Supreme Court Dismisses Pleas For SIT Investigation Into Electoral Bonds 'Quid Pro Quo', Says Ordinary Remedies Not Invoked

The Supreme Court on Friday (August 2) dismissed petitions seeking to set up a Special Investigation Team (SIT) to investigate the alleged instances of quid pro quo arrangements between corporate and political parties through Electoral Bonds donations.

The Court said that it would be "premature" and "inappropriate" to order an investigation under the monitoring of a retired judge when the remedies available under the ordinary law governing criminal law procedure have not been invoked.

The Court also turned down the pleas to direct the authorities to recover the donations received by political parties through electoral bonds and to re-open their income tax assessments. The Court said that these remedies pertain to the exercise of statutory functions by authorities under the Income Tax Act. For the Court to issue any such directions at this stage would amount to a conclusive opinion on disputed facts.

The Court said that the underlying premises of the petitions are "assumptions at the present stage."

The bench of CJI DY Chandrachud and Justices JB Pardiwala and Manoj Misra dealt with four petitions, one filed jointly by NGOs Common Cause and the Centre for Public Interest Litigation (CPIL), three others by Dr.Khem Singh Bhatti, Sudip Narayan Tamankar and Jai Prakash Sharma.

The bench observed in the order as follows :

"The purchase of electoral bonds and the donations made to the political parties were on the basis of a law enacted by the Parliament. The provisions of the statute have since been held to be unconstitutional. The issue to be decided is whether the underlying reasons for the donations to political parties should be subjected to a Court-monitored investigation under an SIT.

The petitions are founded on two assumptions : (1) There would be prima facie an element of quid pro quo where the date of the purchase of electoral bonds was in proximity to the award of a contract or a change in policy. (2) There is an involvement of certain officials of the investigating agencies as a consequence of which an investigation by a normal process of law would not be fair or independent.

We have highlighted the underlying premise of the submission to indicate that these are assumptions at the present stage and require the Court to embark upon a roving enquiry into the purchase of the electoral bonds, the donations which were made to the political parties and the arrangements in the nature of quid pro quo. 

The submissions which are urged on behalf of the petitioners highlight that even according to them an element of criminality may be involved where there is a proximate relationship between the purchase and contribution of the bond and the award of contract, or commission or omission by the authorities, as the case may be.

Individual grievances of this nature with regard to the presence or absence of a quid pro quo would have to be pursued on the basis of the remedies available under the law. Likewise, where there is a refusal to investigate or a closure report has been filed, recourse can be taken to appropriate remedies under the law governing the criminal procedure or under Article 226 of the Constitution.

At the present stage, absent a recourse to remedies which are available under the law to pursue such grievances, it would be both premature - because the intervention under Article 32 must be preceded by the invocation of the normal remedies under the law and contingent upon the failure of those remedies - and inappropriate -because the intervention by this Court at the present stage would postulate that the normal remedies which are available under the law are not efficacious- for this Court to issue such directions.

The other remedies including the directions sought to make recovery from political parties on the basis they are proceeds of crime or for reopening of income tax assessments hinge upon the statutory functions of authorities constituted under the law. For the above reasons, we are of the considered view that the constitution of an SIT, headed by a former judge of this court or otherwise, should not be ordered on the face of remedies which are available under the law governing both criminal procedures.

Likewise, reliefs such as the reopening of assessments pertain to specific statutory jurisdictions conferred upon authorities under the Income Tax Act and other statutory enactments. Issuing a direction of that nature at the present stage would amount to a conclusion on facts which would be inappropriate.."

Arguments 

Advocate Prashant Bhushan appearing for Common Cause and CPIL submitted that the disclosures which emerged after the Court struck down the electoral bonds made it clear that there was a 'quid pro quo' between many corporates, who purchased the bonds, and the political parties, who received the donations.

CJI DY Chandrachud asked Bhushan why can't the normal process of law (lodging of FIR or filing a private complaint before the concerned court as per the Prevention of Corruption Act) be invoked in respect of the doubtful deals.

"Normal courts will not follow these cases, your lordships are aware," Bhushan said.

"What does an SIT exactly investigate at this stage? There is not even an FIR at this point of time. It would virtually be an open-ended enquiry. This case does not fall into the parameters of the cases where the Court has ordered SIT investigation," CJI said.

Bhushan said that this was an extraordinary case, which reveals large-scale shady deals following the disclosures made as per the Supreme Court's order. 

"What has emerged is absolutely shocking. Here some of the premier investigating agencies appear to be involved. Governments are involved. CBI appears to be involved. Top corporate heads are involved. This is the most extraordinary case which is likely to come up before this Court. Nothing will come up in a normal FIR," Bhushan said. He added that the Court had monitored the investigation in the coal block allocation case and Hawala cases when PILs disclosed doubtful circumstances.

