The Supreme Court will take a call on April 11 whether to refer the petitions challenging the validity of the contentious electoral bond scheme to a Constitution bench after the petitioners demanded that the matter regarding funding of political parties goes to the root of democratic functioning in the country.
On Tuesday, a bench of Chief Justice of India (CJI) Dhananjaya Y Chandrachud and justice PS Narasimha heard the petitions but could not proceed with the hearing as the Centre requested for time to file a comprehensive response to the various petitions challenging the scheme.
The lead petition in the case was filed in 2017 by NGO Association for Democratic Reforms (ADR) followed by a spate of petitions by Communist Party of India (Marxist), Congress leader Jaya Thakur and other individuals.
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Advocate Shadan Farasat appearing for CPI (Marxist) urged the Court to consider referring the matter to a Constitution bench of minimum five judges.
He framed seven questions of seminal constitutional importance arising in these matters and said, “This issue impacts the democratic polity and funding of political parties that requires an authoritative pronouncement by a Constitution bench.”
He was supported by senior advocate Dushyant Dave appearing for ADR.
Dave said, “The issue raised by us goes to the core of how a democracy functions as majority of funds are going to only one political party.”
The note submitted by Farasat raised two basic issues for Court’s consideration – whether a citizen has a right to know under Article 19(1)(a) about funding of political parties. If so, whether the electoral bonds scheme is justified in restricting this right as the Government can restrain the right under Article 19(1)(a) on the grounds permitted by the Constitution. These include sovereignty and integrity of India, security of the State, friendly relations with foreign States, public order, decency, morality, contempt, defamation or incitement to an offence.
Since funding of political parties is crucial to functioning of democracy, the note argued that the matter raised questions of constitutional significance as “democracy” and “free and fair elections” form part of the basic structure of our Constitution.
The bench said, “We will post it on April 11. On that day, we can decide whether to refer the matter to a Constitution bench.”
The Court allowed Centre to file its response before the next date of hearing.
The electoral bond scheme was implemented in 2018 as a source of political funding where the credentials of donors were kept anonymous.
These bonds were issued by the State Bank of India (SBI) and donations made under this scheme by corporate and even foreign entities enjoyed 100% tax exemption.
Although Centre had filed its response to the ADR petition, it had sought time to consider the prayers in the accompanying petitions as well.
The ADR opposed the scheme since its inception claiming that such an anonymous route of funding amounted to “legitimising bribery” as corporates could fund the party in power in a state or Centre as a matter of quid pro quo. These donations enjoy 100% tax exemption and even foreign companies can donate through Indian subsidiaries, the petition stated.
As the matter remained pending without any stay operating on the sale of electoral bonds, the ADR moved applications to oppose fresh opening of window for sale of these bonds ahead of assembly elections.
In April 2019, the top court had directed all political parties to submit details of receipts of the electoral bonds to the Election Commission (EC) in a sealed cover. This was done as an interim measure till the petitions on the validity of the bonds are finally decided.
The EC has supported the scheme and had been filing sealed cover reports before the Court in the past indicating the receipt of funds under electoral bonds by various political parties, including the registered and unregistered political parties at national and state level.
