Every company shall prepare and keep books of accounts and financial statement for every financial year accounts: Supreme Court of India
Any expenditure incurred by anyone in purchasing the bonds through banking channels will have to be accounted as an expenditure in his books of  If the purchase of the bonds, as well as their encashment, could happen only through banking channels and if the purchase of bonds is allowed only to customers who fulfil KYC norms, the information about the purchaser will certainly be available with the   SBI   which alone is authorised to issue and encash the bonds as per the Scheme. Moreover, any expenditure incurred by anyone in purchasing the bonds through banking channels will have to be accounted as an expenditure in his books of accounts. This auspicious judgment was passed by the Supreme Court of India in the matter of ASSOCIATION FOR DEMOCRATIC REFORMS &amp; ANR. V. UNION OF INDIA &amp; ORS. [WRIT PETITION (C) NO.880 OF 2017] by Chief Justice of India S. A. Bobde, Justice A. S. Bopanna, and Justice V. Ramasubramanian. The petition was for  (i)  a declaration that all national and regional 2political   parties are public authorities under the Right to Information Act, 2005; (ii) a direction to the Election Commission of India to collect all information concerning the finances of political parties; (iii) a direction to all national and regional political parties to mandatorily disclose complete details about their income, expenditure, donations, and funding as well as full details of the donors. Later, the Association for Democratic Reforms filed the above application I.A. No.183625 of 2019 seeking a stay of the Electoral Bond Scheme, 2018 notified by the Central Government vide notification. The court stated that “Under Section 129(1), such financial statements should give a true and fair view of the state of affairs of the company and comply with the accounting standards notified under Section 133.  These financial statements are to be placed at every   Annual   General Meeting of the company. Under Section 137, a copy of the financial statement, along with all the documents duly adopted at the Annual General Meeting shall be filed with the Registrar of Companies.” Also, the court stated that “All that is required is a little more effort to cull out such information from both sides (purchaser of bond and political party) and do some “match the following”. Therefore, it is not as though the operations under   the   Scheme   are   behind   iron   curtains   incapable   of   being pierced.”
have joined together and come up with the above Public Interest “(a) Issue a writ of declaration or any other appropriate writ Act 1934 Section 137 of the Finance Act 2017 and the corresponding iii) Section 11 of the Finance Act 2017 and the corresponding amendment carried out in Section 13A the Income Tax Act 1961 iv) Section 154 of the Finance Act 2017 and the corresponding Section 236 of Finance Act 2016 and the corresponding amendment carried out in Section 2(1)(j)(vi) of the Foreign b ) Issue a writ of mandamus or any other appropriate writ directing that no political parties would accept any donation in for Democratic Reforms and another person the reliefs sought therein were little different. The prayers made in the said writ petition were for a declaration that all national and regional political parties are public authorities under the Right to Information Act 2005 a direction to the Election Commission of to mandatorily disclose complete details about their income expenditure donations and funding as well as full details of the petitions. Paragraphs 11 to 15 of the said interim order read as 2017. We have closely examined the stand taken by the the rival contentions give rise to weighty issues which have a limited time that is available before the process of funding through the electoral Bonds comes to a closure as per the 12. The court therefore has to ensure that any interim arrangement that may be made would not tilt the balance in In the above perspective according to us the just and proper interim direction would be to require all the political submit to the Election Commission of India in sealed cover received against each bond namely the particulars of the bank 14. The above details will be furnished forthwith in respect of of such other bonds that may be received by such a political submitted on or before 30th May 2019. The sealed covers will 15. As per Clause 8 of the Electoral Bond Scheme 2018 months of January April July and October and additional 30 contained in the Note of the finance Ministry dated 28.2.2019 extracted above a total period of 45 days has been fixed for issuing the bonds in the month of March April and May. This for issuing the bonds in the month of March and May will an election year. The total period therefore allowable for the election year would be 50 whereas the Schedule contemplates 10 days of January. A period of 5 days therefore have to be Finance dated 28.2.2019. such deletion will be made by the Ministry of Finance who will be free to decide the days of As can be seen from the last line of paragraph 11 of the aforesaid order this Court thought fit to make an interim the limited time available before the process of funding through Bonds for the months of March April and May 2019 had been announced to be 1.3.2019 to 15.3.2019 1.4.2019 to Thereafter the Association for Democratic Reforms filed the above application I.A. No.183625 of 2019 seeking a stay of the Therefore the writ petitioners have come up with a fresh respondents from any further sale of Electoral Bonds. This