INCURRING OF ELECTION EXPENDITURE IN EXCSS OF PRESCRIBE LIMIT

CHAPTER -1

INTRODUCTION

India is a country inhabited by people of different religions, castes and languages,

attributing to its richness and vivacity, as also its diversity. In this scenario of diversities,

what is of utmost importance is the basic sense of unit)' and integrity that binds together

the people all over the country. Unity in diversity is a unique feature of India, owing a great

deal to the constitutional system adopted way back in 1950, to guide and mould the destiny

of crores of people in the years ahead. The Constitution of India, which declares the country

a sovereign socialist secular democratic republic, provided the much needed strong frame,

binding together the diverse colours of religion, caste and languages into a single composite

rainbow.

Now, that India has recently celebrated its golden jubilee of independence, which it

achieved on the historic day of 15 August 1947 from British rule, the roots of democracy

have been firmly established in the country and it is looked upon by the whole comity of

nations the world around, as one of the most stable democracies on the globe.The apex

court of the land has rightly described it as an 'oasis of democracy’

Election Laws, Practice and Procedure if we look around and compare the record of its

democratic functioning with that of the other nations who also got freedom from foreign

rule more or less around the same time.

Democracy is one of the inalienable basic features of the Constitution of India and forms

part of its basic structure.1

Democracy is government by the people. It is a continual participative operation, not a

cataclysmic, periodic exercise. The little man, in his multitude, marking his vote at the poll

does a social audit of his Parliament plus political choice of his proxy. Although the full

1 Kesavanand Bharati vs State of Kerala AIR 1973 SC 1461.

1

flower of participative government rarely blossoms, the minimum credential of popular

government is appeal to the people after every term for a renewal of confidence. So we

have adult franchise and general elections as constitutional compulsions.2

The concept of democracy as visualised by the Constitution presupposes the representation

of the people in Parliament and state legislatures by the method of election.3

CHAPTER-2

HISTORY OF ELECTIONS IN ANCIENT INDIA

Elections in India are not a new phenomenon or a new concept born in modem times.

Taking decisions to run their affairs, be they at the level of individual families or at the

community level, collectively and with the consensus of all concerned, has been the

pervading philosophy of Indian way of life from times immemorial. Our ancient scriptures

dating back to Vedic age are filled with references to republics and democracies prevailing

in various parts of ancient India. The ancient historians have recorded graphic details of the

people choosing their own heads. ganapaties, of the great Vaishali ganarajya, thousands of

years back, to lead them in times of peace and war. They were assisted by other wise men

and nobles in their decision-making, like the present council of ministers.

Tracing the history of elections and evolution of representative governments in India, the

Election Commission of India observed in its report after the first general elections in

independent India in 1951-52:

...republican forms of government existed in many parts of ancient India There are

numerous references to such Governments in the Buddhist literature. Even in the 4th

Century BC, there was a republican federation known as the Kshudrah-Malla Sangba, which

offered strong resistance to Alexander the Great. The Greeks have left descriptions of many

2 Mohinder Singh Gill and Anor v Chief Election Commissioner and Ors AIR 1978 SC 851.3 NP Ponnusivami v Returning Officer, Namakkal AIR 1952 SC 64

2

other republican states in India, some of which were described by them as pure

democracies while others were said to be 'aristocratic republics'.

Although, full details of the working of the republican forms of government in ancient India

are not available, it is known that in some of these republics every adult male member had

the right to vote and to be present in the general assembly, which decided all public affairs.

With the increase of population and the growing complexities of the social structure, it

became increasingly difficult for all citizens to assemble at one place for the purpose of

deliberation on state affairs, and gradually this resulted in the evolution of some kind of

representative government. We find numerous references to election, referendum, voting,

ballot papers, etc., in the history of the Hindu polity'.

The nature of franchise for election to the popular assemblies is not fully known. While in

the aristocratic republics, the basis appears to have been a family, in other states, all adult

male persons, who were not otherwise disqualified, appear to have had the right to vote. By

naturalisation, even foreigners could become citizens, and acquire the right of vote.

A vote was known as 'chhanda' which literally means a 'wish'. This expressive term was used

to convey the idea that by voting a member was expressing his free will and choice. We also

find description of the methods of collection of votes of citizens who could not be present

at the meeting of the assembly. For purposes of voting in the assembly, there used to be

multi-coloured voting tickets, called 'shalakas (pins). These were distributed to members

when a division was called and were collected by a special officer of the assembly, known as

"shalaka grahak' (collector of pins). This officer was appointed by the assembly as a whole. It

was his duty to take the vote which could be either secret or open.

Apart from the evolution of the democratic form of government in sovereign states in

ancient India as described 3bove, the genius of India also evolved, as a natural growth, the

system of autonomous and almost self-sufficient village communities, under every system

3

of government. These communities, which lasted through the ages, were run on truly

democratic lines without, of course, the outward trappings of the vote and the ballot box. In

later days, they went by the name of village panchayats and were a vital force in the social

life of the countryside.

Even after the republican states were absorbed within empires, the system of

regulating the local corporate life through popular assemblies survived for a very long time.

Almost every imperial conqueror left the conquered states and communities to carry on

their administrative and social system in their own way as before. During the Muslim

period, the affairs of the trade corporations and the villages continued to be carried on by

popular assemblies. A fundamental change came with the British administration when

revenue, judicial and legal affairs were centralised and conducted away from the villages.

This factor, coupled with the consequent decay of the agricultural and industrial economy

of the countryside, resulted in the deterioration of the corporate life of the rural

communities and gradually the organisations based on the popular will faded out.

In the context of history, therefore, the establishment by the Constitution of the democratic

and parliamentary form of government in the country on the basis of adult franchise was

like the rejoining of a historic thread that had been snapped by alien rule. Franchise on a

liberal scale had been common in various parts of ancient India, and by providing for

universal adult suffrage, the country boldly achieved the consummation of its electoral

aspirations on a national basis.

4

INDIA BECOMING SOVEREIGN REPUBLIC ON COMMENCEMENT OF THE

CONSTITUTION.

On the appointed day, that is, 26 January 1950, referred to in the Constitution as the

commencement of the Constitution (art 394), India became an independent Sovereign

Democratic Republic, ceasing to be a dominion within the British empire, and governed by

its own Constitution 'given by the people of India unto themselves'. On that momentous

day, the Constituent Assembly transformed itself, under art 379, into the provisional

Parliament of India and functioned in that capacity till its last sitting on 5 March 1952,

where after the regular Parliament4 came to be constituted in April 1952, on the basis of the

first general elections held under the Constitution between October 1951 and March 1952.

Dr Rajendra Prasad also entered upon his office as interim President of India on 26 January

1950 and functioned in that capacity till he entered upon his office as the first regularly

elected President of India on 13 May 1952.

India, that is Bharat, is a union of states (art (1)]. Originally, the states forming the Indian

union were divided into three categories-the erstwhile nine British Provinces of Assam,

Bihar, Bombay, Madhya Pradesh, Madras, Orissa, Punjab, Uttar Pradesh and West Bengal

were categorised as Part A states, eight bigger princely states or union of such states which

federated into the Indian union, viz, Hyderabad, Jammu and Kashmir, Madhya Bharat,

Mysore. Patiala and East Punjab States Union, Rajasthan, Saurashtra and Travancore-Cochin

were classified as Part B States, and some smaller princely states and the erstwhile Chief

Commissioners' provinces were constituted into 10 Part C states, viz, Ajmer, Bhopal,

Bilaspur, Coorg, Delhi, Himachal Pradesh, Kutch, Manipur, Tripura and Yindhya Pradesh.

Subsequently, the distinction amongst the Part A, Part B and Part C states was done away

with on their reorganisation in 1956 under the Constitution (Seventh Amendment) Act

1956. On such reorganisation, the political map of India got divided into 14 states and six

union territories (centrally administered areas). Thereafter, there have been several

4 The first House of the People was duly constituted on 2 April 1952 and the Council of States was constituted on 3 April 1952.

5

reorganisations of these states and union territories :trom time to time. At present, there

are 25 states and seven union territories in India. From November 2000, the number of

states shall go up :trom 25 to 28.

All these constituent states, except the State of Jammu and Kashmir, are governed by the

common Constitution, that is, the Constitution of India. The State of Jammu and Kashmir

has, however, a separate Constitution, called the Constitution of Jammu and Kashmir.

DEMOCRACY AND PARLIAMENTARY SYSTEM IN INDIA

As the very preamble to the Constitution of India proclaims, India is a sovereign socialist

secular democratic republic. The Constitution has adopted the parliamentary , form of

government, as in vogue in Britain, as the system of governance of India, with an elected

President as the head of the state. Indian parliament is a bicameral legislature, with the

Council of States and the House of the People as its two chambers. India is a union of states,

and each state has its own legislature. The Constitution has reserved in the Seventh

Schedule some subjects for legislation by Parliament and some for the state legislatures,

with some others falling under the concurrent jurisdiction of Parliament and state

legislatures. Elections to the offices of

President and Vice-President of India and to Parliament and state legislatures form part of

the Union List (Entry 72, List I, Seventh Schedule). But subject to laws made by Parliament,

state legislatures are also competent to legislate on matters relating to elections to their

own Houses (Entry 37, List II, Seventh Schedule).

