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Report No. 170

Chapte.- I

The proposal to delete Explanation I to section 77

4.1.1. Section 77 which occurs in Chapter VIII of Part V of the Act, entitled "Election Expenses", is applicable only to the elections to the Lok Sabha and the Legislative Assembly of a State. As originally enacted, it provided that "Every candidate at an election shall, either by himself or by his election agent, keep a separate and correct account of all expenditure in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 election agent between the date of publication of the notification calling the election and the date of the declaration of result thereof, both dates inclusive."

The words "all expenditure in connection with the election incurred or authorised by him or by his election agent" fell for consideration of the Supreme Court in Kanwarlal Gupta v. Amar Nath Chawla (1975) 3 SCC 646. The court, in the first instance, referred to sub-section (6) of section 123 of the Act which says that " the incurring of authorising of expenditure in contravention of section 77" is a corrupt practice which disqualifies the person from contesting the elections for the next six years.

After referring to the language of section 77, they observed that where the expenditure was authorised by the candidate or by his election agent expressly, there was no difficulty in determining the meaning of the aforesaid words, but, the court observed, difficulty arose where the expenditure was incurred not by the candidate but by the political party which had sponsored him or by his friends and supporters.

The court posed the question "Can the limit on the expenditure be evaded by the candidate by not spending any money of his own but leaving it to the political party or his friends and supporters to spend an amount far in excess of the limit?" and then proceeded to ascertain the object and purpose underlying section 77. The court observed:

"The object of the provision limiting the expenditure is two-fold. In the first place, it should be open to any individual or any political party howsoever small, to be able to contest an election on a footing of equality with any other individual or political party, howsoever rich and well financed it may be, and no individual or political party should be able to secure an advantage over others by reason of its superior financial strength."

4.1.1.1. The court then observed that money plays an important part inasmuch as the paraphernalia required in an election campaign can not be obtained except with the aid of funds. Money is absolutely necessary for fighting an election. The court further observed that the requirement of the constitution was full and effective participation of all citizen in the political process and to have an equal voice in the election of the members of the legislatures.

It is the purpose of law, the court observed, to effectuate the above objective and to ensure that every candidate and every citizen participated in the election process of a footing of equality. The next objective behind the said provision, the court said, was limiting the expenditure on elections so as to eliminate, as far as possible, the influence of big money in the electoral process. If there were no limit on expenditure, political parties would resort to collection of contributions which would naturally come only from the rich and affluent sections of the society.

The court then stressed the pernicious influence of big money in derailing the democratic process and referred in this connection to the evils of big money influence on elections which had come to light in the USA. The court opined that the aforesaid background should inform the court in the interpretation of section 77 of the Act and then made the following pertinent observations:

"Now, if a candidate were to be subject to the limitation of the ceiling," but the political party sponsoring him or his friends and supporters were to be free to spend as much as they like in connection with his election, the object of imposing the ceiling would be completely frustrated and the beneficial provision enacted in the interest of purity and genuineness of the democratic process would be wholly emasculated. The mischief sought to be remedied and the evil sought to be suppressed would enter the political arena with redoubled force and vitiate the political life of the country.

The great democratic ideal of social, economic and political justice and equality of status and opportunity enshrined in the Preamble of our Constitution would remain merely a distant dream eluding our grasp. The legislators could never have intended that what the individual candidate cannot do, the political party sponsoring him or his friend and supporters should be free to do. That is why the legislators wise interdicted not only the incurring but also the authorising of excessive expenditure by a candidate.

When the political party sponsoring a candidate incurs expenditure in connection with his election, as distinguished from expenditure on general propaganda, and the candidate knowingly takes advantage of it, or participates in the programme or activity or fails to disavow the expenditure or consents to it or acquiesces in it, it would be reasonable to infer, save in special circumstances, that he impliedly authorised the political party to incur such expenditure and he cannot escape the rigour of the ceiling by saying that he has not incurred the expenditure, but his political party has done so.

A party candidate does not stand apart from his political party and if the political party does not want the candidate to incur the disqualification, it must exercise control over the expenditure which may be incurred by it directly to promote the poll prospects of the candidate. The same proposition must also hold good in case of expenditure incurred by friends and supporters directly in connection with the election of the candidate. This is the only reasonable interpretation of the provision which would carry out its object and intendment and suppress the mischief and advance the remedy by purifying our election process and ridding it of the pernicious and baneful influence of big money.

This is in fact what the law in England has achieved. There, every person on pain of criminal penalty, is required to obtain authority from the candidate before incurring any political expenditure on his behalf. The candidate is given complete discretion in authorising expenditure up to his limit. If expenditure made with the knowledge and approval of the candidate exceeds the limit or if the candidate makes a false report of the expenditure after the election, he is subject not only to criminal penalties, but also to having his election voided."(Italics added).

4.1.1.2. The court then referred to the earlier decisions of the court supporting the construction bases upon section 77 by them.

4.1.2. The Law Commission of India is of the opinion that the decision in Kanwarlal Gupta's case rightly and correctly interprets section 77. Indeed, it does more. Besides furnishing the rationale for such a provision, it also points out the desirability and necessity of having such a provision to ensure free and fair elections and to keep out the money-power.

4.1.3. Unfortunately, however, soon after the above judgment, the President of India issued an Ordinance amending the section 77 by inserting Explanation 1 in sub-section (1) of section 77. Subsequently, Amendment Act 58 of 1974 was enacted in terms of the said Ordinance and was given retrospective effect on and from October 19, 1974. Explanation I so inserted reads as follow.-

Explanation .- Notwithstanding any judgment, order or decision of any Court to the contrary, any expenditure incurred or authorised in connection with the election of a candidate by a political party or by any other association or body of persons or by any individual (other than the candidate or his election agent) shall not be deemed to be, and shall not ever be deemed to have been, expenditure in connection with the election incurred or authorised by the candidate or by his election agent for the purposes of this sub-section.

Provided that nothing contained in this Explanation shall affec.-

(a) any judgment, order or decision of the Supreme Court whereby the election of a candidate to the House of the People or to the Legislative Assembly of a State has been declared void or set aside before the commencement of the Representation of the People (Amendment) Ordinance, 1974 (Ord. 13 or 1974);

(b) any judgment, order or decision of a High Court whereby the election of any such candidate has been declared void or set aside before the commencement of the said Ordinance if no appeal has been preferred to the Supreme Court against such judgment, order or decision of the High Court before such commencement and the period of limitation for filing such appeal has expired before such commencement."



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