Source: The Hindu

Why in News?

• The Supreme Court (SC) will hear the batch of petitions challenging the Electoral Bonds Scheme on October 31, 2023 in the matter of Association for Democratic Reforms and Anr. v. UoI.

What is the Background of the Electoral Bond Case?

• A donor can buy an electoral bond at specified banks and branches using electronic modes of payment and after having completed the KYC (Know Your Customer) requirements post the amendment made to Section 29C of the Representation of Peoples Act, 1951(RPA).
• Electoral bonds are available in various denominations, allowing purchasers to buy them for any amount in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, or Rs 1 crore. Notably, the bonds do not contain the name of the donor, ensuring the anonymity of the contributor.
• The validity of the Bond remains 15 days within which it has to be encashed by the payee.
• The face value of the bonds will be considered as voluntary contributions received by a qualified political party, and this will be taken into account for the purpose of claiming an exemption from Income-tax under Section 13A of the Income Tax Act, 1961.
• Thereafter came the Finance Act, 2017 which brought forward the provision of anonymous electoral bonds.
  • The Finance Act, 2017 introduced amendments in certain legislations including the Income Tax Act, 1961, RPA.
• The present petition/s are filed by political party Communist Party of India (Marxist), and NGOs Common Cause and Association for Democratic Reforms (ADR) challenging the scheme as “an obscure funding system which is unchecked by any authority”.
• The Court agreed to hear the petition on grounds:
  • Whether anonymous electoral bonds are in violation of citizens' rights?
  • Whether such a scheme is in violation of Article 14, Article 19 and Article 21?
• The matter will be taken by the SC for hearing on 31st October 2023.

What is an Electoral Bond?

• Electoral bonds are a financial instrument used for making political donations in India.
• They were introduced in 2017 as part of the Government's efforts to bring transparency and accountability to political funding.
• The primary objective of electoral bonds is to eliminate the use of cash for political donations and ensure that the funding of political parties is more transparent and legitimate.
• They have following characteristics:
  • Issuer: Electoral bonds are issued by authorized banks in India. State Bank of India (SBI) is the only authorized bank to issue these bonds.
  • Denominations: Electoral bonds are available in multiple denominations, typically ranging from as low as ₹1,000 to as high as ₹1 crore.
  • Purchaser: Any individual or entity, whether an Indian citizen or a corporate entity, can purchase electoral bonds from the designated bank.
  • Anonymity: One of the key features of electoral bonds is that they are bearer instruments. This means that the donor's identity is not mentioned on the bond, ensuring anonymity.
  • Usage: Electoral bonds can only be encashed by political parties that are registered under the Representation of the People Act, 1951.
  • Transparency: The government argued that electoral bonds would enhance transparency as the donor's information is known to the bank, even if it's not disclosed to the public. Regenerate
• Specimen of an Electoral Bond: 

What are the Constitutional Provisions Involved?

• Article 14, 19, 21 take an important position under the Constitution of India.
  • Also, the Supreme Court in the case of Maneka Gandhi v. Union of India (1978) held that a law depriving a person of ‘personal liberty’ does not only stand the test of Article 21 but also that of Article 14 and Article 19.
  • Article 14: Equality before law —The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
  • Article 19: Protection of certain rights regarding freedom of speech, etc.—

(1) All citizens shall have the right—

(a) to freedom of speech and expression;

(b) to assemble peaceably and without arms;

(c) to form associations or unions or co-operative societies;

(d) to move freely throughout the territory of India;

(e) to reside and settle in any part of the territory of India;

(g) to practise any profession, or to carry on any occupation, trade or business.

• • The above-mentioned rights are available subject to reasonable restrictions mentioned under Article 19(2) - (6).
• Article 21: Protection of life and personal liberty. —No person shall be deprived of his life or personal liberty except according to procedure established by law.