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Supreme Court Bench of Chief Justice SA Bobde, Justice AS Bopanna and Justice V. Ramasubramanian reserves order on interim application in the matter of Association for Democratic Reforms v. Union of India, seeking stay on selling of new electoral bonds ahead of Legislative Assembly election in the State of West Bengal, Tamil Nadu, Kerala, Assam and Puducherry.

The hearing today saw an important remark made by the Chief Justice, precisely, “Mr. Attorney we are not sure of what we are saying but this angle of illegal funding, including terrorist funding, we would like you to look into, for activities outside political agenda. You can start a protest from those funds. You can start many things… Suppose there is a political party who wants to buy electoral bonds and fund a protest, can they do that? What is the control of the government on what use the money is put to?”

Learned Counsel Mr. Prashant Bhushan appeared for the Petitioners.

Learned Attorney General, Mr Venugopal for the Union and Senior Counsel Mr. Rakesh Dwivedi for the Election Commission.

Major contentions raised by the petitioners were; (1) Electoral Bonds came in by Finance Bill, 2017, introduced as a money bill without being addressed in the Rajya Sabha, which in itself is questionable (2) Electoral Bonds defeats the principle of Transparency contrary to the recommendations issued time and again by the ECI (3) RBI response says that such bonds have the potential to facilitate shell companies and money laundering (4) No anonymity with the names purchasing electoral bonds; “The Government can always victimize the donor for even lending money to the other party.”

Reference was drawn to the Election Commission and RBI response made earlier in December.

“Electoral bonds have legalised bribery through banking channels. No one will come to know who is the donor, not even the RBI. It has not happened anywhere in any part of the democratic world”, submitted Mr. Bhushan

Referring to the RBI’s response, CJI remarked, “Our question is, if they have shown the readiness and concurrence to issue in demat form with anonymity, what is the difference?”

“Your argument at this stage is more on the point of political morality. This question of morality or ethics regarding black money, was it not considered earlier by us under R.K. Garg case”, the CJI added.

This was responded to by Mr. Bhushan saying, “It is not a question of morality. It is a question of democracy. If you remove transparency in elections, it will destroy democracy.”

Submissions were followed by the Learned AG. 

It was contended that there is no question of money laundering or black money circulation, as all payments are to be made through banking channels. Rebutting that a subsequent buyer can purchase through cash, Learned SG intervened to submit that there can be no subsequent purchase of the bonds. 

At this juncture, CJI asked, “Suppose a businessman goes and buy an electoral bond, does he have to disclose that the money is a black money or a white money and does he have to pay tax on it… Our question is Is the amount brought to Tax somewhere?”

The Learned Attorney responded stating that the Political Parties have to file returns. Solicitor General adds that KYC norms are to be followed in the process.

Senior Counsel Mr. Rakesh Dwivedi clarified that Election Commission is supporting the Electoral Bonds and not opposing them as such. Electoral Bonds ensure accountability as they are to be obtained from the banks, one step forward from earlier positions (of being dealt in cash). 

In the last hearing, Senior Advocate Mr. Bhushan while mentioning had informed the Bench about the urgency of the matter as the bonds are to be issued in early April and also submitted that Election Commission and the Reserve Bank of India have all opined that these bonds facilitate ‘illicit transfer of money from shell companies’ and are ‘detrimental to democracy’.

Case Title: Association for Democratic Reforms v. Union of India