Day 3 Arguments: 11 April 2019

Today the Supreme Court reserved order in the electoral bonds case. Tomorrow, 12th April, it will decide whether to place a stay on the scheme.

 

An electoral bond is a bearer instrument, like a promissory note, that is payable to the bearer on demand. These bonds can be purchased from the Scheduled Banks and can be en-cashed by political parties within 15 days. 

 

The Bench comprises Chief Justice Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna. The petitioners are the Communist Party (Marxist), the Association for Democratic Reforms and Common Cause.

 

Attorney General KK Venugopal on behalf of the Union of India

The Attorney General continued from yesterday by filing an affidavit explaining the working and features of an electoral bond, in attempt to justify their use. He made three main arguments in defense of the electoral bonds scheme:

  1. it curbs the infusion of black money into politics
  2. it protects a donor's fundamental right to privacy
  3. prevents victimization by political parties (via privacy protection)

 

The Attorney General rejected the petitioners' claim that there is complete anonymity under the Electoral Bonds. He explained that bonds can only be purchased using KYC verified account and investigating authorities can get a banking trail through a donor's bank account number.

 

The CJI expressed skepticism about the argument that electoral bonds will lead to a reduction of black money in politics. He observed that the effort at fighting black money may seem counter-productive as under the scheme , the identity of the donor as well as the recipient is unknown. He suggested that electoral bonds may even facilitate money laundering, i.e. turning black money into white money. Justice Sanjiv Khanna weighed in by observing that KYC can only give the bank account number, but without a check on the transaction, black money can be turned to white.

 

Next, the Chief Justice asked the Election Commission if under the current scheme, they are better placed than the SBI to record bond contributions. Mr. Rakesh Dwivedi , appearing for Election Commission replied that before the Finance Act 2017, parties were obligated to disclose all contributions received through an annual contribution report. After the Finance Act 2017, the addition of the Proviso to Section 29C of the Representation of the People Act, political parties have been exempted from reflecting the contributions received through electoral bonds. 

 

CJI Gogoi observed that under the Finance Act structure, the Election Commission has been made worse off than banks in tracking contributions through Electoral Bonds. 

 

At this point, the Bench asked if the citizen does not have a right to know about the funding of political parties? Mr. Venugopal replied that a citizen's right to know is restricted to political candidates and not to the funding source of political parties. He said that  the need for disclosure has to be balanced with the privacy of the donor so that the donor is not victimized by other political parties. 

 

Rejoinder Arguments 

Mr. Prashant Bhushan appearing for Association for Democratic Reforms submitted that there is no link between fighting black money and the electoral bond scheme. He said that electoral bonds have opened up another route of anonymous corporate funding through banking channels, in addition to the pre-existing cash donation route.

 

The arguments concluded for the day and the Court dictated that it would pass orders tomorrow at 10:30 am. The Court in its order will decide whether to place an immediate stay on the electoral bond scheme.