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Electoral Bonds case: ‘This system puts premium on opacity. It must go’

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NEW DELHI: Delivering the judgment nearly three-and-a-half months after it concluded hearings in the

electoral bonds case

, Supreme Court rendered its decision virtually along the lines of what it had delineated on Nov 2 when it reserved the verdict – bringing

transparency

in

corporate funding

of parties to eliminate

kickbacks

, quid pro quo and maintaining political equality in the poll battlefield.

The bench of CJI D Y Chandrachud and Justices Sanjiv Khanna, B R Gavai, J B Pardiwala and Manoj Misra had said on Nov 2 the opaque electoral bond scheme, majorly used by corporate houses to anonymously donate to political parties, needed to be reformed and had asked govt whether it would amend the Companies Act to cap the percentage of profit a company could earmark for political funding.
It had outlined five considerations for pushing out black money from the electoral system – need to reduce cash in the system, transactions through authorised banking channels, incentivising such transactions, transparency, and curbing kickbacks and quid pro quo.
Having identified the components for making the electoral system clean, CJI Chandrachud had said, “When a balance is drawn, it is not the electoral bond or previous system. This system puts a premium on

opacity

. It must be removed. How it is to be done is for the govt or legislature to decide.

“When we consider these five considerations, we find that in the present system, there is no cap on contributions to be made by companies. In the earlier regime, there was a cap of 7.5% (of the three-year average net profit of a company which from 1985 till 2013 was 5%). In the present regime, a company making a loss can also donate to political parties. This gives credence to allegations about shell companies being used by big corporations to donate to political parties.”

Solicitor general Tushar Mehta had said operation of shell companies was a concern for the govt and sustained action had resulted in elimination of over 2,000 shell companies. He said, “I can make a statement that the apex court can direct that only profit-making companies can purchase electoral bonds for contributing to funds of political parties.”
Mehta had said the cap was removed in 2018 as it was found that companies wishing to donate more than 7.5% of their net profit were using shell companies and cash for political funding. “Now, everything is through the banking channel,” he said and read out the speech of the then FM Arun Jaitley, who had conceded that it was not a foolproof mechanism, but would help in substantially reducing the play of black money in the electoral system.
Jaitley had said electoral bond was one of the steps in the long series of attempts by successive govts to eradicate illicit money in the poll system. “India is no exception. The govts are continuously developing the mechanism to counter the play of black money in the electoral system. There may be flaws and there is scope for improvement. But that is no ground for the court to invalidate the electoral bonds, which is a policy decision of the govt and backed by legislative action of Parliament,” he had said.

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