Supreme Court Refers Pleas Challenging Validity Of Electoral Bonds To Constitution Bench

Electoral Bond Scheme: Petitions challenging the validity of electoral bond scheme for political funding of parties will be heard by a five-judge bench.

A view of the Supreme Court. The court will hear the electoral bonds case from October 30

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The Supreme Court on Monday referred petitions challenging the validity of electoral bond scheme for political funding of parties to a five-judge Constitution bench. The top court will start hearing the matter on October 30, PTI reported.

The decision was announced by Chief Justice of India DY Chandrachud. "In view of the importance of issue raised, and with regard to Article 145(4) of the Constitution of India, the matter be placed before a bench of at least five judges. The matter will be retained on October 30, 2023," the CJI said, Bar and Bench reported.

In the previous hearing, senior advocate Prashant Bhushan said the matter needed adjudication before the electoral bond scheme opens for the 2024 general elections.

The petitions against the electoral bond scheme focus primarily on two issues -- the legalisation of anonymous donations to political parties and the violation of citizens' right to information about the funding of parties.

In a bid to make funding to political parties transparent and free from cash donations, the electoral bond scheme was announced in the 2017 Union Budget. An electoral bond is an interest-free bearer instrument that is used to donate money to political parties. The bonds are issued in multiple denominations and can be bought from SBI branches.

The electoral bonds system was introduced in 2017 through a Finance bill and it was implemented in 2018. The legislation was passed as a money bill and thus it did not require the assent of the Rajya Sabha.

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The introduction of the scheme through the Finance Act 2017 saw amendments being made to the RBI Act, the Income Tax Act and the Representation of People Act. The petitioners have said that the Finance Act could not have been passed as a money bill.

Moreover, before the new scheme was announced, there was a limit on how much a company could donate to a political party. However, the cap was removed after the Centre amended the Companies Act. Petitioners have argued that this opened the doors to unlimited funding by corporates.

On the other hand, the Centre maintained that the electoral bonds scheme was transparent. In March 2021, the Supreme Court had dismissed an application seeking a stay on the scheme.