Supreme Court Allows Sale of “Electoral Bonds”

What is the News?

The Supreme Court has refused to stay the sale of electoral bonds prior to the Assembly elections in West Bengal and Tamil Nadu.

What was the case?

• An NGO, Association for Democratic Reforms(ADR), filed a petition. The petition demanded a stay on the sale of the Electoral bonds scheduled between April 1 and 10.
• The petitioner alleged that there were serious apprehensions in the electoral bonds. Further, the ADR mentioned that the sale of bonds before the elections would increase illegal and illicit funding of political parties through shell companies.

What did the Supreme Court say?

• On Anonymity of Buyers: The scheme ensures that unidentified persons cannot a) purchase the bonds; b) give them to the political parties. Under Clause 7 of the scheme, buyers have to apply in the prescribed form either physically or online, disclosing their particulars.
• On Corporate Houses Can Finance Political Parties: The Companies Act requires registered companies to file financial statements with the Registrar of Companies. Hence, the purchase and encashment of the bonds through banking channels will reflect in their financial statements. Further, it is also available in the public domain.
• Bonds are not tradable: The court rejected the contention that bonds can be Repurchased with Black Money. It said that under clause 14 of the Scheme, the bonds are not tradable. Moreover, the first buyer will not stand to gain anything out of such a sale except losing white money.
• Apprehension of Foreign Influence on Elections: The court observed that the apprehension of Foreign Influence on Elections is misconceived as under Clause 3 of the Scheme. Under this, the Bonds may be purchased only by a person who is a citizen of India or incorporated or established in India.

What were the arguments against the Electoral Bonds?

• The anonymity of Buyers: Neither the donor nor the political party is obligated to reveal whom the donation comes from.
  • Before the introduction of electoral bonds, political parties had to disclose details of all their donors who donated more than Rs 20,000.
• Corporate Houses Can Finance Political Parties: Electoral bonds could be a channel for corporate bribes paid to political parties as a “quid pro quo” (favour or advantage granted in return for something).
• Bonds Bought with White Money can be Repurchased with Black Money: The first purchase of the Electoral Bonds may be through banking channels for a consideration paid in white money. But someone may repurchase the bonds from the first buyer by using Black Money.
• Foreign Influence on Elections: There is an apprehension that foreign corporate houses may buy the bonds and attempt to influence the electoral process in the country.

Source: The Hindu