1. Challenge to amendments in the Finance Act, RBI Act, Representation of the People Act, Income Tax Act, Companies Act, and FCRA regarding political funding and Electoral Bonds. (Para 1 , 2 , 3 )
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2019 Supreme(SC) 1513
SUPREME COURT OF INDIA
Ranjan Gogoi, CJI., Deepak Gupta, Sanjiv Khanna, JJ.
Association For Democratic Reforms & Anr. - Appellants
Versus
Union Of India & Ors. - Respondents
Writ Petition (Civil) No. 333 of 2015
Decided On : 12-04-2019
Advocates Appeared:
Prashant Bhushan, Pranav Sachdeva, Ms. Neha Rathi, Jatin Bhardwaj, Shadan Farasat, Ms. Hamsini Shankar, Ms. Jahnavi Sindhu, Ms. Shruti Narayan, Advocates, for the Appellants; K.K. Venugopal, AG, Tushar Mehta, SG, Ms. Shraddha Deshmukh, Arvind Kumar Sharma, Mukesh Kumar Maroria, Anil Katiyar, B.V. Balaram Das, Amit Sharma, Dipesh Sinha, Ms. Ayiala Imti, Prateek Kumar, Neelesh Singh Rao, P.V. Dinesh, Ms. Sindhu T.P., Mukund P. Unny, Bineesh K., Suren Uppal, Aviral Kashyap, Ms. Tavleen Kaur Mohi, Ms. Akanksha Goyal, Sanjeev Menon, Arvind Kumar Gupta, B.K. Pal, Amit Anand Tiwari, Advocates, for the Respondents/Applicants
Prashant Bhushan, Pranav Sachdeva, Ms. Neha Rathi, Jatin Bhardwaj, Shadan Farasat, Ms. Hamsini Shankar, Ms. Jahnavi Sindhu, Ms. Shruti Narayan, Advocates, for the Appellants; K.K. Venugopal, AG, Tushar Mehta, SG, Ms. Shraddha Deshmukh, Arvind Kumar Sharma, Mukesh Kumar Maroria, Anil Katiyar, B.V. Balaram Das, Amit Sharma, Dipesh Sinha, Ms. Ayiala Imti, Prateek Kumar, Neelesh Singh Rao, P.V. Dinesh, Ms. Sindhu T.P., Mukund P. Unny, Bineesh K., Suren Uppal, Aviral Kashyap, Ms. Tavleen Kaur Mohi, Ms. Akanksha Goyal, Sanjeev Menon, Arvind Kumar Gupta, B.K. Pal, Amit Anand Tiwari, Advocates, for the Respondents/Applicants
The Court addressed the transparency of political funding via Electoral Bonds. As an interim measure to safeguard the electoral process's sanctity, it directed political parties to submit detailed donor particulars in sealed covers to the Election Commission of India pending final adjudication.
Headnote:
Finance Act, 2017 - Challenge to Amendments - Section 135 of Finance Act, 2017 - Section 31 of Reserve Bank Of India Act, 1934 - Section 137 of Finance Act, 2017 - Section 29C of Representation of The People Act, 1951 - Section 11 of Finance Act 2017 - Section 13A of Income Tax Act, 1961 - Section 154 of Finance Act 2017 - Section 182 of Companies Act 2013 - Section 236 of Finance Act, 2016 - Section 2(1)(j)(vi) of Foreign Contribution (Regulation) Act, 2010
Fact of the Case:
The amendments to various sections of different acts, including the Finance Act, 2017, and consequential amendments in other acts, have been challenged for affecting transparency in political funding and opening avenues for foreign contributions to Indian political parties.
Finding of the Court:
The Court found weighty issues with a tremendous bearing on the sanctity of the electoral process, requiring an in-depth hearing. It directed political parties receiving donations through Electoral Bonds to submit detailed particulars of the donors and the bonds to the Election Commission of India in sealed cover.
Issues: The challenge to amendments affecting transparency in political funding and opening avenues for foreign contributions, and the need for detailed disclosure of donors and bonds received through Electoral Bonds.
Ratio Decidendi: The Court emphasized the need for an in-depth hearing on weighty issues affecting the electoral process and directed detailed disclosure of donors and bonds received through Electoral Bonds to ensure adequate safeguards.
