Electoral bonds not an amnesty scheme, SC right in striking it down: Sr advocate Aryama Sundaram

01/05/2024

Senior advocate Aryama Sundaram is one of the leading lawyers in the Supreme Court (SC). He has appeared in a wide spectrum of cases, involving constitutional, commercial, corporate and taxation laws.

In an exclusive interview with Moneycontrol, Sundaram speaks about why the SC was right in striking down the electoral bonds scheme. According to him, the scheme for political funding could not be used like an amnesty scheme where people could donate to political parties and reap the benefits of their donations and remain anonymous.

Sundaram also speaks about the controversy surrounding wealth redistribution and why taking a person’s wealth and giving it to another is not the right way to go about it.

Speaking about the dispute surrounding the 28 percent Goods and Services Tax (GST) on the full face value of the bets in online gaming, Sundaram says he is opposed to it because it is being levied on a service that platform is not rendering in the first place.

He also speaks about the ‘level-playing field’ debate raised by Delhi Chief Minister Arvind Kejriwal and why the collegium system came about and how the National Judicial Appointments Commission (NJAC) law was a lost opportunity. Edited excerpts:

What do you think of the Supreme Court’s electoral bonds judgment? Do you think the scheme deserved to be struck down?

I think the judgment was right, in the sense that the electoral bonds lacked transparency. If the aim (of the scheme) was to ensure that contributions to political parties were to be made openly, and not through cash, that is a great purpose. The hushed-up manner in which it was being done and the lack of transparency was not in keeping with the objective of the scheme. This is exactly why the SC struck it down, and rightly so.

Having said so, the court illegitimised all bonds which had not been encashed, but seemed to have legitimised the bonds which had already been encashed. That seems to have created an uneven playing field between parties which had encashed the bonds and parties which had not. Both these parties received these contributions through electoral bonds. When the bonds were held to be unlawful, the court should not have invalidated certain bonds and validated others.

What happens to the right to privacy of the donor? They had donated money to these parties after the government promised anonymity, but their names were revealed.

The electoral bonds scheme was not an amnesty scheme. A person cannot say he/she will contribute the way he/she wants, and gets a quid pro quo, and it’s anonymous.

Anonymity was the illegality of the scheme that the court struck down. To keep the anonymity here would have been absurd. The scheme went against the basic objective of making transparent contributions. I don’t believe keeping the donors anonymous would have been right at all. While right to privacy is permitted, it is not absolute.

The SC itself has said that the right to privacy is not absolute, and privacy has its own constraints.

There is a lot of discussion around wealth redistribution now, after what Rahul Gandhi said in his rallies. What do you think is the ideal way for a government to do it?

If I could start from square one, economists through the years have tried to see what is the best form of economics. There was Laissez-faire, there was capitalism, there was socialism, and there was extreme socialism, which we call communism.

To alleviate the poor and keep everybody more or less equal is what you call socialistic and communistic. But now, so called communist countries have themselves gone away from that system because it didn’t work, because it did not help in making wealth for the country.

The making of wealth is what really improves the Gross Domestic Product (GDP) of a country. By making wealth, the GDP of a nation improves and the country’s ability to pass on the benefits to people who do not have it improves. I do believe that it is the government’s duty to provide for those who do not have what they should.

But the government can better provide aid if your whole GDP increases. Now, you take India, for example. You know, where we have developed in the last 20-25 years? Even our middle class has become so much more. Yes, of course, we have poverty, and unfortunately, many, many countries have poverty, it’s a very sad reality of life.

But I think changing wealth redistribution through confiscation of one person’s wealth and giving it to another is not the answer. Because at the very beginning of civilisation, no one had anything, some made more, some made less — that is the very basis of human beings.

Now that will continue happening. You take from somebody who has made it and give it to somebody who hasn’t. What you will find over a period of time is that a man from who you’ve taken it from will again make and the man who you’ve given it to may want again.

So, there is no hard and fast rule. Of course, as a concept, the distribution of wealth equally among people is a great. It is something which I think is a model concept. It’s a great utopian concept. But in reality, I feel the country will better be served by creating an atmosphere of wealth-building. This wealth can, thereafter, be distributed among people.

Arvind Kejriwal has contended in courts that arresting him at this point in time is hampering his party’s chances of winning more seats in the election. But the question of law here is can investigations that have been happening for some time be halted because the accused wants to contest election?

When a democracy goes to polls, the ruling party always has an advantage of being able to create an unequal playing field by creating an environment difficult for the opposition. The opposition has an advantage because of the natural suspicion of the population to the ruling party, and anti-incumbency.

Has the level field been affected (by his arrest)? The answer is yes, without doubt, yes. But are any of the actions being taken illegal or unlawful? The answer is no.

The point is you leave yourself open to be prosecuted, and the prosecution goes strictly against you.

The prosecution could have gone on leniently. The prosecution need not have led to an arrest. It could have led to something else. But, equally in law, it could lead to an arrest. Now, you should know that in a political situation, every party will use position or any situation to its advantage.

But please note my words, apply the law strictly. If you have not broken the law, or if you have not left yourself open to an investigation or if you have not left yourself open to incarceration, they cannot do it (arrest). But if you’ve left yourself open to it, they can do it. And they will do it when you’re the opposition.

What is your opinion on the 28 percent GST on full face value of the bets in online gaming ? Is this going against India’s ease-of-doing business narrative?

The gambler who wants to wager will wager anyway. What he will start finding is ways to wager without his money being out in the market, without his money being declared.

The 28 percent GST itself, I cannot fault it. It was done correctly. What do I mean by correct? In online gaming, the gaming platform is providing a platform for you to gamble. You are not gambling with that platform. You are gambling with each other. Now, if I’m gambling with you, and you are gambling with me, there is no GST on our transaction. What happens is I have to pay income tax on the money I earned from you. As earnings, there is no GST, because there is no service rendered. There is no good sold between you and me. It’s a pure form of wager and there is no service rendered or goods sold.

So, if let us say the platform is charging 5 percent of the wager (for providing the platform), the service it is rendering is that 5 percent of the wagering and you can definitely tax and levy GST on it. Because that is a service being provided, it becomes liable to be taxed. But making the GST payable on all amounts being wagered is not correct.

What is your opinion on the controversy surrounding the collegium system of appointment of judges?

We have had a system earlier in the past (before collegium) when the government made appointments on the recommendation of the judges. We find most of those appointed during this time were great judges. However, the government, at that time in the 70s, started superseding judges (who were senior), and started bringing in their favourites . This led to the suspicion of executive interference in the judiciary. This led to a batch of cases that resulted in the formation of the collegium system.

Is the collegium system fool-proof? Certainly not. I can’t think of any air-tight system. But I can say one thing. The error, I think, made by the government in the National Judicial Appointments Commission (NJAC) Act was that they gave the power of approval (of judges) to the executive. This power should have been given to the Chief Justice of India.

If that had been done, I feel it could have been a good system. Since the power of approval is given to the executive for appointment of judges, it totally destroyed the separation of powers, which is why it was struck down.