Giving due importance to the conduct of elections in a :tree and fair manner in a democratic

set-up, the founding fathers of the Constitution devoted a separate part, Part XV containing

arts 324 to 329, in the Constitution to elections. Article 324 provides for the setting up of an

independent Election Commission of India for conduct of elections to the offices of

President and Vice-President of India, and of elections to Parliament and state legislatures.

6

Article 325 mandates the preparation of one general electoral roll for each territorial

constituency containing the names of all eligible electors, without discrimination on

grounds of religion, race, caste or sex or any of them. Article 326 has adopted 'universal

adult suftrage' as the basic tenet of direct elections to lower Houses of Parliament and state

legislatures, namely, the House of the People and state legislative assemblies. Articles 327

and 328 empower Parliament and state legislatures to make laws relating to elections.

Article 329 bars the interference of courts in electoral matters when the electoral process is

on.

Originally, the right to be registered as a voter under art 326 was conferred on adult Indian

citizens of the age of 21 years or above. But the Constitution is a living and organic law,

subject to amendments from time to time, to keep pace with the changing needs of the

society and to meet its expectations and aspirations. By the Constitution (Sixty-first

Amendment) Act 1988, the minimum voting age was lowered from 21 years to 18 years

effective from 28 March 1989. The Constitution has been amended from time to time, 81

times so far, in several other respects also, but without changing its basic structure. The last

such amendment was made in June 2000, by the Constitution (Eighty-first Amendment) Act

2000.

CHAPTER-3

WORKING OF ELECTORAL MECHANISM

Thus, the electoral mechanism in India is superintended and controlled by two

constitutional authorities, namely, the Central Election Commission of India for elections to

the offices of the President and the Vice-President of India and to Parliament and state

legislatures, and the State Election Commissions appointed in each state for elections to the

panchayati raj institutions as institutions of local self government.

All matters relating to various aspects of elections to the offices of the President and the

Vice-President of India, and of elections to Parliament and state legislatures have been dealt

7

with at length in the following chapters. In order not to confuse and tax the readers with

too many details relating to elections to panchayati raj institutions, which are governed by

separate state laws of each state concerned, the present book is mainly confined to the

"discussions relating to elections to the offices of the President and die Vice-President of

India and elections to Parliament and state legislatures only. However, salient features of

the panchayati raj institutions and elections to those bodies have been briefly discussed in

the concluding chapter of this book. Basically, elections to these institutions of local self-

government are also held in the same manner as elections to the House of the People and

state legislative assemblies, though under different sets of loca11aws.

Who can stand for Election ?

Any Indian citizen who is registered as a voter and is over 25 years of age is allowed to contest

elections to the Lok Sabha or State Legislative Assemblies. For the Rajya Sabha the age limit is

30 years.

Every candidate has to make a deposit of Rs. 10,000/- for Lok Sabha election and 5,000/- for

Rajya Sabha or Vidhan Sabha elections, except for candidates from the Scheduled Castes and

Scheduled Tribes who pay half of these amounts. The deposit is returned if the candidate

receives more than one-sixth of the total number of valid votes polled in the constituency.

Nominations must be supported at least by one registered elector of the constituency, in the

case of a candidate sponsored by a registered Party and by ten registered electors from the

constituency in the case of other candidates. Returning Officers, appointed by the Election

Commission, are put in charge to receive nominations of candidates in each constituency, and

oversee the formalities of the election.

In a number of seats in the Lok Sabha and the Vidhan Sabha, the candidates can only be from

either one of the scheduled castes or scheduled tribes. The number of these reserved seats is

meant to be approximately in proportion to the number of people from scheduled castes or

scheduled tribes in each state. There are currently 79 seats reserved for the scheduled castes

and 41 reserved for the scheduled tribes in the Lok Sabha.

8

CHAPTER -4

ELECTION EXPENSES

Account of Election Expenses:

Every candidate, either by himself or by his election agent, shall keep a separate and correct

account of all expenditure in connection with the election incurred or authorised by him or

by his election agent, between the date on which he has been nominated and date of the

declaration of the result thereof both dates inclusive. The account shall contain such

particulars as may be prescribed. (Section 77, Act 1951).

With the amendment to Section 77 of the Representation of People Act, 1951 only the

expenses on account of travel of leaders of the political parties, covered under explanation

2 below Section 77, will be exempted from being included in the account of election

expenses of the candidate. All other expenses - incurred/authorized by the political parties,

other associations, body of persons/ individuals-are required to be included in the account

for the candidate.

Rules 86-90 (Part VIII) of the Conduct of Election Rules, 1961 deal with election expenses.

The total expenses in connection with an election in anyone of the Parliamentary

constituencies shall not exceed the prescribed maximum.

9

Maximum election expenses(Maximum election expenses under conduct of

election rules,1961)(Rule 90)

The total of the expenditure of which account is to be kept under section 77 and which is

incurred or authorised in connection with an election in a state or union territory

mentioned in column 2 of the below shall not exceed—

a) In any one Parliamentary constituency of that state or Union territory, the amount

specified in the corresponding column 3 of said table and

b) In any one assembly constituency if any, of that state or Union territory, the amount

specified in the corresponding column 4 of said table -

TABLE5

S No Name of state or Union Territory Maximum limit of election expenses any

one

Parliamentary

constituency

Assembly

constituency

1

State

2 3

Rs

4

Rs

1 Andhra Pradesh 2500000 1000000

2 Arunachal Pradesh 1700000 600000

3 Assam 2500000 1000000

4 Bihar 2500000 1000000

5 Goa 1400000 500000

6 Gujarat 2500000 1000000

7 Haryana 2500000 1000000

8 Himachal Pradesh 2500000 700000

9 Jammu and Kashmir 2500000 ----------

10 Karnataka 2500000 1000000

5 Subs by S.O.1232(E)dated 24th October,2003.(w.e.f.24.10.2003)

10

11 Kerala 2500000 1000000

12 Madhya Pradesh 2500000 1000000

13 Maharashtra 2500000 1000000

14 Manipur 2200000 500000

15 Meghalaya 2200000 500000

16 Mizoram 2000000 500000

17 Nagaland 2500000 500000

18 Orissa 2500000 1000000

19 Punjab 2500000 1000000

20 Rajasthan 2500000 1000000

21 Sikkim 1700000 500000

22 Tamil nadu 2500000 1000000

23 Tripura 2500000 1000000

24 Uttar Pradesh 2500000 1000000

25 West Bengal 2500000 1000000

26 Chhattisgarh 2500000 1000000

27 Uttaranchal 2500000 700000

28 Jharkhand 2500000 1000000

2

Union

Territo

ries

1 Andaman & Nicobar islands 1700000 ------------

2 Chandigarh 1400000 -------------

3 Dadra and nagar havely 1000000 --------------

4 Daman and diu 1000000 ----------------

5 Delhi 2500000 900000

6 Lakshadweep 600000 ------------

11

7 Pondicherry 2000000 500000

Particulars:

According to the Conduct of Election Rules, 1961 the account of election expenses is to

contain the following particulars in respect of each item of expenditure from day- to-day,

namely:

(a) the date on which the expenditure was incurred or authorised;

(b) nature of the expenditure (as for example, travelling, postage or printing and the like);

(c) the amount of expenditure-

(i) the amount paid; and (ii) the amount outstanding;

(d) the date of payment;

( e) the name and address of the payee;

{f) serial number of the entry in case of amount paid;

(g) serial number of bills, if any, in case of amount outstanding;

(h) the name and address of the person to whom the amount outstanding is payable. (Rule

86, 1961) Rules)

A voucher is to be obtained for every item of expenditure, unless, from the nature of

the case, such as postage, travelling by rail and the like, it is not practicable. All the vouchers

are to be lodged along with the account of election expenditure and arranged according to

the date of payment and serial numbers by the candidate or his agent and such serial

numbers are to be entered in the account under item (f) above. It is necessary to give

12

particulars mentioned in item ( e) in regard to the items of expenditure for which vouchers

have not been obtained.

District Election Officer:

Every contesting candidate shall, within thirty days from the date of election of the returned

candidate lodge with the District Election Officer an account of his election expenses which

shall be a true copy of the account kept by him or by his election agent.

Reference to the Election Officer shall, in relation to a constituency in a Union Territory, be

construed as a reference to the Returning Officer for the constituency. (Section 78, Act

1951)

As soon as may be after the expiration of 30 days, the District Election Officer is to report to

the Election Commission -

(a) the name of each contesting candidate;

(b) whether, each candidate has lodged his account of election expenditure and, if so, the

date on which such account has been lodged; and

( c) whether in his opinion, such account has been lodged within the time and in the manner

required by the Act of 1951 and the Conduct of Election Rules, 1961.

