The matter was last heard in March 2021, when the top court bench had dismissed poll rights body ADR's plea to block the sale of electoral bonds over concerns of anonymity in political party funding.

The Supreme Court is likely to hear pending petitions challenging the electoral bond scheme on September 19, Monday.

The public interest litigation by poll rights body Association for Democratic Reforms (ADR) was filed in 2017. Separate petitions were also filed by NGO Common Cause and the Communist Party of India (Marxist).

The matter was last heard on March 26, 2021, when the top court bench headed by then Chief Justice of India S.A. Bobde had dismissed ADR’s plea to block the sale of electoral bonds, ahead of the assembly elections, over concerns of anonymity in political party funding or apprehensions of their misuse.

CJI Bobde had noted that the sale of these bonds, which began in January 2018, have continued “without any impediment” in 2018, 2019 and 2020.

Dismissing the plea, which had referred to concerns raised by the Election Commission (EC) and the Reserve Bank of India (RBI), the bench had observed, “If the purchase of the bonds as well as their encashment could happen only through banking channels and if purchase of bonds are allowed only to customers who fulfil KYC norms, the information about the purchaser will certainly be available with the SBI which alone is authorised to issue and encash the bonds as per the Scheme.”

“Moreover, any expenditure incurred by anyone in purchasing the bonds through banking channels, will have to be accounted as an expenditure in his books of accounts. The trial balance, cash flow statement, profit and loss account and balance sheet of companies which purchase Electoral Bonds will have to necessarily reflect the amount spent by way of expenditure in the purchase of Electoral Bonds,” it added.

However, as per a report in the Indian Express, ADR had argued that though the first purchase may be through banking channels for a consideration paid in white money, someone may repurchase the bonds using black money and hand it over to a political party.

Additionally, an article in The Hindu Business Line had explained why bank payments for electoral bonds don’t necessarily make them clean money. “SBI knows the details of the bank accounts from which the electoral bonds are purchased but it is not for it to look into the source of funds of the donor,” it read.

Issues with electoral bonds

However, in 2017, the EC in an affidavit had opposed the electoral bonds, calling it a ‘retrograde step’, saying that it opposed the principle of ‘anonymity’ of the bond donor and redeemer.

The Reserve Bank of India had also raised concerns on the electoral bonds. In 2019, HuffPost India reported that the Narendra Modi government had ignored the central bank’s recommendation not to go ahead with the bonds, as it could funnel black money into politics and destabilise the Indian currency.

The Wire had reported that electoral bonds worth Rs 19,000 crore had been printed as of May 2020 – of which, bonds worth more than Rs 6,200 crore had been sold in 13 phases altogether. What’s noteworthy here is that taxpayers, not donors or parties, are bearing the cost of printing these bonds.

Electoral bonds are interest-free financial instruments through which anyone can donate money to political parties, with the help of which parties fund their electoral expenses. Such bonds can be issued or purchased for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1,00,000, Rs 10,00,000 and Rs 1,00,00,000 from the specified branches of the State Bank of India (SBI). These bonds have to be encashed by the respective political parties within 15 days of receiving them.

These bonds are available for a period of 10 days each in the months of January, April, July and October. An additional period of 30 days shall be specified by the Union government in the year of Lok Sabha elections.

On the face of it, the process ensures that the name of the donor remains anonymous.

In 2020, the Central Information Commission – the statutory body for the implementation of the Right to Information (RTI) Act – had dismissed an appeal by Maharashtra-based activist Vihar Durve, who had sought information about scheme donors. It had held that disclosing the identities of the electoral bond scheme donors is not in the public interest.

While announcing the Electoral Bond Scheme in 2018, the Union government had said they will “cleanse the system of political funding in the country”. However, the concerns on the scheme’s opaque nature, raised by several transparency activists, appears to be defeating the purpose why this scheme was brought in the first place.