"We will hear it on April 11 to see if case should be referred to Constitution Bench": Supreme Court on challenge to Electoral Bonds Scheme

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Synopsis

The petitions allege that the scheme has opened the doors for donations to political parties days before polls are due, thereby perpetuating unaccounted for money.

 

The Supreme Court today said that it would consider on April 11, 2023 if a reference needs to be made to a Constitution Bench to hear the petitions challenging the 2018 Electoral Bonds Scheme.

This order was passed by a CJI Chandrachud led bench after Advocate Shadan Farasat submitted before the bench that the issue required hearing by a Constitution Bench as it impacted democratic polity and funding of political parties.

When the matter was taken up for hearing Senior Advocate Dushyant Dave submitted that it was a very serious matter which needed to be heard.

"We are in the midst of a Constitution Bench, we can hear it in May, how much time will you take?" Court questioned while giving a date in May. The bench also said that in May it would consider the question of reference, but on Dave's request, a date in April has been given.

The Supreme Court in January had said that said that the batch of petitions raised various issues which are separate including the challenge to the scheme, as to whether political parties will come within the ambit of the Right to Information Act (RTI) and amendments made to the Foreign Contribution (Regulation) Act (FCRA). 

The outcome of this plea will have implications on political parties as parties raise funds through issuing electoral bonds.

The government notified the Electoral Bond Scheme in 2018. According to a press release, an Electoral Bond is a bearer instrument in the nature of a Promissory Note and an interest free banking instrument. A citizen of India or a body incorporated in India will be eligible to purchase the bond. The press release further states that electoral bond would be issued/purchased for any value, in multiples of `1,000, `10,000, `1,00,000, `10,00,000 and `1,00,00,000 from the specified branches of the State Bank of India (SBI). 

Electoral bonds were introduced through Finance Act 2017, which amended three other statutes - the RBI Act, the Income Tax Act and the Representation of People Act for enabling introduction of such bonds. 

The usual practice is that bonds under the scheme are floated for purchase by any person for a period of ten days each in the months of January, April, July, and October by the Centre.

Last year in October, the Centre took the position in Supreme Court that the methodology of electoral bonds scheme is a "completely transparent" one and that it does not perpetuate black money or unaccounted money.

Cause Title: Association for Democratic Reforms vs. Union of India and ors | Jaya Thakur vs. UOI & other batch petitions

Statutes: Finance Act, Representation of Peoples Act 1951, Constitution of India, Right to Information Act 2005, Foreign Contribution (Regulation) Act (FCRA) 2010