MEMORIAL FOR PETITIONER

INTHEHON’BLESUPREME COURT OF INDIANA

IN THE MATTER OF: -

Association for Democratic Reforms and Anr. ….. Petitioner(s)

Versus

Union of India and Ors.….Respondent(s)

ON SUBMISSION TO THE HON’BLE SUPREME COURT OF INDIANA

UNDER ART.32 OF THE CONSTITUTION OF INDIANA

WRITTEN SUBMISSIONS ON BEHALF OF THE PETITIONER

COUNSEL APPEARING ON BEHALF OF THE PETITIONER

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 MEMORIAL FOR PETITIONER

LIST OF ABBREVIATIONS

¶ : Paragraph

AIR : All India Report

All : Allahabad

AP : Andhra Pradesh

Art. : Article

Bom : Bombay

Cal : Calcutta

Del : Delhi

Ed. : Edition

Ker : Kerala

DPSP : Directive Principles of State Policy

HC : High Court

Kar : Karnataka

PIL : Public Interest Litigation

SC : Supreme Court

SCC : Supreme Court Cases

u/s : Under Section

UOI : Union of India

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STATEMENT OF JURISDICTION

THE HONOURABLE SUPREME COURT HAS BEEN EMPOWERED BY ARTICLE 32 1 OF

THE CONSTITUTION OF BRAHMASTHAN. The counsel on behalf of the respondent most
humbly and respectfully submits to the jurisdiction of the Hon’ble Supreme Court in the present
matter.

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Article 32 in The Constitution of India-
32. Remedies for enforcement of rights conferred by this Part
(1) The right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by
this Part is guaranteed
(2) The Supreme Court shall have power to issue directions or orders or writs, including writs in the nature of habeas
corpus, mandamus, prohibition, quo warranto and certiorari, whichever may be appropriate, for the enforcement of
any of the rights conferred by this Part
(3) Without prejudice to the powers conferred on the Supreme Court by clause ( 1 ) and ( 2 ), Parliament may by law
empower any other court to exercise within the local limits of its jurisdiction all or any of the powers exercisable by
the Supreme Court under clause ( 2 )
(4) The right guaranteed by this article shall not be suspended except as otherwise provided for by this Constitution.

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STATEMENT OF FACTS
Indiana is a federal country with a multiparty system consisting of 29 states; and has adopted
bicameral nature of Parliament. Free and fair election is held to be the ‘basic structure of the
Indiana Constitution’ by the Indiana Supreme Court, rendering it incapable of being amended.

1. For cleaning and improving the process of political funding in Indiana and for making
Indiana’s economy cashless, the Union Finance Minister on 2nd of January 2018.

2. An electoral bond is a financial instrument similar to a Promissory Note. In effect, it is like a

bank note that is payable to the bearer on demand, and being free of interest.

3. For keeping the donor’s detail confidential, electoral bonds will not bear the name of the donor
or the name of the political party to which the donation is made. But all the details regarding
donor and political parties receiving the electoral bonds will be available with bank Donors can
buy the bond with a KYC-compliant account.

4. For en-cashing an electoral bond, party must be registered under a section 29A of the
Representation of the People Act, 1951 (43 of 1951) and must have secured at least 1% of the
votes polled in the most recent Lok Sabha or State election. The Election Commission of Indiana
will allot a verified account to an eligible party so that electoral bond transaction can be made
only via this account.

5. Prior to this new scheme of electoral bonds, source of funding was not necessary to be
disclosed by the political parties if the donor has made the donation less than ₹20,000. Under the
old system of funding, the political parties used to claim that they received 90% of their political
funds in the denominations of less than ₹20,000 in order to avoid disclosure of their sources of
funding.

6. On the recommendation of Election Commission, the Indiana government reduced the limit of
anonymous donation during the Budget presentation in February 2017, and had proposed that the
maximum amount of cash donation that a political party can receive be capped at ₹2,000; and
that parties be entitled to receive donations by cheque or digital mode, in addition to electoral
bonds.

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7.That there is provision in the Constitution of Indiana that ‘Money Bill’ need not to be
introduced in the Rajya Sabha, the Upper House of the Parliament and the amendments
introduced through the new Finance Act, 2017 by the Ministry of Finance, passed as a money
bill thereby bypassing the Rajya Sabha.

8. That the relevant points of Finance Act, 2017 are as follows:

- The Finance Act, 2017 was introduced in Lok Sabha, the lower house of the Parliament, as Bill.
No. 12 of 2017 on February 1, 2017.

9. That the Finance Act, 2017 amended the provisions of the Companies Act, 2013, which
removed the cap for companies to make political donations. Earlier the cap was 7.5% of net
profits of the last three years for the company. The companies are no longer required to disclose
name or even break up contributions made to the political parties.

11. The Action for Democratic Reforms (ADR) is an Indiana’s non-partisan, nongovernmental
organization, which works in the area of electoral and political reforms.It challenged the
electoral bond scheme in the Supreme Court of Indiana.