If the District Election Officer is of the opinion that the account of election expenses of any

candidate has not been lodged in the manner required by the Act of 1951 and the Rules he

share with every such report send to the Election Commission the account of the election

expenses of the candidate with the vouchers lodged along with it. The District Election

Officer shall publish a copy of the report by fixing the same to his Notice Board. [Rules 89(1),

89(2), 89(3), Rules of 1981].

Commission's guidelines regarding maintenance of account of expenses and

inspection thereof:

13

The Commission vide Order No. 76/2003/JS.II, dated 24.10.2003 has revised the format for

maintaining account of election by candidates ills 77 of the R.P. Act, 1951. (Appendix 1).

The format in which the abstract statement of the expenses giving detailed information

about the expenses have undergone comprehensive changes (Appendix- 2). The format of

the affidavit to be submitted by the candidates (Appendix-3) and the format of the letter to

be handed over to the candidates by the Returning Officers inviting their attention to the

requirements of law regarding filing of account of election expenses (Appendix-4) have also

been modified.

Instructions for contesting candidates for lodging their accounts of election

expenses-inspection of accounts of election expenditure:

The Commission vide Order No.7 6/2003/JS.1I, dated 29.10.2003 reiterated instructions

issued vide letter No. 76/98/J.S. II, dated 19.1.1998 stating that the contesting candidates

are required to maintain their election expenditure account in the prescribed register on

day-to-day basis. They are also required to make available the said register, with supporting

documents, for inspection, at any time during the process of election, to the District

Election Officers/Retuning Officers /Election Observers appointed by the Commission or any

other such authority nominated by the Commission in this behalf It has also been clarified

that the failure to produce this register, on demand, will be considered as a major default.

The register with the said supporting documents shall be made available by the contesting

candidates only once in three days.

The Commission has now prescribed a revised format for maintaining account of election by

candidates under Sections 77 and 78 of the Representation of the People Act, 1951 wde its

letter No. 76/2003/JS.II, dated 24 October 2003. Under Section 77(1) [vide the 'Election And

Other Related Laws (Amendment) Act, 2003', only the expenses on account of travel of

'leaders' of the political parties covered under Explanation 2 will be exempted from being

included in the account of election expenses of a candidate. All other expenses -

14

incurred/authorised by the political parties, other associations, body of person, individuals-

are required to be included in the account of the candidate.

In order to streamline the scrutiny of accounts maintained by the candidates, the

Commission has given the following directions:

1. A register in the standard fonnat as already prescribed vide Commission letter

No 76/2003/JS.II, dated 24.10.2003 shall be issued to each candidate by the Returning

Officer immediately after his nomination, for keeping the day-to-day account of his

expenditure.

2. The register shall be duly page-numbered and authenticated by the District Election

Officer at the time of issue.

3. All day-to-day accounts shall be faithfully recorded in this register and in no

other documents by the candidate or his election agent.

4. All documents such as vouchers, receipts, bill, acknowledgments, etc., in support of the

expenditure incurred or authorised shall be obtained from day-to-day as the expenditure is

incurred- and authorised and maintained in the correct chronological order along with the

aforesaid register as prescribed under rule 86 of the Conduct of Election Rules 1961.

5. The day-to-day account maintained in the aforesaid register together with the

supporting documents shall be made available for inspection once in three days during the

process of election to the District Election Officer/Returning Officer/ Election Observer

appointed by the Commission or any other such authority nominated b)' the Commission in

this behalf.

6. The District Election Officer and the Election Observer shall prepare a schedule of

inspection whereby a three-day cycle of furnishing of accounts will be set for every

15

candidate in such a manner that on each day, accounts of one or more contesting

candidates are made available for scrutiny to the concerned officers. In other words, the

turn of a candidate to furnish his accounts for scrutiny will fall after very third day

throughout the period between the filing of his nomination and declaration of results.

7. The accounts of the candidates will be scrutinised by the District Election Officer/

Returning Officer and/or Election Observer or by the nominated officers and they will keep

two photocopies of the relevant pages of the register. One copy of the relevant pages of the

register will be displayed on the notice board of the Returning Officer and the other copy

will be retained in a separate file for each constituency as proof of record with the

Returning Officer and furnished to the District Election Officer on conclusion of the poll

process.

8. Any person desiring a copy of these day-to-day accounts will be provided the same

by the Returning Officer subject to payment of usual copying charges.

9. While lodging the accounts of the election expenses under Section 78 of the

Representation of the People Act 1951, the candidate shall file the prescribed register along

with the abstract statements of election expenses and the prescribed affidavit prescribed

vide Commission order No. 76/2003/ JS.II, dated 24.10.2003.

Maintenance of accounts of election expenses - Reports by the District

Election Officers:

16

The Commission vide Order No. 76/2oo3/JS.II, dated 2.1.2004 has stated that every

contesting candidate at an election shall, within 30 days from the date of the election of the

returned candidate, lodge with the District Election Officer an account of his election

expenses which shall be a true copy of the account kept by him or his election agent under

Section 77 of the Representation of People Act, 1951. Rule 89 of the Conduct of Election

Rules, 1961 prescribes the manner in which accounts of the candidate shall be lodged and

the steps to be taken by the District Election Officer consequent upon the lodging of the

account of election expenses by the candidate.

The Commission has directed that in tenus of Rule 89 of the Conduct of Election Rules,

1961, all District Election Officers shall report to the Commission under Rule 89(2) the

following:

(a) Name of each contesting candidate who failed to lodge the expenses as prescribed by

the Commission in tenus of its instructions dated 29.10.2003.

(b) The dates on which the accounts were furnished by such candidates during the course of

the elections, and if not furnished, whether notices for non- compliance of the instructions

of the Commission were issued to them and further follow-up action taken, if any.

(c) The discrepancies noticed by the District Election Officers/ Returning Officers/designated

Officers in the accounts submitted every third day by the candidate with the actual

expenditure noted/assessed by the District Election Officer/ Returning Officer/Election

Observer/designated Officer and specifically mentioning the items of expenditure which in

the opinion of District Election Officer/Returning Officer/ Observer, have been suppressed.

(d) Comments of the District Election Officer on the overall final accounts furnished by the

candidates in tenus of actual expenditure incurred by each candidate. In giving his final

comments, the District Election Officer shall taken into account the observations made by

the Election Observers and any other candidate or by any other organizations or member of

the general public on the daily accounts exhibited on the notice board of the Returning

Officer as required under the directions at para 7 of the Commission's instructions dated

29.10.2003. These shall be submitted as annexures to the report that is submitted by the

17

District Election Officer in the profonna (Annexure'XXXVIII) prescribed in para 11.1 of

Chapter XVII of the Handbook of Returning Officers (all elections where EVMs are used),

1998 edition. In the 'Remarks' column of the profonna, the annexure number under which

the comments of the DEO pertaining to a candidate shall be mentioned.

Disqualification in Case of Non-Submission of Accounts:

As soon as may be after the receipt of the report mentioned on the preceding paragraph

the Election Commission shall consider the same and decide whether any contesting

candidate has failed to lodge the account of election expenses within the time limit and in

the manner required by the Act and the Rules. If the Election Commission decides that a

contesting candidate has failed to lodge his account of election expenses within the time

and in the manner required by the Act and the Rules, it shall, by notice in writing, call upon

the candidate to show cause why he should not be disqualified under Section 10-A of the

Act of 1951.

The contesting candidate, who has been called upon by notice to show cause, may, within

20 days of the receipt of such notice, submit in respect of the matter a represenltation in

writing to a Election Commission and shall at the same time and send to the District Election

Officer a copy of his representation, together with a complete account of his election

expenses if he had not already furnished such an account.

The District Election Officer then, within 5 days of the receipt of such representation and

accounts, shall forward to the Election Commission the copy of the representation and the

account, if any, with such comments as he wishes to make thereon. If the Election

Commission is satisfied, after considering the representation submitted by the candidate

and the comments made by the District Election Officer and after such enquiry as it thinks

fit, that the candidate has no good reason or justification for his failure to lodge his

accounts, it shall declare him to be disqualified under Section lO- A of the Act, 1951 for a

period of three years from the date of the order and cause the order to be published in the

18

Official Gazette. (Rule 89(4) to Rule 89(8), Rules of 1961).

The procedure set-out above has been given in some detail here to apprise the contesting

candidates and especially the returned candidates of the serious consequences of not

maintaining the election expenses and lodging the same in time and in the manner provided

in the Act of 1951 and the Conduct of Election Rules, 1961.

