The Supreme Court on Tuesday agreed to urgently hear a petition challenging the funding of political parties through electoral bonds issued by the government.

Advocate Prashant Bhushan drew the attention of the court to an article that said a Calcutta-based company, IFB Agro Industries Ltd, had decided to approve contributions to political parties, through electoral bonds totalling not more than Rs 40 crore for 2022-23. The company said in its disclosure to the stock exchanges that it was writing in continuation of earlier letters in which excise-related issues being faced by the firm were mentioned.

Chief Justice of India N.V. Ramana told Bhushan, appearing for petitioner Association For Democratic Reforms, an NGO: “If it was not for Covid, I would have heard this earlier. Let us see, we will take up.”

Bhushan informed the bench, which includes Justices Krishna Murari and Hima Kohli, that the matter had not been taken up for hearing for over one year despite his repeated requests.

“The matter has not been listed for more than a year. Every two months, fresh tranche of electoral bonds are being issued,” the advocate said.

Bhushan then referred to the article on the Calcutta-based company and a suggestion that the proposed donation through electoral bonds could be intended at preventing excise harassment. “This is distorting democracy. The court must intervene,” Bhushan said.

The petition filed by ADR has sought striking down certain amendments made through Finance Act, 2017 and Finance Act, 2016, both passed as money bills, which according to it had “opened the floodgates to unlimited corporate donations to political parties and anonymous financing by Indian as well as foreign companies which can have serious repercussions on the Indian democracy.”

According to the NGO, the amendments “have removed the existing cap of 7.5 per cent of net profit in the last three years on campaign donations by companies and have legalised anonymous donations”.

The government had notified the Electoral Bond Scheme on January 2, 2018. According to provisions of the scheme, electoral bonds may be purchased by a person, who is a citizen of India or incorporated or established in India. An individual can buy electoral bonds, either singly or jointly with other individuals. Only political parties registered under Section 29A of the Representation of the People Act, 1951 and which secured not less than 1 per cent of votes polled in the last general election to the Lok Sabha House of the People or the Legislative Assembly of a state, are eligible to receive electoral bonds.

The NGO submitted that 17,488 electoral bonds worth Rs 9,187 crore were sold from March 2018 to January 2022 in 19 tranches. The 20th tranche has been opened by the government from April 1 to April 10 this year, ADR said.

According to the NGO, electoral bonds are in the nature of bearer bonds where the identity of the donor is kept anonymous. Political parties are not required to disclose the name of the donors who contribute through these bonds.

The earlier requirement for donor companies to disclose details in their profit and loss account about the political party to which a donation has been made has also been removed. It also opens up the possibility of companies being brought into existence by unscrupulous elements to route funds to parties through opaque instruments such as electoral bonds, the NGO submitted.