W.P.(C) 880/2017 tagged with W.P.(C) 330/2015 and SLP (C) No. 18190/2014
Introduction of Electoral Bonds Challenged

Common Cause and the Association for Democratic Reforms (ADR) have challenged the introduction of the Electoral Bonds, as part of the Finance Act 2017, which have, arguably, made electoral funding of political parties more opaque and legitimised corruption to an unprecedented scale. A PIL filed in the Supreme Court alleges that the bonds make the electoral funding unlimited for big corporates and open the doors for foreign lobbyists.    

The PIL seeks directions from the Supreme Court to strike down the amendments made through Finance Act, 2017 and Finance Act, 2016. It is alleged that such wide-ranging amendments in The Representation of Peoples Act, 1951, The Reserve Bank of India Act, 1934, The Income Tax Act, 1961 and The Companies Act, were brought in illegally as a “Money Bill”, in order to bypass the Rajya Sabha. Hence, it has been urged that suitable directions be given so that the practice of by-passing the Rajya Sabha for important Bills by classifying them as money bills be stopped. This matter is likely to be taken up on October 3, 2017.

The Finance Act, 2017 has introduced a system of electoral bonds to be issued by any scheduled bank for the purpose of electoral funding. The earlier restriction that political donations would not exceed 7.5 per cent of the donating company’s average three-year net profit has been done away with. This may result in even loss-making companies making donations of any amount to political parties out of their capital or reserves. Also, a company is no longer required to disclose the name of the parties to whom such contributions are made.

The Finance Act, 2016 has allowed foreign companies with subsidiaries in India to fund political parties in India, effectively, exposing the Indian politics and democracy to corporate lobbyists who may want to further their agenda. According to the petitioners, these Amendments pose a serious danger to the autonomy of the country and are bound to adversely affect electoral transparency, encourage corrupt practices in politics and make the unholy nexus between politics and corporate houses more opaque and treacherous and is bound to be misused by dubious interest groups and corporate lobbyists. 

The matter was heard by the Court on 3 October 2017 and was tagged with W.P. (C) No. 333/2015 and SLP (C) No. 18190/2014.

On March 12, 2019, the bench had decided to hear the matter when the Counsel for petitioners told the bench that it opens flood gates for violating norms fixed by the Election Commission and related government notifications. 

On March 26, 2019, the bench comprising Chief Justice Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna, told that the matter would be heard by an appropriate bench on April 2. 

On March 27, the Election Commission filed an affidavit before the Supreme Court, which indicated that the introduction of electoral bonds will have a serious impact on the transparency of political funding.

On April 2, 2019, the Court will hear the petitions challenging the validity of the Electoral Bonds Scheme, 2018, notified by the Central Government on January 2, 2018.

On April 3, 2019, a fresh affidavit has been filed by Centre before the Supreme Court, which said that electoral bonds were a positive step in the right direction to ensure accountability and transparency.

On April 5, 2019, the Supreme Court refused to grant an interim stay on the operation of electoral bonds scheme.

On April 10, 2019, the AG said:

"Electoral bonds are meant to eradicate black money in political funding...as we have no State funding of elections. Political parties get funds from supporters, affluent persons, etc. The funders all want their political party to come to power. But if their party does not, then there could be repurcurssions....so secrecy is required."

Contrary to centre's stand, the Election Commission of India has an opposite view:

"We are not against electoral bonds. We are only opposed to the anonymity associated with it."

On April 11, 2019, the AG said:

“...Voters have a right to know what? Voters dont need to know where money of political parties comes from. Also, there is the Right to Privacy..."

 Justice Sanjiv Khanna observed:

“KYC which you have mentioned is only about identity of the purchaser. It is not a certificate of genuineness of the money – whether it is black or white.”

The Court heard brief rejoinder submissions by the petitioners before reserving its order.

On April 12, 2019, the SC declined to pass a stay order against the issuance of electoral bonds, saying it would examine in detail the changes made in law and at this point, interim orders might effect the balance in the favour of or against specific political parties. The bench consisting Chief Justice Ranjan Gogoi, accompanied by Justice Deepak Gupta and Justice Sanjiv Khanna observed the transparency and anonymity in donations through electoral bond, raises weighty issues which are vital to fairness of electoral process but the question could not be determined on the basis of a short hearing. 

