Electoral Bonds - Finance Ministry Allowed Additional Sale Window Overruling Objections By Certain Officials : ADR Tells Supreme Court

The Centre's recent notification amending the Electoral Bonds Scheme to allow an additional window of 15 days for the sale of the bonds was issued overruling the objections raised by certain officials of the Ministry of Finance and Ministry of Law & Justice, stated the NGO Association for Democratic Reforms in a supplementary affidavit filed before the Supreme Court.

On November 7, 2022, the Ministry of Finance amended the Electoral Bond Scheme to allow 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 notification came ahead of the assembly elections in Gujarat and Himachal Pradesh. ADR contends that the amendment has been done to "ensure that more and more donations can be made in a completely opaque manner before state elections." 

Relying on documents obtained by Commodore Lokesh Batra under the RTI Act, ADR stated that the subordinate officials from the Ministry of Finance, Department of Economic Affairs and Ministry of Law and Justice had warned the senior officials of the Ministry of Finance against the amendment to the Scheme since the matter is sub-judice in the top court and the Model Code of Conduct is in force. It has also been stated that the officials suggested to obtain legal opinion from the Ministry of Law and Justice and obtain the clearance from Election Commission of India since Model Code of Conduct is in place.

In response to the reservations raised by the officials, the Solicitor General of India opined that there is no prohibition to the Government amending the scheme and allowing additional window of 15 days similar to the 30 days additional window allowed in the year of Lok Sabha elections

The ADR further stated that the Secretary Economic Affairs, in his response regarding obtaining clearance from the Election Commission had said that, similar amendment was proposed in March 2021 which was noted by the ECI and therefore another reference on the matter to the ECI is not required. The petitioner points out that suggestions of the lower-level officials were discussed by the senior officials with the finance minister, however the proposals were overruled.

"The concurrence of ECI for the amendment or for the issuance from the MCC perspective is not needed. However, the ECI may be informed about the proposed issuance", the senior officials of the Ministry of Finance stated overruling the subordinate officials' reservation.

In this background, the petitioner submits :

"The fact that the Ministry of Finance did not consider it necessary to take prior approval of the Election Commission before bringing an amendment to the Electoral Bonds Scheme, 2018 amounts to an absolute abuse of power by the party in power and indicates suspicion towards the intent behind the amendment as well as government's averseness towards the idea of participatory democracy. This also shows that the Ministry had deliberately tried to withhold the information regarding amendment to the Electoral Bonds Scheme from the Commission"

The affidavit also states that the ECI has in a letter in 2009, addressed to the Cabinet Secretary, Government of India, the Chief Secretaries and the Chief Electoral Officers of all States and UTs, stated that once the Model Code of Conduct comes into effect Ministry of Finance would need to take prior approval of the Commission on any policy announcements, fiscal measures, taxation related issues and such other financial reliefs and Ministries would have to take approval of the Commission before announcing any benefits. It has been further submitted by the petitioner that the top court has not only recognized but endorsed the concept of MCC.

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.

The affidavit submits that the introduction of the use of electoral bonds through the Finance Act 2017 have removed the existing cap on campaign donations by companies which was earlier fixed at 7.5% of net profit in the last three years and have legalised anonymous donations which opens doors to unchecked, unknown fundings to political parties. The Affidavit adds that, "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."

The affidavit points out that since the introduction of Electoral Bond Scheme, 22 tranches of Electoral Bonds have been opened for sale in which 19,520 Electoral Bonds worth Rs. 10,791.4751 crores. 

The petitioner submits that a news report showed that in response to an RTI dated 28th October 2022 by RTI activist Commodore Lokesh K. Batra (retd.), the Department of Economic Affairs, Ministry of Finance stated that the Central Government paid Rs. 9.53 crore of taxpayers' money towards commission and printing cost of the Electoral Bonds issued to fund political parties. It has been stated by the petitioner that, "huge amounts of money spent and being spent on use of government machinery and manpower for managing and operating Electoral Bonds Scheme for the 'Tax-Free' benefits of Political Parties at the 'Tax-Payers' cost"

Association for Democratic Reforms and Anr. vs Union of India and Ors. – W. P. (C) No. 880/2017