The Supreme Court on Wednesday reserved its orders on a plea seeking a stay on the sale of the next tranche of Electoral Bonds in light of the upcoming legislative assembly elections in four states and one union territory. The plea, filed by the Association of Democratic Reforms (ADR), said there are serious apprehensions that further sale of the EBs would increase "illegal and illicit funding of political parties through shell companies".
During arguments, the bench led by Chief Justice of India SA Bobde expressed his apprehension on what happens if a political party wants to buy electoral bonds to fund terrorism. "There are political parties who do terrorism," he said.
What if a political party wants to buy electoral bonds and then uses the money to fund a protest which has the potential to become violent? What is the government control on how the money will be used after it is encashed, he asked the Centre, which was represented by Attorney General KK Venugopal.
To this, Venugopal said using money encashed from EBs could not fund terrorism because it was white money—by way of cheques, bank drafts—that is used to buy electoral bonds. AG informed the court, that earlier political parties did not even file IT returns. The major political parties started filing taxes after a Supreme Court judgment mandated the same. Hence, once the money is in the account of any political party, the potential for misuse is low, the AG said. "Terrorism is not funded by white money," the AG added.
Anonymous EBs is "legalised corruption": ADR to SC
Anonymous electoral bonds are "legalized corruption" and paves the way for shell companies to essentially offer bribes to political parties, advocate Prashant Bhushan argued. Bhushan, who represents ADR, further submitted that at least the Reserve Bank of India (RBI) must know who the initial subscriber is.
"The only person who wants anonymity is the person who is paying a bribe to the party in power…there is no justification for the argument that anonymity is maintained for the safety of the donor. Because, it is not anonymous to the Government who the donor is which can track identity, but is anonymous to everyone else," Bhushan told the three-judge bench.
At CJI Bobde's query on whether he sought complete anonymity, Bhushan said that he in fact wanted "complete transparency". "This Court has held that candidates should disclose their assets, criminal background etc. Even without a law, this Court directed that. This court has held that transparency is absolutely necessary in an election," Bhushan said.
Bhushan also highlighted concerns raised by the RBI and the Election Commission.
In response to ADR's plea challenging the constitutional validity of EBs, the RBI had expressed concerns that EBs could be transferred thus facilitating money laundering and kickbacks. EC on the other hand sought greater transparency and recommended the disclosure of the donor's identity.
No stay on sale of bonds, but seek transparency: EC to SC
The EC on Wednesday told the SC that it opposed the stay on the sale of bonds but sought "transparency".
"Without electoral bonds, we will go back to the earlier cash system, which was unaccounted. Bonds is one step forward, as all transactions are through banking channels," senior advocate Rakesh Dwivedi said. "We are against the stay of electoral bonds as then we will go back to the unaccounted cash system," Dwivedi, representing the EC said.