In a significant development, the Supreme Court of India announced on Monday that it would refer the challenge to the contentious Electoral Bonds scheme to a Constitution Bench of the Court.
Chief Justice of India DY Chandrachud made this announcement, highlighting the matter’s significance and invoking Article 145(4) of the Constitution of India. He stated, “In view of the importance of the issue raised, and with regard to Article 145(4) of the Constitution of India, the matter shall be placed before a bench of at least five judges. The matter will be retained for October 30, 2023.”
During the last hearing on October 10, the Court had indicated that the matter would be scheduled for final hearing on October 31 this year. While debating whether to refer the matter to a Constitution Bench, the urgency of the case seemed to deter the decision. Nevertheless, the Court eventually opted to refer it to a Constitution Bench, primarily due to the legal issue concerning the passage of laws as money bills.
Advocate Shadan Farasat, representing the petitioner, requested that the final hearing date of October 31 be retained, which the Court accepted.
The Electoral Bond is a financial instrument resembling a promissory note or bearer bond that can be acquired by individuals, companies, firms, or associations of persons, provided they are Indian citizens or incorporated/established in India. These bonds, available in various denominations, are specifically designed for contributing funds to political parties under the existing scheme.
The Electoral Bonds were introduced through the Finance Act of 2017, which, in turn, amended three other statutes – the RBI Act, the Income Tax Act, and the Representation of People Act – to facilitate the introduction of these bonds. The 2017 Finance Act established a system through which electoral bonds could be issued by any scheduled bank for the purpose of electoral funding. Notably, the Finance Act was passed as a money bill, bypassing the need for the Rajya Sabha’s approval.
Several petitions are currently pending before the Supreme Court, challenging at least five amendments introduced to different statutes through the Finance Act of 2017. The crux of these challenges revolves around concerns that the amendments have opened the door to unrestricted and unmonitored funding of political parties. Moreover, these petitions argue that the Finance Act should not have been passed as a money bill.
The Central government has consistently maintained that the electoral bonds scheme is transparent. In March 2021, the Supreme Court dismissed an application seeking a stay on the scheme. Earlier this month, the Court ordered that the challenge to the Electoral Bonds scheme would be scheduled for final hearing on October 31.