in a gap of two years are one and the same they were taken up At the outset learned Attorney General submitted that the counter if no fresh material other than those found in I.A 9. We have heard Shri Prashant Bhushan learned counsel for the applicants writ petitioners Shri K.K. Venugopal learned 10. We should point out at the threshold that there cannot be interim reliefs sought relates to something that is to happen at periodical intervals of time. Under Clause 8(1) of the Electoral Bonds Scheme 2018 the bonds under the Scheme are made January April July and October. Therefore once this Court has every time the window for the purchase under the Scheme is 11. Despite the aforesaid normal rule of procedure and practice we heard the learned counsel on both sides on the present which is not healthy for a democracy. Though technically the Government may be in a position to find out the names of the not in power will not be able to find out. Moreover the amount of funds received by a party in power will normally be more as it will 12. Opposing the prayer for stay it is contended by the learned Attorney General that this Scheme was intended to prevent channels. This according to the learned Attorney General curbed the menace of black money playing a huge part in the elections Shri Rakesh Dwivedi learned Senior Counsel for the Election It is true as seen from the correspondence that RBI has had Government by a notification dated 2.1.2018 in exercise of the in which RBI participated. In their letter dated 4.8.2017 RBI We recommend the following safeguards may be incorporated to b) The EBBs can be purchased for any value in multiples of Rs.1 000 Rs.10 000 or Rs.100 000 The purchase of EBBs would be allowed from a fully KYC stated that the major objective of the Scheme is to provide anonymity and that the same can be achieved if the bonds are a physical scrip. On 27.9.2017 the matter was placed before the serious reservations. These reservations incorporated in the next letter of the RBI dated 27.9.2017 were read out to us by Shri Prashant Bhushan in support of his contention that the Scheme 15. However paragraph 5 of the same letter dated 27.9.2017 of scrip form we can discuss the modalities of issuance of EB in proceeds are eventually credited to a political party’s designated of the information of the initial subscriber and the subsequent the same time ensuring that consideration for transfers between persons and entities before the value of bond is credited to the political party is through bank transfers and not cash or other means. This will be an enduring reform consistent with the 16. Therefore it is not correct to say that the RBI was opposed to in scrip form rather than in demat form. What RBI wanted to achieve was in their own words the twin advantage ofproviding anonymity to the contributor and ensuring that consideration for transfers is through banking channels and not cash or other the concerns expressed by RBI to the form and not to the 17. As a matter of fact most of the recommendations of the RBI have been accepted and incorporated in the Scheme. The following features of the Scheme demonstrate this: only political parties registered under Section 29A of the Representation of the People Act 1951 and secured not less than the bond the bond can be encashed by an eligible political party only through a bank account with the authorized bank and the authorized bank may also call for any additional KYC all payments for the issue of the bonds shall be accepted in Indian rupees through demand draft or cheque or through designated bank account of the eligible political party the face value of the bonds shall be counted as income by way of 18. Despite the fact that the Scheme provides anonymity the cannot purchase the bonds and give it to the political parties Under clause 7 of the Scheme buyers have to apply in the prescribed form either physically or online disclosing the shall not be disclosed to any authority for any purposes it is agency. A non­KYC compliant application or an application not 19. As far as the information to the Election Commission is concerned the interim order passed by this Court on 12.4.2019 takes care of the same. In the reply filed by the Election sealed covers from various political parties of the Companies Act 2013 every a profit and loss account or in the case of a company carrying on any activity not for profit an income and a statement of changes in equity if applicable and any explanatory note annexed to or forming part of any Provided that the financial statement with respect to One Person Company small company and dormant company 24. Under Section 129(1) such financial statements should give a financial statements are to be placed at every Annual General Meeting of the company. Under Section 137 a copy of the financial 25. The financial statements of companies registered under the Companies Act 2013 which are filed with the Registrar of fee. Since the Scheme mandates political parties to file audited financial statements of registered companies to be filed with the bonds happening only through banking channels is always under the Scheme are behind iron curtains incapable of being 26. One of the contentions of the petitioners is that though the first buyer by using black money and hand it over to a political Under Clause 14 of the Scheme the bonds are not tradable be purchased only by a person who is a citizen of India or 28. Therefore in the light of the fact that the Scheme was intervals in January April July and October of every year that they had been so released in the years 2018 2019 and 2020