Where a candidate fails to submit account of election expenses in prescribed form and time,

he automatically incurs disqualification and it is not necessary for the Election Commission

to afford reasonable opportunity to the candidate before passing order of disqualification,

nor is it necessary to pass reasoned order. There is no question of imposition of any

punishment or stigma on the basis of any discriplinary proceedings against the candidate, as

the disqualification contemplated by Section 10A of the Act is a necessary consequence

flowing from his failure to lodge the account of election expenses within the stipulated

period and in the prescribed manner.6

After lodging the accounts of election expenditure under section lO-A(a) including

particulars as prescribed under Rule 86 if an account is found to be incorrect or untrue after

enquiry by the Election Commission under Rule 89 the Election Commission may hold that

the candidate concerned had failed to lodge his accounts within the meaning of section 10-

A and may disqualify the said candidate. 7

Small Discrepancies:

Small Discrepancies in the accounts do not matter. Rent was incurred for microphone used

during the election. In the return filed by the candidate, the date of the bill was wrongly

mentioned as the date of payment. It was held that no inference against the candidate

could be drawn from this discrepancy. 8

Expenditure before Nomination:

Expenditure before the date of nomination need not be shown in the return of expenses.

6 Capt. Chanan Singh Sindhu v. The Election Commissioner of India, AIR 1992 P. & H.183.7 L.R. Shiuaramagowdav. T.M. Chandrashekar, (1999) 1 SCC 666.8 Nongomban lboucha Singhv. Hisangthem Chandramani Singh, AIR 1977 SC 682.

19

Nor would the amount be taken -into consideration in calculating the total expenses of the

successful candidate for detennining whether the election expenses exceeded the

prescribed limit.

In the above case, it was held, that where the allegation is that the candidate incurred

expenses on petrol during election and the jeep used by him was bearing the No. NLM 194,

the evidence must show that petrol was sold for a vehicle bearing that number,

Nongomban Iboucha Singh, v. Hisangthem Chandramani Singh, AIR 1977 SC 682.

Election Expenditure Observers:

The Commission has decided to appoint Election Expenditure Observers to closely watch,

analyse and report to the Commission instances of misuse of money power for

manipulating the will of the electors. The Commission will also determine the magnitude of

election expenditure in the light of the report of these observers.

CHAPTER-5

"INCURRING OF EXCESSIVE EXPENDITURE BY CANDIDATES AND

MAINTENANCE OF ACCOUNTS BY POLITICAL PARTIES" ...

DEFINITION

Corrupt practice of incurring excessive expenditure is defined in section 123(6). Every

candidate at an election shall either by himself or by his election agent keep a separate and

correct account of all expenditure in connection with the election incurred or authorised by

him or by his election agent between the date of publication of the notification calling the

election and the date of declaration of the result thereof, both days inclusive. [Section 78

(1), Act 1951 and section 123(6)].

The maximum amount of election expenditure which may be incurred by the candidates for

20

the Parliamentary and Assembly Constituencies in the various states is laid down in Conduct

of Election Rules, 1961. (Rule 90, Rules of 1961). .

Mere non-disclosure of expenditure is not a corrupt practice. It is incurring of

expenditure in excess of the prescribed amount which is covered by the corrupt practice

defined in section 123(6). Contravention of Section 77, sub-section (1) and (2) or failure to

maintain correct accounts with the prescribed particulars does not fall within section

123(6).9

What is referred to in sub-section (6) of section 123 as corrupt practice is only the incurring

or authorising of expenditure in contravention of section 77. It does not take into its fold,

the failure to maintain true and correct accounts. The language of sub- section (6) is so clear

that the corrupt practice defined therein can relate only to sub section (3) of section 77, i.e.,

the incurring or authorising of expenditure in excess of the amount prescribed. It cannot by

any stretch of imagination be said that non- compliance with section 77(1) and (2) would

also fall within the scope of section 123(6).

Consequently, it cannot fall under section 1O O(l)(b). The attempt to bring such non-

compliance within section 100 (1) (d) (iv) must also fail because the essential requirement

under section 100 (1)( d)(iv) is that the result of the election in so far as it concerns the

returned candidate has been materially affected.

It is needless to point out that failure on the part of the returned candidate to maintain

accounts as required by section 77(1) and (2) will in no case affect, and much less materially,

the result of the election. Where the main averment in the election petition was that

expenditure thereby incurred had not been included in the statement of accounts as

submitted to the District Election Officer as required under section 77 of the Act and Rules

86 and 90 of the Conduct of Election Rules 1961, the court held the candidate was not guilty

9 Dal ChandJainv. Narain Shanker Trivedi, 1969 DEC 129; Gajanan Krishnaji Bapatv: Dattaji Raghobaji Meghe, (1995) 5 SCC 347: AIR 1995 SC 2284.

21

of corrupt practice under section 123(6).10

EXPENDITURE MUST BE BY CANDIDATE OR HIS ELECTION AGENT

It is clear from section 123(6) and 77 that, in order to be a corrupt practice, the

excessive expenditure must be incurred or authorised by the candidate or his election

agent. An expenditure incurred by a third person which is not authorised by the candidate

or his election agent is not a corrupt practice. The Supreme Court held in Ramjaya Singhv.

Bed Nath Singh (1955) 1 SCR 671; AIR 1954 SC 749 : 10 ELR 129, that where the paid

employees of the father of the candidate worked at the election of the candidate, the

employees were mere "volunteers" qua the candidate and the payment to them by the

father could not be taken into account and consequently no corrupt practice was

committed.

Where a person interested in a candidate spent amounts to help the candidate in the

election, but the candidate himself had not authorised it and did not eventually meet such

expenditure, the candidate is not bound to include such expenditure in his return of

election expenses and would not be guilty of corrupt practice under section 123(6), if he

omits to include such expenses in his return. G. Vasanthapaiv. Srinivasan, 22 ELR 221.

To prove the corrupt practices of incurring expenditure beyond the prescribed limit, it

is not sufficient for the petitioner to prove merely that the expenditure of more than the

prescribed limit had been incurred in connection with the election, he must go further and

prove that the excess expenditure was incurred with the consent or under the authority of

the returned candidate or his election agent. Megh Raj Patoqia v. R.K. Birla, AIR 1971 SC

1295; the following cases were relied (upon, Ranan Jaya Singh v. Bay Nath Singh, AIR 1954

SC 749 = 1955 SCR 671; RamDayalv. Brijraj Singh, AIR 1970 SC 110; Mubarak Mazdoor v. Lai

Bahadur, 20 ELR 176.

In order to constitute a corrupt practice as contemplated by-sections 77 and 123(6), it is

necessary to plead requisite facts showing authorisation or undertaking of

reimbursement by the candidate or his election agent. Incurring or authorising expenditure

10 LR. Shivaramagowdav. T.M. Chandrashekar, (1999) 1 SCC 666.

22

beyond the prescribed limit is not established from the mere allegation that several jeeps

carrying party flags were plying in the constituency and that food was given to party

workers. Dhartipakar Madan Lai Agarwalv. Rajiv Gandhi, AIR 1987 se 1577.

From a plain reading of sections 123(6) and 77 including Explanation 1 to section 77 of the

Act, it is clear that in order to be a corrupt practice, the excessive expenditure must be

incurred or authorised by the candidate or his election agent. An expenditure incurred by a

third person, which is not authorised by the candidate. or his election agent, is not a corrupt

practice. Voluntary expenditure incurred by friends, relations or sympathisers of the

candidate or the candidate's political party is not required to be included in the candidate's

return of expenses, unless the expenses were incurred in the circumstances from which it

could be positively inferred that the successful candidate had undertaken that he would

reimburse the party or the person who incurred the expense, A candidate cannot be

permitted to place his own funds in the power or possession of a political party, an

association, or some other persons or individuals for being spent on his behalf and then

plead for the protection under Explanation 1 to Section 77 of the Act. Where the election

petitioner successfully establishes that the funds were provided by the returned candidate,

it would be immaterial as to who actually made the payments, which ought to have been

included in the return of election expense. It is not "whose hand it is that spends the

money". The essence of the matter is "whose money it is" that has been spent. In order that

Explanation 1 to Section 77 of the Act may apply, therefore, it must be proved that the

source of the expenditure incurred was not out of the money of the candidate or his

election agent. Gajanan Krishnaji Bapat v. Dattaji Raghobaji Meghe, (1995) 5 see 347: AIR

1995 se 2284.

DEFECT IN THE LAW

The ceiling on expenditure is fixed only in respect of the expenditure incurred or

23

authorised by the candidate himself but the expenditure incurred by the party or

anyone else in his election campaign is safely outside the net of legal sanction. The spirit

of the provision suffers violation through the escape route. The prescription of

ceiling on expenditure by a candidate is a mere eye-wash and no practical check on

election expenses for which it was enacted to attain a meaningful democracy. This

lacuna in the law is, however, for the Parliament to fill lest the impression is reinforced

that its. Retention is deliberate for the convenience of everyone. If this be not feasible,

it may be advisable to omit the provision to prevent the resort to indirect methods for

its circumvention and subversion of the law, accepting without any qualm the role of

money power in the elections. This provision has ceased to be even a fig leaf to hide the

reality.

