On Monday (16 October), the Supreme Court of India opted to refer the contentious matter of the electoral bonds scheme to a constitution bench, comprising a minimum of five judges.

Chief Justice of India, DY Chandrachud, made this announcement earlier today, emphasising the significance of the issue at hand and invoking Article 145(4) of the Indian Constitution.

The case is slated for further consideration on 30 October 2023.

During the previous hearing on 10 October, the court had set the matter for a conclusive hearing on 31 October of this year.

In that session, the question of whether to refer the case to a constitution bench was deliberated, initially leaning against it due to the pressing nature of the case.

However, it was ultimately deemed essential, particularly given the legal complexities tied to the passage of laws framed as money bills.

Advocate Shadan Farasat represented the petitioner and requested that the final hearing date of 31 October be maintained, a request which the court acceded to.

The electoral bond is akin to a promissory note or bearer bond, available for purchase by individuals, companies, firms, or associations within India, whether citizens or entities incorporated or established in the country.

These bonds, issued in various denominations, are designed specifically for the purpose of contributing funds to political parties under the existing scheme.

The introduction of electoral bonds was facilitated through the Finance Act of 2017, which necessitated amendments to three critical statutes: the RBI Act, the Income Tax Act, and the Representation of People Act. This legislation established a system wherein electoral bonds could be issued by any scheduled bank, aimed at financing electoral activities.

Crucially, the Finance Act of 2017 was passed as a money bill, bypassing the need for approval from the Rajya Sabha.

However, several petitions challenging at least five amendments instituted via this act are currently pending before the Supreme Court.

The central argument revolves around these amendments potentially enabling unbridled and unrestricted funding for political parties.

Additionally, these petitions contest the categorisation of the Finance Act as a money bill.

The central government, in its counter-affidavit, has maintained that the electoral bonds scheme is transparent.

In March 2021, the Supreme Court dismissed an application seeking a stay on the scheme.

Earlier this month, the court directed that the challenge to the electoral bonds scheme would be listed for a conclusive hearing on 31 October.