Electoral Bond hearing: Here's what CJI Chandrachud said on corporate contributions, anonymity

New Delhi : Chief Justice of India D.Y. Chandrachud, while listening to challenges to the Electoral Bond scheme, remarked that before the scheme was brought in, the corporates could make contributions but only 7.5% of total profits and were bound to disclose this.

And this disclosure would mean public scrutiny on whether the transaction was a matter of quid pro quo, he added. "In the erstwhile regime, prior to Electoral Bonds, corporations could make contributions as well. But it was 7.5 per cent of total profit. The difference was that you had a duty to disclose. By disclosure there could be public scrutiny of whether this is really a quid pro quo," the CJI remarked while listening to senior advocate Prashant Bhushan's argument.

Bhushan, who was representing ADR, had submitted before the court that the electoral bonds were privileging the ruling party and further skewing the level playing field. He said that these bonds cannot be taken by smaller parties that receive less than 1 per cent of votes and individual candidates.

At this, the CJI pointed out to Bhushan that this scheme anonymised donations in relation to the rest of the society and not the donee. "Another point you may want to also explore is that this is not an anonymised donation in relation to a donee. It's anonymised in relation to the rest of society. The donee may or may not but could know of the sources."

To this, Bhushan replied that the instrument of anonymised donations is promoting corruption. He further submitted before the court that right to a corruption-free society is covered under of Article 21 of the Constitution.

Justice Sanjiv Khanna however pointed out that even under the earlier regime, the donations to the ruling party would always be more in number, compared to the non-ruling party. To this Bhushan agreed but said that here the question is of kickbacks.

"Earlier you could be prosecuted for corruption if you had given donations to a political party who in turn had given you some favours...But now because no one will know as to who has donated, whether you've received quid pro quo- it is promoting corruption."

The CJI further said that in the case of a company, now even shareholders will not be told who they're contributing to and they will only get the result that the company has donated Rs 250 crore.

Senior advocate Kapil Sibal started his argument by saying that capital and influence go hand in hand. He said that the electoral process must be such that it provides a level playing field to all participants.

Sibal argued that the shareholders in a company put in their money to ensure that the corporation functions within the framework of the MoU. By donating to Electoral Bonds, the company is not informing the shareholders as to how their money is going to be spent. Sibal also said that the donations have nothing to do with electoral bonds as the political party can use the funds as they like.

"There is nothing in the scheme which connects the donations made to the participation in the electoral process. It's a means for political parties to be enriched," he argued.

At this, the CJI asked if there was no spending requirement. Sibal replied, "None! You can spend this money, however. You can build your office. You can set up a whole internet network throughout the country."

He further told the court that if required the account can be closed anytime by the political party. He also submitted before the court that this is a scheme to protect criminals from being prosecuted.

"Please read Section 7 of the Prevention of Corruption Act. This is also true under the PMLA. Because a predicate offence has been committed but no proceeds of crime - you'll never know...You never know who bribed whom, how much was the bribe, what quid pro quo was there - you never get to know."

He also said that the corporate sector which doesn't vote can donate Rs 10 crore and not disclose it, but a citizen's name will be disclosed. "So is the corporate sector being granted a privilege of anonymity over the citizen?" he asked. Referring to his own personal experience as MP and politician, Sibal said we know who is donating. " All this anonymity is really not anonymous because the person who donates will go and tell him orally," he said.

To this, the CJI remarked that anonymity would exist only if it was truly fungible. In which case, if it is truly fungible like a DMAT account, you give it to EC - then it becomes anonymous. "Suppose A purchases the bond worth Rs 100 crore. A is only the person who is being put up to purchase the bond because A has KYC etc. A has to only physically hand over the bond to B. B gives to C who will in turn give it to a party... Now there is no control over the transaction between A and B. So B can trade on that bond for cash or for other considerations. B acquires that bond. B gives to C who hands it to a political party."

The CJI further remarked that even as trading is prohibited, there is no way to prohibit trading the electoral bond. Justice Khanna also observed that because of the curtain, there cannot be any questions regarding quid pro quo.

The CJI, while listening to Sibal, also added that the person could be an aggregator of bonds and may give the bonds to ten others. On this, Sibal informed the court that the RBI has raised these concerns repeatedly. The bench also heard advocate Shadan Farasat, appearing for the CPI-M, who told the court that his party was the only political party here.

"Despite being a ruling party, we've taken a principled stance not to accept any electoral bond. We haven't taken a single rupee in Electoral Bond in last 5.5 years" he said.

On Tuesday, the top court heard petitions largely challenging the electoral bond scheme. The petitioners have made vast submissions before the court including that the scheme violates the citizen's fundamental right to information about political parties.

Earlier, Attorney General R. Venkataramani has submitted before the apex that the electoral bonds scheme floated by the Centre does not impinge upon any existing right of any person and cannot be said to be repugnant to any fundamental rights contained under Part III of the Constitution. In his brief submissions filed before the apex court, the top law officer of the Union government said that any law that is not repugnant to the fundamental rights of citizens cannot be voided for any other reason. He added that the judgments rendered by the apex court in the past cannot be read as to suggest that a citizen has a right to information under Art. 19(1)(a) regarding funding of political parties.

A constitutional bench headed by CJI Chandrachud and comprising Justices Khanna, B.R. Gavai, J.B. Pardiwala, and Manoj Misra are hearing the case. The bench will resume hearing on Wednesday.