Gadakh Yashwantrao Kankarrao v. E. V. alias Balasaheb Vikhe Patil and others, AIR 1994

se 678 : (1994) 1 see 682 : JT 1993 (6) se 345; e. Narayanaswamiv. O.K. Jaffer Sharief,

1994 Supp. (3) see 170.

EXPENDITURE BY PARTY ORGANISATION OR ASSOCIATION

Voluntary expenditure by friends, relations or sympathisers of the candidate or the

candidate's party is not to be included in the candidate's return of expense, unless the

expenses were incurred in circumstances trom which it can be inferred that the

successful candidate would reimburse the party or the person who incurred it. It is not

enough that some advantage accrued to the candidate, or that the expenditure was

incurred within the knowledge of the candidate. Smt. Indira Nehru Gandhi v. Raj Narain,

AIR 1975 SC 2299, 2421. The Supreme Court in the case just cited re- affirmed the

earlier judgments of that court on the point, reported as Ramanjaya Singh v. Baij Nath

Singh, (1955) 1 SCR 671 = AIR 954 SC 749 ; Ram Dayal v. BrijRaj Singh, (1971) 1 SCR 530

= AIR i970 SC 110; MeghRajPatodia v. R.K. Birla, (1971) . 11 SCR 118 = AIR 1971 SC 1295.

24

The decision of the court presided over by Bhagwati and Sarkaria J. in KanwarLal

Guptav. AmarNath Chawla (AIR 1975 SC 308) was held to be contrary to the above

cases.

The decision that the party's expenses were to be returned by the candidate in his

return of expenses, led to the amendment of section 77( 1) of the Act of 1961, by

Amendment Act 58 of 1974. While making mention of Amendment Act 58 of 1974, the

Supreme Court observed in Smt. Gandhi's case (AIR, 1975 SC 2299,2420) that the

amendment was merely an attempt to restore the law as it had been understood to be,

previous to decision of the court in K.L. Gupta v. Amar Nath Chawla, AIR 1975 SC 2299.

VALIDITY OF EXPLANATION 1

In KarunakarDas v. Union of India, AIR 1984 Ori. 174, the High Court of Orissa, following

the Indira Nehru Gandhi, case upheld the constitutional validity of the Explanation

appended to section 77 by 1974 Amendment. The issue of constitutional validity of

Explanation 1 added to section 77(1) of 1951 Act came up again before* the Supreme

Court in Dr. P. Nalla Thampy v. Union of India, AIR 1985 SC 1133 : 1985 (Supp.) SCC 189.

A five-judge constitutional Bench led by Y.V. Chandrachud, C.J, examined the whole

issue de novo and upheld its constitutionality.

One constitutional count on which Explanation 1 had been challenged was that it was

violative of article 14, because "it sanctions serious discrimination between one political

party or individual and another on the basis of money power. It makes the wealth or

affluence of the political party supporting the candidate the decisive factor in the

outcome of elections ..." This argument the court seems to meet by observing that

explanation 1 "classifies all political parties or associations in one group and confers

upon them the same or similar advantage”.

25

The other challenge in Dr. P. Nalla Thampy, which was of a general nature, was that

Explanation 1 nullified the effect of section 77(1). It made a mockery of the salutary

object of imposing a ceiling on a candidate's expenditure a provision which was

"enacted in the interests of purity and genuineness of the democratic process."

This argument was met by the Supreme Court by pointing out that section 77(1) and

Explanation 1 deal with two different aspects. The former deals with the expenditure

'incurred or authorised by' a candidate or his election agent in connection with the

election; whereas the latter deals with the expenditure incurred or authorised by a

political party or any other association or body of persons or an individual other than

the candidate or his election agent. Lest the expenditure of the kind described in

explanation 1 should be deemed to be incurred or authorised by the candidate or his

election agent, the provision in the explanation is specifically made to mean that it shall

not be so deemed. In view of this express provision, the court held that "the latter

(namely, explanation 1) cannot render the former [namely, section 77(1)] meaningless. "

In addition to the clear legislative intent of separating the two election expenditures,

which indeed in the prerogative of the legislature to do, the Supreme Court adduced a

few good reasons indicating the desirability of having political parties. Y.V. Chandrachud

C J stated:

"In any democratic system of Government, political parties occupy a distinct and unique

place. They are looked upon as guardian angels by their members, though, occasionally,

they fail to discharge the benign role of guardian, leave alone the angelic part of it. It is

through them that the generality of the people attempt to voice or ventilate their

grievances. Considering, also the power which they wield in the administration of

Governmental affairs, a special conferment of benefits on them in the matter of

mobilities governing the election process cannot be regarded as unreasonable or

26

arbitrary."

How to resolve the situation wherein an expenditure which purports to have been

incurred say, by a political party, has in fact, been incurred by the candidate or his

election agent? The Supreme Court in Dr. P. Nalla Thampy has answered this situation

by stating categorically that "Explanation 1 will not be attracted." In its view it is only if

the expenditure is in fact incurred or authorised by a political party or any other

association or body of persons, or by an individual (other than the candidate or his

election agent) the explanation 1 will come into play. The candidate cannot be allowed

to place his own funds in the power or possession of a political party, or a trade union or

some other person and then plead for the protection of explanation 1. That would only

be "a mere facade," or a subterfuge for evading the restraint imposed by section 77(1).

In reality, the expenditure is incurred by the candidate himself because the money is his.

According to the court, the deciphering distinction is:

"What matters for the purpose of explanation 1 is not whose hand it is that spends the

money. The essence of the matter is, whose money it is. It is only if the money

expended by a political party, for example, is not laid at its disposal by the candidate or

his election agent that explanation 1 would apply.'"

Thus, in order that Explanation 1 may apply, it must be proved that the source of the

expenditure incurred was not the candidate or his election agent.

It is interesting to note here that the Amendment Act 58 of 1974 mentioned above did

not apply to Chawla's case. In that case it was wrongly decided that the party's expenses

were to be added to the candidate's expenses and (by such addition) the expenses

incurred exceeded, by a few hundred rupees, the prescribed limit. Chawla was unseated

and he incurred the disability under the law to stand for election for six years from the

date of the judgment of the Supreme Court, which was delivered on

27

3rd October, 1974. Chawla made a petition to the President under section 8-A of the Act

of 1951 for removal of his disqualification on a number of grounds, pointing out the

discrepancies in the judgment of the Supreme Court. The Election Commission heard

arguments and gave its opinion, recommending removal of the disqualification for the

unexpired portion of the period of six years. The President accepted the opinion and the

recommendation of the Election Commission, and passed an order removing the

disqualification; vide Government of India Gazette Extraordinary, bearing the date May

19, 1976.

Expenses incurred by the party organisation for printing and distribution of leaflets to

induce people to support the party candidate cannot be deemed an expenditure

incurred or authorised by the candidate himself. Biresh Misra v. Ram Nath Sarma and

Others, 17 ELR 243.

As a political party is interested in carrying on propaganda in favour of the party as such

money that it may spend in furtherance of any such propaganda cannot in law be said to

have been incurred by the candidate that may be set up under the aegis of the party.

Expe

nses incurred by a political party which sets up candidate from numerous constituencies

by way of propaganda relating to the principles or policy which the party stands for

cannot be regarded as expenses incurred for or on behalf of the candidate. Prabhu Das

v. Jorsang, 18 ELR 110; V. Rama Chandra Rao v. V.B. Raju, 119 ELR 358; Mubark

Mazdurv. Lai Bahadur, 20 ELR 176.

If an association or society is interested in the success of a candidate, and members of

that society or organisation canvass for the candidate, such association or society and

every member of r.uch society would be an agent of the candidate and the expenses

incurred by them should be included in the return of election expenses. Amir Chand v.

Surendra Lai Jha, 10 ELR 57.

28

Expenses incurred by Congress organisation on either persons for a meeting held with

the main object of propagating the cause of the Congress in general cannot be held to

be election expenses of the candidate set up by the Congress-Elgin case 5 O'M and H, 2

Hancaster case 5 O'M and Hand Haggerstone case 5 O'M and H 69 referred to. Mast

Ram v. Hernam Singh Sethi, 7 ELR 301.

A payment by way of donation to the Congress by a candidate after he had been elected

as a congress candidate cannot be deemed to be an election expense. Mast Ram v.

Hamam Singh Sethi, 7 ELR 303.

Payments made to the party for party ticket and for general expenses of the party's

elections fund do not form part of the election expenses of a candidate. Shiva Dass v.

Sheikh Mohd Abdul Samad, 8 ELR 265.

In one case, the Supreme Court had occasion to deal with the question whether the

expenses incurred by a political party to advance the prospects of the candidates put up

by it fell within section 77, Act 1951. The Supreme Court observed; "this Court as well as

the High Courts have taken the view that the expenses incurred by a political party to

advance the prospects of the candidate to be put up by it, without more, do not fall

within the meaning of Section 77." Megh Raj Patodia v. RK. Birla and others, AIR 1971 SC

1295.

In ShahjayantiLal v. Kasturi Lai Naginas Doshi and Others, 1969 DEC 376 (SC), Swatantra

Party spent Rs. 4,000 in the constituency of the candidate set-up by the party. The

contention of the petitioner was that the expenses incurred by the Swatantra Party

were really incurred by the returned candidate. The Supreme Court expressed the view

that expenses incurred by a political party in respect of its candidates do not come

within the mischief of section 123 (6), read with section 77 Act of 1951.

