made to Section 29C of the Representation of Peoples Act 1951(RPA), political parties need not report to EC the donations received through electoral bonds. The EC said if contributions were not reported, it will not be possible to ascertain if political parties have taken donations from government companies and foreign sources, which is prohibited under Section 29B of RPA.
The amendments made to Companies Act 2013 were also flagged by the poll panel. The amendment to Section 182 of the Act took away the restriction that contribution can be made only to the extent of 7.5% of net average profit of three preceding financial years, enabling even newly incorporated companies to donate via electoral bonds.
"This opens up the possibility of shell companies being set up for the sole purpose of making donations to political parties, with no other business consequence of having disbursable profits", said the EC letter. Also, the amendment to Section 182(3) abolished the provision that companies should declare their political contributions in their profit and loss accounts. Now, this requirement is diluted to only showing the total expenditure under the head. This would "compromise transparency" and could lead to the "increased use of black money for political funding through shell companies" expressed the ECI.
The Centre’s Stand
The Centre, through Attorney General K K Venugopal, had vehemently supported the scheme, claiming that the purpose behind it was to eliminate the use of black money in elections. It asked the court not to interfere with it at this stage and examine whether it has worked or not only after the elections.
The donor's identity is kept anonymous to prevent them being victimized, in case they turn out to have supported the losing party, said the AG. "The actual objective is to remove any impediment to payments which is posed by disclosing their source and to which political party they are tendered. If you back the wrong horse, then tomorrow an industrialist who is bidding for a dam will get victimised if the opposite party came to power", said the AG, as quoted by Live Law.
BJP Got Maximum Funds via Electoral Bonds
In a report by Times Of India, BJP received Rs 997 crore and Rs 990 crore through donations in 2016-17 and 2017-18, respectively, which is five times more than what Congress received in the same period, the EC told the apex Court on Thursday. This information was given to the SC by senior advocate Rakesh Dwivedi who was appearing for the EC.
According to TOI, when petitioner’s counsel Prashant Bhushan argued that electoral bonds were designed to benefit corporate houses and industrialists who contributed handsomely yet anonymously to the ruling party to receive a quid pro quo and claimed that BJP received 95% of such donations, AG said Bhushan was “kite flying” and questioned the basis of his information.
However, Dwivedi handed over a two-page note to the bench which proved Bhushan right as far as BJP getting maximum donations was concerned. It showed that in the 2017-18, 520 bonds worth Rs 222 crore were issued by State Bank of India, of which 511 bonds worth Rs 221 crore were redeemed.
According to PTI, the sale of electoral bonds zoomed by 62% compared with last year, ahead of the Lok Sabha elections. The SBI reported selling bonds worth over Rs 1,700 crore, with the highest purchase in Mumbai at Rs 495.60 crore, followed by Kolkata at Rs 370.07 crore, Hyderabad at Rs 290.50 crore, Delhi at Rs 205.92 crore and Bhubaneswar at Rs 194 crore, as per an RTI reply.
First published in Newsclick.
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