After hearing the last counsel from the challengers’ side, senior advocate Vijay Hansaria, a bench of Chief Justice D Y Chandrachud and Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra said the problem with the electoral bond scheme was the selective confidentiality to the donor’s name and the political party to whom the contribution was made.
“It is not confidential for the State Bank of India which issues the electoral bonds or to law enforcing agencies. So, the government may come to know who has funded opposition parties, but the opposition parties would have no wherewithal to find who has donated to the ruling party. This creates an imbalance in the scheme,” the bench said. “The other problem is that a donor may not necessarily be the purchaser of the electoral bond as a corporate donating a huge sum can ask a large number of people to buy electoral bonds by paying a premium over the cost price, then aggregate it to give it to political parties. This does not rule out the play of black money.”
Solicitor general Tushar Mehta said the nature of the beast was such that a complete ban or restriction on corporate donations to political parties exponentially increased infusion of black money into the system in the past and every political party knows this and successive governments attempted to eradicate black money by regulating it through various means.
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If the electoral bond scheme was struck down, then political funding would be governed by a system prior to 2017 when the majority of funding by corporate houses was through black money to avoid victimisation and retribution by political parties, Mehta said.
The CJI-led bench said, “If it is your (the government’s) argument that striking down of electoral bond scheme will take the political funding system to pre-2017 stage, we are not precluding the government from coming out with a transparent scheme. We know black money is a problem in political funding in democratic countries. But the government can frame a scheme that is more transparent and which allows a level playing field to political parties.”
When the SG said that traditionally, the party holding the reins of governance got the lion’s share of corporate funding, the bench said, “Maybe the earlier schemes have failed to curb black money in the electoral system. But at least, it allowed disclosure of donations to shareholders and put a cap on the quantum of donations to a certain percentage of profits. But now there is an information blackhole. The objective behind electoral bonds may not be in doubt but there are problems.”
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The SG said the confidentiality attached to the electoral bond mode of donations was essential to prevent victimisation of donors by political parties and in a democracy, no one knew who would be in office at what point of time. He also said the confidentiality clause was such that even the government did not have access to the identity of the donors and their contributions to political parties.
The CJI said, “We are not saying one political party is holier than the other. The question is of selective confidentiality. One method could be that all donations are entrusted to the Election Commission which in turn can distribute it to political parties.” The SG said this would cause the same old problem of briefcase donation culture. Arguments will continue on Thursday.