29

ONUS TO PROVE THAT THE EXPENDITURE INCURRED BY THE POLITICAL

PARTY WAS INFACT INCURRED BY THE POLITICAL PARTY AND NOT BY THE

CANDIDATE IS ON THE CANDIDATE.

There can be no dispute that the expenditure incurred by a candidate himself would

squarely fall under Section 77(1) of the R P Act. There can also be no dispute with the

proposition that the expenditure actually incurred and spent by a political party in

connection with the election of a candidate cannot be treated to be the expenditure

under Section 77(1) of the Act. The question, however, for determination is what rule of

evidence is to be followed to attract the provisions of Explanation I to Section 77 of the

RP Act? The said Explanation is in the nature of an exception to Sub-'section I of Section

77. A candidate in the election who wants to take the benefit of Explanation I to Section

77 of the RP Act- in any proceedings before the Court- must prove that the said

expenditure was in fact incurred by the political party and not by him. Any expenditure

in connection with the election of a candidate which according to him has been incurred

by his political party shall be presumed to have been authorised by the candidate or his

election agent. But the presumption is rebuttable. The candidate shall have to show that

the said expenditure was in fact incurred by a political party and not by him.

The candidate shall have to rebtit the presumption by the evidentiary standard as

applicable to rebuttable presumption under the law of evidence. An entry in the book

of account of a party maintained in accordance with Section 13A of the Income Tax Act

showing that the party has incurred expenditure in connection with the election of a

candidate may be itself be sufficient to rebut the presumption. On the other hand, the

ipse-dixit of the candidate or writing at the bottom of the pamphlet, poster, cut-out,

30

hoarding, wall painting, advertisement and newspaper etc. that the same were issued

by the political party may not by itself be sufficient to rebut the presumption. The

Supreme Court therefore, held that the expenditure (including that for which the

candidate is seeking protection under Explanation I to Section 77 of RP Act) in

connection with the election of a candidate- to the knowledge of the candidate or his

election agent- shall be presumed to have been authorised by the candidate or his

election agent. It shall, however, be open to the candidate to rebut the presumption in

accordance with law and to show that part of the expenditure or whole of it was in fact

incurred by the political party to which he belongs or any other association or body of

persons or by an individual (other than the candidate or his election agent). Only when

the candidate discharges the burden and rebuts the presumption he would be entitled

to the benefit of Explanation I to section 77 of the RP Act. But the Supreme Court has

made it clear that any expenditure incurred or authorised by a political party in respect

of general propaganda or for the propagation of its election manifesto shall not be

considered an expenditure" to be incurred in connection with the election of the

candidate/ candidates belonging to the said party. Dr. N.P. Nalla Thampy Telahv. Union

of India and others AIR 1985 SC 1133: 1985 (Supp.) SCC 189 relied . Common Cause a

registered Society v. UOI & Ors, JT 1996 (3) SC 706: (1996) 2 SCC 752.

CHAPTER -6

EXPENDITURE INCURRED-SUBSTITUTION OF THE EXPLANATION.

31

Explanation 1 and 3 to the section 77 have been substituted by Amending Act 46 of

2003 with effect from 11.9.2003. Explanation 1 declaring that (a) the expenditure incurred

by leaders by air or by any other means of transport for propagating programmers of the

political party shall not be deemed to be the expenditure in connection with election

incurred or authorised by a candidate of that political party or his election agent for the

purposes of section 77 (1). (b) any expenditure incurred in respect of any arrangement

made, facilities provided or any other act or thing done by any person in the service of the

Government belonging to any of the classes mentioned in clause (7) of section 123 in the

discharge or purported discharge of his official duty in the proviso to that clause shall not be

deemed to be expenditure in connection. with the election incurred or authorised by a

candidate or by his election agent.

For the purposes of clause (a) of explanation 1 the expression "leaders of a political party"

means - (i) where such political party is a recognised political party, such persons not

exceeding forty in number, and (ii) where such political party is other than a recognised

political party, such person not exceeding twenty in number, whose names have been

communicated to the Election Commission and the Chief Electoral Officers of the States by

the political party to be the leaders.

CHAPTER-7

EXPENDITURE MUST BE IN CONNECTION WITH THE ELECTION.

Under section 77 an account has to be kept 'of all expenditure in connection with the

election and the total of the 'said expenditure' is not to exceed the maximum fixed.

Expenses incurred in holding any public meeting or issuing advertisements, circulars, or

publications etc., would be expenses on account of or in respect of the conduct or

management of the election. Amir Chand v. Surendra Lai Jha. 10 ELR 57.

Expenditure incurred in promoting or procuring the election of a candidate form a primary

part of the expenses in connection with the election. M.R. Meganathan v. K.T. Kosal Ram, 9

32

ELR 242.

WHAT ARE AND WHAT ARE NOT ELECTION EXPENSES?

Amount spent for repairs of motor cars need not be shown as election expenses even

though the immediate object of the repairs was for using the car for election purposes.

11

Reasonable hire for the cars belonging to others used by a candidate in connection with

his election, even if none was in fact paid, should be included in the return.

Expenses incurred in the holding of meetings or in doing other propaganda work for

promoting the candidate's election should be included in the return. 12

Donations paid by the candidate to a party to which he belongs and which has

supported his candidature can form part of election expenses under certain circumstances.

The sum paid on the eve of election is an act of charity or an election expense must depend

on whether or not such payment was open to the charge of having been made in oi dei to

induce the voters to vote in favour of the donor.13

Donation of Rs. 25,000 made by a candidate in Madhya Pradesh to the Congress Party

Fund at Delhi cannot be regarded as an election expense particularly when it was made

prior to the date of publication of the notification calling the election. 14

The amount deposited as security with the Congress by a candidate, but there being no

evidence that the amount was lost to him because he fought against the official candidate,

the amount need not be shown in the election expenses.15

The election expenses incurred for local telephone calls need not be shown in the

11 M.R. Meganathan v. K.T. Kosal Ram, 9 ELR 242.12 Amir Chand v. Surendra Lai Jha, 10 ELR 57.13 S. Khadar Sheriffv. Munuswami Gounder, (1955) 2 SCR 469; 283: 7 ELR 301. 15 K.C. Sharmav. Rishab

Kumar, 20 ELR 401 : AIR 1960 MP 27.

14 K.C.Sheriff V.Munuswami Gounder15 Chuni Lai Singh Raguvanshiv. Gajadhar and Others, 1969, DEC 464 SC.

33

election expenses if the telephone exchange does not charge any thing for local calls. 16

CHAPTER-8

FREE SUPPLY OF CERTAIN MATERIAL TO CANDIDATES.

By inserting new Part VA consisting sections 78A and 78B by Act 46 of 2003 with effect

from 11.9.2003 it has been provided vide section 78A that the Government shall supply,

free of cost, to the candidates of recognised political parties such number or copies of the

electoral roll and such other material as may be prescribed. The above material shall be

supplied subject to such conditions as may be imposed by Central Government in

consultation with the Election Commission and through such officers as may be specified by

the Commission. Section 78B provides for supply of certain items to the candidates.

For the purposes of section 39A,this part, and clause (hh) of "sub-section (2) of section 169,

the expression "recognised political party" has the meaning assigned to it in the Election

Symbols (Reservation and Allotment) Order, 1968.

PERIOD FOR WHICH EXPENDITURE TO BE INCLUDED.

Section 77 gives the period for which the election expenses are to be entered in a

separate account. It is between the date of publication of the notification calling the

election and the date of declaration of the result thereof, both days being inclusive, [section

77(1), Act 1951].

Expenditure incurred by a candidate before the date of the notification would not fall

within the operation of section 77, even if it was incurred in connection with the election. 17

Under the law as it stood just prior to the amending Act 27 of 1956, no such starting

point or ending date were prescribed. The words used were expenses incurred by "the

16 AmarNath v. Lakshman Singh and others, 1968 DEC 130 SC.17 Shivrama Sawnt Bhonsale v. Pratap Rao Deo Rao Bhonsale, 17 ELR 37.

34

candidate". This expression gave rise to controversy in number of cases as to when a person

is deemed to be a candidate. The Supreme Court held in the case S. Khadar Sheriffv.

Munuswami Gounder (1955) 2 SCR 496; AIR 1955 SC 775, that the exact point and time

from which a candidate must be deemed to be a candidate is the time when, with the

election in prospect, he himself decides leaving no manner of doubt as to his intention.

The amended section 77 has removed the difficulty of proving by evidence the time

from which a person became the prospective candidate all who has provided a point of time

which can be established without controversy by the production of the notification calling

the election.

