SC verdict on validity of electoral bonds scheme today: Arguments explained

The Supreme Court will pronounce its verdict on Thursday on a batch of petitions challenging the validity of the electoral bonds scheme. A Constitution Bench including CJI DY Chandrachud, Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra had reserved the judgment in the matter on November 2 after hearing the matter for three days.

The electoral bond is a scheme introduced by the government in 2018 via amendments to the Finance Act 2017. This was an alternative to cash donations made to political parties as part of efforts to bring transparency to political funding. As per the scheme, the electoral bonds may be purchased by any citizen of India or entity incorporated or established in the country either singly or jointly with other individuals.

However, only the political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than 1 per cent of the votes polled in the last elections to the Lok Sabha or a state legislative assembly are eligible to receive electoral bonds. The bonds can be encashed by an eligible political party only through an account with an authorised bank.

Arguments and hearing

1) The plea against the electoral bonds was filed by the Association for Democratic Reforms (ADR), Communist Party of India (Marxist), Dr Jaya Thakur. They contended that the anonymity attached to the electoral bonds affects the transparency in political funding and infringes on the voters' right to information. 

2) Another argument was that the scheme allowed contributions to be made through shell companies.

3) The Centre contended that the scheme was a method to ensure that 'white' money is used for political funding through proper banking channels.

4) The Union Government also argued that it was necessary to keep the identity of donors confidential so that they would not face any retribution from political parties.

5) The bench raised several pertinent queries to the Central Government about the scheme, flagging its "selective anonymity" and also asked whether it is legalising kickbacks for parties. The court also observed that while the ruling party could know the identity of the donors, the opposition parties could not get such information.

6) The bench also questioned the provision that companies can only donate a maximum of 7.5% of their net profits to political parties.

7) The bench also directed the Election Commission of India to submit to the court in a sealed cover the details of the contributions received by all political parties through electoral bonds till September 30.

In April 2019, the apex court declined to stay the electoral bonds scheme and made it clear that it would accord an in-depth hearing on the pleas as the Centre and the Election Commission had raised "weighty issues" that had "tremendous bearing on the sanctity of the electoral process in the country".