Electoral Bonds | 2021 Interim Order Summary

Constitutionality of the Electoral Bond Scheme

Judges: S.A. Bobde CJI, A.S. Bopanna J, V. Ramasubramanian J


The Association for Democratic Reforms had filed a petition to challenge the constitutional validity of the electoral bonds scheme. These bonds are ‘bearer instruments’, like cash currency, that can be purchased from banks. However, they are valid only for 15 days. and can be encashed only by recognised political parties.

Senior Advocate Prashant Bhushan, appearing for the petitioner, had asked for interim relief. They wanted the Court to stay the April issue of these bonds. Attorney General KK Venugopal had argued against this.

Order Summary

Chief Justice Bobde’s bench, with Justices Bopanna and Ramasubramaniam, refused to grant a stay.

They first referred to an earlier interim order. Interim relief should be ‘just and proper’ to both parties, until the challenge itself was fully heard. It asked political parties to submit information about donations received through bonds to the Election Commission of India in a sealed cover. That order had also refused a stay. The Bench noted that the same relief cannot be sought multiple times, simply because the act being challenged occurs periodically.

The Bench also denied the argument that the scheme led to anonymous corporate and foreign donations. The purchase of electoral bonds would be reflected in any company’s annual financial statement. They were mandated to publish this under S 128(1) of the Companies Act, 2013. ‘All that is required is a little more effort’, they said, to ‘do some match the following’. Foreign companies and individuals were barred from purchasing the bonds under Clause 3 of the Electoral Bonds Scheme, 2018.

The bonds could not be traded for cash either, the Bench pointed out. Clause 14 of the Scheme barred this. Further, the first purchaser would have no incentive. They would pay ‘white money’ to the bank, but get ‘black money’ in cash.

The Bench also looked at the RBI’s letter. Bhushan had argued that they had objected to the Scheme in this letter. The Bench said that the RBI had only made some recommendations. In fact, they supported the bonds since they reduced cash in the system. They recommended that bonds should be issued in an electronic form rather than a physical form. Further, they asked that only the RBI was permitted to issue these bonds. Such a system would ensure anonymity. The Bench pointed out that most of their recommendations, besides the above two, had been incorporated.

So, the Bench refused to grant a stay.