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SC hearing on ‘Electoral Bonds’ Case (Specials)

  • Category
    Polity & Governance
  • Published
    3rd Nov, 2023

Context:

Recently, the Supreme Court (SC) gave judgements on Electoral Bond keeping donor’s privacy over voter’s right to known by the Central Government, and gives itself a waiver.

Background:

  • The Supreme Court (SC) has referred petitions challenging the 2018 Electoral Bonds Scheme to a five-judge Constitution Bench.
  • While the Centre has termed the scheme “a big step towards electoral reform” which “will ensure transparency” and “accountability”, petitioners have contended that it affects transparency in political funding.
  • The Electoral Bond scheme introduced instruments through which anyone in the country could donate money to political parties anonymously.
  • This is not the first time the scheme has ended up before the top court since its inception in 2017.

What are electoral bonds?

  • First announced during the Union Budget session in 2017, “electoral bonds” are interest-free “bearer instruments”, which means that they are payable to the bearer on demand, similar to a promissory note.
  • Essentially, electoral bonds allow Indian citizens or a body incorporated in India to purchase bonds, enabling anonymous donations to political parties.
  • Usually sold in denominations ranging from Rs.1, 000 to Rs.1 crore, these bonds can be bought from authorised SBI branches through accounts complying with KYC norms.
  • Following this, the political parties can choose to encash the bonds within 15 days of receiving them and fund their electoral expenses.

Section 29A of the RPA deals with the registration of associations and bodies as political parties with the Election Commission.

  • However, they aren’t available for purchase throughout the year and can only be purchased between 10-day windows falling in the months of January, April, July, and October.
  • Importantly, electoral bonds can only be used to donate to political parties registered under Section 29A of the Representation of the Peoples Act, 1951, securing at least 1% of the votes polled in the last election to the House of the People or a Legislative Assembly.

Why were electoral bonds introduced?

  • The Centre’s rationale behind introducing the electoral bonds scheme was to “cleanse the system of political funding in the country” and bring about “transparency in electoral funding in India”.
  • To tackle these problems, then-Finance Minister Jaitley proposed electoral bonds while suggesting that the amount of money that a party could accept in cash from anonymous sources be reduced from Rs 20,000 to Rs 2,000.

The Finance Act and Electoral Bond Scheme:

  • The Finance Act(s) of 2016 and 2017 amended four separate legislations to make way for the electoral bonds scheme, including;
  • The Foreign Contribution Regulation Act, 2010;
  • The RPA, 1951;
  • The Income Tax Act, 1961; and
  • The Companies Act, 2013.

The First Petition challenging Electoral Bond Scheme:

  • In 2017, the first batch of petitions was filed by two NGOs, Common Cause and the Association for Democratic Reforms (ADR), to strike down amendments made through the Finance Acts of 2016 and 2017, passed as money bills, which “opened doors to unlimited political donations, even from foreign companies,” thereby legitimising electoral corruption on a huge scale. The pleas also argued that the bonds ensured complete non-transparency in political funding.
  • Arguing that the scheme shouldn’t have been introduced “illegally,” bypassing the Rajya Sabha’s approval; the petitioners sought a stay on the scheme.

Previous ruling of SC on Electoral Bond Scheme:

  • A three-judge SC bench, in an interim order, directed political parties receiving donations through electoral bonds to submit the details of the bonds to the ECI.
  • Subsequently, while dismissing a prayer to stay the sale of fresh bonds in March 2021, a three-judge SC Bench headed by then CJI SA Bobde disputed the petitioner’s contention regarding the “complete anonymity” of bond purchasers.
  • “It is not as though the operations under the scheme are behind iron curtains incapable of being pierced”, the court said, dismissing petitions seeking to stay the sale of fresh electoral bonds ahead of Assembly elections in West Bengal, Tamil Nadu, Kerala, Assam, and Puducherry.
  • Additionally, the SC said that bonds had been issued in the past, between 2018 and 2020, “without any impediment,” and it had already ordered “certain safeguards” by way of its April 2019 interim order.

