Electoral Bonds: SBI Seeking More Time Negates SC Verdict

The State Bank of India (SBI), in an application filed on March 4 before the Supreme Court, made a plea that it would be difficult to adhere to the court’s Order of February 15, 2024 for supplying the Election Commission of India, by March 6, the details concerning the purchase of each electoral bond, the name of the purchaser of the bond, the political party getting it and the denomination of the bond.

It, therefore, sought more than three months, till June 30, 2024, to comply with the Supreme Court Order. It means that while the Supreme Court wanted to make public the details of electoral bonds before the commencement of the general elections of 2024, the State Bank of India, in its application, sought to do so after the polls.

Electoral bond scheme mandated courts to get details of the bonds

Such a submission of the SBI does not sound reasonable at all in the face of the express provision of Section (4) of Clause 7 of the Electoral Bond Scheme (EBC), 2018, which mandates that, “Information furnished by the buyer shall be treated as confidential by the authorised bank and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon registration of a criminal case by any law enforcement agency.”

It is made unequivocally clear in the EBC itself that when a competent court demands that details of electoral bonds should be disclosed, the SBI has no option but to do comply with the court Orders in this regard.

So right from the commencement of the electoral bond scheme in 2018, the law itself empowers the judiciary to issue Orders for the information concerning who purchased the electoral bonds, who they were paid to and what was the amount involved in buying those bonds.

Apart from the aforementioned specific provisions of the law, the Supreme Court, while hearing the petitions challenging the constitutionality of the electoral bonds in 2019, had on April 12 that year issued an Order directing the SBI to maintain a record with all the details of political parties purchasing the electoral bonds and the sums paid for that purpose.

It is instructive to note that the Supreme Court, in its February 15 judgment declaring the electoral bond scheme unconstitutional, made a very pertinent observation on Section (4) of Clause 7 of the EBC.

It referred to the argument of the Union of India thus, “Clause 7(4) of the Electoral Bond Scheme balances the right to information of the voter and the right to informational privacy of the contributor”.

The court examined the stand of the Union government in the context of the express provision of Clause 7(4) which stipulates that the information furnished by the buyer shall be treated as confidential by the authorised bank and it has to disclose the information when it is demanded by a competent court or upon the registration of a criminal case by a law enforcement agency.

“It needs to be analysed,” the Supreme Court held, “If the measure employed [Clause 7(4)] balances the rights or tilts the balance towards one of the fundamental rights.”

It then very firmly observed, “The Union of India has been unable to establish that the measure employed in Clause 7(4) of the Electoral Bond Scheme is the least restrictive means to balance the rights of informational privacy to political contributions and the right to information of political contributions.”

In stating so, it gave primacy to the voters’ right to information concerning the money received by political parties through electoral bonds.

It may be mentioned that the SBI was duty-bound to take steps to maintain the records of electoral bonds issued after the 2019 Order of the Supreme Court which has been mentioned above.

Logically, it follows that that record should be easily available either in digital or physical form. There should hardly be any difficulty for the SBI to furnish the details in a few days.

In fact after the 2019 Order of the Supreme Court, the records of electoral bonds should have been maintained in such a manner so as to enable it to submit the details to the court without any delay and not in three months.

Based on that Supreme Court Order, the SBI should have prepared a list of those bonds and updated it from time to time depending on the opening of those bonds for sale.

It means that the list so prepared should only take a few days to get the latest information and that could have been done in the period after the Supreme Court pronounced the judgment on February 15 this year.

SBI seeking more time is unreasonable

It is quite inconceivable that when so much is being talked about ‘Digital India’ by the Modi regime and an aggressive publicity campaign is being launched relentlessly by it to take credit for digitally storing information, the disclosure of details concerning electoral bonds would need more than three months.

It has been reported that there are a total of 44,000 electoral bonds and the details of half of them should have been recorded following the 2019 Supreme Court Order.

It is quite possible that the other half consisting of 22,000 bonds may not be available in a digital form, so the SBI wants more time to do so for the purpose of furnishing those details by June 30 this year.

In this age, electronic business is transacted with lightning speed and the SBI, with its vast network of digitally connected offices, has a proven record of handling immense volumes of work at an accelerated pace. So, it would not take three months to process the details of information concerning those electoral bonds.

SBI asking for more time impairs the right to information

The Supreme Court, in its February 15, 2024 judgment, held that secrecy surrounding the electoral bonds deprived people of knowing the details of funding received by political parties and so their right to information was violated.

That reasoning constituted the very basis of the Supreme Court judgment which declared electoral bonds as unconstitutional. People’s right to know about the funding of political parties is essential for upholding the cause of transparency in the electoral process.