12. ADR contended in its Petition that the amendments made via Finance Act, 2017 are not only
unconstitutional but also violate citizen’s fundamental right to information.That the amendments
to the Reserve Bank of Indiana Act, 1934, Representation of the People Act, 1951 and Income
Tax Act, 1961 have affected transparency in political funding. This will have a major implication
on transparency in political funding as now the political parties are free not to file contributions
received through electoral bonds.

18. That the Petition filed under the provisions of Constitution of Indiana primarily hinges on
citizen’s fundamental right under Article 19 (1) (a). The petitioner challenged the amendments
introduced by the Finance Act, 2017. The amendments made by the Finance Act 2017 are as
follows:

i. Section 31, the Reserve Bank of Indiana Act, 1934 through Part III, Section 135 of the Finance
Act, 2017,

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ii. Section 29C, the Representation of the People Act, 1951 through Part IV, Section 137 of the
Finance Act, 2017

iii. Section 13A, the Income Tax Act, 1961 through Chapter III, Section 11 of the Finance Act,
2017

iv. Section 182 of the Companies Act, 2013 through Part XII, Section 154 of the Finance Act,
2017

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ISSUES PRESENTED-

1.Whether or not the said amendments violating the -

(a) Right to know and obtain information under Article 19 (1) (a) and
(b) Section 29B of Representation of People Act and section 2 (e) of the Foreign
Contribution (Regulation) Act, 1976.

2.Whether or not the said amendments violating the -

(a) Right to know and obtain information under Article 19 (1) (a) and
(b) Section 29B of Representation of People Act and section 2 (e) of the Foreign
Contribution (Regulation) Act, 1976.

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1.Whether or not the said amendments violating the -

(c) Right to know and obtain information under Article 19 (1) (a) and
(d) Section 29B of Representation of People Act and section 2 (e) of
the Foreign Contribution (Regulation) Act, 1976.

1.(a) The right of information is indisputably a fundamental right , a facet of

‘speech and expression’ ad contained in Article 19 (1) (a). It is elementary that
citizens ought to know what their government is doing. No democratic government
can survive without accountability and the basic postulate of accountability is that
the people should have information about the functioning of the government.

With a view to provide for freedom to every citizen to secure access to official
information, in order to promote openness, transparency and accountability in
administration and I n relations to the matter connected therewith or incidental
thereto , the Freedom of Information Act,2002 has been passed..

The Freedom of Information Act,2002 was amended in 2005, proving for

constitution of information commission at the State level which is to function as a
quasi-judicial authority.

It is most humbly submitted before the hon’ble Supreme Court of Indiana –

The electoral bond scheme was notified by Union Finance Minister on 2 nd January,
2018 in a bid to ‘cleanse’ the system of political funding in the Union of Indiana.

It is hereby alleged that that the scheme creates “an obscure funding system which
is unchecked by any authority”

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It explains, ‘Firstly, the provisions of the scheme are arbitrary, vague, and in
violation of the fundamental right to information in their implementation of the
impugned amendments. Secondly, the Scheme mandates compliance of the
purchase of bonds with “Know Your Customer” norms specified by the Reserve
Bank of India.

It is submitted that the rational effect of this provision is that contributors using
unaccounted cash to donate to political parties and they continuously donating the
reserves of black money to the political parties.

It is further contended that the system of donations has also been made ‘secretive’
by excluding the requirement of disclosure of names of political parties to whom
contributions have been made. It asserts that such secrecy violates the right to
freedom of information under Article 19 (1) (a) of the Constitution of India.

“In effect, at both the ends of the transaction, neither the contributor nor the
recipient of the funds is required to disclose the identity of the other. The inevitable
consequence of these is the destruction of the principle underlying Article 19 (1)
(a).

‘There is a total transparency as to the person purchasing it though there are

specific provisions for its disclosure. The instrument is non-transferable, non-
tradable. Only the political party is entitled for encashment. But there is total
anonymity as to the person who has purchased it and the donee cannot find out
who the donor is. The IT returns will show the complete amount but not the name
of the person who has donated it.

The amendments made via Finance Act,2017 are not only unconstitutional but also
violate citizen’s fundamental right to information. It is also argued that the
aforesaid amendments are against the transparency in public life by providing for
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non-disclosure of the donor’s name and the source of funding. In this way
transparency in the political funding will be severely compromised. After the said
amendments loss making companies have started making donations and in turn ask
favour from the political parties.

In case of Shreya Singhal v Union of India 2015, the Apex Court wherein
Section 66-A inserted to the Information Technology Act,2002, relating to the
restrictions on the online speech by amendment, in 2009 was struck down as
unconstitutional, stating that the provision directly affecting the people’s right to
know.

1.(b) Section 236 of the Finance Act, 2016 amended the definition of ‘foreign
source’ provided in Foreign Contribution (Regulation) Act, 2010. This amendment

allowed a company, having a nominal value of share capital within the limits
specified for a foreign investment under the Foreign Exchange Management Act
(FEMA), 1999, not to be considered as a foreign source. One of the major
implications of this modification is that the change in the definition allows foreign
corporations to donate not only uncapped but also anonymous donations to
political parties in Indiana.

If contributions are not reported, it will not be possible to ascertain if political

parties have taken donations from government companies and foreign sources
which is prohibited under Section 29B of Representation of People Act.

