Vol. XLII No. 06 February 11, 2018

On Challenge in Supreme Court to Electoral Bonds

ON February 2, 2018 the Supreme Court of India has sought a response from Union of India and the Election Commission in the petition filed by the CPI(M) challenging the constitutionality of the introduction of electoral bonds by the Finance Act, 2017.

The Finance Act, 2017 amended four different statues, namely the Reserve Bank of India Act 1934, The Representation of Peoples Act 1951, The Income Tax Act 1961 and the Companies Act, 2013 to introduce the concept of electoral bonds. The electoral bonds were operationalised by the central government by issuing a notification on January 2, 2018.

The net effect of the above provisions is that any natural or legal person, including a company owned by a foreign corporation can finance a political party in India to an unlimited extent without either the name of the donor entity or the donee political party being disclosed to anyone in the public domain. The electoral bond is a ripe way to ensure that all kinds of quid-pro-quo arrangements are made by the ruling party with all kinds of entities without any public knowledge or scrutiny.

The constitutional challenge to the electoral bonds is on the ground that it flies on the face of the “right to know” in democratic functioning of the polity recognised under Article 19(1)(a) of the constitution, is arbitrary and thus violative of Article 14 of the constitution and has been passed by perpetrating a fraud on the constitution by passing it as a money bill, even though it does not qualify as a money bill under Article 110 of the constitution.