Case Comment: Association For Democratic Reforms V. Union Of India, Writ Petition (C) No. 880 Of 2017

Archana B, BBA LLB, School of Law, Christ (Deemed to be) University

INTRODUCTION

Former Union Finance Minister Arun Jaitley, when presenting the 2017-18 Union Budget, stated that after 70 years of Independence, “the country has not been able to evolve a transparent method of funding political parties which is vital to the system of free and fair elections.” He proposed the Electoral Bonds Scheme, which was designed to “cleanse the system” of political funding.1 These bonds are issued by the Reserve Bank of India and can be purchased by individuals and organizations to donate to political parties.

BACKGROUND

The issue dates back to 2016, when The Finance Act2 came into force to amend Section 2(1)(j)(vi) of the FCRA3 to allow foreign companies holding majority shares in India to contribute to political funding which was previously banned. Further, this Finance Act amended Section 13A of the Income tax Act4, to exempt parties from maintaining a record of such fundings, Section 31 of the RBI act5, permitting Schedule banks to issue electoral bonds, Section 29C of the Representation of the People’s Act6, to publish contributions above 25,000 in “contribution reports”, Section 182 of the Companies Act7, to remove the ceiling of 7.5 lakhs in political contributions. Moreover, Section 181 the Companies Act demands for special resolution for ‘Charitable contributions’, but Section 182 only requires a Board resolution. These amendments were challenged in the Hon’ble Supreme Court by Association of Democratic Reforms and others.