Electoral Bonds Day #8: Bench Decides to Hear Three Issues in Separate Cases

Electoral Bonds

Judges: D.Y. Chandrachud CJI, P.S. Narasimha J

On January 31st, 2023 the Supreme Court heard challenges to recent changes in how political parties are allowed to receive external contributions and donations. A Bench comprising Chief Justice of India D.Y. Chandrachud and Justice P.S. Narasimha divided the petitions into three separate challenges, each dealing with a distinct issue.

Background

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 reduced 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 it to the Election Commission. 

In January 2018, the Union notified a new electoral bonds scheme that allows individuals and corporations to anonymously make donations to a political party. 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.

Bench Orders Petitions to be De-Tagged and Heard separately

In Order to simplify the proceedings going forward, the Bench observed that the seven petitions filed in this case deal with three distinct issues:

  1. Challenges to the Union’s electoral bond scheme;
  2. Scrutiny of political parties under the Right to Information Act, 2005 (RTI).
  3. Validity of the 2016 and 2017 Amendments to the Foreign Contribution (Regulation) Act, 2010 (FCRA) which allows political parties to receive foreign funding.

The Bench issued an Order directing the seven petitions to be separated and heard in three different cases based on the issue they deal with. The challenge to the Electoral Bond scheme will be heard first and is listed to be heard during the third week of March. The plea to allow a political party to be scrutinised under the RTI Act and the challenge to the FCRA Amendments will be heard in April. 

The Order also directed the Union government to file a counter affidavit in the electoral bonds challenge by the end of February.