What does a safeguard mean?

  • The “safeguards” the court was referring to here were “requiring all the political parties who have received donations through Electoral Bonds to submit to the Election Commission of India in sealed cover” along with particulars of the donors for each bond, including the amount of each bond and credit details received against each bond, like bank account details and the date of crediting the amount.

Recent SC Bench and the Petition

  • In the present case, the Supreme court will be dealing with four petitions, filed by ADR, CPI(M), Congress leader Jaya Thakur, and a PIL by one Spandan Biswal.
  • Besides challenging the constitutionality of the electoral bonds scheme, the petitioners have asked the court to declare all political parties as public offices to bring them under the ambit of the Right to Information Act and compel political parties to disclose their income and expenditure.

What has the ECI’s stance been?

  • In its submission to the Standing Committee on Personnel, Public Grievances, Law, and Justice in May 2017, the ECI objected to the amendments in the RPA exempting political parties from disclosing donations received through electoral bonds while describing the move as a “retrograde step”.
  • In 2019, as part of the ongoing challenge to electoral bonds in the SC, the ECI filed an affidavit flagging the issue of laws being changed to allow political parties to receive contributions from foreign companies, allowing “unchecked foreign funding of political parties” which could lead to “Indian policies being influenced by foreign companies”.

What has the Centre’s stance been?

  • Attorney General R Venkataramani told the Supreme Court, by way of written submissions, that the citizens’ right to know is subject to reasonable restrictions.
  • Stating that “there can be no general right to know anything” without “reasonable restrictions”, the AG responded to the petitioner’s prayer for a “declaration that citizens have a right to know as an aspect/facet of the right to freedom of expression,” based on which they have the right to access the details of contributions to political parties.
  • Defending the Centre’s scheme, the AG said that it “extends the benefit of confidentiality to the contributor” and promotes the contribution of clean money.

Recent Arguments for the Privacy of Electoral Bonds donation:

  • It is imperative for the State to protect the fundamental right to privacy of a citizen donating to a political party because the donation is a reflection of her “Political affiliation” which is in the “Core zone of privacy”.
  • This argument that Solicitor General of India put before the Supreme Court is at the heart of the Centre’s defence of the structural opaqueness in the electoral bond scheme.
  • The Government’s case is that the donor’s right to privacy over-rides the voter’s right to know, even if in protecting that privacy, the state gives itself an exemption.

SC Views on recent petition:

  • The right to privacy point was flagged by Chief Justice of India who observed during the hearing, the donor of an electoral bond is not exactly anonymous.
  • While the State, through law enforcement agencies and the State Bank of India, is privy to the donor’s identity and, therefore, expression of “political affiliation”, this information is protected from the voter exercising her fundamental right to participate in a democracy.
  • A citizen’s fundamental right is exercised against the state.
  • It flows from Article 13 of the Constitution, which mandates that the state cannot make any laws inconsistent with or interrogation of fundamental rights.
  • The secret ballot system of voting, an example of expression of political affiliation, is protected against the State. The constitution places the responsibility to protect is right with an independent arm of the state, the Election Commission.

SC 2017 judgment of Right to privacy and Government Stand:

  • The Centre stand relies heavily on the Supreme Court’s landmark 2017 ruling in KS Puttaswamy v Union of India, in which a nine-judge bench unanimously reaffirmed the right to privacy as a fundamental right under the Constitution.
  • Ironically, the government, in that case, had argued that citizens do not have a fundamental right to privacy since it did not specifically find a place in the Constitution.
  • The Centre had taken this stand — against elevating the right to privacy to the status of a fundamental right — since 2014 even before smaller benches of the Supreme Court.
  • In 2021, the Supreme Court in the Pegasus spyware case, refused to accept the government’s blanket national security ability to violate the fundamental right to privacy.

Conclusion:

The free flow of information from the Petitioners and the State, in a writ proceeding before the Court, is an important step towards Governmental transparency and openness, which are celebrated values under Indian Constitution.

Verifying, please be patient.

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