The electoral bonds scheme is an absolutely transparent mode of political funding, the Centre told the Supreme Court on Friday, PTI reported.

Electoral bonds are monetary instruments that citizens or corporate groups can buy from a bank and donate to any eligible political party, which can then redeem them for money.

Former Union Finance Minister Arun Jaitley had announced this scheme in his Budget speech in 2017, claiming the government wanted to clean up political funding and make it a transparent process.

However, the entire process is anonymous since no one is required to declare their purchase of these interest-free bonds and political parties do not need to show the source of the money. The government had contended that the money is unlikely to be “black” since it has to be given by cheque.

On Friday, the Supreme Court took up the case after it was heard last on March 26, 2021. A bench of Justices BR Gavai and BV Nagarathna heard a batch of petitions filed by non-governmental organisations Association for Democratic Reforms, Common Cause and Communist Party of India (Marxist) against the electoral bonds scheme.

Solicitor General Tushar Mehta, appearing for the Centre, told the court that it is impossible to get any black or unaccounted money through it.

“The methodology of receiving money has been so transparent,” he claimed. “We will explain step by step. It is the most transparent system. To say it affects democracy does not hold water.”

Senior advocate Prashant Bhushan, representing Association for Democratic Reforms, said the matter involves issues that strike at the root of democracy, Bar and Bench reported. “We have challenged amendments allowing electoral bonds, unlimited donations even by subsidiaries and retrospective changes to Foreign Contribution Regulation Act,” he said.

Senior advocate Kapil Sibal, appearing for the petitioners, said the issues raised are important and suggested that the matter should be heard by a larger bench.

The court said it would examine on December 6 whether the pleas challenging electoral bonds should be referred to a larger bench.

The case so far

The case against electoral bonds was filed by the Association for Democratic Reforms in September 2017.

In April 2019, the Supreme Court had directed political parties to submit details to the Election Commission about electoral bonds that they had received.

In March 2021, the Association for Democratic Reforms again approached the Supreme Court seeking a direction to bar the sale of electoral bonds ahead of the Assembly elections in Tamil Nadu, West Bengal, Assam, Kerala and in the Union Territory of Puducherry.

The NGO had argued that the electoral bonds scheme would result in a rise in illegal funding of political parties through shell companies.

However, a bench headed by SA Bobde, who was the chief justice at the time, had dismissed the application after questioning the petitioner’s claim that the buyers of the bonds had “complete anonymity”.

The court had remarked that “it is not as though the operations under the scheme are behind iron curtains incapable of being pierced”.

On April 5, former Chief Justice of India NV Ramana agreed to hear the case after the matter was mentioned by lawyer Prashant Bhushan. However, the case did not get listed during his tenure.