Safeguards in, no purpose to cease sale of ballot bonds: Supreme Court

Countering arguments made by the petitioner concerning their anonymity and potential misuse, the Supreme Court Friday refused to remain the sale of electoral bonds forward of the Assembly elections that start on Saturday.
“It is not as though the operations under the Scheme are behind iron curtains incapable of being pierced,” stated a bench headed by Chief Justice S A Bobde because it dismissed functions filed by NGOs Association for Democratic Reforms (ADR) and Common Cause.
The functions got here at the same time as ADR’s writ petition difficult the Electoral Bond Scheme, 2018, is pending earlier than the courtroom.
The bench, additionally comprising Justices A S Bopanna and V Ramasubramanian, cited precedent to argue that there was no purpose to cease the sale.
“…in the light of the fact that the Scheme was introduced on 2.1. 2018; that the bonds are released at periodical intervals in January, April, July and October of every year; that they had been so released in the years 2018, 2019 and 2020 without any impediment; and that certain safeguards have already been provided by this Court in its interim order dated 12.4.2019, we do not see any justification for the grant of stay at this stage. Hence both the applications for stay are dismissed”, the bench stated.

The courtroom’s reference was to its April 2019 interim order by which it directed political events that acquired donations by way of Electoral Bonds, to “forthwith” submit the small print of those bonds to the EC. That order, too, had come on the petition filed by ADR in September 2017.
Early this month, each NGOs had approached the courtroom in search of a keep in view of the forthcoming Assembly polls. ADR argued that the identification of the donors may by no means be recognized to the general public, and likewise referred to reservations raised by the Reserve Bank of India (RBI) and Election Commission (EC) to the Scheme.
On anonymity, the courtroom stated: “Despite the fact that the Scheme provides anonymity, the Scheme is intended to ensure that everything happens only through banking channels. While the identity of the purchaser of the bond is with-held, it is ensured that unidentified/unidentifiable persons cannot purchase the bonds and give it to the political parties. Under Clause 7 of the Scheme, buyers have to apply in the prescribed form, either physically or online disclosing the particulars specified therein. Though the information furnished by the buyer shall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purposes, it is subject to one exception namely when demanded by a competent court or upon registration of criminal case by any law enforcement agency. A non-KYC-compliant application or an application not meeting the requirements of the scheme shall be rejected”.
The bench referred to the Election Commission receiving particulars of contributions by way of bonds, in pursuance of its April 2019 order, and stated: “We do not know at this stage as to how far the allegation that under the Scheme, there would be complete anonymity in the financing of political parties by corporate houses, both in India and abroad, is sustainable.”
“If the purchase of the bonds as well as their encashment could happen only through banking channels and if purchase of bonds are allowed only to customers who fulfil KYC norms, the information about the purchaser will certainly be available with the SBI which alone is authorised to issue and encash the bonds as per the Scheme,” the bench stated.
“Moreover, any expenditure incurred by anyone in purchasing the bonds through banking channels, will have to be accounted as an expenditure in his books of accounts. The trial balance, cash flow statement, profit and loss account and balance sheet of companies which purchase Electoral Bonds will have to necessarily reflect the amount spent by way of expenditure in the purchase of Electoral Bonds.”
Also, underneath Companies Act, 2013, each firm is remitted to organize and maintain books of accounts and statements for each monetary 12 months and these statements are to be positioned at each Annual General Meeting after which filed with the Registrar of Companies which, in flip, is accessible on-line on the web site of the Ministry of Corporate Affairs for anybody or obtained in bodily type from the Registrar of Companies upon fee of prescribed price, stated the order.
“Since the Scheme mandates political parties to file audited statement of accounts and also since 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 that eventually come to the public domain”, it added.
“All that is required is a little more effort to cull out such information from both sides (purchaser of bond and political party) and do some “match the following”. Therefore, it’s not as if the operations underneath the Scheme are behind iron curtains incapable of being pierced”, the courtroom stated.
On the objections of the RBI and EC, the courtroom stated “it is true, as seen from the correspondence, that RBI has had some reservations. But it is not correct to say that the RBI and the Election Commission of India opposed the Electoral Bond Scheme itself”.
“RBI’s objection was to the issue of bonds in scrip form rather than in demat form. What RBI wanted to achieve was, in their own words, the twin advantage of (i) providing anonymity to the contributor; and (ii) ensuring that consideration for transfers is through banking channels and not cash or other means. In fact, RBI called Electoral Bonds as “an enduring reform, consistent with the Government’s digitization push”. Therefore, the issues expressed by RBI, to the shape and to not the substance, can not actually advance the case of the petitioners”, the courtroom dominated.
“As a matter of fact, most of the recommendations of the RBI have been accepted and incorporated in the Scheme”, added the bench.
The NGO had argued that although the primary buy could also be by way of banking channels for a consideration paid in white cash, somebody could repurchase the bonds utilizing black cash and hand it over to a political celebration.
The courtroom stated “this contention arises out of ignorance of the Scheme” as “Under Clause 14 of the Scheme, the bonds are not tradeable”.