"May Constitute One Of India's Largest Scams": Plea In Apex Court Seeks SIT Probe Into Electoral Bonds Scheme

A Writ Petition has been filed by two NGOs before the Supreme Court, seeking a thorough investigation by a Special Investigation Team (SIT) into the controversial electoral bonds scheme.

The Petition, jointly filed by Common Cause and the Centre for Public Interest Litigation, both registered societies, highlights the necessity of an SIT inquiry to uncover alleged conspiracies and malpractices associated with the electoral bonds scheme, which facilitated anonymous donations to political parties.

The plea filed by Advocate Prashant Bhushan states, "This Hon’ble Court vide judgment dated 15.02.2024 in W.P.C. No. 880 of 2017 titled Association for Democratic Reforms & Anr. vs Union of India &Ors reported as (2024) SCC Online SC 150struck down the Electoral Bond Scheme, 2018, which allowed anonymous donation to political parties on the grounds that it violated the right of the people to be informed about who is donating how much to political parties; and that it could lead to quid pro quo arrangements between corporates and governments headed by these political parties; and that it distorts the level playing field by giving a massive advantage to parties in power."

The plea states that the Constitutional Bench had also directed the State Bank of India (SBI) to release all the data about the purchase of bonds and encashment of bonds by political parties, and after some foot-dragging by the SBI, the data was finally released, and within minutes of the release of the data, the donors of bonds were matched with the political party encashing the bonds.

The NGOs, in their plea, state that the electoral bond data that has been revealed shows that the bulk of the bonds appear to have been given as quid pro quo arrangements by corporates to political parties for:

(a) getting contracts/licences/leases/clearances/approvals worth thousands and sometimes lakhs of crores and other benefits from the governments or authorities controlled by the governments which were in turn controlled by the political parties that received those bonds,

(b) electoral bonds given in close proximity to action by agencies like the ED/IT/CBI raising suspicion of it being “protection” money to avoid/ stall action by or in exchange for regulatory inaction by various regulators like the drug controller etc.

(c) electoral bonds given as a consideration for favourable policy changes.

"In several cases, the donations appear to have been made in blatant violation of the regulatory framework governing contributions by companies to political parties. Section 182(1) of the Companies Act prohibits any government company or any company having been in existence for less than 3 years from making contributions to political parties. Yet perusal of the data disclosed on electoral bonds, shows that at least 20 companies bought electoral bonds within three years of their incorporation. The donation by such companies total more than Rs. 100 crores. In some cases, the companies were just a few months old when they purchased bonds, in flagrant violation of the provisions of the Companies Act," the plea reads.

Given these alarming revelations, the Petitioners argue that the electoral bonds scheme may constitute one of "India's largest scams". Unlike previous scandals like the 2G scam or the coal scam, the Electoral Bonds Scheme leaves a discernible money trail.

Hence, the Petitioners seek the Supreme Court's intervention to initiate an SIT probe into the matter, comprising sitting or retired officers appointed by the Court and supervised by a retired Supreme Court Judge. "..this scam needs to be investigated by a Special Investigative Team (SIT) of sitting/retired investigating officers of impeccable integrity chosen by this Court and working under the supervision of a retired judge of this Hon’ble Court," the Petitoners prayed.

The plea alleges, "In the Electoral Bond scam, some of the country’s main investigative agencies such as the CBI, Enforcement Directorate and the Income Tax Department appear to have become accessories to corruption.Several firms which were under investigation by these agencies have donated large sums of money to the ruling party, potentially to influence outcomes of probes."

"The investigation in this case would not only need to unravel the entire conspiracy in each instance...but also the officers concerned of agencies like the ED/IT and CBI etc., who appear to have become part of this conspiracy," the plea states.

Cause Title: Common Cause & Anr. v. Union of India