Electoral Bonds Day #7: Mr. Bhushan Presents Additional Issues For Bench to Consider

Constitutionality of the Electoral Bond Scheme

On November 14th, 2022, the Bench comprising Justices B.R. Gavai and B.V. Nagarathna listed the challenge to the Unions electoral bond scheme for hearing on December 6th, 2022, after briefly hearing arguments from the petitioners and the Union government.

Senior Advocates Prashant Bhushan and Kapil Sibal explained the issues that arise in the challenge to the Union’s 2018 electoral bonds scheme. Solicitor General Tushar Mehta briefly attempted to explain how the scheme was transparent, but did not get an opportunity to elaborate. 

Background: The Electoral Bond Scheme

The Finance Act, 2016 was enacted in May of that year as a ‘Money Bill’. Money Bills require the approval of only the Lok Sabha unlike other Bills which must be approved by both the Lok Sabha and the Rajya Sabha. The Act amended the Foreign Contribution (Regulation) Act, 2010 (FCRA) and made it easier for political parties to receive foreign funds with minimal oversight. In 2017, another Finance Act was enacted which amended the Representation of People Act, 1951 and allowed political parties to receive funding through electoral bonds without reporting the contributions to the Election Commission. 

In January 2018, the Union notified a new electoral bond scheme which allows individuals and corporations to anonymously make political donations. This scheme was challenged by two NGOs: the Association for Democratic Reforms (ADR) and Common Cause. They argued that the 2016 and 2017 Finance Acts were illegally enacted as Money Bills and that anonymous foreign contributions threaten the right to free and fair elections. The Election Commission seconded the latter point through an affidavit arguing that the scheme would reduce transparency and increase foreign influence on political parties. 

The case was last heard in March 2021. The Court is yet to begin hearing arguments on the merits of the case. 

Bench Finds a Middle Ground For Date of Next Hearing

Sr. Adv. Prashant Bhushan, representing Common Cause, argued that electoral bonds was just one of the issues the Bench must consider in this case. He presented two others:

  1. Does the Right to Information Act, 2005 apply to political parties?
  2. Can the FCRA be amended to allow foreign contributions to political parties with minimum oversight?

Sr. Adv. Kapil Sibal said the electoral bonds scheme threatened the right to free and fair elections guaranteed by Article 324 of the Constitution of India. As the Bench was about to break for lunch, he did not go into the reasons why.

SG Tushar Mehta attempted to explain that the scheme was actually very transparent. He began explaining how the details of the donor will be placed in the demand draft for the contribution. However, Mr. Bhushan cut him off stating that the electoral bond donation was not made through a demand draft. The conversation with the Bench resumed and Mr. Mehta did not get an opportunity to elaborate further. 

Mr. Bhushan attempted to convince the Bench to list the case sometime next week as there are upcoming State elections in Gujarat and Himachal Pradesh in December. On the other hand, Mr. Mehta and the new Attorney General R. Venkataramani said there was no urgency to hear the case and asked the Bench to list the next hearing in January. The Bench eventually decided to hear the case on December 6th, 2022.