8 Highlights Of Day 2 Hearing On Electoral Bonds: Questions Raised On Selective Anonymity, Confidentiality Of Scheme

The Supreme Court bench of CJI Chandrachud, and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra heard the batch of pleas challenging the validity of the electoral bonds scheme for funding political parties for the second day on Wednesday (1 November).

On the first day of the hearing, the bench acknowledged that anonymity behind political donations under the Electoral Bonds Scheme may have been aimed at preventing repercussions from parties to which a person or entity has not made donations.

Here are the highlights of second day's hearing:

1. "No implication of fundamental right"

During the argument on behalf of the petitioners, senior advocate Vijay Hansaria asserted, "A company is now required to only declare that x amount has been donated without declaring which party they have donated to."

To which CJI responded saying, "All this has been regulated by statutes... If it is conferred by statute it can be taken away by statute. No implication of a fundamental right can arise."

2. Tax exemption

Vijay Hansaria also argued that under Section 80G of the Income Tax Act, companies enjoy complete tax exemption. They are only obligated to disclose the total amount contributed to a political party in their profit and loss account without specifying the recipient's name. This lack of details makes it challenging to trace the donations.

He expressed concerns, among other things, regarding the absence of a cap on the total contributions that can be made.

3. Disclosure required for candidates, not political parties

Another argument of Hansaria was that "disclosure is required for candidates and not of political parties," to which CJI responded saying, "Originally, our law didn't speak of political parties at all. The law spoke of a party after tenth schedule was introduced in the Constitution."

One of the counsel representing a political party said that there is a cap stating that only parties which secure more than 1 per cent votes shall be eligible to receive electoral bonds and there is no rationale nexus to it and it is a barrier to entry.

Responding to it, Justice Gavai said, "A political party must have atleast 1 per cent votes. Tomorrow you may have two persons party and may claim donations."

5. Question of opacity

Justice Khanna questioned, "Because we have this opacity with regards to who is funding, the issue that may come up is, if there is a quid pro quo, how does anyone establishes it?"

Solicitor General Tushar Mehta responded to it and said, "If the element of confidentiality goes from the scheme, the scheme goes back to a regime when black money was donated to political parties."

6. Problem of selective anonymity

CJI said, "The problem with the scheme is that it provides with selective anonymity. It's not completely anonymous. It's not confidential qua the SBI. It's not confidential qua the law enforcement agency. So a large donor would never take the risk of buying the EB."

7. Court with centre

"The purpose of ensuring that electoral funding relies less and less on cash component and more and more on accountable component is work in progress. We're with you on that," said CJI to Mehta on his argument of having a transparent scheme.

8. Selective confidentiality

Calling out the issue of selective confidentiality, Justice Khanna said, "It is easier for party in power to get the information. The opposition party may not know who are your donors. But donors to the opposition party can be ascertained, atleast by the investigative agencies. So they're at a disadvantage to question you on your donations."