Bar and Bench
Debayan Roy

The Court passed the direction after the petitioner's counsel said the matter is of Constitutional importance and could impact democratic polity in the country.

The Supreme Court on Tuesday directed that the case challenging the controversial electoral bonds scheme be listed on April 11 to examine whether it needs to be heard by a Constitution bench [Association for Democratic Reforms and anr vs Union of India Cabinet Secretary and ors].

A bench of Chief Justice of India DY Chandrachud and Justice PS Narasimha passed the direction after the petitioner's counsel said the matter is of Constitutional importance and could impact democratic polity in the country.

"This is an issue which impacts the democratic polity and funding of political parties.. This case should be heard by a constitution bench since this deserves an authoritative pronouncement by the court," advocate Shadan Farasat said.

"Then we will hear it on April 11, 2023 to see if it should be referred to the Constitution bench," the apex court said.

An electoral bond is an instrument in the nature of a promissory note or bearer bond which can be purchased by any individual, company, firm or association of persons provided the person or body is a citizen of India or incorporated or established in India.

The bonds, which are in multiple denominations, are issued specifically for the purpose of contribution of funds to political parties in its existing scheme in the country.

Electoral bonds were introduced through Finance Act 2017, which in turn amended three other statutes - the RBI Act, the Income Tax Act and the Representation of People Act - for enabling introduction of such bonds.

The 2017 Finance Act introduced a system of electoral bonds to be issued by any scheduled bank for the purpose of electoral funding.

The Finance Act was passed as a money bill, which meant that it did not require the assent of Rajya Sabha.

Various petitions are pending before the top court challenging at least five amendments made to different statutes through Finance Act 2017 on the ground that they have opened doors to unlimited, unchecked funding of political parties.

The Supreme Court is also seized of a plea challenging a recent notification extending the period of sale of electoral bonds by 15 days during years when elections are scheduled to be held for State assemblies and Union Territories with legislature.

The Central government in its affidavit has maintained that the electoral bonds scheme is most transparent.

The top court had in March 2021 dismissed an application seeking a stay on the scheme.

During the hearing on Tuesday, Senior Advocate Dushyant Dave submitted that it is a very important case and should be heard at the earliest.

The Central government sought time to file a composite reply.

"Are we going to wait for the Karnataka elections now so that another tranche of electoral bonds are issued," Dave asked.

The bench then said that it will list the matter on May 2 for final disposal.

Advocate Farasat then said that the matter needs to be considered by a Constitution bench.

The bench then proceeded to list the case for April 11.

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