RTI Reveals Electoral Bond Scheme Passed After Only 'Informal Discussion' Among Officials

Though the law ministry had reservations about allowing the particular amendment to the Companies Act, it made an exception for the electoral bonds scheme.

New Delhi: An investigation by a Right to Information activist has revealed that the Narendra Modi government allowed unlimited and unaccounted money to be channelled into political parties through the electoral bond scheme, despite knowing that this would amount to a breach of the constitution.

The government also made the effort to bypass the Rajya Sabha, where it lacked numbers to pass the scheme. Further, though the law ministry found the move to be illegal, it still approved it.

A series of RTI queries filed by activist Saurav Das have led to the unravelling of the manner in which the electoral bond scheme was introduced in blatant disregard to rules.

It was in response to his query to the Ministry of Corporate Affairs that Das received the most detailed reply. Das in his query filed on November 28, 2019 stated that “whereas the Companies Act, 2013 provided for a cap on the contributions made by companies to various political parties to the extent of 7.5% of the net profit of the last three financial years”, the “Finance Act 2017, amended the Companies Act, 2013 to remove this cap of 7.5%”.

Also read: Electoral Bonds: Here’s What the Numbers Say

The Ministry, not giving any direct answers to his questions, forwarded to him a set of documents pertaining to communication between various departments of ministries on the issue of the change in Section 182 of the Companies Act, pertaining to prohibition and restriction regarding contributions to political parties.

One of these notes, File No, 1/1/2015-CL-1, revealed that a briefing meet was hosted by the Minister of Corporate Affairs on March 8, 2017 where the proposal for issuing electoral bonds following amendment to the RBI Act, 1934, was raised.

It was stated that this “will bring much awaited reform for giving/receiving of donations for/ by political parties.”

Only ‘informal discussion’

The file note revealed that only an “informal discussion” took place between officers of the Ministry of Corporate Affairs and Department of Revenue on “inclusion of the said amendment in Section 182 in the Finance Bill 2017.”

The absence of formal discussion meant that minutes of the meeting were not recorded in conformation with a 2013 Supreme Court judgment and the Manual of Office Procedure of the Ministry of Personnel, Public Grievances and Pensions.

The electoral bond scheme, the opposition charged, was pushed by the BJP as a Money Bill so that it could not be stalled by the opposition in Rajya Sabha. It allowed political parties to receive donations from private individuals, corporations, trusts and NGOs and over the past two years BJP has emerged as the biggest beneficiary of the scheme, receiving over 95% of funds channelled through it.

Law ministry’s misgivings

Another note of the Department of Legal Affairs, under Ministry of Law and Justice, pertained to the reference from the MCA seeking the opinion on the Department as to “whether the amendment in Section 182 of the Companies Act 2013 is a money Bill under Article 110 of the Constitution or can it be considered a Finance Bill under Article 117(1) of the Constitution”.

This note revealed that the Department of Legal Affairs had reservations regarding the manner in which the proposal for electoral bonds through an amendment to the Companies Act was being pushed as a Money Bill to bypass Rajya Sabha.

Also read: Transparency Activists Lament SC’s Refusal to Grant Interim Stay on Electoral Bonds

The Department note stated that “since the amendments proposed in Section 182 are not the provision directly dealing with all or any of the matters enumerated thereunder clauses (a) to (g) of Article 110(1) in strict sense, it may not be considered as money Bill.”

An exception

But the Department still made an exception for the Centre in the matter of electoral bonds.

It held that since the “amendments proposed are having a bearing on regulation of Income Tax under the Income Tax Act, 1961 and revenue flowing into the Consolidated Fund of India, it may be made through official amendment in the Finance Bill, 2017.”

But, the Department did not shy from issuing a caveat that this practice not be repeated. “In order to avoid considering this practice as a precedent, it is advisable to adopt the extant regular legislative practice and procedure in future.”

Similar query, varying replies

While the file records and communication provided by MCA were quite revealing, the queries filed by Das with the Reserve Bank of India, Prime Minister’s Office and Election Commission revealed varying levels of transparency in dealing with issues of public importance.

In his query filed with the Reserve Bank of India on November 28, 2019, Das asked “whether the Reserve Bank of India had written to the Ministry of Finance or Ministry of Corporate Affairs on this matter of amending this law before or after the amendment happened.”

If so, he asked for the certified copies of the correspondence. Das also asked for replies by the Ministry and the action taken on this. The RBI responded on December 27, 2019 saying, “We do not have any specific information in this regard.”

Also read: Electoral Bond Scheme Results in Visible Dip in Transparent Corporate Donations

The RTI in his query filed with the Prime Minister’s Office had sought the “certified true copies of all correspondences between the PMO and the Ministry of Corporate Affairs or Ministry of Finance on amending this provision of law.”

He also asked for the details and minutes of the meetings conducted between officials or any officer of PMO and officials of the Finance Ministry or Corporate Affairs Ministry.

PMO reply termed same query ‘generic’

The PMO not only denied information but also commented negatively on the activist’s right to seek information. In its response on December 16, 2019, the PMO said:

“The request of the applicant is sweeping, roving and generic in nature. It does not highlight any specific information, the applicant intends to seek from this office. The supply of information in this form would divert the resources of the public authority disproportionately.”

Das had also filed a query with the Election Commission asking if it had written to the Ministry of Finance or Ministry of Corporate Affairs on this matter of amending the Companies Act 2013 before or after the amendment happened. Here too, Das asked for the replies of the Ministry and action taken on them.

The EC responded to Das saying it has “not sent any letter to Ministry of Finance or Ministry of Corporate Affairs on this matter”.

However, it attached a letter it sent to the Ministry of Law and Justice on May 26, 2017 but said “no reply in this regard has been received from Law Ministry”.

Incidentally, The Wire had reported about this letter two years ago and highlighted how the Centre had overlooked EC’s concerns on changes to laws on political funding.