Section- 29B of Representation of People Act- Political parties entitled to accept

contribution – Subject to the provisions of the Companies Act 1956 (1 of 1956),
every political party may accept any amount of contribution voluntarily offered to
it by any person or a company other than a Government company. Provided that
no political party shall be eligible to accept any contribution from any foreign
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source defined under clause (e) of section 2 of the Foreign Contribution

(Regulation) Act, 1976.

The purpose of the law was to eradicate black money or at least reduce it. But now
they can pay legitimately pay their donations out of the white money. The secrecy
is essential to white money and legitimate payments.

Your lordship have to maintain a balance between the purpose for which the law
has been passed as against the content of the amendments and the impact of the
amendments.

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2.(i) Will Electoral bonds eradicate black money from political funding or
prevent donors being victimized?

(ii) Whether the amendments introduced through Finance Act,2017 as Money

Bill are disguised or not?

2 (i) It is humbly submitted before the hon’ble Supreme Court that even though the
reasoning for introducing electoral bond was to enhance transparency and
eliminate black money, the scheme does not achieve any of those objectives.It is
further contended that the Finance Act, 2017 amended the provisions of the
Companies Act, 2013 which removed the cap for companies to make political
donations. Earlier this cap was 7.5 % of net profits of the last three years of the
company. The companies are no longer required to disclose name or even break up
contributions made to the political parties. This is enabling even newly
incorporated companies to donate via electoral bonds.

This opens up the possibility of shell companies being set up for the sole purpose
of making donations to the political parties, with no other business consequence of
having disbursable profits. This would ‘compromise transparency’ and could lead
to ‘increased use of black money for political company through shell
companies’The profitable companies with proven track record should be permitted
to make political donations.

On the recommendations of Election Commission, the Indiana Government

reduced the limit of anonymous donation during the Budget presentation in
February 2017, and had proposed that the maximum amount of cash donation that
a political party can receive be capped at 2,000, and that parties be entitled to
receive donations by cheque or digital mode, in addition to electoral bonds.
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But in 1971, there was Purshothama Reddiar’s case where the Supreme Court
found that a lot of money (much over the prescribed limit of Rs. 2000 had been
incurred over the speakers etc and the Pondicherry assembly election was set aside.
This is reality. Black money is being generated deliberately as kickbacks

It is sumbiited that we are not on the validity of the bonds or that they are not
legalized. We are on the transparency and against anonymity. We want reforms the
bond is fine but the anonymity has to go

There lead to high possibilities of creation of shell companies, rampant corruption,

the rise of benami transactions and use of black money during the electoral
process.

2(ii) That there is provision in the Constitution of Indiana that Money bill need not
to be introduced in the Rajya Sabha, the Upper House of the Parliament and the
amendments introduced through the new Finane Act,2017 by the Ministry of
Finance passed as a money bill thereby bypassing the Rajya Sabha.

The expression ‘Money bill’ is defined by Clause (1) of Article 110. It is that bill
which contains only provisions dealing with all or any of the following matters,
namely –

(a) The imposition, abolition , remission, alteration , or regulation of any tax.

(b) The regulation of the borrowing of money or giving of any guarantee by the
Government of India, or the amendment of the law with respect to the
financial obligations undertaken or to be undertaken by the Government of
India.

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(c) The custody of the Consolidated fund or the Contingency Fund of India, the
payments of money into or the withdrawals of money from any such fund.
(d) The appropriation of the money out of the Consolidated Fund of India.
(e) The declaring of any expenditure to be expenditure charged on the
Consolidated fund of India or increasing the amount of any such
expenditure.
(f) The receipt of money on account of the Consolidated fund of India or the
public account of India or the custody or issue of such money or the audit of
the accounts of the Union or of a State ; or
(g) Any matter incidental to any of the matters specified in sub-clauses (a) to (
f)

Thus a Money Bill is that Bill which contains all or any of the matters contained in
sub-clauses (a) to (g) 0f Clause (1) of Article 110.

It is hereby alleged that the amendments could not have been introduced through
the Finance bill as they do not have the characteristics of a money bill. According
to the petitioner, the amendments were disguised as money bill to bypass the upper
house. And the bill does not contain any of the matter mentioned above in sub
clause (a) to (g).

The relevant points of Finance Acts,2017 are as follows:

- The Finance Act 2017 was introduced in Lok Sabha, the lower House of the
Parliament, as Bill no. 12 of 2017 on February 1 2017
- The above act give effects to the financial proposal of the Union
Government for the year 2017-18
- The Act of 2017 introduced the system of electoral bonds to be issued by
and scheduled bank for the purpose of the electoral funding.

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This is the best scheme possible for the vice of black money in elections and I
earnestly request you to uphold it.

The petition, therefore, demands that the Scheme along with corresponding
amendments in the Representation of the people Act,1951, Income Tax Act, 1961,
Reserve Bank of Indiana Act,1934 have affected transparency in political funding.
This will have a major implication on transparency in political funding as political
parties are now free not to file contributions received through electoral bonds and
this amendments must be declared unconstitutional.

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