SC express concern over electoral bonds

During the concluding session of arguments in the case pertaining to the Electoral Bonds Scheme, the Supreme Court raised a critical question to the Union Government. They inquired whether there were intentions to amend the Companies Act to reintroduce a profit percentage-based limit on corporate donations. While the court did not advocate a return to a cash-based system, it emphasized the need for a revised scheme that would address the significant shortcomings of the current one in a proportional and customized manner. The Constitution Bench, composed of Chief Justice of India DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, delved into various facets of the scheme, particularly its impact on transparency and the potential for corruption. The bench subsequently reserved its judgment.

The discourse commenced with a focus on the primary objective of ensuring transparency in political contributions and discouraging shell companies from making substantial donations. The Solicitor General argued that the amendments aimed to facilitate the infusion of clean funds into the political system while minimizing cash transactions. However, Chief Justice DY Chandrachud highlighted a key distinction: before the scheme’s introduction, companies could only contribute 7.5% of their net profit from the previous three fiscal years. Conversely, after the scheme’s implementation, any company, regardless of its financial performance, could make contributions. The Solicitor General justified this distinction by stating that unprofitable companies should not be allowed to donate, as it could create opportunities for shell companies to subvert the scheme’s objectives.