Assembly polls: ADR moves SC seeking urgent hearing of plea to bar sale of Electoral Bonds

With Assembly elections around the corner in West Bengal, Kerala, Tamil Nadu, Assam and Puducherry, a plea has been moved by NGO, Association for Democratic Reforms (ADR) before the Supreme Court seeking an interim direction to bar sale of Electoral Bonds.

Towards this end, the NGO has sought urgent listing of its 2017 writ petition challenging the Electoral Bonds scheme.

The application states that there is a serious apprehension that any further sale of Electoral Bonds before the upcoming elections in West Bengal, Tamil Nadu, Kerala and Assam, "would further increase illegal and illicit funding of political parties through shell companies."

"The petitioner seeks that no further opening of window for the sale of EBs be allowed during the pendency of the instant writ petition," reads the urgency application.

The NGO has informed the top court that the case was last heard in January, 2020 and even after a similar application was filed on December 27, 2020, seeking urgent hearing of the case, the matter was not listed, Bar & Bench has reported.

An electoral bond is an instrument in the nature of a promissory note or bearer bond which can be purchased by any individual, company, firm or association of persons provided the person or body is a citizen of India or incorporated or established in India. The bonds which are in multiple denominations are issued specifically for the purpose of contribution of funds to political parties.

Electoral bonds were introduced through Finance Act 2017, which in turn amended three other statutes - RBI Act, Income Tax Act and Representation of People Act - for enabling introduction of electoral bonds.

The Finance Act, 2017 introduced a system of electoral bonds to be issued by any scheduled bank for the purpose of electoral funding. The Finance Act was passed as a money bill which meant that it did not require the assent of Rajya Sabha. This, the petitioner submitted in the 2017 petition, was done in order to bypass the Rajya Sabha where the ruling BJP government did not have a majority.

The petitioners also submitted that the consequence of the amendments was that annual contribution reports of political parties to be furnished to the Election Commission of India need not mention names and addresses of those contributing by way of electoral bonds thereby killing transparency in political funding.

The removal of cap on donations by the amendment of the Companies Act, 2013 and the amendments made in Section 236 of the Foreign Contribution (Regulation) Act, 2010 were also challenged as opening the avenues of foreign contribution to Indian political parties.

The plea filed through advocate Prashant Bhushan stated that with the removal of the 7.5% cap on the net profits of the last 3 years of a company, now corporate funding has increased "manifold as there is no limit to how much a company can donate".

"Even loss-making companies now qualify to make donations of any amount to political parties out of their capital or reserves," read the plea.

The Central government promulgated the electoral bond scheme in January 2018, thereby giving effect to the electoral bond system contemplated by the finance act and other consequential amendments.

The petitioner had then approached the top court seeking stay on the scheme.

It was contended that electoral bonds would lead to opacity in funding of political parties and lead to unchecked funding.

The Central government has strongly opposed the petition stating that the issue falls within the realm of policy. It also said that the scheme protects the privacy of donors which should outweigh the right of voters to know about the source of funding of political parties.

The Election Commission has, however, opposed the Central government stating that the scheme of electoral bonds would affect transparency in political funding.