The Supreme Court, with its five-judge bench led by Chief Justice of India (CJI) DY Chandrachud and inclusive of Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, is rigorously examining the legal validity of the electoral bonds scheme. Introduced by the government in January 2018, this scheme was projected as a transparent alternative to cash donations made to political parties, aiming to foster transparency in political funding.
Also read- Supreme Court Examines Electoral Bond Scheme (Day 1) (lawchakra.in)
During the hearing, Senior Advocate Vijay Hansaria, representing the petitioners, voiced concerns about the scheme’s impact on transparency. He remarked that the scheme
“demeans transparency and breathes life into opaqueness.”
Hansaria further highlighted a specific concern regarding subsection 3A to Section 182 of the Companies Act, 2013. This subsection, he pointed out, omits the requirement for companies to provide details of the amount and the beneficiary political party. In response, Justice Khanna emphasized that, despite this omission, companies are still obligated to disclose the donation amount.
Hansaria also delved into the tax exemption nuances under Section 80G of the Income Tax Act. He pointed out a significant shift in disclosure requirements. Companies, under the current framework, are only mandated to declare the total amount they’ve donated to political parties. They aren’t required to disclose the specific party benefiting from the donation. This, Hansaria argued, renders the tracing of such donations virtually impossible. Moreover, he expressed reservations about the lack of a ceiling on the total permissible contributions under the scheme.
Also read- Centre To Supreme Court: Citizens Don’t Have Right To Know Political Party Funding (lawchakra.in)
Solicitor General Tushar Mehta provided clarity on the donation quantum, stating unequivocally that
“There are no restrictions.”
He elaborated that individuals with shared interests could collaboratively form trusts and contribute collectively. Hansaria, referencing data from the Association for Democratic Reforms (ADR), mentioned that 18 electoral trusts have cumulatively contributed ₹49 crore. He emphasized that this data is readily available with the Election Commission.
A nuanced point of contention arose when Hansaria observed that the current legal framework mandates disclosure from ‘candidates’ but not from ‘political parties’. CJI Chandrachud responded with a hint of surprise, stating,
“Really, our law did not speak of ‘political party’ at all.”
Senior Advocate Sanjay Hegde, representing another applicant, shed light on the intricacies of electoral bonds from a corporate perspective. He noted that these bonds, when issued by a company, are specific to an election and necessitate a resolution from the board of directors. Such resolutions, he pointed out, aren’t typically available for public scrutiny. Hegde further highlighted the absence of spending limits when political parties utilize funds accrued from these bonds.
Both Hegde and another Senior Advocate, Kapil Sibal, urged the court to contemplate directives that could potentially diminish the opacity inherent in the current scheme.
Also read- Supreme Court To Revisit Controversial Electoral Bonds Scheme On October 31 (lawchakra.in)
Earlier in the hearing, the Supreme Court had made a pertinent observation regarding the scheme’s confidentiality. The court noted that electoral bonds
“provide (only) selective anonymity… confidentiality.”
This is because purchase records, while anonymous to the public, are retained by the State Bank of India and can be accessed by investigative agencies when required. The government, defending the scheme’s design, posited that such anonymity safeguards donors from “victimisation and retribution,” especially if they didn’t financially support the winning party.
The ongoing hearing underscores the court’s commitment to striking a balance between ensuring transparency in political funding and recognizing the practical challenges of the electoral landscape.
