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A Supreme Court bench has agreed to hear a PIL challenging laws permitting funding of political parties through the electoral bond scheme

A Supreme Court bench has agreed to hear a PIL challenging laws permitting funding of political parties through the electoral bond scheme.

The bench comprising Chief Justice N V Ramana and Justices Krishna Murari and Hima Kohli took note of the submissions of lawyer Prashant Bhushan, appearing for PIL petitioner NGO, ‘Association for Democratic Reforms’, that the issue was “critical” and needed an urgent hearing.

Bhushan brought to the court’s attention that a Calcutta-based company had paid Rs 40 crores through electoral bonds to ensure that there was no excise raid on it.

“This distorts democracy,” Bhushan said, adding the plea has been mentioned earlier also for urgent listing.

Assuring an early listing, the CJI said, “If it was not for Covid …then I would have heard all of this.”

Earlier, Bhushan had sought an urgent listing of the PIL from the apex court on October 4 last year seeking a direction to the Centre not to open any further window for sale of electoral bonds during the pendency of a case pertaining to funding of political parties and alleged lack of transparency in their accounts.

Let’s take a look at what are electoral bonds and why Supreme Court has decided to hear a PIL against it:

What are electoral bonds

Electoral bonds were announced in the 2017 Union Budget as interest-free bearer instruments to anonymously donate money to political parties. By definition, as bearer instrument does have any information about the buyer or the payee and the holder, which is the political party, is presumed to be its owner.

The State Bank of India is the only authorised bank to sell them in the multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.

Any donor can purchase it from the SBI and donate it to the party of their choice, which can be encashed within 15 days.

There is no limit on the number of bonds an individual or company can purchase.

The bonds that are not encashed by a party within 15 days are deposited by the SBI into the Prime Minister’s Relief Fund.

According to an Indian Express report, a total of 12,924 electoral bonds worth Rs 6534.78 crore were sold in fifteen phases between March 2018 to January 2021.

There is no limit on the number of bonds an individual or company can purchase.

Only political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than 1 percent of votes polled in the last general election to the House of the People or the Legislative Assembly of the State, are eligible to receive electoral bonds.

Why have electoral bonds been opposed by activists and some political parties?

An amendment to the Finance Act 2017 allowed the Union Government to exempt political parties from disclosing donations received through electoral bonds. In addition to that, electoral bonds also provide a level of anonymity to the donors.

Even though the political parties reveal the amount of donations received to the Election Commission every year, they don’t need to disclose the details of the donors.

Thus, the voters cannot know which individual or company has funded the political party.

Earlier, political parties had to disclose the details of all the donors who donated more than Rs 20,000.

What is the current case in the Supreme Court

The NGO, Association for Democratic Reforms, had filed the PIL in 2017 on the alleged issue of corruption and subversion of democracy through illicit and foreign funding of political parties and lack of transparency in the accounts of all political parties.

It filed an interim application in March last year before the assembly polls in West Bengal and Assam seeking that window for sale of electoral bonds be not reopened.

The NGO, in its application filed in the pending petition, 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”.

It had alleged that as per data on electoral bonds declared by political parties in their audit reports for 2017-18 and 2018-19, the “ruling party had received more than 60 per cent of total electoral bonds issued till date.” The application had claimed that so far more than Rs 6,500 crore worth of electoral bonds have been sold with the majority of donations going to the ruling party.

P Chidambaram calls electoral bonds 'biggest scam of the decade', says purchasers will be known to BJP

On January 20 last year, the apex court had refused to grant interim stay on the 2018 Electoral Bonds Scheme and sought responses of the Centre and the Election Commission on an interim application by the NGO seeking stay on the scheme.

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