Slightly difficult to accept voter has no right to know source of funding: SC to Govt on electoral bonds

It directed the Election Commission of India to submit in two weeks the details of contributions received by political parties by way of electoral bonds until September 30, 2023.

“Why not make everything open?… As it is, everyone knows about it (donation through electoral bond). The party knows about it. The only person who is deprived is the voter. Your contention that voters do not have the right to know, after the number of decisions of this court, is slightly difficult to accept,” Justice Khanna said.

He made these remarks as Solicitor General Tushar Mehta, appearing for the Centre, submitted that under the 2018 scheme, the party which receives the funds via bonds knows who has donated, and that “there cannot be a system where the donor and donee do not know (each other)”.

Responding to the query on making “everything open”, Mehta said that would defeat the confidentiality deliberately built into the scheme to protect the donor from victimisation.

The other option, he said, would be to go back to the previous regime under which cash flows were allowed and, in turn, encouraged black money.

But CJI Chandrachud said, “It’s not like that. We are not for a moment saying that. There are three or four important considerations which are very important 1. The need to reduce the cash element in the electoral process; 2. The need to encourage use of authorised banking channels for that purpose; 3. Incentivising the use of banking channels – this should result in greater confidentiality. But there is a fourth consideration: the need for transparency. And there is a fifth consideration that this should not become a legitimisation of quid pro quo between the power centres, whether in the states or in the Centre, and people who are really in that sense benefactors of that power.”

“So when the balance is drawn, it has to be by the Legislature, not by us. But it’s not, therefore, that there is an either or – that either you do this or go back entirely to cash. You can design another system which does not have the flaws of this system – they put a premium on opacity. You can still devise a system which balances out in a proportional way. How it is to be done, it’s up to you to decide, that’s not our arena,” he said.

“These five considerations you must read in the perspective of how it has been implemented. First, there was a cap that your donation must be related to a percentage of your net profits – this meant the company must be in a position to have net profits… Now you say it has nothing to do with net profits or not. So a company may have zero profits/turnover, but it gets certain revenue only for the donation… That passes muster,” he said.

Mehta clarified that only a profit-making company can donate as otherwise it would lead to the setting up of shell companies which the government was trying to eliminate.

The CJI asked if the government would bring an amendment in the Companies Act to clarify that.

Mehta said that “amending is a legislative function, I cannot make that statement”. He said the court may instead read the provision accordingly.

Referring to a situation where a company makes Re 1 profit, the CJI asked why would such a company donate through electoral bonds. “The reason why these caps were introduced (in the older scheme) and they stood the test of time were for a very legitimate reason – because you are a company. Your purpose is to carry business, not to donate to political parties. And if your purpose is not to donate to political parties, you must donate only a small portion of your net profits,” he said.

Mehta said “experience shows, in most cases, whoever donates… they donate for what kind of government they want… The idea was, instead of shell companies and cash, let clean money come into the system. And whether we like it or not, the industrial house, commercial sector have immensely helped in the development of the nation. Everyone doesn’t pay as kickbacks. To assume that they need electoral bonds to be used to influence the decision-making would be shutting an eye on the reality. Some … companies may misuse… But good companies do decide to donate, based on their experience, whether in this regime of the political government, our investment is safe or not, whether the country is going forward or backward”.

The CJI too said, “All companies cannot be tarred with the same brush. You have a corporate sector which has contributed to the productive assets of the nation.”

Justice Gavai asked, “What about the voter’s right to know?”

Mehta said policies have to be based on practicalities. “Voter’s right is to know what party gets what information. I would not choose to vote for A party because Mr X, a contractor, has given electoral contributions to A party. That’s a utopian dream. That’s an idealistic dream. We have to formulate a policy based on the practicalities involved.”

“Your Lordships have a heavy responsibility, that is encouraging clean money to come into the system and discouraging those elements which compel people to use black money… Purity of election is supreme over the right to vote. The voter votes, not based on which party is funded by whom. Voter votes based upon ideology of the party, principle, leadership, efficiency of the party,” he said.

Mehta also sought to allay the Bench’s concern that while the government can find out about donations via bonds, the Opposition parties cannot.

He said no one can access the information, the only exception being a court order. “We have tried to make it as transparent as possible… It’s a fool-proof scheme.”

With the Solicitor General were senior officials of the SBI, the only bank through which the bonds can be purchased. Mehta said the court could interact with them in the chamber if it needed to clarify doubts on the integrity of the system. The Bench, however, declined, saying it did not want to do something which the other side would not have access to.

Mehta also said that the electoral bonds scheme was not intended only for elections. “It’s for running the party. I am not feeling shy saying that… I am saying it consciously”.

“It applies to everyone, across the board,” the CJI remarked.