By TIOL News Service

NEW DELHI, APR 13, 2019: THE issue is - Whether the issue of political funding even through Electoral Bonds requires detailed examination as it impacts the sanctity of the electoral process in the country. YES is the verdict.

Facts of the case

The Ministry of Finance, Department of Economic Affairs by Notification dated 2.1.2018 had promulgated a scheme called 'The Electoral Bond Scheme, 2018' whereunder an 'electoral bond' was defined as "a bond issued in the nature of promissory note which shall be a bearer banking instrument and shall not carry the name of the buyer or payee." The other provisions of the Scheme dealt with the banks authorized to issue and encash the Electoral Bonds; persons entitled to purchase such bonds and the procedure for making an application for purchase of bonds and encashment of the said bonds. Clause 8 of the Scheme dealt with the periodicity of the issue of bonds.

Petitioners questioned the amendments and the scheme, alleging lack of transparency in political funding inasmuch as in the annual contribution reports of political parties to the Election Commission there need not be any mention of the identity of the donors who had contributed to the coffers of the political parties through Electoral Bonds. This, in turn, was contended to affect the citizens' right to know about the contributions made to various political parties and the source of such contribution. The removal of cap on donations by the amendment of the Companies Act, 2013 and the amendments made in Section 236 of the Foreign Contribution (Regulation) Act, 2010 was also challenged as opening the avenues of foreign contribution to Indian political parties.

The Election Commission of India in its affidavit stated that it had informed the Ministry of Law and Justice that certain provisions of the Finance Act, 2017 and the corresponding amendments carried out in the Income Tax Act, the Representation of the People Act, 1951 and the Companies Act, 2013 will have serious repercussions on the transparency aspect of political funding of political parties.

Having heard the parties, the Apex Court held that,

++ all that this court would like to state for the present is that the rival contentions give rise to weighty issues which have a tremendous bearing on the sanctity of the electoral process in the country. Such weighty issues would require an indepth hearing which cannot be concluded and the issues answered within the limited time that is available before the process of funding through the Electoral Bonds comes to a closure;

++ the Court, therefore, has to ensure that any interim arrangement that may be made would not tilt the balance in favour of either of the parties but that the same ensures adequate safeguards against the competing claims of the parties which are yet to be adjudicated;

++ the just and proper interim direction would be to require all the political parties who have received donations through Electoral Bonds to submit to the Election Commission of India in sealed cover, detailed particulars of the donors as against the each Bond; the amount of each such bond and the full particulars of the credit received against each bond, namely, the particulars of the bank account to which the amount has been credited and the date of each such credit;

++ such details will be furnished forthwith in respect of Electoral Bonds received by a political party till date. The details of such other bonds that may be received by such a political party upto the date fixed for issuing such bonds as per the Note of the Ministry of Finance dated 28.2.2019, i.e. 15.5.2019 will be submitted on or before 30th May, 2019. The sealed covers will remain in the custody of the Election Commission of India and will abide by such orders as may be passed by the Court;

++ as per Clause 8 of the Electoral Bond Scheme, 2018, electoral bonds are to be issued for a period of 10 days in the months of January, April, July and October and additional 30 days is provided during an election year. As per the Schedule contained in the Note of the Finance Ministry dated 28.2.2019, a total period of 45 days has been fixed for issuing the bonds in the month of March, April and May. This, we are told, is in addition to the period of 10 days during which the Bonds were made available in the month of January, 2019. In view of Clause 8 of the Electoral Bond Scheme the days fixed for issuing the bonds in the month of March and May will necessary have to be related to the period of 30 days allowed for an election year. The total period, therefore, allowable for the month of January (10 days), April (10 days) and 30 days for the election year would be 50 whereas the Schedule contemplates issuance of bonds for a total period of 55 days i.e. 45 days plus 10 days of January. A period of 5 days, therefore, have to be deleted from the Schedule contained in the Note of the Ministry of Finance dated 28.2.2019. Such deletion will be made by the Ministry of Finance who will be free to decide the days of deletion/exclusion.

(See 2019-TIOL-161-SC-MISC-LB)