Case BriefsSupreme Court

Supreme Court: The 3-judge bench of SA Bobde, CJ and AS Bopanna and V, Ramasubramanian, JJ has refused to interfere with the scheme of sale of electoral bonds by the Political Parties challenged on the ground that it allows the donors of political parties to maintain anonymity which is not healthy for a democracy. The Court said that even though the Scheme provides anonymity, it is intended to ensure that everything happens only through banking channels and that,

“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 is not as though the operations under the Scheme are behind iron curtains incapable of being pierced.”

The following prayers were made before the Court:

(i)  A declaration that all national and regional political parties are public authorities under the Right to Information Act, 2005;

(ii) A direction to the Election Commission of India to collect all information concerning the finances of political parties;

(iii) A direction to all national and regional political parties to mandatorily disclose complete details about their income, expenditure, donations and funding as well as full details of the donors.

Analysis

Explaining the Scheme, the Court said that while the identity of the purchaser of the bond is withheld, it is ensured that unidentified/ unidentifiable persons cannot purchase the bonds and give it to the political parties.

Under clause 7 of the Electoral Bonds Scheme, 2018, 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.

“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 fulfill 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.”

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.

Further, the financial statements of companies registered under the Companies Act, 2013 which are filed with the Registrar of Companies, are accessible online on the website of the Ministry of Corporate Affairs for anyone. They can also be obtained in physical form from the Registrar of Companies upon payment of prescribed fee. 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.

The apprehension that foreign corporate houses may buy the bonds and attempt to influence the electoral process in the country was also found to be “misconceived”. Under Clause 3 of the Scheme, the Bonds may be purchased only by a person, who is a citizen of India or incorporated or established in India.

The Court, hence, found no reason to interfere with the Scheme.

[Association for Democratic Reforms v. Union of India, 2021 SCC OnLine SC 266, decided on 26.03.2021]


Appearances before the Court by:

For appellant: Advocate Prashant Bhushan,

For Union of India: Attorney General KK Venugopal

For ECI: Senior Advocate Rakesh Dwivedi

Case BriefsTribunals/Commissions/Regulatory Bodies

Central Information Commission (CIC): Suresh Chandra (Information Commissioner) observed that disclosure of the names of the donors and donees of electoral bonds from books of accounts may be in contravention of Section 8(1)(e) and (j) of the RTI Act.

Facts of the Case

The appellant filed an application under the Right to Information Act, 2005 before the Central Public Information Officer, State Bank of India seeking the following information:

  • Furnish me (Yearwise from 2017 to 2018) the relevant portion of Statutory Report/Audit Report/any other report/certificates submitted by Chartered Accountants relating to Electoral Bonds from the books of accounts of SBI.
  • Guidelines, Circulars, Notifications, Office Memorandum Rules and Regulations, Copy of Act etc. issued to Statutory Auditor i.e. to Chartered Accountants to conduct relating to certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Name and Designation of Officer who is supposed to issue Guidelines, Circulars, Notifications, Office Memorandum Rules and Regulations, Copy of Act relating to certification of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance by Statutory Report i.e. Chartered Accountants relating to Electoral Bonds.
  • Furnish me (Yearwise from 2017 to 2018) relevant portion Accounting Standards, Guidance Notes applicable to conduct the certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Whether the details of Donor and Donee are available to Chartered Accountants relating to Electoral Bonds while certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Details of Donor and Donee made available to Chartered Accountants relating to Electoral Bonds while certification/audit/signing of Balance sheets, Profit and Loss Account, Financial Statement, Trial Balance of Electoral Bonds.
  • Details of Donor and Donee of Electoral Bonds from the books of accounts of (a) SBI Mumbai Main Branch Code 00300 (b) SBI Chennai Main Branch Code 00800 (c) SBI Kolkata Main Branch Code 00001 d) SBI New Delhi Main Branch Code 00691.
  • Letter written by Election Commission to The Secretary, Legislature Department Ministry of Law and Justice, Shastri Bhavan New Delhi relating to Electoral Bonds and its impact on Transparency, corruption in India.
  • Details/Records, Correspondence and the impact of certain amendments in the Income Tax Act, the Representation of the People Act 1951 and the Companies Act 2013 to introduce/issue Electoral Bonds for funding political parties of Transparency, corruption in India.
  • Telephone No. and Email ID of CPIO and Appellate Authority as per Official Memorandum of Det of Personnel and Training available on www.rti.gov.in>Circulars.

