The Supreme Court on Tuesday said that the Election Commission of India is obligated to have up-to-date records of all political donors and contributions through electoral bonds, reported the Hindustan Times.

Electoral bonds are monetary instruments that citizens or corporate groups can buy from a bank and give to a political party, which is then free to redeem them. 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 Bharatiya Janata Party government at the Centre introduced the scheme in January 2018.

A five-judge bench comprising Chief Justice DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala and Manoj Misra was on Tuesday hearing a batch of petitions challenging this chief source of donations to political parties.

The bench told the Election Commission to keep ready for its perusal the details of political funding through electoral bonds. However, the poll panel’s counsel told the court that they have data only till 2019.

“Why only till 2019?” the judges asked. “This was a continuing mandamus. It was an interim order and it had to continue till the final order. You were supposed to keep such data till date.”

They were referring to a Supreme Court order passed on April 12, 2019, which directed all parties to submit information to the Election Commission by May 30 of that year about the donations received through electoral bonds, including the identity of the donors, money received, details of payments and bank accounts.

This was an interim measure till the pending petitions challenging the validity of electoral bonds were decided.

The court asked advocate Amit Sharma, representing the Election Commission, if their understanding was that the collection of such information should be restricted to May 30, 2019. Sharma told the judges that he will check check with the poll panel and respond.

Anonymity required to protect citizens’ right to privacy: Centre

Solicitor General Tushar Mehta, representing the Centre, told the Supreme Court on Tuesday that electoral bonds are kept anonymous to protect the donors’ political affiliations since it is part of their private life, reported The Indian Express.

The Centre said that the right to know how political parties are funded must be balanced against the right to privacy regarding a person’s political affiliations. “It is submitted that no right can be absolute and unqualified and the right to know is no different,” Mehta said in a written submission to the top court.

By revealing the names of donors, the scheme may become ineffective and it could potentially lead to a return to cash-based political funding, Mehta said, reported Bar and Bench.

Mehta also told the court that donors and political parties have to adhere to some disclosure requirements to ensure transparency and accountability, particularly in the event of legal investigations.

Trading favour through electoral bonds

During the first day of the hearing on Monday, the court had flagged the lack of control over transactions involving electoral bonds and its impact on influential entities currying favours with political parties, reported Live Law.

“Suppose ‘A’ purchases a bond worth 100 crores,” said the chief justice. “A’ is only the person who is being put up to purchase the bond because ‘A’ has KYC [know your customer] etc. ‘A’ has to only physically hand over the bond to ‘B’. ‘B’ gives to ‘C’ who will in turn give it to a political party. Now there is no control over the transaction between ‘A’ and ‘B’.”

Chandrachud pointed out that although trading of electoral bonds is prohibited, any person could become its aggregator and transfer it to others.

Justice Khanna added that since such transactions maintain a curtain of anonymity about the actual donor, “no questions would be asked about any quid pro quo”.

Quid pro quo refers to an exchange of goods or services in return for a favour.