The bench has directed all the political parties to submit to the Election Commission, details of the bank account/s receiving donations and total donations they would receive till May 15, 2019 through Electoral Bonds; including the identity of donors, payment details, etc. by May 30, 2019, in sealed covers. 

The bench has also directed the Finance Ministry to modify its recent notification and reduce the window of purchase of Electoral Bonds in April-May, during which elections take place. The said notification specifies the sale of Electoral Bonds for 10 days each in March, April, May and July and an additional period of 30 days during the Lok Sabha elections.

On April 15, 2019, the Registry was directed by the bench consisting the Chief Justice, Justice Deepak Gupta and Justice Sanjiv Khann to supply copies of the counter affidavit(s) filed by the respondents in Writ Petition (C) No. 333/2015 to Dr. Madhuker Sharma, the Intervenor, who must appear in person, within two weeks.

On December 4, 2019, after mentioning by the Petitioner's Counsel, it was directed to list the matter in the month of January, 2020 before the appropriate Bench. Notice has been issued in  Writ Petition (C) No. 408/2019 and tag along with Writ Petition (C) No. 333/2015 and other connected matters. 

On January 20, 2020, the bench has granted two weeks’ time to the respondent/s to file counter affidavit(s) and directed to list the matter thereafter. 

On March 18, 2021,  the bench consisting the Chief Justice and Justices Bopanna & Ramasubramanian ordered IA Nos. 36653 of 2021 and 183625 of 2019 in WP(C) 880 of 2017 to be listed on Wednesday i.e. March 24, 2021.

On March 24, 2021, IA No. 45810 of 2019 in WP(C) 59/2018 is ordered to be listed along with WP(C) 333/2015 in due course. In IA Nos. 183625 of 2019 and 36653 of 2021, hearing was concluded and orders were reserved.

On March 26, 2021, the Chief Justice, Justice Bopanna & Justice Ramasubramanian dismissed IA Nos. 183625 of 2019 and 36653 of 2021, referring to the interim order dated April 12, 2019 and highlighted that since 2018 when the bonds were introduced, there has not been any impediment and with the safeguards already provided by the Court, it did not see any justification for the grant of stay on electoral bonds at this stage. The judgment said:

25. The financial statements of companies registered under the Companies   Act,   2013   which   are   filed   with   the   Registrar   of Companies, are accessible online on the website of the Ministry of Corporate Affairs for anyone. They can also be obtained in physical form from the Registrar of Companies upon payment of prescribed fee. Since the Scheme mandates political parties to file audited statement of accounts and also since the Companies Act requires financial statements of registered companies to be filed with the Registrar of Companies, the purchase as well as encashment of the bonds,   happening   only   through   banking   channels,   is   always reflected in documents that eventually come to the public domain.  All that is required is a little more effort to cull out such information from both sides (purchaser of bond and political party) and do some “match the following”. Therefore, it is not as though the operations under   the   Scheme   are   behind   iron   curtains   incapable   of   being pierced. 

26. One of the contentions of the petitioners is that though the first purchase may be through banking channels for a consideration paid in white money, someone may repurchase the bonds from the first buyer by using black money and hand it over to a political party. But this contention arises out of ignorance of the Scheme. Under   Clause   14   of   the   Scheme,   the   bonds   are   not   tradable. Moreover, the first buyer will not stand to gain anything out of such sale except losing white money for the black. 

27. The apprehension that foreign corporate houses may buy the bonds and attempt to influence the electoral process in the country, is also misconceived. Under Clause 3 of the Scheme, the Bonds may be purchased only   by   a   person,   who   is   a   citizen   of   India or incorporated or established in India. 

 


Download :

W.P.(C) 880 of 2017
Petition challenging the introduction of Electoral Bonds WP(C) 880/2017
Order_Oct 3, 2017
Order_Apr 15, 2019
Order_Dec 4, 2019
Order_Jan 20, 2020
Order_Mar 18, 2021
Order_Mar 24, 2021
Order_Mar 24, 2021 - Judgment Reserved
Order_Mar 26, 2021
Order_Mar 26, 2021 - Judgment