Dissatisfied with the response, the instant second appeal was filed before this Commission.

Appellant submitted that CPIO’s response was wrong, incomplete and misleading.

Further, the appellant pleaded that the SBI was supposed to uphold public interest and not the interest of political parties and that the SBI was not in fiduciary capacity with any political party and hence had no legal duty to maximize the benefit of any public sector or private sector bank; there was no relationship of “trust” between them.

Adding to the above, appellant requested the Commission to direct the CPIO to provide the complete information and take necessary action as per Section 20(1) of the RTI Act.

With respect to point nos. 6 and 7 of the RTI application it was stated that the information in respect to those points was exempted under Section 8(1)(e) and (j) of RTI Act; information in respect of point no. 11 of the RTI application was not covered within the definition of “information” under Section 2 (f) of RTI Act and no link was maintained in respect of point no. 12 of the RTI Application.

The FAA held that the information relating to electoral bonds issued to various political parties sought by the appellant was held by the bank in fiduciary capacity and hence was denied to the appellant.

Decision

Commission of perusal of the facts and circumstances observed that the respondent revisited the RTI application and reiterated its earlier stand in respect of pint nos 6 and 7 of RTI application that disclosure of the information was exempted under the provisions of Section 8(1)(e) and (j) of the RTI Act.

Bench upheld the respondent’s contention that the disclosure of the names of the donors and donees of electoral bonds from books of accounts may be in contravention of Section 8(1)(e) and (j) of the RTI Act.

While parting with order, Commission stated that there appeared no larger public interest overriding the right to privacy of the concerned donor and donees.

Hence, the appeal was dismissed. [Vihar Durve v. CPIO, SBI; 2020 SCC OnLine CIC 1327; decided on 21-12-2020]

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Ranjan Gogoi, CJ and Deepak Gupta and Sanjiv Khanna, JJ has directed all the political parties who have received donations through Electoral Bonds to submit,

  • detailed particulars of the donors as against 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.

to the Election Commission of India in sealed cover by May 30, 2019.

The aforesaid direction was given in order 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.

In the matter that deals with a larger question involving transparency in political funding, the bench said

“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, as per the schedule noted earlier.”

The Ministry of Finance, Department of Economic Affairs by Notification dated 2.1.2018 in exercise of powers under Section 31(3) of the Reserve Bank of India Act had promulgated a scheme called ‘The Electoral Bond Scheme, 2018’ whereunder an ‘electoral bond’ has been 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 deal 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.

It was contended before the Court that the said scheme has affected 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 have contributed to the coffers of the political parties through Electoral Bonds.   This, in turn, is contended   to   affect   the   citizens’   right   to   know   about   the contributions made to various political parties and the source of such contribution.

Attorney General KK Venugopal, appearing for ECI, had contended that the said scheme has been introduced to deal with the menace of unaccounted money coming into the country’s economy through political funding. It is to do away with the aforesaid menace that the amendments to the different statutes had been brought by the Finance Act, 2016 and 2017 and the Electoral Bond Scheme has been introduced. He said,

“the implementation of the measures will be tested by the results obtained in the course of the on­going general elections and the success thereof will be known only after the elections are over. The government must be allowed a free hand to implement measures in execution of policies framed and therefore it is premature for the Court to render any opinion on the issues raised or to pass any order/orders in the matter for the present.”

[Association for Democratic Reforms v. Union of India, WRIT PETITION (CIVIL) NO. 333 OF 2015, decided on 12.04.2019]

Hot Off The PressNews

Supreme Court: The Court has eserved its order on a PIL challenging the government’s electoral bond scheme for political funding. The bench headed by Chief Justice Ranjan Gogoi said it would pronounce its order tomorrow on the plea filed by NGO, Association of Democratic Reforms (ADR).

The NGO, which has challenged the validity of the scheme, has sought interim relief including that either the issuance of electoral bonds be stayed or the names of the donors be made public to ensure transparency in the poll process.

Attorney General K K Venugopal, appearing for the Centre, supported the scheme saying the purpose behind it is to eliminate the use of black money in elections. Adding that the court can scrutinize the scheme after elections, AG said

“So far as the electoral bond scheme is concerned, it is the matter of policy decision of the government and no government can be faulted for taking policy decision”

(Source: PTI)