Supreme Court: Refusal to Stay Electoral Bonds Undermines Transparency In

OVERVIEW OF THE CASE

• The Supreme Court in this case has dealt a severe blow to transparency in electoral process by rejecting applications seeking stay of electoral bonds ahead of assembly polls in various Indian states.
• The Supreme Court's refusal to treat the issue with promptitude facilitated the release of bonds in different cycles from 2018 to 2020
• The Supreme Court has cited the release of electoral bonds in 2018, 2019 and 2020 "without any impediment" as a reason to reject the stay on the release of the next tranche of bonds. On going through this justification given in the last paragraph of the order, one might get reminded of legal maxim 'a person cannot take advantage of his own wrong', though it is debatable if this principle applies to courts

EC CONTENTIONS?

• The Election Commission of India in this case, made an astonishing move by filing a counter-affidavit in the case expressing its serious reservations about the electoral bonds scheme. The ECI called the anonymous bond scheme a "retrograde step as far as transparency of donations is concerned"
• In this case, without seriously engaging with concerns expressed by the Election Commission in its affidavit, the Supreme Court makes observations to the effect that the allegations of complete anonymity of the bonds may not be sustainable.

ACCORDING TO THE COURT

• Since the law mandates political parties to file audited statement of accounts and 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 which are accessible to the public.
• The donor information could be obtained by doing a "match the following" on the basis of public records of companies and parties.
• The effect of the order is that the electoral bonds scheme will continue, without any effective safeguards against the various concerns flagged by ECI and RBI, while several 'weighty issues', including the 'money bill issue'(which is now referred to a constitution bench), await adjudication by the SC.

WHAT THE COURT FAILED TO NOTICE

• Here, according to the SC, Political parties need not report to the ECI the contributions received through electoral bonds by virtue of the amendment made to Section 29C of the of the Representation of People Act by the Finance Act 2017
• Furthermore, the Companies need not separately specify in their profit and loss accounts the contributions made by them to different parties after the Finance Act 2017
• Consequently, there is no data available in the public domain to do "match the following" to pierce the anonymity of the bonds. The Supreme Court omitted to consider the amendments to Section 29C RP Act and Section 182(3) of the Companies Act while making this observation.
• The understanding that foreign corporate houses may buy the bonds and attempt to influence the electoral process in the country, is also misconceived.
• It can be further noted that the Supreme Court did not address the issue from the standpoint of a voters' right to know. It is known that the voter has a fundamental right to know if big businesses and corporate houses are funding political parties with the expectations of return favors. Such information is crucial for a voter to make the best judgment.

BRUSHING ASIDE RBI’S CONCERNS

• The apprehension here was that the Supreme Court acknowledged that the Reserve Bank of India had "some reservations" about the scheme, but brushed them aside by saying that the RBI, was not opposed to the scheme in principle.
• The Supreme Court is based on a paragraph in a correspondence by the RBI Governor which urged the Centre to issue electoral bonds in demat form instead of physical scrip form.

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