Electoral Bonds Scheme Case (Crucial Things to Know)

• In the case of Association for Democratic Reforms and Anr vs. Union of India Cabinet Secretary and ors, the SC reserved its verdict in the batch of pleas challenging the legal validity of the electoral bonds scheme that allows anonymous donations to political parties.
• It was a five-judge bench consisting of (CJI) DY Chandrachud and Justices Sanjiv Khanna, BR Gavai, JB Pardiwala, and Manoj Misra.
• The Supreme Court bench asked the Election Commission of India (ECI) to provide up-to-date data on electoral bonds sold under the scheme till September 30, 2023, before reserving its verdict on a batch of petitions challenging the scheme’s validity.
• The bench noted that an interim direction was issued to the ECI in April 2019, and the ECI submitted data in a sealed cover at the time. However, the court order was not restricted to that date, and the ECI could have sought clarification.
• The bench suggested that an alternative system could be devised for political donations to remove the “flaws” that plague the current electoral bonds system.

BACKGROUND OF THE CASE 

• The electoral bond scheme allows people to donate money to political parties anonymously. To do this, they can buy bearer bonds from the State Bank of India (SBI).
• An electoral bond is an instrument like a promissory note or bearer bond that can be purchased by any individual, company, firm, or association of persons, provided the person or body is a citizen of India or incorporated or established in India.
• The bonds, which are in multiple denominations, are issued specifically to contribute funds to political parties in its existing scheme.
• Electoral bonds were introduced through the Finance Act of 2017, which amended three other statutes – the RBI Act, the Income Tax Act, and the Representation of People Act – to introduce such bonds.
• The 2017 Finance Act introduced a system by which electoral bonds could be issued by any scheduled bank for the purpose of electoral funding.
• The Finance Act was passed as a money bill, which meant that it did not require the assent of the Rajya Sabha.
• Various petitions were filed before the top court challenging at least five amendments made to different statutes through the Finance Act 2017 on the ground that they have opened doors to unlimited, unchecked funding of political parties.
• The petitions have also raised the ground that the Finance Act could not have been passed as a money bill.
• The Central government, in its counter-affidavit, has maintained that the electoral bonds scheme is transparent.
• In March 2021, the Court dismissed an application seeking a stay on the scheme.