The legislature by prescribing the inner and the outer limits in Section 77 of the R.P. Act

intended the elimination of money influence during the elections and maintaining of purity

of elections. The expenditure incurred after the declaration of the result of the election can

possibly have no nexus with the purity of the electoral process. The very fact that the

advertisements thanked the electorate for electing a candidate would show that the same

could only have been issued for publication after the declaration of the candidate as the

returned candidate. The expenditure incurred in that connection therefore cannot be said

to be an expenditure 'authorised' or 'incurred' during the prohibited dates. Indeed, there

may be cases where some expenditure can be incurred or authorised by a returned

candidate in connection with his election, even after the declaration of the result, but

unless that expenditure can be related to the process of election, authorised or incurred

during the prohibitory limits set out in Section 77 { 1) of the Act, it is not required to be

included in the return of expenses. The mere fact that the advertisements appeared in the

newspapers on the very next day of declaring the result cannot lead to any presumption

that the expenditure in connection there with had been incurred or authorised by the

returned candidate during the prescribed prohibitory dates in anticipation of his being

declared elected. 18

CHAPTER-9

BURDEN OF PROOF OF EXCESSIVE EXPENDITURE.

18 Gajanan Krishnaji Bapat v. Dattaji Raghobaji Meghe, (1995) 5 SCC 347 : AIR 1995 SC 2284.

35

In the instant case the Supreme Court has held that-under the circumstances of the case it

stands established that the appellant returned candidate had used two vehicles.

From this, the necessary conclusion is that he did not specify in his expenditure return

that he used the said vehicle and the expenditure incurred towards that vehicle. Thus he

deliberately suppressed the material fact of the user of the vehicle and the expenditure

incurred for its use. What expenditure he had incurred for the use of the vehicle can be

inferred from proved fact. Had the appellant gone into the witness box and examined

himself as a witness, he would have been subjected to cross- examination of his actual total

expenditure. Moreover even though notice was issued to produce his account deliberately

with held its production. For these facts the High Court has reasonably arrived at the finding

that had he produced the account, the expenditure would have been shown to be in excess

of the limit prescribed under the Act. An adverse inference was drawn from the omission to

produce the account that, the appellant had committed corrupt practice under S. 123 (6) of

the Act. This conclusion on the basis of the evidence on record, cannot be said to be vitiated

by any error of law.

In an election petition, it is not reasonably practicable for the election petitioner to establish

by meticulous evidence as regards the actual expenditure incurred by the candidate. The

said evidence is always within the exclusive knowledge and custody of

the returned candidate or other person. Under Section 77, it is for the candidate election

agent to maintain a regular account of the expenditure incurred in connection with the

election and statement in that behalf is required to be filed before the collector. In this case

the respondent election petitioner had issued a notice to the appellant-returned candidate

calling upon him to produce the expenditure account which he did not produce.19

CHAPTER-10

MAINTENANCE OF AUDITED ACCOUNTS AND FILING OF RETURN OF INCOME

BY POLITICAL PARTIES - MANDATORY.19 R. Puthunainar Alhithan v. P.H. Pandian (1996) 3 SCC 624: AIR 1996 SC 1599.

36

The provision of Section 13A of Income-Tax Act, 1961 read with Section 293A of the

Companies 'Act, 1961 clearly indicate the legislative scheme the object of which is to ensure

that there is transparency in the process of fund-collecting and incurring expenditure by

the political parties. The requirement of maintaining audited accounts by the political

parties is mandatory and has to be strictly enforced.

Under provisions of sections 139 (4B), 142 (1) and 276CC of the Income-tax Act,

1961 the political parties, are under a statutory obligation to furnish a return of income for

each assessment year. To be eligible for exemption from income-tax they have to maintain

audited accounts and comply with the other conditions envisaged under Section 13A of the

Income-tax Act. Sub-section (4B) of Sec. 139 of LT. Act makes it obligatory for the Chief

Executive Officer of every political party to furnish a return of income for each year in

accordance with the provisions of the I. T Act. Sec. 142 (1) provides for inquiry before

assessment. Failure to furnish a return of income has been made a criminal offence

punishable under Section 276 CC of the LT. Act. It leaves no leeway. The mandatory

provisions of the law have to be enforced.20

CONSEQUENCES OF NON-MAINTAINING OF AUDITED AND AUTHENTIC

ACCOUNTS AND NON-FILING OF RETURN OF INCOME BY A POLITICAL

PARTY.

A political party which is not maintaining, audited and authentic accounts and is not

filing the return of income before the income tax authorities cannot justifiably plead

that it has incurred or authorised any expenditure in connection with the election of a

party candidate. The expenditure "incurred or authorised in connection with the

election of a candidate by a political party" can only be the expenditure which has a

20 Common Couse a Registered Society v. Union ofIndia & others, JT 1996 (3) SCC 706 : (1996) 2 SCC 752

37

transparent source. Explanation I to Section 77 of the R.P. Act does not give protection

to the expenditure which comes from an unknown or black source. Bulk of

income of a political party by way of contributions donations is from companies. Section

293A of the Companies Act makes it mandatory that such contributions donations are

made in a transparent manner as provided under the said section. Similarly, Section 13A

of the Income-tax Act lays down that all income derived from contributions donations is

exempt from income-tax, only if a political party satisfies that

(i) it keeps and maintains such books of accounts and other documents as would enable

the assessing officer to properly deduce its income there from;

(ii) it keeps and maintains a record of each voluntary contribution in exces~ of Rs.

10,000 and of the names and addresses of person who have made such contributions;

(iii) the accounts of political party are audited by a chartered accountant or other

qualified accountant. Sub-section 4B has been inserted in Section 139 of the Income Tax

Act by Taxation Laws (amendment) Act, 1978 under which every political party is

obliged to file every year a return of total income voluntarily. The total income for this

purpose is to be computed without giving effect to the provisions of Section 13A of the

Income Tax Act. If such total income exceeds the maximum amount which is not

chargeable to tax, the liability of the political party to file return of income voluntarily

arises. It is thus, obvious that Section 293A of the Companies Act read with Section 13A

and other provisions of the Income Tax Act are with an avowed object of bringing

transparency in the accounts and expenditure of the political parties. If apolitical party

deliberately chooses to violate or circumvent these mandatory provisions of law and

goes through the election process with the help of black and unaccounted money the

said party, ordinarily, cannot be permitted to say that it has incurred or authorised

expenditure in connection with the election of its candidates in terms of Explanation 1

38

to Section 77 of the R.P. Act.21

CHAPTER-11

HIGH COST OF ELECTIONS AND ABUSE OF MONEY POWER.

One of the most critical problems in the matter of electoral reforms is the hard reality

that for contesting an election one needs large amounts of money. The limits of

expenditure prescribed are meaningless and almost never adhered to. As a result, it

becomes difficult for the good and the honest to enter legislatures. It also creates a high

degree of compulsion for corruption in the political arena. This has progressively

polluted the entire system. Corruption, because it erodes performance, becomes one of

the leading reasons for non-performance and compromised governance in the country.

The sources of some of the election funds are believed to be unaccounted criminal

money in return for protection, unaccounted funds from business groups who expect a

high return on this investment, kickbacks or commissions on contracts etc. No matter

how we look at it, citizens are directly affected because apart from compromised

governance, the huge money spent on elections pushes up the cost of everything in the

country. It also leads to unbridled corruption and the consequences of wide spread

corruption are even more serious than many imagine. Electoral compulsions for funds

become the foundation of the whole super structure of col11}ption.

The present provisions of law have a significant loophole in the shape of Explanation 1

to section 77(1) of the Representation of the People Act, 1951, under which the

amounts spent by persons other than the candidate and his agent themselves, are not

counted in his election expenses. This means that there can be never any violation of

the expenditure limits. All extra expenditure, even when known and proven, can be

shown to have been spent by the party or by any mends and it remains outside of the

enforceable limits. In view of the increasing cost of the election campaigns, it is

desirable that the existing ceiling on election expenses for the various legislative bodies

21 Common Cause a Registered Society v. Union of India and others, JT 1996 (3) SC 706: (1996) 2 SCC 752.

39

be suitably raised to.

A reasonable level reflecting the increasing costs. However, this ceiling should be fixed

by the Election Commission from time to time and should include all the expenses by

the candidate as well as by his political party or his mends and his well- wishers and any

other expenses incurred in any political activity on behalf of the candidate by an

individual or a corporate entity. Such a provision should be the part of a legislation

regulating political funding in India. The Commission recommends that Explanation 1 to

section 77(1) of the Representation of the People Act, 1951 should be deleted.

Transparency in the context of election means both the sources of finance as well as

their utilization as are listed out in an audited statement. If the candidates are required

to list the sources of their income, this can be checked back by the income tax

authorities.

The Commission recommends that the political parties as well as individual candidates

be made subject to a proper statutory audit of the amounts they spend. These accounts

should be monitored through a system of checking and cross-checking through the

income-tax returns filed by the candidates, parties and their well-wishers. At the end of

the election each candidate should submit an audited statement of expenses under

specific heads.

The EC should devise specific formats for filing such statements so that fudging of

accounts becomes difficult. Also, the audit should not only be mandatory but it should

be enforced by the Election Commission. Any violation or misreporting should be dealt

with strongly.

40

The Commission recommends that every candidate at the time of election must

declare his assets and liabilities along with those of his close relatives. Every

holder of a political position must declare his assets and liabilities along with

those of his close relations annually. Law should define the tenD 'close relatives'.

