A panel comprising Chief Justice of India (CJI) DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra is poised to deliver its judgment tomorrow in the case concerning the legality of the electoral bonds scheme, which allows for undisclosed contributions to political parties (Association for Democratic Reforms and Anr vs Union of India Cabinet Secretary and ors). The Supreme Court, following a three-day hearing on November 2, 2023, where a five-judge Constitution bench was convened, including CJI DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra, had reserved its decision. In doing so, the Court directed the Election Commission of India (ECI) to furnish data on electoral bonds sold under the scheme by September 30, 2023.
Under the electoral bonds scheme, donors have the option to contribute funds to political parties anonymously by purchasing bearer bonds from the State Bank of India (SBI). These bonds, available in various denominations, are issued to provide financial backing to political parties as part of their ongoing activities. The Finance Act of 2017 introduced electoral bonds, amending several key acts including the RBI Act, the Income Tax Act, and the Representation of the People Act to facilitate their implementation.
Challenges to the constitutional validity of at least five amendments enacted through the Finance Act, 2017 were brought before the Supreme Court via numerous petitions. These challenges contended that the amendments enabled unchecked and unregulated financing of political parties, and questioned the Finance Act’s classification as a money measure. The Central government, in its counter-affidavit, maintained that the electoral bonds program promotes transparency and accountability.
Despite an application for a stay on the scheme being dismissed by the Court in March 2021, the matter has continued to be contested. The impending verdict by the Supreme Court holds significant implications for the future of political financing in India.
