Supreme Court Refers Electoral Bonds Case To 5-Judge Constitution Bench

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(Source: The Hindu, 10/17/2023)

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Why in the news?

• Recently, the Chief Justice of India D.Y. Chandrachud referred the petition challenging the validity of the electoral bonds scheme to a five-judge Constitution Bench.
• The electoral bonds scheme has been challenged for facilitating anonymous donations to political parties.

What did the Supreme Court state on the Electoral Bonds case?

• Five-judge bench: The Electoral Bonds validity case was referred to a five-judge Constitutional bench of the Supreme Court following a plea filed by the petitioner to refer the case to a larger bench from the previous three-judge bench.
• Hearing: The Court acknowledged the seriousness of the matter and stated that the first hearing would be on October 31st.
• Delays: The petitioner - NGO Association for Democratic Reforms - had asked the court to hear and decide the issue before the Lok Sabha election in 2024.
  • The Court stated that it would not delay the formation of the bench as the case has been pending before the Supreme Court for the last eight years.
• Issues of focus: The Supreme Court agreed with the petitioner’s plea to focus on two issues concerning the violation of Articles 19, 14, and 2.
  • Anonymity: Legalization of anonymous donations to political parties
  • Right to know: Violation of citizens’ right to information about the funding of political parties, promoting corruption.
  • However, the five-judge Bench may not consider the legal question related to the passage of the electoral bonds scheme as a Money Bill but wait for the verdict of the seven-judge Bench on the designation of a bill as a Money Bill.

Progress in the electoral bonds case

• In 2017, the NGO Association for Democratic Reforms filed a petition on the alleged corruption and subversion of democracy through illicit and foreign funding of political parties and lack of transparency in the accounts of all political parties.
• In 2022, an interim application was filed seeking that the window for sale of electoral bonds not reopened before the assembly polls in West Bengal and Assam.
• According to the petitioners, electoral bond data for 2017-18 and 2018-19, revealed that the ruling party received more than 60% of total electoral bonds issued to date, exposing a significant disparity.
• In 2019, the Supreme Court directed political parties to furnish details of funds received through electoral bonds to the Election Commission in a sealed cover.
• In 2021, the Supreme Court refused to grant an interim stay on the scheme and sought the response of the Union government and the EC.

What are the arguments made by the petitioners?

• Anonymity of donations: The scheme had completely anonymized and sanitized political donations.
  • As a result, the public lacked information about the donations to political parties.
  • Amendments were introduced in the Companies Act to allow companies to obfuscate donations to political parties via the purchase of electoral bonds.
• Cap on donations: Amendments made via the Finance Acts of 2016 and 2017 which were both passed as Money Bills, enabled unlimited political donations via electoral bonds.
  • The amendments removed the limits on campaign donations by companies and exempted donations from disclosure under the Representation of Peoples Act, 1951.
  • This has enabled funding to political parties to be unchecked, anonymous, and unregulated.
• Foreign influence: The Finance Act, 2016 amended the Foreign Contribution Regulation Act, 2010 to allow foreign companies with Indian subsidiaries to fund Indian political parties.
  • This has exposed Indian politics and democracy to international lobbyists and funds.

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FAQs

MCQs

Question: Hawala transactions relate to payments: (UPSC CSE 1996)

(a) received in rupees against overseas currencies and vice versa without going through the official channels

(b) received for sale/transfer of shares without going through the established stock exchanges

(c) received as commission for services rendered to overseas investors/buyers/sellers in assisting them to get over the red tape and/or in getting preferential treatment

(d) made to political parties or to individuals for meeting election expenses

Question: Consider the following statements about Electoral bonds.

1. Electoral bonds are issued by the State Bank of India.
2. It can be issued in multiples of ₹100, ₹1,000, ₹10,000, ₹ 1 lakh, ₹10 lakh, and ₹1 crore.
3. They can be purchased only six months before an election to the Lok Sabha or state Assembly.

How many of the above statements is/are correct?

(a) Only 1 statement

(b) Only 2 statements

(c) All 3 statements

(d) None of the above