SC asks Political Parties to Disclose Details of Donations through electoral bonds to ECI
On April 12, 2019, the Supreme Court, in an interim order, asked political parties to submit details of the donations received, details of the donors, bank accounts, and other relevant particulars through electoral bonds in a sealed cover to the Election Commission of India (ECI) by May 30, 2019.
The order was passed by a bench comprising Chief Justice Ranjan Gogoi, justices Deepak Gupta, and Sanjiv Khanna, on a public interest litigation (PIL) filed by the Association of Democratic Reforms (ADR), an NGO, and the Communist Party of India (Marxist) CPI(M). The plea had challenged the validity of the electoral bond scheme and sought interim relief, saying that either the issuance of electoral bonds be stayed or the names of the donors be made public to ensure transparency in the poll process.
The ruling came after the SC rejected the Centre’s appeal to allow it to continue with the funding system till the end of the Lok Sabha Election 2019. The government had contended that voters need not know the identity of contributors. However, the Election Commission (EC), wanted the procedure to be more transparent.
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Background The government introduced electoral bonds after making amendments through the Finance Act 2017 to the Reserve Bank of India Act 1934, Representation of Peoples Act 1951, Income Tax Act 1961, and Companies Act and on January 2, 2018, the Centre notified the scheme under which electoral bonds, like a promissory note, could be purchased by any Indian citizen or a body incorporated in India. As per the provision, the identity of the donor, known only to the bank, would remain anonymous.
But it was feared that Section 182 of the Companies Act would give undue leverage to private corporate interests over the needs and rights of the people of the state in policy considerations.
The petitioners wanted an immediate stay on the scheme, stating that 95 per cent of electoral bonds had been sold in favour of only one political party, the Bhartiya Janata Party (BJP) and most of the bonds bought since 2018 had been of the denominations of ` 10 lakh and ` 1 crore. Such big denominations clearly indicate that it is not the common people but corporates that have been taking them while enjoying anonymity.
According to the Press Trust of India (PTI), the sale of electoral bonds shot by 62 per cent ahead of the Lok Sabha elections.
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The Election Commission’s Stand
The EC had expressed concerns over the matter way back in May 2017 itself, immediately after the passage of the Finance Act 2017, which affected amendments that laid the foundation for the scheme.
As per the amendment, made to Section 29C of the Representation of Peoples Act 1951(RPA), political parties were not required to report to EC the donations received through electoral bonds. The EC objected to this development by arguing if contributions were not reported, it would not be possible to ascertain the source of the funds to political parties.
The EC also raised suspicion over the amendments made to Companies Act 2013. The amendments did away with the provisions that put a restriction to the maximum contribution to be made by a company to 7.5 per cent of net average profit of three preceding financial years. This would enable even new companies to contribute through the medium electoral trends.
Moreover, the amendment to Section 182(3) abolished the provision that companies should declare their political contributions in their profit and loss accounts. Such a step is detrimental to transparency and could result in the increased use of black money for political funding through shell companies.
The Centre’s Stand
The Centre, through Attorney-General K.K. Venugopal, had strongly supported the scheme, stating that it would eliminate the use of black money in elections. It asked the court not to interfere with it and examine whether it had worked or not only after the elections. It said the reason for keeping the identity of donor anonymous is to prevent them from being victimised on account of their political affiliation. It would also remove any impediment to payments posed by disclosing their source.
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