Electoral bonds case | Offers selective anonymity; no level-playing field: SC

The Supreme Court on Wednesday (November 1) said the problem with the electoral bonds scheme is that it provides for "selective anonymity" and "selective confidentiality" as the details are available with the State Bank of India (SBI) and can also be accessed by the law enforcement agencies.

A five-judge constitution bench headed by Chief Justice DY Chandrachud observed that the problem with the scheme would lie if it does not provide a level-playing field to political parties and if it suffers from opacity.

While hearing arguments on a batch of pleas challenging the validity of electoral bonds scheme for funding political parties, the apex court said the motive behind the scheme may be perfectly laudable, but in an effort to bring in white money into the electoral process, it essentially provides for a "complete information hole".

"The problem with the scheme is it provides for selective anonymity. It is not completely anonymous. It provides for selective anonymity, selective confidentiality... it is not confidential qua the State Bank of India. It is not confidential qua the law enforcement agencies," the bench, also comprising Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra, told Solicitor General Tushar Mehta who was arguing the case for the Centre.

Under the scheme, electoral bonds can be issued or purchased from some authorised branches of the SBI.

"Your argument that look if you were to strike down the scheme, you will go to a situation which existed prior… that may not be valid for the reason that we are not precluding the government from coming out with a transparent scheme or a scheme which has a level-laying field," the CJI observed.

Big donors wouldn't risk buying electoral bonds: CJI

During the day-long hearing, the CJI said a big donor would never take the risk of buying electoral bonds for the purpose of tendering it to political parties and never put his or her head on the line by being in the books of accounts of the SBI.

The CJI said a big donor may disaggregate the donation to people who will purchase electoral bonds with small amounts through the official banking channel and not through cash.

Mehta, who told the bench he would explain the entire scheme, said each and every word in it was very consciously used and what the petitioners have called "anonymity or opaqueness" was neither anonymous nor opaque but was "confidentiality by design".

"The purpose of ensuring that electoral funding relies less and less on cash component and more and more on accountable component is, of course, a work-in-progress and we are completely with you. There is no difficulty," the bench said.

Making it clear that the apex court was not saying what the scheme should be, the bench said maybe the earlier scheme had failed and did not get as much white money into the electoral funding as desired.

Problem of 'selective confidentiality'

Justice Khanna said one of the issues was selective confidentiality and it may be easier for the party in power to get the information about the electoral bonds.

He said because of selective confidentiality, the opposition parties may not know who the donors are but the donors of the opposition parties may be identified at least by the probe agencies.

"We will have to trust at some stage someone as the final fiduciary authority," Mehta said, adding, "Nobody has taken your lordships through the scheme… Nobody can come to know, including the Central government".

Possibility of retribution

During the arguments, the CJI observed that the scheme did not obviate the possibility of retribution.

The bench said it was not on the issue of whether a particular political party was holier than the other and that it was only testing a question of constitutionality.

Mehta told the bench that every country was grappling with the problem of use of black money in election and politics. He said country-specific issues were being dealt with by every nation depending upon the circumstances existing there.

The solicitor general said every government did its bit to ensure that some methodology was adopted to eradicate the power of black money or unclean money in the electoral process.

"Having tried several attempts, several mechanism and modes, the menace of black money was not being dealt with as effectively because of the systemic failures and therefore, the present scheme is a conscious and deliberate attempt to ensure clean money coming into the banking system and election," said the solicitor general.

Mehta highlighted steps taken by the government to deal with black money including digitised payments and action taken against 2.38 lakh "shell companies" between 2018 and 2021.

Referring to the role played by digitalisation, Mehta said India has nearly 750 million mobile internet users and is adding one new internet user every three seconds. "The quantum of digital payments in India is almost 7 times of that in US and Europe combined, 3 times of that in China," he said.

If confidentiality goes, the scheme goes: Govt

During the arguments, the solicitor general said, "Legality of the scheme is entirely for your lordships to consider and decide… but one thing I will be able to satisfy your lordships is that, if the element of confidentiality goes from the scheme, the scheme goes...".

Referring to the argument advanced by the petitioners that electoral bonds scheme has benefited the ruling party most, he said, "More contribution going to the ruling party is the norm".

"According to you, why is it the norm that the ruling party gets a substantial part of the donations, what is the reason?" the CJI asked.

Mehta, while citing figures, said they showed that whichever party is the ruling party gets more. "This is my reply, not the government's reply," he hastened to add.

Mehta said earlier, due to the fear of victimisation, the safest way to donate was by cash in which clean money used to get converted into black money and that was disastrous for the economy.

When the bench referred to partial confidentiality and observed the person in power can have access to the details, the solicitor general said the information is completely confidential.

"That is a grey area. You may say so, the other side will not agree to it," the bench said.

"We take your point that confidentiality is designed to ensure that people are not victimised for contributing," the CJI observed, adding, "But if you really want to have that scheme at a level-playing field, then all these donations should be given to the Election Commission of India which will then distribute it on an equitable basis".

Mehta responded, saying "Then nothing will come and everything will be by cash".

‘Anonymous corporate funding demeans transparency’

During the day-long hearing, senior advocate Vijay Hansaria, appearing for an intervenor, argued that free and fair elections were a basic structure of the Constitution, and anonymous corporate funding of political parties "which is essentially kickback for a favour, strikes at the root of democratic functioning of the government".

He said electoral bonds are an instrument for anonymous corporate funding that demeans transparency and gives rise to opaqueness.

Senior advocate Sanjay Hegde, appearing for another intervenor, also advanced his submissions during the day.

When he said electoral bonds are election-specific, the bench observed, "not necessarily". The bonds are sold at certain stipulated times in a year and then some days before the general elections," it said.

Electoral bonds being given as kickbacks, bribes, quid pro quo: Petitioners

During the hearing, Justice Khanna referred to the submissions advanced by the petitioners' side about electoral bonds being given by way of 'kickbacks', 'bribes', or 'quid pro quo'.

The bench asked the Election Commission about the total financing which was required for each general election or for the state elections on an average, and amount which was collected through these bonds and used.

"The issue which may come up is, because we have this opacity with regard to who is funding, etc., then if there is any quid pro quo, how does anybody establish it?" it asked.

Responding to the question, Mehta said, "Please, for the time being, for appreciating my arguments, remove the two expressions repeatedly used, 'anonymity and opacity'. It is a restricted, limited confidentiality which can be opened and the veil can be lifted by judicial direction."

‘Electoral bonds will destroy democracy’

During the arguments on Tuesday (October 31), the petitioners had told the apex court that the "opaque" electoral bonds scheme for funding political parties will "destroy democracy” as it promotes corruption and does not allow a level-playing field between the ruling and opposition parties.

The scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring in transparency in political funding.

According to the provisions of the scheme, electoral bonds may be purchased by any citizen of India or entity incorporated or established in India. An individual can buy electoral bonds, either singly or jointly with other individuals.

Only the political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than one per cent of the votes polled in the last election to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds.

According to the notification, electoral bonds shall be encashed by an eligible political party only through an account with an authorised bank.

The apex court had, in April 2019, declined to stay the electoral bonds scheme and said it would accord an in-depth hearing on the pleas as the Centre and the EC had raised "weighty issues" that had "tremendous bearing on the sanctity of the electoral process in the country".

The hearing remained inconclusive and will continue on Thursday (November 2).

(With inputs from agencies)