Final Decision: The Court directed political parties receiving donations through Electoral Bonds to submit detailed particulars of the donors and the bonds to the Election Commission of India in sealed cover, with a deadline for submission.
Legal Category Hierarchy
- constitutional law
- administrative law
- corporate law
- financial law
Table of Contents
2. Petitioners allege lack of transparency and foreign funding risks; Government contends the measures combat black money and require implementation before judicial review. (Para 4 , 5 , 6 , 7 , 8 , 10 )
3. Issues regarding political funding transparency and electoral sanctity are weighty and require in-depth hearing, necessitating an interim balance between competing claims. (Para 11 , 12 )
4. Interim judicial directions may be issued to preserve transparency and safeguard the electoral process when weighty constitutional issues require prolonged adjudication. (Para 11 , 12 )
5. Political parties directed to submit donor details in sealed covers to the Election Commission; Ministry of Finance to reduce bond issuance period by five days. (Para 13 , 14 , 15 )
6. What is the primary legal concern regarding the anonymity of Electoral Bonds?
The anonymity of donors through Electoral Bonds may compromise transparency in political funding, hindering the ability to verify if donations violate prohibitions against contributions from government companies or foreign sources. (Para 5 , 7 )
7. How does the removal of the donation cap in the Companies Act affect political funding?
Removing the cap on corporate donations may facilitate the use of shell companies for political funding, as companies without significant business profits could be established solely for making donations. (Para 7 )
8. What is the legal implication of amending the Foreign Contribution (Regulation) Act regarding foreign companies?
Amendments allowing donations from foreign companies with majority stakes in Indian companies may lead to unchecked foreign funding, potentially influencing national policies. (Para 8 )
9. What interim measure did the court adopt to balance transparency with the ongoing electoral process?
The court required political parties to submit detailed donor particulars of Electoral Bonds in sealed covers to the Election Commission to ensure safeguards while the main issues are adjudicated. (Para 13 , 14 )
ORDER
1. The provisions of Section 135 of the Finance Act, 2017 and the consequential amendments carried out in Section 31 of the Reserve Bank Of India Act, 1934; Section 137 of the Finance Act, 2017 and the corresponding amendment carried out in section 29C of the Representation of The People Act, 1951; Section 11 of the Finance Act 2017 and the corresponding amendment carried out in section 13A of the Income Tax Act, 1961; Section 154 of the Finance Act 2017 and the amendment carried out in Section 182 of the Companies Act 2013 and Section 236 o the Finance Act, 2016 and the corresponding amendment carried out in Section 2(1)(j)(vi) of the Foreign Contribution (Regulation) Act, 2010 have been challenged in this group of writ petitions.
2. The provisions of the statutes prior to amendment and subsequent thereto will require specific notice. Hence, for convenience the same are reproduced hereinbelow.
| Section 29C, Representation of the People Act 1951 | |
| Prior to Amendment by the Finance Act, 2017 | Upon Amendment by Section 137 of the Finance Act, 2017 |
| 29C. Declaration of donation received by the political parties.- (1) The treasurer of a political party or any other person authorized by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely; (a) the contribution in excess of twenty thousand rupees received by such political party from any person in that financial year; (b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year. (2) The report under sub-section (1) shall be in such form as may be prescribed. (3) The report for a financial year under subsection(1) shall be submitted by the treasurer of a political party or any other person authorized by the political party in this behalf before the due date for furnishing a return of income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961), to the Election Commission. (4) Where the treasurer of any political party or any other person authorized by the political party in this behalf fails to submit a report under subsection (3) then, notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax relief under that Act | Section 29C. Declaration of donation received by the political parties.- (1) The treasurer of a political party or any other person authorized by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely: (a) the contribution in excess of twenty thousand rupees received by such political party from any person in that financial year; (b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year. Provided that nothing contained in this subsection shall apply to the contributions received by way of an electoral bond. Explanation - For the purposes of this subsection, "electoral bond" means a bond referred to in the Explanation to sub-section (3) of section 31 of the Reserve Bank of India Act, 1934. (2) The report under sub-section (1) shall be in such form as may be prescribed. (3) The report for a financial year under subsection (1) shall be submitted by the treasurer of a political party or any other person authorized by the political party in this behalf before the due date for furnishing a return of income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961), to the Election Commission. (4) Where the treasurer of any political party or any other person authorized by the political party in this behalf fails to submit a report under subsection (3) then, notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax rel |
