The Association of Democratic Reforms (ADR) has filed a writ petition in the Supreme Court of India seeking a stay on the implementation of Electoral Bonds scheme. This is an intervention application that will be heard on Monday in the apex court along with the existing petition filed by ADR in 2017.

The application was filed by Advocate Prashant Bhushan and comes after a series of investigative stories on Electoral Bonds. It has asked the court, “…to strike down certain amendments made through Finance Act 2017 and the earlier Finance Act 2016 which were passed as money bills which opened the doors for the unlimited donation even from foreign companies and thereby legitimising the electoral corruption on a  huge scale while at the same time ensuring complete non-transparency in political funding”.

You can read more about how the Money Bill was passed here.

The petition raises several concerns on the way Electoral Bonds can be misused in the garb of political funding. 

“…the requirement of the donor companies to disclose details in their profit and Loss accounts about the name of the political party to which a donation has been made is also removed. Only the total amount of donations to political parties has to be disclosed without naming the political party.”

Another important point pertains to the removal of the 7.5 per cent cap on the net profit of a company’s past three financial years for corporate contributions. This implies that loss-making companies also qualify to donate to political parties from their capital or reserves. According to the petitioner by doing so, “it opens up the possibility of companies being brought into existence by unscrupulous elements primarily for routing funds to political parties through anonymous and  opaque instruments like Electoral bonds.” Moreover, the contribution received by Electoral Bonds will exempt the party from paying tax as per Section 13A of the Income Tax Act.

The petition makes a note of recent investigative reports by journalist Nitin Sethi, which was published on Newslaundry Hindi. The series was based on Commodore Lokesh K Batra’s RTI papers. The petition mentions all the reports from the series, including the report that highlighted how the RBI had opposed the Electoral Bond scheme and the amendments made to the RBI Act through Finance Bill, 2017.  The petition also notes the objections by the Election Commission and the prime minister’s office ordering the illegal sale of bonds before crucial elections. 

The petition further makes a note of an RTI filed by ADR seeking a list of all political parties to submit details of their donations received through Electoral Bonds to ECI in a sealed cover.

The reply to this RTI states that 19 out of 93 political parties submitted the required details in a sealed cover to the ECI on or before 30 May 2019. The same RTI also discloses that even political parties that fail to meet the required eligibility criteria under the scheme have received donations through Electoral Bonds.

The ADR has mentioned in the petition a report it prepared on November 8, 2019, titled, ‘The Analysis of Eligibility of Registered Unrecognised Political Parties to Recieve Funding Through Electoral Bonds observations of the report”. 

Some of the highlights of the report are as follows:

• 10 registered unrecognised political parties that submitted the details did not contest any elections before the 2019 General Elections.
• There is no list mentioned in the Electoral Bond Scheme, 2018, which mentions eligibility of political parties to receive a donation.
• The scheme mentions that the bond can be encashed only by an eligible political party by depositing the same in their designated bank account, raising the question that how political parties which fail to meet the required eligibility under the scheme have submitted details on Electoral Bonds to ECI in a sealed cover.
• No scrutiny by any authority at any stage prior to the redemption of Electoral Bonds by political parties not eligible to encash bonds under the Electoral Bonds scheme, 2018.
• The details of the last General Election to the house of the People or the Legislative Assembly of the State contested are not available for 13 Registered Unrecognised political parties on the ECI website at the time of preparation of the report