"If this investigation is not monitored by a retired judge, nothing will come out," Bhushan urged. He said that the CBI, ED, and Income Tax department appear to be involved in the case. There is a pattern of these agencies raiding certain corporate houses and dropping further action after those companies purchased electoral bonds. He said that one company, IFB Agro, openly admitted that they purchased electoral bonds after they faced Excise issues in Tamil Nadu. He alleged Megha Engineering got an infrastructure project worth several crores after making electoral bond donations. He also took the name of Future Gaming. 

At this juncture, Justice Pardiwala weighed in, "Mr.Bhushan, we are not doubting your motive. But, it will be a far-fetched enquiry. What do you expect the SIT to do?".

Bhushan replied that the SIT should investigate the cases where there are prima facie indications of quid pro quo and that the petition has cited at least 30 such instances. When the role of the premier investigating agencies are under doubt, will the ordinary criminal process be an efficacious remedy, he asked.

When Justice Misra asked if the award of contracts has been challenged in any such instance, Bhushan said that rival companies shy away from challenging such bids for fear of being blacklisted by the Government. He said that only public-spirited petitioners will pursue such cases. The proximity in the time between the donations and the award of contracts raise strong doubts of quid pro quo, he submitted.

At this juncture, Justice Pardiwala said that one of the reliefs claimed in the petition - to recover the amounts received by political parties through electoral bonds as part of quid pro quo deals - was "directly or indirectly" declined in the judgment which struck down Electoral Bonds scheme. Disagreeing, Bhushan said that the information regarding quid pro quo came to light only after the judgment and hence, such a prayer could not have been sought in the previous petition. 

Some of the donations were given by pharmaceutical companies which were under scanner and after they donated electoral bonds, the investigations were dropped, he added.

Arguments of petitioner seeking confiscation of electoral bonds donations

The Court also heard the arguments of Senior Advocate Vijay Hansaria, appearing for another petitioner (Dr.Khem Singh Bhatti) who is seeking a direction to confiscate the amounts received by the political parties through electoral bonds. Hansaria said that the judgments of CJI DY Chandrachud clearly stated that quid pro quo electoral bonds donation would amount to the offence of bribery under the Prevention of Corruption Act.  Justice Khanna's judgment stated that such deals would come under the ambit of "proceeds of crime" as per the Prevention of Money Laundering Act (PMLA).

"If FIRs have been closed after receiving crores through electoral bonds, what does it indicate? What more a public-spirited individual can show?" Hansaria submitted saying that several FIRs against Future Gaming in Kolkata were closed.

Advocate Pranav Sachdeva submitted that though his client (Sudip Narayan Tamankar) had made a complaint before the CBI in respect of the electoral bonds matter, there is no response. No FIR has been registered or Preliminary Enquiry has been conducted even after three months of the complaint, he submitted, urging the Court to call upon the CBI. Only a constitutional court can order a CBI investigation as per the settled law, he added.

The petitions were filed following the Top Court's decision to strike down the Electoral Bonds Scheme as unconstitutional and violative of Article 19(1)(a) of the Constitution. The court's decision highlighted concerns about transparency and fairness and directed the State Bank of India to cease further issuance of such bonds and make a public disclosure of bond transactions since April 12, 2019. It may be noted that the Election Commission of India uploaded the Electoral Bonds data on its website on March 14 complying with the Apex Court's directions.

The petitioner contended that the data which was disclosed to the public after the Supreme Court struck down the anonymous electoral bonds scheme showed that the bulk of the bonds appear to have been given as quid pro quo arrangements by corporations to political parties either : (a) to secure government contracts or licenses, (b) to secure protection from investigations by CBI, Income Tax Department, Enforcement Directorate, (c) as consideration of favourable policy changes.

The key reliefs sought by the petitioners include

(1) court-monitored investigation by an SIT into the "instances of apparent quid pro quo between public servants, political parties, commercial organisations, companies, officials of investigation agencies and others, and other offences;

(2) direction to the authorities to investigate the source of funding of shell companies and loss-making companies to various political parties;

(3) direction to the authorities to recover the amounts from political parties as donated by companies to these parties as part of quid pro quo arrangements where these are found to be proceeds of crime.

It may be noted that a subsequent petition was also filed challenging the legitimacy of funds received by political parties through the Electoral Bond Scheme and seeking directions to the Union, ECI and Central Vigilance Commission to confiscate the amounts received under the scheme by the involved political parties. Additionally, the plea seeks the formation of a committee led by a former Supreme Court judge to investigate the alleged illegal benefits provided to donors by major political parties. 

Case Details : COMMON CAUSE AND ANR. Versus UNION OF INDIA W.P.(C) No. 266/2024 and Other Related Matters