Courtesy: Newsclick

Does challenge to electoral bonds deserve a Constitution bench? Supreme Court to decide next month

The matter was to be heard today, but the Union government sought time to file its counter affidavit in the matter, which was instituted in 2017.


THE Supreme Court will consider next month whether the challenge to the Union government’s 2018 scheme of introducing electoral bonds should be referred to a five-judge Constitution bench of the court. A division bench comprising Chief Justice of India (CJI) Dr. D.Y. Chandrachud and Justice P.S. Narasimha directed the listing of the matter on April 13 for the same purpose.

The matter was to be heard today, but the Union government sought time to file its counter affidavit. The bench was considering listing the matter on May 2 for final disposal. However, advocate Shadan Farasat, on behalf of one of the petitioners, the Communist Party of India (Marxist), submitted that the matter should be heard by a bench of five judges, owing to its impact on the democratic polity and funding of political parties.

Senior advocate Dushyant Dave, for another petitioner, the non-political, non-partisan and non-governmental organisation Association for Democratic Reforms, submitted in agreement. Dave, however, took strong objection to the Union government asking for further time to file its counter. He said that the government ought to have filed it long back.

Dave also drew the attention of the court to the upcoming elections to the Karnataka legislative assembly, and urged the court to advance the hearing.

An electoral bond is like a promissory note, similar to a banknote, which is payable to the bearer on demand and free of interest. It can be purchased by any Indian citizen or a body corporate in India. An electoral bond may be issued in multiples of ₹ 1,000, ₹ 10,000, ₹ one lakh and ₹ one crore, available at specified branches of the State Bank of India. A donor can purchase an electoral bond with a Know Your Customer (KYC)-compliant account and can donate the bonds anonymously to a political party of their choice, and the bond can be cashed within 15 days through the party’s verified account .

This scheme was introduced through the Finance Act, 2016 and the Finance Act, 2017.

On March 26, 2021, a Supreme Court bench, headed by the then CJI S.A. Bobde had refused to grant a stay on the electoral bond scheme. The bench had observed: “[T]he Scheme was introduced on January 2, 2018; that the bonds are released at periodical intervals in January, April, July and October of every year; that they had been so released in the years 2018, 2019 and 2020 without any impediment; and that certain safeguards have already been provided by this Court in its interim order dated April 12, 2019, we do not see any justification for the grant of stay at this stage. Hence, both the applications for stay are dismissed.

In 2019, the Election Commission of India (ECI), in its affidavit in the Supreme Court, had said that electoral bonds and the removal of a cap on corporate funding would have a serious impact on transparency in the funding of political parties.

Any donation received by a political party through an electoral bond has been taken out of the ambit of reporting under the Contribution Report as prescribed under Section 29C of the Representation of the People Act, 1951,” the ECI had clarified.

The changes made in the Foreign Contribution (Regulation) Act, 2010 through the Finance Act, 2016 would allow unchecked foreign contribution/funding of political parties in India, which could lead to Indian policies being influenced by foreign companies, the ECI had added.

Appearing for the ECI, senior advocate Rakesh Dwivedi had in 2019 informed the Supreme Court that the Bharatiya Janata Party received ₹ 997 crore and ₹ 990 crore through donations via electoral bonds in 2016–17 and 2017–18 respectively, five times more than what the Indian National Congress received in the same period.