The application of the SBI to disclose information about electoral bonds after three months has the potential of demolishing the very basis of the Supreme Court judgment.

More time sought by the SBI to share the details of the electoral bonds persuades people to feel that an attempt is being made to put a lid over the funds gained by the ruling Bharatiya Janata Party (BJP), which has got over ₹16,000 crore and opposition parties in contrast received much less amount.

Delaying the disclosure of the details will ill serve the cause of conducting free and fair elections which has been held to be the basic structure of the Constitution.

If the application of the SBI is not in tune with that basic structure then it should be accordingly dealt with by the Supreme Court so as to reiterate its February 15 judgment on electoral bonds declaring these as contrary to the Constitution and constitutional morality.

Background

The electoral bond scheme was introduced through the Finance Bill, 2017, which brought amendments to the Representation of the People Act, (RPA)1951; Income Tax Act, 1961; the Companies Act, 2013 and the Foreign Contribution (Regulation) Act, (FCRA) 2010.

It was notified by amending Section 31 (issue of demand bills and notes) of the Reserve Bank of India Act, 1934.

Several petitions were filed challenging the amendments on grounds of violation of fundamental rights guaranteed under the Constitution of India under Articles 14, 19(1)(a), 21.

It was argued by the petitioners that the electoral scheme gnaws at the “very root of our democracy.” The respondents defended the scheme stating that it was crucial for “eradicating unclean and black money in elections”.

In the unamended RPA, under Section 29C (declaration of donation received by the political parties), if a political party received contributions in excess of twenty thousand rupees from a single person in a financial year, they were required to report such donations to the Election Commission of India.

The 2017 amendment removed the reporting requirements if the contributions are made through electoral bonds.

The electoral bond scheme provided that only those political parties registered under Section 29A of the RPA, and who have secured not less than 1 percent of the votes polled in the last general elections to the House of the People or the legislative assembly shall be eligible to receive the bonds.

Under the Companies Act, contribution to a political party by a corporation could not exceed the ceiling limit of 7.5 percent of the average net profit during the three immediately preceding financial years.

The 2017 amendment removed a proviso under Section 182 (prohibition and restrictions regarding political contributions) of the Companies Act which mandated this requirement.

Another amendment to the Companies Act was a challenge to Section 182(3), whereby earlier the name of the political party to which a donation was made along with the particulars of the amount had to be disclosed.

After the amendment, the name of the political party to which the contribution was made need not be disclosed. Only the total amount of the donation had to be disclosed.

Under the Income Tax Act, 1961, before the amendment, Section 13A provided that any income by way of voluntary contributions to a political party was not included in the total income of an individual in the calculation of the income tax provided that the political party maintained a record of such contributions, including the names and addresses of the persons who made such contributions.

After the amendment, political parties did not have to maintain a record of such contributions if they were received in the form of electoral bonds.

Under the FCRA, foreign contributions were prohibited to political parties and public servants. After the amendment, the government had “effectively” allowed foreign donations.

Notably, the Election Commission of India had opposed the 2018 electoral bond scheme.

Also read: Electoral bonds: No solution to illegal political funding

On February 15, 2024, a Constitution Bench headed by Chief Justice of India Dr D.Y. Chandrachud and also comprising Justices Sanjiv Khanna, B.R. Gavai, J.B. Pardiwala and Manoj Mishra has held that the non-disclosure of voluntary political contributions is violative of Article 19(1)(a) of the Indian Constitution.

The Bench reasoned that in a democracy the right to information includes the right to know the source of political funding. The right to information could only be restricted through Article 19(2). However, the ground of curbing black money is not “traceable” to Article 19(2).

Further, it has held that the unlimited political funding by corporates is violative of the fundamental right to free and fair elections and therefore manifestly arbitrary under Article 14.

The court also struck down the corresponding amendments made through the Finance Bill, 2017.

The court has directed the State Bank of India (SBI), the issuing bank under the scheme, to immediately stop the issuance of electoral bonds.

It has directed the SBI to submit data on electoral bonds purchased till date, including names of purchasers, denominations of the purchases and names of political parties that have received contributions.

The Bench has directed that the said information shall be published by the Election Commission of India by March 31.

The court was hearing a challenge to the constitutionality of the 2018 electoral bond scheme, which defines electoral bonds as: “A bond issued in the nature of a promissory note which shall be a bearer banking instrument and shall not carry the name of the buyer or payee.”

As per the scheme, the bonds can be issued in the denominations of one thousand, ten thousand, one hundred thousand, ten hundred thousand and one crore rupees. 

Courtesy: The Leaflet

The author was Press Secretary to President of India late KR Narayanan.

Gursimran Kaur Bakshi, who is a staff reporter with The Leaflet, contributed in the writing of this piece.