New Delhi: Reserving verdict on a plea challenging the validity of electoral bonds, the Supreme Court on Thursday said that if the identity of the purchasers of electoral bonds was not known, the efforts of the Government to curtail black money in elections would be “futile”. (Catch The Action of Lok Sabha Elections 2019 Here)

The plea had also sought that either the issuance of electoral bonds be stayed or the names of donors be made public to ensure transparency in the poll process.

Supporting the scheme, the Centre said the purpose was to eliminate the use of black money in elections and asked the court not to interfere with it at this stage and examine whether it had worked or not only after the elections.

“So far as the electoral bond scheme is concerned, it is the matter of policy decision of the government and no government can be faulted for taking a policy decision,” it told the bench comprising Chief Justice Ranjan Gogoi and Justices Deepak Gupta and Sanjiv Khanna.

The bench asked Attorney General K K Venugopal, representing the government, as to whether the bank knows the identity of purchasers at the time of issuing the electoral bonds. Answering in the affirmative, Venugopal said banks issue bonds after ascertaining KYC which is applicable for opening
the bank accounts.

The bench then asked if the bank had details on which bonds were issued to which individuals. When the response was in the negative, the bench said, “If the identity of purchasers of bonds is not known then there will be greater ramification on the Income Tax law and all your (government’s) efforts to curtail black money will be futile”.

The bench also asked about donations by shell companies and said that if the identity of donors was not known then such firms would “turn black to white” and moreover, the KYC was only the certification of the source of money.

Lawyer Prashant Bhushan, appearing for Association of Democratic Reforms (ADR), said that the scheme has nothing to do with the effort to curb black money and it now allows people to donate through banks while remaining anonymous. “Earlier, you could donate cash to the party, now you can donate through bank also,” he said.

The Centre and the Election Commission had taken contrary stands in the Supreme Court on Wednesday over political funding with the government wanting to maintain the anonymity of the donors of electoral bonds and the poll panel batting for revealing the names of donors for transparency.