Validity of electoral bonds scheme | Supreme Court to examine on January 31 whether petitions need to be referred to Constitution Bench

The petitions, which have been in limbo for about eight years, allege that the scheme has opened the doors for anonymous donations to political parties days before polls are due.

A view of the Supreme Court of India, in New Delhi. File | Photo Credit: Sushil Kumar Verma

The Supreme Court is on January 31 scheduled to examine whether petitions challenging the validity of electoral bonds scheme need to be referred to a Constitution Bench.

The petitions, which have been in limbo for about eight years, allege that the scheme has opened the doors for anonymous donations to political parties days before polls are due.

Advocate Prashant Bhushan, appearing for petitioner NGO Association for Democratic Reforms, has argued that amendments made via Finance Acts of 2016 and 2017, both passed as Money Bills, have through the electoral bonds scheme, “opened the floodgates to unlimited political donations”.

“The amendments have removed the caps on campaign donations by companies and have legalised anonymous donations. The Finance Act of 2017 has introduced the use of electoral bonds which are exempt from disclosure under the Representation of Peoples Act, 1951, opening doors to unchecked, unknown funding to political parties.

The Finance Act, 2016 has also amended the Foreign Contribution Regulation Act (FCRA), 2010, to allow foreign companies with subsidiaries in India to fund political parties in India, effectively, exposing Indian politics and democracy to international lobbyists,” the petition said.

Response received from the Department of Economic Affairs (DEA) on January 27 to a Right to Information application filed by Commodore Lokesh Batra (retired) shows that electoral bonds were sold from March 2018 to December 2022 in 24 phases at a total cost of ₹10.23 crore to the taxpayer. The expenses include ₹8.33 crore in bank commission and ₹1.90 crore in printing charges. While Rs. 6.74 lakh electoral bonds were printed, bonds worth Rs. 11699.84 crore were sold, the RTI response showed.

When the case came up for hearing last on December 15 last year, a Bench led by Justice B. R. Gavai noted that the case has remained pending since 2015. Mr. Bhushan said the petitioners have been repeatedly asking the court to urgently take up the issue.

The legality of the electoral bonds scheme and the long pendency of the case in the apex court have come back into focus even as nine States are heading to polls in 2023. Also in focus in the apex court is a challenge to a recent government notification allowing the sale of electoral bonds for an additional 15 days during Assembly election years.

This petition has sought the quashing of the November 7 notification issued by the Finance Ministry amending the electoral bonds scheme. “An additional period of 15 days shall be specified by the Central government in the year of general elections to the Legislative Assembly of States and Union Territories with the legislature,” the gazette notification had said. Earlier, a 30-day extra period for sale was allowed only in Lok Sabha election year.

In October, during a hearing in the case, the court had asked the government whether the electoral bonds’ system revealed the source of money pumped in to fund political parties even as the Centre had repeatedly maintained that the scheme was “absolutely transparent”.

The petitioners, also represented by senior advocate Kapil Sibal, had argued that the scheme “affected the very idea of free and fair elections which is central to a democracy”.