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ADR to SC: Finance Ministry Allowed Additional Sale Window for Sale of Electoral Bonds

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Supreme Court LAW INSIDER

Aastha Thakur

Published on: 05 December 2022 at 17:39 IST

The recent notification released by the Centre has allowed by amending the Electoral Bonds Scheme an additional window of 15 days for the sale of the bonds.

However, this was issued in contravention of objections raised by certain officials of the Ministry of Finance and Ministry of Law & Justice, as per the supplementary affidavit filed by the NGO Association for Democratic reforms.

On November 7, 2022 Ministry of Finance amended the Electoral Board Scheme allowing the additional period of 15 days for sale of Electoral Bonds in the year of General Elections to the Legislative Assembly of States and Union Territories.

The ADR regarding amendment submits that it has been done in order to “ensure that more and more donations can be made in a completely opaque manner before state elections.”

Referring to the documents obtained by Commodore Lokesh Batra under the RTI Act, the senior officials of the Ministry of Finance have been warned by the sub-ordinate officers against the amendment to the Scheme since matter is sub-judice in Apex Court and the Model Code of Conduct is in force.

Additionally, it has been reported that since the Model Code of Conduct is in force, the officials suggested getting legal advice from the Ministry of Law and Justice and obtain approval from the Election Commission of India.

The Solicitor General of India responded to the officials’ concerns by saying that there was nothing stopping the government from amending the scheme and allowing an additional window of 15 days, equivalent to the 30 days permitted during the Lok Sabha election year.

ADR further contended that Economic Affairs Secretary, earlier responded that similar amendment was proposed in March 2021 for approval of ECI. Therefore, another reference on the matter to the ECI is not required anymore.

The ministry official noted that the concurrence of ECI for the amendment or for the issuance from the MCC perspective is not needed. However, the ECI will have to be informed about the proposed issuance.

Any person, business, or group of people with Indian citizenship may purchase an electoral bond, which is an instrument in the form of a promissory note or bearer bond.

The bonds, which come in various amounts, are issued with the intention of providing financial support to political parties participating in the nation’s current political system.

Advocate Prashant Bhushan presented the arguments against the scheme in April of this year before then Chief Justice of India (CJI) NV Ramana, who promised to list the case; however, this was not done.

The supplementary affidavit has been filed in the writ petition filed by the ADR in 2017 challenging the amendments made through Finance Act 2017 which paved the way for electoral bonds scheme.

Introduced in 2017, Finance Act, in turn amended three other statutes – the RBI Act, the Income Tax Act and the Representation of People Act – for enabling introduction of such bonds.

Various petitions are pending before the top court which challenge at least five amendments made to different statutes through Finance Act 2017 and Finance Act 2016 on the ground that they have opened doors to unlimited, unchecked funding of political parties.

According to the Affidavit submitted by Association for Democratic Reforms, the Electoral Bonds Scheme has opened floodgates to unlimited corporate donations to the political parties and anonymous financing by Indian as well as foreign companies which can have serious repercussions on the Indian Democracy.

Another challenge that has been posed is the removal of the cap on donations by the amendment to the Companies Act, 2013 and the amendments made to Section 236 of the Foreign Contribution (Regulation) Act, 2010.