W.P.(C) 880/2017 tagged with W.P.(C) 330/2015 and SLP (C) No. 18190/2014
Introduction of Electoral Bonds Challenged

Common Cause and the Association for Democratic Reforms (ADR) have challenged the introduction of the Electoral Bonds, as part of the Finance Act 2017, which have, arguably, made electoral funding of political parties more opaque and legitimised corruption to an unprecedented scale. A PIL filed in the Supreme Court alleges that the bonds make the electoral funding unlimited for big corporates and open the doors for foreign lobbyists.    

The PIL seeks directions from the Supreme Court to strike down the amendments made through Finance Act, 2017 and Finance Act, 2016. It is alleged that such wide-ranging amendments in The Representation of Peoples Act, 1951, The Reserve Bank of India Act, 1934, The Income Tax Act, 1961 and The Companies Act, were brought in illegally as a “Money Bill”, in order to bypass the Rajya Sabha. Hence, it has been urged that suitable directions be given so that the practice of by-passing the Rajya Sabha for important Bills by classifying them as money bills be stopped. This matter is likely to be taken up on October 3, 2017.

The Finance Act, 2017 has introduced a system of electoral bonds to be issued by any scheduled bank for the purpose of electoral funding. The earlier restriction that political donations would not exceed 7.5 per cent of the donating company’s average three-year net profit has been done away with. This may result in even loss-making companies making donations of any amount to political parties out of their capital or reserves. Also, a company is no longer required to disclose the name of the parties to whom such contributions are made.

The Finance Act, 2016 has allowed foreign companies with subsidiaries in India to fund political parties in India, effectively, exposing the Indian politics and democracy to corporate lobbyists who may want to further their agenda. According to the petitioners, these Amendments pose a serious danger to the autonomy of the country and are bound to adversely affect electoral transparency, encourage corrupt practices in politics and make the unholy nexus between politics and corporate houses more opaque and treacherous and is bound to be misused by dubious interest groups and corporate lobbyists. 

The matter was heard by the Court on 3 October 2017 and was tagged with W.P. (C) No. 333/2015 and SLP (C) No. 18190/2014.

On March 12, 2019, the bench had decided to hear the matter when the Counsel for petitioners told the bench that it opens flood gates for violating norms fixed by the Election Commission and related government notifications. 

On March 26, 2019, the bench comprising Chief Justice Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna, told that the matter would be heard by an appropriate bench on April 2. 

On March 27, the Election Commission filed an affidavit before the Supreme Court, which indicated that the introduction of electoral bonds will have a serious impact on the transparency of political funding.

On April 2, 2019, the Court will hear the petitions challenging the validity of the Electoral Bonds Scheme, 2018, notified by the Central Government on January 2, 2018.

On April 3, 2019, a fresh affidavit has been filed by Centre before the Supreme Court, which said that electoral bonds were a positive step in the right direction to ensure accountability and transparency.

On April 5, 2019, the Supreme Court refused to grant an interim stay on the operation of electoral bonds scheme.

On April 10, 2019, the AG said:

"Electoral bonds are meant to eradicate black money in political funding...as we have no State funding of elections. Political parties get funds from supporters, affluent persons, etc. The funders all want their political party to come to power. But if their party does not, then there could be repurcurssions....so secrecy is required."

Contrary to centre's stand, the Election Commission of India has an opposite view:

"We are not against electoral bonds. We are only opposed to the anonymity associated with it."

On April 11, 2019, the AG said:

“...Voters have a right to know what? Voters dont need to know where money of political parties comes from. Also, there is the Right to Privacy..."

 Justice Sanjiv Khanna observed:

“KYC which you have mentioned is only about identity of the purchaser. It is not a certificate of genuineness of the money – whether it is black or white.”

The Court heard brief rejoinder submissions by the petitioners before reserving its order.

On April 12, 2019, the SC declined to pass a stay order against the issuance of electoral bonds, saying it would examine in detail the changes made in law and at this point, interim orders might effect the balance in the favour of or against specific political parties. The bench consisting Chief Justice Ranjan Gogoi, accompanied by Justice Deepak Gupta and Justice Sanjiv Khanna observed the transparency and anonymity in donations through electoral bond, raises weighty issues which are vital to fairness of electoral process but the question could not be determined on the basis of a short hearing. 

The bench has directed all the political parties to submit to the Election Commission, details of the bank account/s receiving donations and total donations they would receive till May 15, 2019 through Electoral Bonds; including the identity of donors, payment details, etc. by May 30, 2019, in sealed covers. 

The bench has also directed the Finance Ministry to modify its recent notification and reduce the window of purchase of Electoral Bonds in April-May, during which elections take place. The said notification specifies the sale of Electoral Bonds for 10 days each in March, April, May and July and an additional period of 30 days during the Lok Sabha elections.

On April 15, 2019, the Registry was directed by the bench consisting the Chief Justice, Justice Deepak Gupta and Justice Sanjiv Khann to supply copies of the counter affidavit(s) filed by the respondents in Writ Petition (C) No. 333/2015 to Dr. Madhuker Sharma, the Intervenor, who must appear in person, within two weeks.

On December 4, 2019, after mentioning by the Petitioner's Counsel, it was directed to list the matter in the month of January, 2020 before the appropriate Bench. Notice has been issued in  Writ Petition (C) No. 408/2019 and tag along with Writ Petition (C) No. 333/2015 and other connected matters. 

On January 20, 2019, the bench has granted two weeks’ time to the respondent/s to file counter affidavit(s) and directed to list the matter thereafter. 

Download :

W.P.(C) 880 of 2017
Petition challenging the introduction of Electoral Bonds WP(C) 880/2017
Order_Oct 3, 2017
Order_Apr 15, 2019
Order_Dec 4, 2019
Order_Jan 20, 2020