New Delhi: The solicitor general (SG) of India Tushar Mehta on Wednesday, November 1, defended the contentious electoral bonds scheme in the Supreme Court, saying they protect the privacy of citizens who make such donations to political parties.
The top court began hearing petitions challenging the scheme, which were first filed five years ago in 2018, on Tuesday. The matter is being heard by Chief Justice of India (CJI) D.Y. Chandrachud, Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala and Manoj Misra.
The SG emphasised the protection of “privacy” and “political affiliation of the citizens who make such donations to political parties”, as per Bar and Bench.
Earlier, in written submissions, the Union government had said that citizens did not have the fundamental right to know the source of political funding. Attorney general R. Venkataramani said that the “right to know” must be subject to reasonable restrictions and can be exercised for specific ends or purposes.
Venkataramani had also said in writing that the Supreme Court would be entering the domain of policy if it tried to regulate electoral bonds.
SG Tushar Mehta said the scheme aims to strike a balance between the necessity for transparency and the need to safeguard donor confidentiality.
Mehta stated that donors often resort to using unaccounted cash for political contributions due to their apprehension of potential victimisation or retribution from other political parties.
Mehta was cited by Bar and Bench as saying that previous government initiatives aimed at cleaning up the source of political donations, such as tax exemptions and electoral trusts, had proven unsuccessful.
“The electoral bond does not carry the name of the buyer or payee in order to protect the citizen’s right to privacy to its own political affiliation and to choose to fund a political party of its own choice, without the fear of being targeted or suffering vindicative repercussion for owning such a choice. It is in furtherance of the State’s positive obligation to safeguard the privacy of its citizens, which necessarily includes, the citizens’ right to informational privacy, including the right to secure the political affiliation of its citizens,” he submitted.
The current scheme is a response to “donor resistance” and safeguarding their identities, said the SG.
Mehta suggested that eliminating the confidentiality aspect of the scheme would render it ineffective and could potentially lead to a resurgence of cash-based political contributions.
“The present scheme is the result of tackling this resistance of donors and to incentivise them to use clean money through official banking channels while maintaining the confidentiality of their names. If this confidentiality, which is the heart and soul of the scheme and necessary to achieve the object of utilizing clean money for political donations, is removed, the scheme will become redundant and the country would go back to the era where donations to political parties were substantially made in cash,” he submitted.
He said that all arguments of the petitioners regarding the right to know and the necessity of transparency need to be examined from the above perspective.
In a surprising claim, Mehta wondered what might be gained only by making known who the donors are. Confidentiality of those paying political parties and the parties benefitting from them strikes at the heart of clean political funding and healthy democratic practices. But Mehta said, “How the citizens would gain by going back to the earlier regime on the ground that the present scheme, though absolutely transparent and operating through the official channel, is declared to be bad merely on the ground that the donor and donee remain confidential.”
He stressed that the elements of anonymity and the privacy of information are crucial to encourage and popularise the scheme.
Live Law reports that Justice Khanna said, “There are two aspects. One, whether by giving confidentiality to a donor you ensure a greater public interest is served. Second, is selective confidentiality. What happens is the person in power can have access to it.”
The judge added, “If confidentiality [of donor] is given, how do we ensure what was called quid pro quo – how do we ensure that this is checked?”
To this, Mehta said there is confidentiality as the State Bank of India maintains complete confidentiality. “The government cannot find out whether my learned friend has given to A party or B. That I will show from the scheme. But ultimately, you have to trust somewhere,” LiveLaw cites him as saying.
Mehta spent considerable time arguing that there would be no quid pro quo between the party in government and the way electoral bonds have been devised and that the party in power would not be able to know who is donating to whom. The 15-day window for encashing bonds was also justified on the same ground, as not allowing for a ‘quid pro quo’.
To this, CJI Chandrachud said, “Retribution is not avoided by the scheme. I’ll tell you the simple reason. Under the Companies Act, now modified, a company doesn’t have to disclose to which political party it has contributed. But it has to show how much it has contributed.”
He went on, “So a company says I’ve contributed 400 crore this FY. Now, the party in power knows how much has come to it in terms of Electoral Bonds from that company.” SG Mehta said, “It can never know.” The CJI said, “No, the party of course knows.”
CJI Chandrachud asked why the Election Commission was not the nodal entity to clean up election finances. “But if you really wanted to have that scheme and have a level playing field, then all these donations should be given to the Election Commission of India, which would then be distributed on an equitable basis!”
To this, Mehta said, “Then nothing will come and everything will be by cash.”
The CJI said, “You’re absolutely right! That shows us the motivation for these donations.”
The bench will resume hearings tomorrow on day three.
What is an electoral bond?
An electoral bond is like 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. Bonds of denominations of Rs 1,000, Rs, 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore can be purchased.
The bonds are issued specifically to contribute funds to political parties. The Finance Act which came up with electoral bonds was controversially passed as a Money Bill to bypass the Rajya Sabha’s assent. At the time, the BJP did not have control over the upper house to see that it was passed.
Electoral bonds have been accused of making political funding opaque and non-transparent. The sale of bonds has been skewed so far in the ruling party’s favour. The Association for Democratic Reforms, which analysed donations received by political parties between 2016-17 and 2021-22, found that the BJP received more than thrice the total that all other parties received.
This article was first published on The Wire.
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