Author: Akshaya Singh, NBT Law College, Nashik
SHORT SUMMARY
Electoral bond Scheme is a form of Financial Instrument introduced by Government of India in 2018. These bonds can be bought by an individual or group of individual or by a company under KYC account (Know Your Customers), and can be donated to any respected political party, which must be registered under Representation of the People, Act 1951. These bonds have the range from Rs.1000 to 1 crore and can be bought only via State Bank of India (SBI).
The donors identity will not be revealed. The party must encash the bond within 15 days, which is the expiration period of the bond, if not the bond will not be refunded, instead the funds would be transferred to Prime Minister’s National Relief Fund (PMNRF). To implement the Electoral Bond Scheme, the State enforced four vital amendments in four Acts, under The Finance, Act 2017, they are, The Representation of the People’s Act, 1951, The Companies Act, 2013, The Income Tax, Act, 1961, and The Foreign Contributions Regulation, Act, 2010. The major goal to introduce this scheme is to reduce the flow of black money in the politics and paves way for more transparency. Before the introduction of this scheme, the politicians are bound to publicly announce their donors, who donated more than Rs.20,000 and more over no corporate company was allowed to donate more than 7.5% of their average net profit, but now even a company with zero profit can donate an amount without any limits. The controversy of this scheme is the contradiction between the purpose and the actions of this scheme. When electoral bond scheme focus on transparency, why it conceal the identities of the donors ?, When this scheme focus on reducing the influence of black money, why it also grants access to the shell company to donate ?.
ABSTRACT
In 2018, Association for Democratic Reforms (ADR), Communist Party of India (Marxist) CPI(M), Dr. Jaya Thakur (Congress Member), and Common Cause organization filed case against Electoral Bond due to lack of transparency and against voters rights. In 2019, the SC ordered Interim Order to State Bank of India (SBI) to submit the details of the political parties who received electoral bonds, which includes the unique alphanumerical codes to the Election Commission of India. But SBI did not disclose the donors information despite of the interim order of SC. On February 15, 2024, the Supreme Court struck down the Electoral Bond Scheme due to the violation against Article 19(1)(a) “Right to Information” and declared it as unconstitutional, and ordered SBI to submit the details of Electoral Bond without being selective to the ECI by March 06, 2024, as per the 2019 interim order of SC. The data of Electoral bonds sparked national wide outrage .
TOP DONORS :
COMPANY
TOTAL DONATION (₹ Crore)
Future Gaming and Hotel Services
1,368
Megha Engineering and Infrastructures Ltd
966
Qwik Supply Chain Pvt Ltd
410
Vedanta Group
402.4
Haldia Energy Ltd
377
Bharti Airtel Group
247
Essel Mining and Industries Ltd
224.5
Western UP Power Transmission power Co Ltd
220
Jindal Group
195.5
Keventer Foodpark Infra Ltd
195
Biggest Beneficiaries of Electoral Bonds:
The Bharatiya Janata Party (BJP) received most percentage of electoral bonds, which is over 6000.Cr between April 12, 2019 to January 24, 2024. Megha Engineering (MEIL) donated highest sum to Bharatiya Janata Party(BJP), the worth of the bond was Rs.519 crore. Meannwhile an non-listed firm, which is Qwik Supply an indirect wing of Relience they donated Rs. 375 crore. Vedanta is natural resource based company the worth of their bond to BJP was Rs.226.7 crore.
Bharti Airtel donated Rs.183 crore, which is not the end. The BJP got more donations from companies like Madanlal Ltd, who donated Rs.175.5 crore, Keventers Foodpark Infra, the worth of the bond was Rs.144.5 crore, DLF Commercial Developers donated Rs.130 crore worth bond, and Industrialist Lakshimi Mittal contributed Rs.35 crore worth bond.
The Second place goes to All India Trinamool Congress (TMC), as the ruling party in the West Bengal it received a huge sum from various corporates. Especially from the top donor, which Future Gaming and Hotel Services donated 542 crore. Meanwhile, Haldia Energy contribution was Rs.281 crore worth bond via SBI, Dhariwal Infra Enterprise contribution was 90 crore worth bond, and MKJ enterprises contribution was 45.9 crore worth bond.
The third place was stood by Congress party and Vedanta known to the largest donator for Congress, they donated 125 Crore. Western UP Transmission Co donated Rs.110 crore, MKJ Enterprises Rs.91.6 crore, Yashoda Super Speciality Hospital donated Rs.64 Crore, Avees Trading & Finance Ltd donated Rs.53 crore and finally Future Gaming and Hotel Services donated Rs. 50 crore.
The Telangana based regional party Bharat Rashtra Samithi (BRS) was donated by Megha Engineering (MEIL) for Rs.195 crore bond, Yashoda Super Speciality Hospital donated Rs.94 crore, Chennai Green Woods Pvt.Ltd contributed the bond worth for Rs.50 crore, meanwhile Dr.Reddy’s Labs contributed Rs.32 crore worth bond, and Hetero Drugs Ltd donated Rs.30 crore worth bond.
