New Delhi: A five-judge bench constitution bench of the Supreme Court Wednesday flagged how the ‘selective anonymity’ of the electoral bonds scheme makes it easier for the ruling party to obtain information about the donors to the opposition parties qua law enforcement agencies, and the opposition parties donations get questioned.
The apex court stressed that it is not precluding the government from coming with a transparent scheme or a scheme which has a level playing field for all the political parties.
A bench led by Chief Justice of India D Y Chandrachud and comprising Justices Sanjiv Khanna, B R Gavai, J B Pardiwala, and Manoj Misra, is hearing a clutch of petitions challenging the validity of the Centre's electoral bonds scheme as a source of political funding. Defending the scheme, Solicitor General Tushar Mehta, representing the Centre, said the present scheme is an attempt to ensure clean money comes through banking channels to the political parties and stressed that anonymity is required in political donations to ensure that there is no retribution.
The Chief Justice said the problem with the scheme is that it provides for selective anonymity and it is not completely anonymous, or selective confidentiality. "The State Bank of India is not confidential qua SBI, it is not confidential qua law enforcement agencies. So, a large donor will never take the risk of buying the electoral bonds for the purpose of tendering to the political party. All the large donor has to do is to disaggregate the donation. Give people who will purchase electoral bonds with small amounts which will be purchased through official banking channels and not through cash," said the Chief Justice.
On the aspect of aggregators, Mehta said: "I will have to find ten people (to deposit Rs 1 crore each) who are ready to risk Rs 10 crore". The Chief Justice observed, “A large donor will never put his or her head on the line by being on the books of account of SBI having purchased….the scheme is capable of selective anonymity, selective confidentiality”.
Mehta urged the CJI to allow him to explain the entire scheme. The Chief Justice continued that Mehta’s argument that if court were to strike down the scheme, then we would revert to the prior situation "will not be valid in itself for that reason". “We are not precluding the government from coming with a transparent scheme or a scheme which has a level playing field”, said the Chief Justice.
The Chief Justice said the purpose of ensuring the electoral bonds is that the electoral funding rely less on cash component and more on the accountable component and it is a work in progress, and the court is completely with Mehta on this, as it is a problem that democratic societies are grappling with.
The Chief Justice said the problem with the scheme is: (a) if it doesn’t provide a level playing field to political parties; and (b) it suffers from opacity as the petitioners’ have argued, and maybe the earlier scheme failed as it could not get as much white money into the electoral funding as expected.
Pointing at the safeguards in the earlier scheme of political parties funding, the Chief Justice said a cap on the net profit a company can contribute, a disclosure within a company's own accounts allows shareholders to know that company is funding a political party. “Motive may be perfectly laudable, question is whether you adopted means which are proportional...," the Chief Justice observed.
In a lighter vein, Mehta said, "I hope the bench is putting the petitioners' contention," and added that "it is already 3 PM and there was a lot of seriousness and he wanted to break that seriousness". Laughter broke out in the courtroom and the CJI said “our word is the last word when judgment is delivered…..”.
Mehta said anything other than keeping it confidential will not be able to address the problem of victimization, and victimization incentivizes payment by cash. Justice Khanna said victimization and retribution is normally by the party in power and not by the party in Opposition.
During the hearing, Mehta cited a trend, whether this scheme or prior, maximum money goes to the ruling party. “Because of selective confidentiality, donations to the Opposition party are concerned that there are ways and means to get that information. Easier for the party in power to get that information, putting it very frankly…..now what is the fear is because of this selective confidentiality, the Opposition do not know who are your (ruling party) donor but donors to the Opposition parties can be ascertained at least by investigative agencies….their (Opposition parties) donations get questioned," said Justice Khanna.
Mehta said at some stage one will have to trust on someone as the final fiduciary authority and nobody has taken the court through the scheme and how it operates and he intends to do that. Mehta said there is a possibility it may not be a 100% fool-proof scheme.
The Chief Justice said retribution is not avoided by this scheme and under the Companies Act modified, a company is not required to disclose to which political party it has contributed but it has to disclose how much it has contributed totally.
“So a company says I have contributed Rs 400 crores this Financial Year. Now the party in power knows how much has come to it in terms of electoral bonds from that company. The party of course knows how much has come from this company into its coffers and from the balance sheet of the company it would be known how much it has contributed in a macro sense….That mismatch is sufficient to know as to how much money has gone to the party in power. It is not that the possibility of retribution is averted by this scheme” , observed the Chief Justice.
The electoral bonds scheme was notified on January 2, 2018. It introduced money instruments through which companies and individuals in India can donate to political parties anonymously. The hearing in the matter will continue on Thursday.
Previously, the apex court had indicated concerns about influential entities covertly setting up persons with verified accounts to purchase electoral bonds for them through the regular banking route in order to anonymously enter into a quid pro quo with ruling political parties.
Also read: ‘Electoral bonds scheme limited confidentiality can be lifted by judicial order’, Centre to SC
