The RBI had dubbed the bond system a weapon for financial scams, Prashant Bhushan said.
The Supreme Court today refused to bar the sale and purchase of electoral bonds ahead of the upcoming state assembly elections. It rejected an NGO's plea seeking a stay on their scheduled sale between April 1 and April 10. The plea also wanted them banned till matters related to parties' funding and transparency of incomes were sorted out. The bonds can now be issued from April 1, the court said.
"Since the bonds were allowed to be released in 2018 and 2019 without interruption, and sufficient safeguards are there, there is no justification to stay the electoral bonds at present," the court said today.
Electoral bonds are financial instruments that political parties can use to gather funding, with their buyer remaining anonymous and transactions allowed only through the State Bank of India. They were introduced by the Narendra Modi government in the Finance Bill-2017 as an alternative to cash donations made to political parties.
The Association for Democratic Reforms (ADR), a non-governmental organisation working in the area of electoral and political reforms, had moved the court seeking an interim stay on them between April 1 and April 10, alleging that front companies could use them to bribe parties.
Appearing for ADR, Senior Advocate Prashant Bhushan had argued that the bonds had turned into a tool for receiving bribes in the garb of donations. He also cited the banking regulator's misgivings about it: "The RBI has said that this system of bonds is a type of weapon or medium for financial scams."
He went on to say that the bonds were proof of the government's real approach to black money as opposed to its official stance.
The court, however, responded to such doubts saying it is not only the ruling party that is always the beneficiary of such transactions. Chief Justice Sharad A Bobde told Mr Bhushan that his arguments came across as related more to the political morality of the instrument. "Hasn't the Supreme Court already gone through such arguments already," the Chief Justice asked.
Mr Bhushan answered saying it was not about "political morality" but "democratic morality".
"Nowhere in the world does this happen. It (electoral bond) is a tool of bribing the government. So much so that even the Election Commission doesn't know who has donated how much to which party. Only the State Bank of India know, and through it, the government," he said.
The court's decision also followed the Election Commission's approval of the instrument since, according to it, without the bonds, political parties could deal in hard cash. The poll panel, however, said it is keen on bringing in more transparency into the transactions involving the bonds.