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2021 (3) TMI 1144 - SC - Indian LawsSale of Electoral Bonds under the Electoral Bond Scheme, 2018 - Scheme allows the donors of political parties to maintain anonymity - seeking direction to all national and regional political parties to mandatorily disclose complete details about their income, expenditure, donations and funding as well as full details of the donors - HELD THAT - It is not correct to say that the RBI was opposed to the Scheme in principle. RBI s objection was to the issue of bonds in scrip form rather than in demat form. What RBI wanted to achieve was, in their own words, the twin advantage of (i) providing anonymity to the contributor; and (ii) ensuring that consideration for transfers is through banking channels and not cash or other means. In fact RBI called Electoral Bonds as an enduring reform, consistent with the Government s digitization push . Therefore, the concerns expressed by RBI, to the form and not to the substance, cannot really advance the case of the petitioners. Despite the fact that the Scheme provides anonymity, the Scheme is intended to ensure that everything happens only through banking channels. While the identity of the purchaser of the bond is withheld, it is ensured that unidentified/ unidentifiable persons cannot purchase the bonds and give it to the political parties. Under clause 7 of the Scheme, buyers have to apply in the prescribed form, either physically or online disclosing the particulars specified therein. Though the information furnished by the buyer shall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purposes, it is subject to one exception namely when demanded by a competent court or upon registration of criminal case by any law enforcement agency. A nonKYC compliant application or an application not meeting the requirements of the scheme shall be rejected. Under Section 129(1), such financial statements should give a true and fair view of the state of affairs of the company and comply with the accounting standards notified under Section 133. These financial statements are to be placed at every Annual General Meeting of the company. Under Section 137, a copy of the financial statement, along with all the documents duly adopted at the Annual General Meeting shall be filed with the Registrar of Companies - The financial statements of companies registered under the Companies Act, 2013 which are filed with the Registrar of Companies, are accessible online on the website of the Ministry of Corporate Affairs for anyone. They can also be obtained in physical form from the Registrar of Companies upon payment of prescribed fee. Since the Scheme mandates political parties to file audited statement of accounts and also since the Companies Act requires financial statements of registered companies to be filed with the Registrar of Companies, the purchase as well as encashment of the bonds, happening only through banking channels, is always reflected in documents that eventually come to the public domain. All that is required is a little more effort to cull out such information from both sides (purchaser of bond and political party) and do some match the following . Therefore, it is not as though the operations under the Scheme are behind iron curtains incapable of being pierced. The apprehension that foreign corporate houses may buy the bonds and attempt to influence the electoral process in the country, is also misconceived. Under Clause 3 of the Scheme, the Bonds may be purchased only by a person, who is a citizen of India or incorporated or established in India - in the light of the fact that the Scheme was introduced on 2.1.2018; that the bonds are released at periodical intervals in January, April, July and October of every year; that they had been so released in the years 2018, 2019 and 2020 without any impediment; and that certain safeguards have already been provided by this Court in its interim order dated 12.4.2019, we do not see any justification for the grant of stay at this stage. Application dismissed.
Issues Involved:
1. Constitutionality of Sections 135, 137, 11, 154 of the Finance Act, 2017, and Section 236 of the Finance Act, 2016. 2. Anonymity of donors under the Electoral Bond Scheme, 2018. 3. Interim reliefs and stay of the Electoral Bond Scheme, 2018. 4. Compliance with Right to Information Act, 2005. 5. Concerns of the Reserve Bank of India (RBI) and Election Commission of India (ECI). Issue-wise Detailed Analysis: 1. Constitutionality of Sections 135, 137, 11, 154 of the Finance Act, 2017, and Section 236 of the Finance Act, 2016: The petitioners sought a declaration that these sections and their corresponding amendments in various acts are unconstitutional, illegal, and void. The court noted that these issues required an in-depth hearing and could not be resolved within the limited time available before the closure of the electoral bond funding process. 2. Anonymity of Donors under the Electoral Bond Scheme, 2018: The primary contention was that the scheme allows donors to maintain anonymity, which is unhealthy for democracy. The court observed that while the government can identify donors through banking channels, the public and opposition parties cannot. The court acknowledged the concerns but emphasized that the scheme ensures transactions through banking channels, thus curbing black money. The RBI had recommended safeguards to minimize misuse, and most of these were incorporated into the scheme. 3. Interim Reliefs and Stay of the Electoral Bond Scheme, 2018: The petitioners sought a stay on the scheme, arguing that it facilitates anonymous donations. The court had previously issued an interim order requiring political parties to submit donor details to the ECI in sealed covers. The court reiterated that repeated applications for the same interim relief are not permissible. The court found no justification for granting a stay, noting that the scheme had been operational since 2018 with periodic releases and existing safeguards. 4. Compliance with Right to Information Act, 2005: The petitioners also sought a declaration that political parties are public authorities under the RTI Act and should disclose complete financial details. The court's interim order addressed the need for transparency by requiring political parties to submit donor details to the ECI. The court noted that some parties had complied, while others had not submitted their audited accounts, which was not the subject of the current applications. 5. Concerns of the Reserve Bank of India (RBI) and Election Commission of India (ECI): The court examined RBI and ECI's reservations about the scheme. The RBI had suggested issuing bonds in demat form rather than physical scrip to ensure anonymity and prevent misuse. The court concluded that RBI's concerns were about the form, not the substance of the scheme. The ECI's reply indicated compliance with the court's interim order, with political parties submitting donor details in sealed covers. Conclusion: The court dismissed the applications for a stay, emphasizing that the scheme ensures transactions through banking channels, incorporates safeguards, and mandates political parties to file audited accounts. The court found no justification for a stay and highlighted that the scheme's operations are transparent and subject to scrutiny through available financial statements.
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