Common Cause and CPIL Move Supreme Court for SIT Probe into Electoral Bond Scam
The Supreme Court has received a petition from the non-profit organizations Common Cause and Centre for Public Interest Litigation (CPIL), demanding a special investigation team (SIT) probe under judicial supervision into an alleged scam in electoral financing using electoral bonds (EBs). The petition contends that at least 20 firms have contributed over ₹ 100 crore to political parties within three years of their establishment.
The petition claims that the EB data released last month on the orders of the Supreme Court shows that the bulk of these contributions were given as “quid pro quo” arrangements by corporates to political parties either for fiscal gains or for avoiding actions by central agencies, including the Central Bureau of Investigation (CBI), Enforcement Directorate (ED), and Income Tax department.
Additionally, the petition alleges that EBs were purchased for donation to political parties to trigger some policy and regulatory changes to favor certain business firms.
The petition filed through advocate Prashant Bhushan on April 18 further states that these apparent pay-offs amount to several thousand crores and have potentially influenced contracts worth lakhs of crores and regulatory inaction by agencies worth thousands of crores. It also highlights the alleged sale of substandard or dangerous drugs in the market, endangering the lives of millions of people in the country.
The petition also cites media reports to claim that the scrutiny of donations made through EBs since 2018 shows quid pro quo arrangements between political parties, corporates, public servants, and others working under the government, which would lead to blatant violation of Articles 14 (equality and equal protection) and 21 (life and liberty) guaranteed under the Constitution of India.
The petition alleges that private companies have paid crores of funds to political parties either as ‘protection money’ for protection against agencies under the central government or as a ‘bribe’ in return for undue benefits. It further claims that in some instances, the political parties in power at the Centre or in states have amended policies and/or laws to provide benefits to private corporates at the cost of public interest and the public exchequer.
The petition contends that substantial irregularities and potential violations of the Companies Act have occurred, with at least 20 companies, some newly incorporated, contributing over ₹ 100 crore to political parties within three years of their establishment, which is prohibited under Section 182(1) of the Companies Act.
The petition details how loss-making and shell companies have allegedly donated significant amounts through EBs, potentially as a method to launder money and gain undue favors from political entities, particularly those in power. This, the plea argues, mirrors scenarios seen in the 2G and Coal Scam cases, where court-monitored investigations were mandated due to arbitrary allocations without direct evidence of monetary transactions.
The petition further accuses some of India’s primary investigative agencies, such as the CBI, ED, and the Income Tax department, of being complicit in these corrupt dealings, arguing that firms under investigation by these bodies have made substantial donations to the ruling party, presumably to influence the outcomes of their probes.
Given the gravity and complexity of the allegations, involving both private and government entities, the non-profits contend that the existing regulatory bodies are inadequate for a fair investigation and, therefore, requested the formation of an SIT, under the supervision of a retired Supreme Court judge, to ensure a thorough and unbiased investigation.
Supreme Court Scraps Electoral Bond Scheme
In February 2023, a five-judge Constitution bench of the Supreme Court struck down the electoral bond scheme, declaring it to be “unconstitutional” because it completely masked contributions made to political parties. The bench directed the State Bank of India (SBI) – the only designated EB-issuing bank – to stop the issuance of EBs and submit details of EBs purchased since April 12, 2019, to the poll watchdog by March 6.
The data released by the Election Commission of India (ECI) over two weeks in March revealed that Tamil Nadu-based Future Gaming and Hotel Services was the top donor, accounting for ₹ 1,365 crore worth of bonds. The BJP emerged as the largest beneficiary, followed by the TMC and DMK.
BJP Nets Majority of Electoral Bonds
According to the data, the BJP netted ₹ 6,061 crore of the ₹ 8,252 crore between April 12, 2019, and January 11, 2024. The TMC received ₹ 1,610 crore of the ₹ 1,708 crore, and the Congress netted ₹ 1,422 crore of the ₹ 1,952 crore during the same period.
The petition filed before the Supreme Court has cited several of the above-mentioned donations to term these fundings quid pro quo transactions.
