Electoral bonds: SC agrees to hear plea seeking stay on sale ahead of Assembly elections on March 24

The Supreme Court on Thursday agreed to hear a plea seeking direction to stop further sale of electoral bonds on an urgent basis on March 24, Bar and Bench reported. Non-governmental organisation Association for Democratic Reforms had moved the court on March 9, citing “serious apprehension” that the sale of electoral bonds ahead of the upcoming Assembly polls would lead to an increase in illegal funding of political parties through shell companies.

Electoral bonds are monetary instruments that citizens or corporate groups can buy from a bank and give to a political party, which is then free to redeem them for money. The Centre had first introduced electoral bonds in January 2018.

Advocate Prashant Bhushan, representing the NGO during Thursday’s hearing, told the court that they wanted the matter to be listed as new bonds were to be issued from April 1. Elections in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry will be held between March 27 and April 29, and the results will be out on May 2.

“New set [of] bonds to be issued from April 1 for coming elections,” Bhushan said, according to Bar and Bench. “We need our case to be heard urgently. Election Commission has said these bonds allow illegal funds to be diverted to shell companies.”

He also pointed out to the court that the matter was pending since 2017, Live Law reported. “Whenever electoral bonds are released, we file application to stay [the issuance of bonds],” Bhushan said.

Chief Justice of India SA Bobde then asked Bhushan if the plea was rejected earlier. To this, Bhushan said it was not the case and that the Supreme Court had asked political parties to give information on donations they receive in sealed covers.

“The court said it was not the stage to consider stay,” Bhushan said, according to Live Law. “...That was two years ago...after that two documents have emerged, one from the RBI [Reserve Bank of India], another from the ECI [Election Commission of India], both of which say these bonds are very detrimental to democracy.”

One of the two documents Bhushan mentioned was an affidavit on the matter submitted by the Election Commission to the Supreme Court in March 2019. In it, the poll panel had said that the introduction of electoral bonds and the removal of the cap on corporate donations, will have a “serious impact” on the transparency of political funding.

The other one was a HuffPost India report, published in November 2019, that revealed the RBI had suggested to the Centre not to launch the bonds. It had reportedly said electoral bonds would set a “bad precedent” and could be used to launder money.

After hearing out Bhushan, Justice Bobde said the matter would be listed on next Friday (March 26). However, Bhushan objected saying that the Centre might delay responding on the matter before the bonds are issued on April 1. Solicitor General Tushar Mehta suggested that the matter can be heard on March 24, when Attorney General KK Venugopal will be available to defend the Centre.

The case so far

The Association for Democratic Reforms had filed a writ petition in 2017, challenging the provisions of the Finance Act that cleared the way for anonymous electoral bonds.

In November, the ADR had filed a plea to expedite hearing on the matter in light of the Bihar Assembly elections. It had then pointed out that a notification of January 2, 2018, stipulated the sale of electoral bonds in months of January, April, July and October months of each year. But, the sale window was not opened in April and July in 2020. However, it was opened in October, just ahead of the Bihar elections.

The NGO had earlier moved a similar plea, seeking stay on the scheme in January 2020 ahead of the Delhi Assembly elections. The Supreme Court had refused to grant the interim stay on the scheme and had sought response from the Centre and the Election Commission.