Supreme Court agrees it is Parliament’s job to improve electoral bonds

The five-judge Constitution bench reserved its judgement on the validity of the scheme but observed that it was for Parliament to fix the flawed system

The Constitution Bench of the Supreme Court of India (pictured) is hearing petitions on the electoral bond scheme's validity, with the 2024 general elections impending and a debate on transparency ongoing (photo: Getty Images)
The Constitution Bench of the Supreme Court of India (pictured) is hearing petitions on the electoral bond scheme's validity, with the 2024 general elections impending and a debate on transparency ongoing (photo: Getty Images)

A.J. Prabal

The petitioners who had challenged the electoral bond scheme in the Supreme Court six years ago appear to have fought a losing battle before the Constitution bench.

The bench, while reserving its judgement on the hearing on Thursday, 2 November, agreed with the solicitor general of India, Tushar Mehta, that the scheme’s intention of reducing unaccounted-for donations in cash to political parties was ‘noble’ and that it was for Parliament to enact and amend the laws to regulate the system.

At the same time, the bench also agreed with the petitioners that the scheme is:

  • skewed against the Opposition

  • not transparent enough

  • favouring the ruling party

  • and ridden with serious loopholes that may allow dubious corporations and foreign entities to donate to political parties.

The court also found it “slightly difficult to accept” the government’s contention that voters do not have the right to know the source of funding of political parties.

Following three days of hearing both the petitioners and the government since Tuesday, 31 October, the Bench—presided over by chief justice of India D.Y. Chandrachud and including justices Sanjeev Khanna, B.R. Gavai, J.B. Pardiwala and Manoj Misra—suggested that the government could design a ‘better scheme’ to address the deficiencies.

“Why not make everything open…? As it is, everyone knows about it (donation through electoral bond). The party knows about it. The only person who is deprived is the voter. Your contention that the voters do not have the right to know, after the number of decisions of this court, is slightly difficult to accept,” Justice Khanna said to the solicitor general.

The solicitor general was then allowed to tie himself up in knots on the issue of confidentiality and transparency.

Mehta defended the ‘confidentiality’ of the scheme and spoke of the need to keep the identity of donors a secret. He also said that there can be no system in which the donor and the donee do not know each other, thus admitting that the ruling party and the government know who the donors are.

The solicitor general also did not rule out ‘misuse’ of the scheme by some donors, but was unable to explain on what ground he believed that only 2–5 per cent of the donors abused the scheme.

Confidentiality of the donor is required so that they are not victimised by a government formed by a different party, the solicitor general argued.

Since the scheme was launched in 2018 and the same party has ruled at the Centre since then, he obviously did not have any empirical evidence for such a happenstance. What the scheme is more likely to ensure, perhaps, is that the same donors would start donating to the new ruling party.

However, the bench and the CJI appeared to provide ample indication of another judgement that will acknowledge the authority of Parliament to make laws and of the executive to implement them and devise processes.

The only surprise that was sprung by the bench was its direction to the Election Commission of India to share the total amount of donations by electoral bonds received by each of the 25 political parties that are eligible to receive such donations (and which have opened the designated bank accounts to receive them). It is not clear what the bench could possibly mean to do with such details.

When Mehta argued that the only alternative to the present scheme was to revert to the earlier system, when anonymous cash donations were the norm, CJI Chandrachud interjected to say:

“It’s not like that. We are not for a moment saying that.

"There are three or four important considerations which are very important:

"1. The need to reduce the cash element in the electoral process;

"2. The need to encourage use of authorised banking channels for that purpose;

"3. Incentivising the use of banking channels — this should result in greater confidentiality;

"But there is a fourth consideration — the need for transparency;

"And there is a fifth consideration — that this should not become a legitimisation of quid pro quo between the power centres, whether in the states or in the Centre, and people who are really (in that sense) benefactors of that power.

“So, when the balance is drawn, it has to be by the Legislature, not by us. But it’s not, therefore, that there is an either/or — that either you do this or go back entirely to cash.

"You can design another system which does not have the flaws of this system. They put a premium on opacity. You can still devise a system which balances (this bias towards opacity) out in a proportional way. How it is to be done, it’s up to you to decide; that’s not our arena.”

Readers can read between the lines and draw their own conclusions on which way the judgment is headed.

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