In order to ensure that State funding of elections is not abused and misused, it is

necessary to put in place an effective mechanism for audit of party funds and

their combined funds. It is further necessary that Explanation 1 to section 77(1)

of the Representation of the People Act, 1951 is deleted and a full foolproof

mechanism to curb violations on the limits of election expenses is created.

The Commission recommends that any system of State funding of elections bears a close

nexus to the regulation of working of political parties by law and to the creation of a

foolproof mechanism under law with a view to implementing the financial limits strictly.

Therefore, proposals for State funding should be deferred till these regulatory mechanisms

are finnly in position.

All candidates should be required under law to declare their assets and liabilities by an

affidavit and the details so given by them should be made public.

Further follow up action, the particulars of the assets and liabilities so given should be

audited by a special authority created specifically under law for the purpose. Again, the

legislators should be required under law for the purpose. Again, the legislators should be

required under law to submit their returns about their liabilities every year and a final

statement in this regard at the end of their term of office.

CHAPTER-12

ELECTORAL REFORMS

41

Electoral Reforms - Political Funding - (i) Broad Casting Rules (ii) Public Funding Model

Accountable and legitimate political party expenditure and campaign finance is at the heart

of the fight against corruption. A law to this effect having far-reaching consequences has

seen the light of the day. The Election and Other Related Laws Amendment Act 2003,

enacted in September 2003 is an important milestone in the evolution of our democracy.

The law has the following key provisions:

Full tax exemption to individuals and corporate on all contributions to political

parties.

Effective repeal of Explanation 1 under Section 77 of The Representation of the

People Act 1951 - expenditure by third parties and political parties will now

come under ceiling limits. Only travel expenditure of leaders of parties is exempt.

Disclosure of party finances and contributions over Rs 20,000

Indirect public funding to candidates of recognized political parties - including

free supply of electoral rolls (already in vogue), and such items by the Election

Commission as are decided in consultation with the Union government.

Equitable sharing of time by the recognized political parties on the cable

television network and other electronic media (public and private).

While the law has been enacted, rules pertaining to equitable sharing of time by the

recognized political parties on the cable television network and other electronic

media (public and private) are have not been framed.

The relevant section of the law (Section 39A of The RP Act) is as follows:

42

'39A. Allocation of equitable sharing of time.-

(1) Notwithstanding anything contained in any other law for the time being in force, the

Election Commission shall, on the basis of the past performance of a political party, during

elections, allocate equitable sharing of time on the cable television network and other

electronic media in such manner as may be prescribed to display or propagate any election

matter or to address public in connection with an election

.

(2) The allocation of equitable sharing of time under sub-section (1), in respect of an

election, shall be made after the publication of list of contesting candidates under section

38 for the election and shall be valid till forty-eight hours before the hour fixed for poll for

such election.

(3) The allocation of equitable sharing of time under sub-section (1) shall be binding on all

political parties concerned.

(4) The Election Commission may, for the purposes of this section, make code of conduct

for cable operators and electronic media and the cable operators and every1 person

managing or responsible for the management of the electronic media shall abide by such

code of conduct.

Explanation.- For the purposes of this section,-

(i) "electronic media" includes radio and any other broadcasting media notified by the

Central Government in the Official Gazette;

(ii) "cable television network", and "cable operator" have the meanings respectively

assigned to them under the Cable Television Networks (Regulation) Act, 1995 (7 of 1995).'.

43

As can be seen, the law mandates the Election Commission to draw up suitable guidelines

for implementing the above mandate. But the Commission is waiting for the Law Ministry to

frame appropriate rules under the new legislation.

This legislation provides a golden opportunity to change the very nature of political

campaigns in this country. For example, Lok Satta have successfully conducted over 300

debates between candidates, both at the assembly and parliamentary constituency level as

well as at the state level during the 1999 and 2004 elections in Andhra Pradesh. The

debates were largely modeled after the American Presidential debates and were very

popular with the public. These debates were broadcast live by the local cable channels and

provided an opportunity for the public at large to question their representatives on a

variety of public policy issues.

Such an exciting debate format will not only prove to be extremely popular, but it will also

change the nature of politics and electoral contests overtime. Costs of electioneering will be

brought down dramatically, informed choices will be encouraged, and competent

candidates with leadership qualities and parties with sound ideas will have better chance of

being elected.

If such a decision is taken in principle, a code of conduct can be evolved, and a suitable

debate format can be designed. An appropriate set of guidelines can be framed to suit the

requirements of elections at the national, state and constituency levels.

The Law Ministry/Election Commission should put in place a mechanism for the conduct of

such debates on all electronic media. This will ensure that the time allocated to parties can

be utilized in a manner that will be attractive and appealing to the public, which will make it

easier for the channels to broadcast them during primetime. Here are a few suggestions for

consideration of NAC:

44

Assuming that there are 5 major parties with a plurality of vote shared between them - let us say

parties A, B, C, D and E secured 35%, 30%, 20%, 10% and 5% votes in the previous election. Let us

say that the party with the least vote share Both the donor and recipient shall be obliged to make

full disclosure to the Election Commission and the Income Tax authorities. Penalty for non-disclosure

or false disclosure shall be:

For Donors: fine equal to ten times the contributions and imprisonment for six months.

For Candidates: disqualification for six years, fine equivalent to ten times the amount not disclosed,

and imprisonment for at least one year.

For Parties: de-recognition and de-registration for five years, fine equivalent to ten times the

amount not disclosed, and imprisonment of office bearers for three years.

The third, and critical issue relates to public funding. The law enacted in September 2003 is silent on

public funding. The NCMP is committed to providing public funding

for elections.

Public funding should be considered only after other funding reforms are in place, and after

parties are democratised and regulated. Any public funding to be successful should be

limited, fair, transparent, verifiable and non-discretionary.

The following model could be considered for public funding. This model is based on a

careful study of comparative international experience. The objectives of public funding are:

provide parties with the necessary resources to effectively participate in normal political

activity; and to provide support by way of reimbursement of costs of electioneering.

However, we have a system of raising resources from private sources, and election

expenditure ceilings mandated by law.

45

Pre-Conditions for Public Funding

Political Party regulation to ensure internal democracy

Party candidates to be democratically selected by secret ballot by

members or their elected delegates

Decriminalization of politics

Rectification of defects in electoral rolls

Elimination of voting fraud through introduction of voter identity cards

and electronic voting.

Strict disclosure and penalty norms

Essential Elements of Public Funding

Transparent

Verifiable

Non-Discretionary

Incentive for performance

Encourage private resource mobilization

Prevent fragmentation

46

Fair to new parties and independents

Finite cost to exchequer

Equal treatment of all candidates

CHAPTER-13

CONCLUSION

Reducing the Cost of Elections

There should be a systematic attempt under law to reduce election expenditure. Modes of

electioneering which create public nuisance, namely, wall writings, campaign through

loudspeakers, holding rallies on the roads and parks, creating traffic jams, etc. can very

conveniently be curbed by making necessary provisions under law or the rules framed

under the parent legislation. Ferrying people on automobiles to the polling booths can very

conveniently be curbed by making necessary provisions in law. There does exist some legal

mechanism in these areas and what is needed is better enforcement of the provisions so

made.

Wall writings, display of cut-outs, hoardings and banners, hoisting of flags (except at party

offices, public meetings and other specified places), use of more than a specified number of

47

vehicles for election campaign and for processions, announcements or publicity by more

than a specified number of moving vehicles, holding of public meetings beyond the

specified hours, display of posters at places, other than those specified by the

district/electoral authorities, should be banned and strong penalty provided for violation of

expenditure ceiling. A suitable law should be enacted providing penalties against damaging

or desecrating public or private property by candidates, political parties or the agents,

through painting of slogans or erecting cut- outs and hoarding or putting banners and

buntings. The law should also provide for special courts to ensure strict compliance of the

aforesaid provisions of law, should any dispute arise in respect of the alleged violations of

provisions of law by any candidate, political party or his agents and well-wishers.

With a view to reducing election costs and strain on human and other resources, State and

Parliamentary level elections, to the extent possible, should be held at the same time.

Campaign period should be reduced considerably.

Candidates should not be allowed to contest election simultaneously for

the same office from more than one constituency.

The election code of conduct which should come into operation as soon

as the elections are announced should be given the sanctity of law and

its violation should attract penal action.

48

BIBLIOGRAPHY

INTERNET:

1) http//www.google.com/election commission of india/ppl file (visited on 22nd

May,2008).

2) www.Election Commission India.htm

BOOKS:

1) Johari.J.C., Indian Government & Politics.

2) Kapoor.A.C., Principles of Political Science.

3) Devi Rama & Mandiratta.E.S., How India Votes Election Law

Procedure Practice.

49

4) Bhattachariya.D.C., Political Theory.

5) Chawla, Election Law Procedure.

6)Indian Constitution ,V.N.Shukla

7) THE REPRESENTATION OF THE PEOPLE ACT, 1951(Bare act)

JOURNAL

All India Reporter

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