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 Finance Act, 2017 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 and Finance Act 2016 on the ground that they have opened doors to unlimited, unchecked funding of political parties.
The petition by two NGOs – Association for Democratic Reforms and Common Cause said that the money bill route was adopted in order to bypass the Rajya Sabha, where the ruling BJP government does not have a majority.
The petition has assailed five major amendments which have been brought about through Finance Act, 2017 and Finance Act, 2016.
Section 31, the Reserve Bank of India Act, 1934 through Part III, Section 135 of the Finance Act, 2017,
Section 29C, the Representation of the People Act, 1951 through Part – IV, Section 137 of the Finance Act, 2017
Section 13A, the Income Tax Act, 1961 through Chapter III, Section 11 of the Finance Act, 2017 and in
Section 182 of the Companies Act, 2013 through Part-XII, Section 154, the Finance Act, 2017.
Section 2 of the Foreign Contribution Regulation Act, 2010 (FCRA) through Finance Act, 2016.
The petitioners have also submitted that the consequence of the amendments was that annual contribution reports of political parties to be furnished to the Election Commission of India need not mention names and addresses of those contributing by way of electoral bonds, thereby killing transparency in political funding.
The removal of the cap on donations by the amendment to the Companies Act, 2013 and the amendments made to Section 236 of the Foreign Contribution (Regulation) Act, 2010 have also been challenged as opening the avenues of foreign contribution to Indian political parties.
The top court had in March 2021 dismissed an application seeking a stay on the sale of Electoral Bonds.
Source: Barandbench
