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Supreme Court rejects SBI plea for extension in electoral bond case, pulls up the bank for the delay

Rejecting the extension application of SBI the SC has ordered the bank to disclose the details of electoral bonds, including donor and party details, by 12 March

Introduction

On March 11, hearing the contempt petition filed by the Association for Democratic Reforms (ADR) and Communist Party of India (Marxist) while simultaneously hearing the extension application filed by State Bank of India (SBI), the court rejected the arguments of the bank that it requires further time to comply with its February 15 order, and demanded urgent compliance of the same. It sternly asked SBI to disclose all the details about the bonds, including date of purchase, denomination of each bond purchased as well as information on the purchasers of the bonds and the political parties who encashed it.

The CJI led bench directed SBI to comply with its order latest by March 12, 2024, and asked Election Commission of India (ECI) to compile the information and publish the same on its website by March 15, latest by 5 PM. Furthermore, the court warned that while it is not considering contempt proceedings against the bank at this stage, the failure to comply with the its order may incline the court to proceed against SBI  for wilful disobedience. Notably, the court also observed that it will ask ECI to disclose the information about electoral bonds that it had received in a sealed cover from political parties and which it has since kept in safe custody following the interim order of this court on 12 April 2019.

Brief Background

On February 15 this year the Supreme Court of India in a significant ruling stuck down the electoral bond scheme and accompanying amendments made to the Companies Act, Income Tax Act, and the Representation of People Act, as unconstitutional for violating Article 14 (due process) and 19(1)(a) (freedom of speech and expression – right to information being part of it) of the Indian Constitution by permitting anonymous and unlimited political funding, thus affecting the integrity of free and fair elections and the right to information of voters. The court had noted in its order that “The statutory amendments and the Scheme are manifestly arbitrary because (i) large scale corruption and quid pro quo arrangements would go unidentified due to the non-disclosure of information about political funding; (ii) they enable capture of democracy by wealthy interests; and (iii) they infringe the principle of ‘one person-one vote’ because a selected few overpower the voice of the masses because of their economic wealth”. The bench also held that voters have the right to information which is essential for them to exercise their freedom to vote.

In the same order it had ordered State Bank of India (SBI), the authorised bank under the scheme, to disclose the details of the bonds purchased and encashed by political parties for the duration of April 12, 2019 to February 15, 2024. It had order SBI to disclose the details by March 6, 2024 to ECI, which would publish it by 13 March, but SBI failed to disclose the details, resulting in the contempt petition against the bank. The interim order on April 12, 2019, as aforementioned, had already asked parties to submit the bonds details to ECI.

The interim order of April 12 authored by the then CJI Ranjan Gogoi, Deepak Gupta, and Sanjeev Khanna read, “…according to us, the just and proper interim direction would be to require all the political parties who have received donations through Electoral Bonds to submit to the Election Commission of India in sealed cover, detailed particulars of the donors as against the each Bond; the amount of each such bond and the full particulars of the credit received against each bond, namely, the particulars of the bank account to which the amount has been credited and the date of each such credit.” It continued, “The above details will be furnished forthwith in respect of Electoral Bonds received by a political party till date.”

The interim order may be read here:

Why did the SC reject the extension plea by SBI

Harish Salve, appearing for the State Bank of India, requested that the extension be granted by the court till June 30 to comply with its February 15 order, as it is a complex and laborious exercise to compile and match the information stored in two different silos (for donors and recipients respectively). He explained that the SOP made sure that there was no name of the purchaser in core banking system and the bond number. Questioning the stance taken by SBI, the Chief Justice observed that the court had not asked for the matching exercise and so to seek time saying that a matching exercise is to be done is not warranted, we have not directed you to do that, Live Law reported. When Salve responded that the co-relation exercise is suggested in a particular passage, Justice Gavai riposted that don’t go by what is suggested, go by what is stated. Justice Sanjeev Khanna also questioned the delay, and said, “For what 26 days, something must have happened.”

When the CJI observed that it will direct the registry to open the sealed covers right away and will ask ECI and SBI to divulge whatever is with them, the SBI counsel seemed taken aback, and asked the court not to hurry, saying, “We don’t want to create any havoc by making any mistake.” Responding back, Justice Khanna assured the counsel and said that “There is no question of any mistake. You have the KYC. You are the number 1 bank in the country. We expect you to handle it.” The CJI also exclaimed over the fact that assistant general manager of SBI had filed an affidavit seeking modification of the judgment of a Constitution Bench of the Court.

While Salve had assured that SBI can provide details about the bonds in 3 weeks if no matching exercise had to be undertaken, the bench rejecting the proposed timeline ordered SBI to provide a full disclosure of the details by March 12, 2024 to ECI, which in turn will compile the information and upload it on its website by March 15, latest by 5 PM.

Strictly warning the SBI to comply with its order the court observed, “The SBI shall file an affidavit of its Chairman and Managing Director on compliance with the directions issued above. While we are not inclined to exercise the contempt jurisdiction at this time, we place SBI on notice that this Court may be inclined to proceed against it for wilful disobedience if SBI does not comply with the directions by the timelines indicated in this order.”

Now it is to be seen in what format SBI discloses the details to ECI and how accessible will it be for a voter to make an informed voting decision. There still remains some lack of clarity whether information will personally identify donors with parties or not, but whatever will be the outcome, the court has sent a strong message to the State and the public that anonymous political funding has no place in democracy and voters right to information cannot be supressed under any guise.

SC order may be read here.

 

(The author is part of the CJP’s Legal Research Team)

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