Supreme Court To Consider If Electoral Bonds Case Should Be Referred To Constitution Bench

The Supreme Court on Tuesday listed the batch of petitions challenging the Electoral Bonds scheme on April 11 2023 to decide if the matter should be referred to Constitution Bench. The bench comprising CJI DY Chandrachud and Justice PS Narasimha heard the matter today. 

In today's proceedings, a letter was circulated on behalf of the Union of India seeking time to file a counter affidavit.

At the outset, the bench noted that the matter could be listed on 2 May 2023 for final disposal.

However, Advocate Shadan Farasat, appearing for a petitioner, requested the bench that the matter should be heard by a Constitution Bench owing to its impact on the democratic polity and funding of political parties. He added that the matter required an "authoritative pronouncement by the court". Senior Advocate Dushyant Dave also supported this request. He also requested the bench to advance the hearing to April, considering that the Karnataka assembly elections are due in May.

CJI DY Chandrachud said–

"We will hear on April 11, 2023 to see if it should be referred to the constitution bench."

Earlier, the court had bifurcated the batch of petitions into three sets and decided to hear them separately. 

The bench noted that the petitions could be divided in three distinct sets raising the following issues–

1. The challenge to the Electoral Bonds Scheme;

2. Whether political parties should be bought within the purview of the Right to Information Act, 2005; and

3. The challenge to the amendment to the Foreign Contribution Regulation Act, 2010 through the Finance Act of 2016 and 2018.

While the first batch of petitions pertaining to the challenge to electoral bond scheme was decided be heard in March 2023, the second batch, dealing with petitions to bring the political parties within the purview of RTI Act, and the third batch concerning the FCRA Amendments was listed for April 2023.

Background

By virtue of the 2017 amendment made to Section 29C of the Representation of Peoples Act 1951(RPA), a donor may buy an electoral bond at specified banks and branches using electronic modes of payment and after having completed the KYC (know your customer) requirements. However, political parties are not required to disclose the source of these bonds to the Election Commission of India (ECI). The bonds can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore. The name of the donor will not be there in the bond. The bond will be valid for 15 days from the date of issue, within which it has to be encashed by the payee-political party. The face value of the bonds shall be counted as income by way of voluntary contributions received by an eligible political party, for the purpose of exemption from Income-tax under Section 13A of the Income Tax Act, 1961.

The petitions have been filed by political party Communist Party of India (Marxist), and NGOs Common Cause and Association for Democratic Reforms(ADR),which challenge the scheme as "an obscure funding system which is unchecked by any authority". The petitioners voiced the apprehension that the amendments to Companies Act 2013 will lead to "private corporate interests taking precedence over the needs and rights of the people of the State in policy considerations".

Case Title: Association for Democratic Reforms And Anr. v. UoI WP(C) No. 333/2015 & Connected Matters