SC: Will List Electoral Bonds Matter Scheme, Allow for Anonymous Funding of Political Parties

Justice DY Chandrachud Law Insider

Sarthak Umang

Published on: 14 November 2022 at 22:19 IST

The Supreme Court said that it will start listing the matter challenging the electoral bond, which gives liberty to make anonymous donations to the political parties.

Chief Justice of India (CJI) DY Chandrachud gave the decision, when Advocate Anoop Chaudhari drew the Court’s attention to a recent plea contesting a recent regulation relating to an electoral bond scheme.

A fresh notification amends the scheme regarding the time period, providing “an additional period of 15 days” for the sale of electoral bonds “in the year of general elections to the legislative assemblies of States and Union Territories with legislatures.”

Regarding this, Advocate Chaudhari contended that the released notification is totally illegal. The matter was then scheduled for hearing, according to DY Chandrachud.

An electoral bond is an instrument in the form of a promissory note or bearer bond that can be purchased by any individual, company, firm, or association of persons so long as the person or body is a citizen of India or incorporated or established in India. Multiple denominations of electoral bonds are issued specifically for the purpose of making contributions to political parties under their current scheme in the nation.

Electoral Bonds were introduced in 2017 for the purpose of electoral funding and can be purchased from any scheduled bank.

Various pleas are already pending before the Apex Court, contesting the five amendments made to different statutes through the Finance Act of 2017 and the Finance Act of 2016, as the amendments are only giving licence to political parties to cash unlimited and unchecked money.

The Association for Democratic Reforms and Common Cause, two NGOs, claimed in a petition that the money bill method was used to avoid the Rajya Sabha, where the governing BJP government lacks a majority.

Five significant amendments that were implemented as a result of the Finance Acts of 2017 and 2016 have been challenged in the petition.

  • Section 31, the Reserve Bank of India Act, 1934 through Part III, Section 135 of the Finance Act, 2017,
  • Section 29C, the Representation of the People Act, 1951 through Part – IV, Section 137 of the Finance Act, 2017
  • Section 13A, the Income Tax Act, 1961 through Chapter III, Section 11 of the Finance Act, 2017 and in
  • Section 182 of the Companies Act, 2013 through Part-XII, Section 154, the Finance Act, 2017.
  • Section 2 of the Foreign Contribution Regulation Act, 2010 (FCRA) through Finance Act, 2016.

The petitioners claim that the consequence of the amendments is that annual contribution reports of political parties to be furnished to the Election Commission of India need not include names and addresses of those contributing by way of electoral bonds, thereby killing transparency.

The abolition of the donation cap by the 2013 Companies Act amendment and the Foreign Contribution (Regulation) Act 2010 amendments to Section 236 have both been contested as opening up the possibility of foreign funding for Indian political parties.

The Supreme Court dismissed an application seeking a stay on the sale of electoral bonds.

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