Electoral Bonds Violate Citizens' Right To Information, Promote Corruption: Prashant Bhushan To Supreme Court [Day 1]

Arguing before the Constitution bench comprising Chief Justice of India DY Chandrachud, Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra in the batch of petitions challenging the Electoral Bond Scheme, Advocate Prashant Bhushan submitted that 99% of Electoral Bonds went to the ruling parties in the Centre and in the States while the opposition parties were left with less than 1% of bonds. He added that total donations declared by BJP by means of Electoral Bonds was more than three times the total donations of Electoral Bonds declared by all other national parties put together.This article provides with the arguments made by Advocates Prashant Bhushan and Nizam Pasha. Other arguments from the hearing today can be found here. Electoral Bonds Have Been Exempted From Disclosure Under Various Legislations: Advocate Prashant BhushanThe Electoral Bond Scheme was introduced by means of amendments to four key legislations—the Foreign Contribution Regulation Act, 2010 (FCRA), Representation of the People Act, 1951 (RPA), Income Tax (IT) Act, 1961 and the Companies Act, 2013. Today, Advocate Prashant Bhushan commenced the arguments for petitioners addressing amendments made to each of these four and described the case as one that goes to the very roots of the Indian democracy. Foreign Companies Now Permitted To Fund Political Parties Under FCRAIn 2016, the Finance Act amended Section 2(1)(j)(vi) of the FCRA. In doing so, this amendment redefined the concept of a "foreign source" and allowed foreign companies to donate to Indian political parties through their subsidiaries registered in India. Prior to this amendment, foreign companies were strictly prohibited from contributing to political parties under both the FCRA and the Foreign Exchange Management Act, 1999. Challenging this amendment, Bhushan asserted that this amendment was a response to a judgment by the Delhi High Court, which had held that both the Bharatiya Janata Party (BJP) and the Indian National Congress (INC) had received foreign contributions through subsidiaries of foreign companies. To overcome this legal challenge, a retrospective amendment had been incorporated into the FCRA through the Finance Act. This amendment stated that if the donation was made by a subsidiary of a foreign company, it would not be treated as a foreign source.Political Parties Don't Need To Reveal Contributions Made By Electoral BondsIn 2017, the Finance Act amended Section 29C of the RPA. These changes introduced a proviso to the section, which earlier mandated the publication of "Contribution Reports" revealing contributions exceeding Rs 20,000 from both companies and individuals. As per the amendment, the political parties were absolved from the obligation to disclose contributions received through electoral bonds. Further, anonymous cash donations to political parties which were earlier capped at Rs 20,000 were now capped at Rs 2,000 post amendment. Challenging the same, Bhushan underlined that the government's rationale for this change was twofold. Firstly, they claimed it was aimed at reducing the use of cash in political funding. Secondly, they argued that by reducing the disclosure threshold from Rs 20,000 to Rs 2,000, they were promoting greater transparency in the political funding process. He pointed out that the reduction in the disclosure threshold from Rs 20,000 to Rs 2,000 might not effectively curb the use of cash in politics. Previously, political parties would declare that they received a certain amount in small donations below Rs 20,000. Now, they could make the same declaration for donations below Rs 2,000, effectively shifting the goalposts without addressing the root issue. Further, he stated that anonymising donations made through Electoral Bonds would not promote transparency in any way.Bhushan proposed a more direct approach to combat the use of cash in political funding. He suggested that political parties could be required to accept donations exclusively through banking channels and prohibited from accepting cash donations altogether. This, he argued, would have been a more effective way to tackle corrupt practices and enhance transparency.Amendment In Companies Act Would Allow "Shell Companies" To Fund Parties Section 154 of the Finance Act amended Section 182 of the Companies Act, 2013, effectively removing the upper limit on corporate donations to political parties. Previously, companies were restricted to donating up to 7.5 percent of their net profits over the previous three years. Bhushan contested this amendment, asserting that implications of these changes were far-reaching. Bhushan pointed out that this alteration allowed even loss-making companies or those with no substantial business activities, essentially "shell companies," to make unlimited donations to political parties. As per Bhushan, this change effectively obscured the source of funding for political parties and curtailed the public's right to be informed about the...

Electoral Bonds Violate Citizens' Right To Information, Promote Corruption: Prashant Bhushan To Supreme Court [Day 1]

Padmakshi Sharma

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