The Tamil Nadu ruling party Dravida Munnetra Kazhagam (DMK) was contributed by Future Gaming and Hotel Service for Rs.503 crore worth bond. Meanwhile, Megha Engineering (MEIL) contribution amount was Rs.85 crore worth bond, following Westwell Gases contribued Rs.8 crore worth bond, Askus Logistics contribution amount was Rs.7 crore worth bond, and Fertileland Food contributed Rs.5 crore worth bond.
Future Gaming and Hotel Services donated the highest among most the of the companies, particularly for Trinamool Congress the donation was 39.6% and for DMK was 36.7%. Megha Engineering (MEIL) contributed to BJP was 60% and for BRS was 20%. Qwik Supply Chain contributed for BJP was 91.5% and for Shiv Sena was 6.1%.
DOES THE STATE LEGALIZE BLACK MONEY IN THE POLITICS?
The Net Profit of Future Gaming and Hotel Service between 2019 to 2022 is Rs.215 crore but the electoral bonds donated by future gaming is over Rs.1300 crore. The Qwik Supply Chain company’s net profit is Rs.109 crore, but the worth of electoral bonds bought by the company is Rs.410 crore. Mandanlal Limited (MKJ) net profit is Rs.10 crore but the worth of electoral bonds is Rs.185 crore.
Now the main question is where is the money comes from? is it black money?
In 2014, the Delhi High Court found both the BJP and the Congress guilty of violating the Foreign Contribution (Regulation) Act (FCRA), 1976, by accepting donations from Vedanta Resources, a London-based mining company, through its Indian subsidiaries between 2004 and 2012. Under the FCRA, political parties were prohibited from receiving funds from foreign companies, making these contributions illegal. However, instead of facing consequences, the ruling BJP government amended the FCRA retrospectively—first in 2016 and then again in 2018—redefining “foreign company” to exclude firms with over 50% Indian ownership. This change, applied retrospectively from 1976 to 2010, effectively nullified the court’s verdict and legalized past violations.
LEGAL JARGONS
REPRESENTATION OF THE PEOPLE’S ACT, 1951 – A law that governs the conduct of elections, qualifications and disqualifications of candidates, and electoral offences in India to ensure free and fair elections.
THE COMPANIES ACT, 2013 – A law that governs the incorporation, regulation, responsibilities, and dissolution of companies in India, aiming to ensure transparency, accountability, and good corporate governance.
THE INCOME TAX ACT, 1961 – A law that governs the levy, collection, and administration of income tax in India, detailing how individuals and entities are taxed on their income.
THE FOREIGN CONTRIBUTION REGULATION, ACT, 2010 – A law that regulates the acceptance and use of foreign contributions and hospitality by individuals, associations, and companies in India to ensure they are not used for activities harmful to national interest.
PRIME MINISTER’S NATIONAL RELIEF FUND (PMNRF) – A sovereign fund established to provide immediate relief in emergencies, support to victims of natural disasters, medical aid for serious illnesses and so on.
CONCLUSION
The ultimate purpose of electoral bond scheme is to reduce the influence of black money in the politics and improve transparency, but the actions of the scheme contradicts the core purpose of the scheme. While the scheme is meant for transparency the concealment of donors information clearly allowed illegal activities in the politics. When a scheme allowed shell company to donate unlimited amount to the political parties questions whether the state legalize the flow of black money in the politics. Why the certain companies contributes donation that exceeds their net profit and where they get so much money to contribute and why?.
FAQS
Q1. What was the 2014 Delhi High Court verdict about BJP and Congress?
In 2014, the court ruled that both BJP and Congress had violated the Foreign Contribution (Regulation) Act, 1976 (FCRA) by accepting donations from Vedanta Resources, a foreign company, through its Indian subsidiaries.
Q2. Why were donations from Vedanta considered illegal?
Vedanta is a UK-based company, and under the FCRA, foreign companies were not allowed to fund Indian political parties to prevent foreign influence in domestic politics.
Q3. How did the government respond to the court’s ruling?
Instead of penalizing the parties, the BJP-led government amended the FCRA in 2016 and again in 2018, changing the definition of “foreign company” retrospectively—thus legalizing past donations from companies like Vedanta.
Q4. What is the context of retrospective amendment?
It means the law was changed backwards in time, from 2016 to cover donations as far back as 1976, effectively erasing the illegality of past foreign contributions.
References
electoral bonds: Explained: What are electoral bonds? How do they work and why are they challenged in SC? – The Economic Times
Explainer: What are electoral bonds and what is the controversy? – India Today
Electoral Bonds scheme: SC orders SBI to refund amount | Mint
https://indianexpress.com/article/india/electoral-bonds-number-supreme-court-sbi-9220138/?utm_
https://www.indiatoday.in/india/story/electoral-bond-scheme-supreme-court-strikes-down-electoral-bonds-top-five-points-2502410-2024-02-15?utm_source
https://www.business-standard.com/elections/lok-sabha-election/ec-releases-electoral-bonds-data-with-bond-numbers-see-full-list-124032100895_1.html#amp_tf=From%20%251%24s&aoh=17502531483235&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.business-standard.com%2Felections%2Flok-sabha-election%2Fec-releases-electoral-bonds-data-with-bond-numbers-see-full-list-124032100895_1.html
