Shouldn’t The Tainted Electoral Bonds Proceeds Be Returned?

Shouldn’t The Tainted Electoral Bonds Proceeds Be Returned?

Why has the apex court stopped short of ordering explicitly the refund of the illicit donations?

S MurlidharanUpdated: Sunday, May 12, 2024, 10:30 PM IST
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It is a trifle curious that the apex court while declaring Electoral Bonds (EB) unconstitutional vide its February 15 judgement did not ask the political parties which got the donations through such EB to return them. In any case, refund is the upshot of its verdict — but then, unless the order is explicit and speaking, political parties aren’t going to volunteer and return to the donors whose identity has been laid bare by the State Bank of India (SBI) and Election Commission of India (ECI) thanks to the Supreme Court’s subsequent persistent initiatives. Why has the apex court stopped short of ordering explicitly the refund of the illicit donations? It is common knowledge that tainted money or money illegally gotten has to be refunded. The company law requires refund to applicants if the IPO is tainted by non-disclosure of vital details about the company. Indeed, if the tainted money is allowed to be retained, it amounts to undue enrichment by the recipient.

The Supreme Court in 2012 had rightly cancelled all the 122 telecom 2G licenses issued to eight firms as they were allotted under the invidious and potentially corrupting first-come-first-served (FCFS). It fobbed the exchequer of its rightful due for the precious licenses while benefitting the chosen few who apparently were tipped off in advance to rush with their applications so that they could be allotted under the wink-wink FCFS dispensation. The idea was to share the spoils. Mutual back-scratching was writ large, especially in hindsight when it emerged that some of the allottees with no telecom background at all had sold back-to-back their licenses for hefty profits. P Chidambaram, the then Finance Minister, called it smartness but those in the know cried foul which robbed the exchequer and the nation of its rightful dues. The apex court order apparently called for the return of license fees paid by the allottees. Why, this time around in the context of EB, has refund not been ordered? Why has the SC pulled its punches?

Indeed, illicit money collected cannot be allowed to pass, much less be winked at. In the early nineties of the last century a theory called doctrine of undue enrichment was in active debate. That happened when a manufacturer who got refund for excess payment of excise duty, due to wrong classification or valuation, got to retain such excess on the grounds that he couldn’t possibly trace the millions of customers who actually bore the brunt given the fact that the tab of all indirect taxes is invariably and ultimately picked up by the ultimate consumers. The consumers to whom the refund belonged evinced no interest in obtaining it given the low stakes and enormous efforts and expenses involved it seeking refund. The Parliament passed a law to cut the Gordian knot — deposit the refund with the Consumer Welfare Fund operated by the ministry of consumer affairs.

Deposit with Consumer Welfare Fund became unavoidable as it was indeed impossible to trace thousands of consumers. Even if somehow traced, they would hardly evince any interest, given the small stakes. But with EB, there are no such problems. The donors have already been traced and their stakes are very high. They donated through EB on condition of anonymity which has been cast asunder by the apex court. Prima facie, therefore in all fairness the illicit donations have to be refunded.

Perhaps the Supreme Court thought better of ordering such refund on grounds of practicality. For all one knows, bulk of the EB proceeds may still not be in the coffers or bank accounts of the beneficiary political parties. AAP is alleged to have spent the laundered money emanating out of the liquor scam in Goa and Punjab elections. Indeed, political parties splurge money on election eve. Was the impossibility of making the beneficiary political parties retrieve the illicit EB money the unstated reason behind the Supreme Court not going the whole hog ie, the logical conclusion — ordering refund of EB money to those who purchased them? Such a cognate order would certainly have fluttered the dovecotes of the political parties but then to the lay folks as well as to the cognoscenti, it appears the studied silence by the SC on this vital aspect of the EB issue makes its entire initiative incomplete. Some may even say it has indeed pulled its punches. Incidentally, the SC wasn’t concerned with the practical difficulties of the telcos when it asked them to stew in their own juices and share even non-telecom revenues like dividend and interest with the DOT. Why then should it indulge political parties?

It is also possible that the Supreme Court finds the donors equally culpable — offering bribes disguised as donations. And hence doesn’t want to indulge their culpability with refund which in its perception they don’t deserve. In that case, it should have ordered refund to the Prime Minister’s National Relief Fund — the same fund the EB scheme posits as the beneficiary in case the purchaser of the bond was remiss in donating expeditiously so as to enable the political party to encash within 15 days of the issuance of EB. Using its plenary powers, the SC could have even gone to the extent of prescribing the altruistic purposes such refund to PM National Relief Fund must be used for. Whatever the rationale, it doesn’t find expression in the verdict.

S Murlidharan is a freelance columnist and writes on economics, business, legal and taxation issues

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