New Delhi: The Supreme Court on Friday dismissed a plea seeking stay on further sale of electoral bonds ahead of assembly elections.
A bench headed by Chief Justice S A Bobde declined to stay sale of the electoral bonds as sought in the application moved by the NGO, Association for Democratic Reforms.
The NGO had also sought stay on sale of the electoral bonds during the pendency of the PIL filed by it pertaining to funding of political parties and alleged lack of transparency in their accounts
The Centre had earlier told the bench, also comprising Justices A S Bopanna and V Ramasubramanian, that the bonds would be issued from April 1 to April 10.
What are electoral bonds?
Electoral Bonds are interest-free bearer instruments that are used to donate money anonymously to political parties. Introduced in the 2017 Union Budget, a bearer instrument does not carry any information about the buyer or payee, and the holder of the instrument (which is the political party) is presumed to be its owner.
The electoral bonds are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore, and the State Bank of India (SBI) is the only authorised bank to sell these. Donors can purchase and subsequently donate the bonds to the party of their choice. Following which the party can withdraw through its verified account within 15 days.
However, as per rules, there is no limit on the number of bonds an individual or company can purchase for the political party. Reportedly, SBI deposits bonds that a political party hasn't encashed within 15 days into the Prime Minister's Relief Fund.
A total of 12,924 electoral bonds worth Rs 6,534.78 crore have been sold in 15 phases between March 2018 to January 2021. Then Finance Minister Arun Jaitley's Budget speech in 2017 stated that these bonds are a way for companies to make anonymous donations.
As per the notification, individuals, groups of individuals, NGOs, religious and other trusts are permitted to donate via electoral bonds.
The case by ADR
The NGO had claimed that there is a serious apprehension that any further sale of electoral bonds before the upcoming assembly elections, including in West Bengal and Assam, would further increase illegal and illicit funding of political parties through shell companies.
While reserving its order on the NGO's application, the apex court on March 24 had flagged the issue of possible misuse of funds received through electoral bonds by political parties for illegal purposes like terrorism and had asked the Centre whether there was any control over how these funds were put to use.
The top court had said that the government should look into this issue of possible misuse of funds received through electoral bonds for illegal purposes like terrorism.
What is the control of the government on how the money is put to use, the bench had asked the government.
The funds can be misused for illegal purposes like terrorism. We would like you, as the government, to look into this aspect, the bench said, adding that political parties may use these funds for activities beyond their political agenda.
If a political party receives electoral bonds worth Rs 100 crore, what is the assurance that it won't be used for illegal purposes or fund violence, the bench had observed.
The Centre had told the bench that electoral bonds have a validity of 15 days and political parties have to file their income tax return also.
It had said that buyers have to use white money and the purchase of electoral bonds is through a banking channel.
Terrorism is not funded by white money. It is funded by black money, the government had said.
The NGO had said there is anonymity about the donor and the Election Commission and the Reserve Bank of India had earlier raised objections on it.
It had also claimed that most of the funds through electoral bonds have gone to the ruling party.
Assembly polls will be held in Tamil Nadu, West Bengal, Assam, Kerala and Union territory of Puducherry beginning from March 27 to April 29.