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.

1
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 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

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

3
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 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

4
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.

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

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
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 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,

6
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. 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

7
'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

8
 and state legislatures have been dealt 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.

9
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.

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

10
 prescribed maximum.

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 Maximum limit of election

Territory expenses any one

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

11
12
13
 Parliamentary Assembly
constituency constituency
1 2 3 4
Stat Rs Rs
e
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
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
Unio
n
Terri
torie
s
1 Andaman & Nicobar islands 1700000 ------------
2 Chandigarh 1400000 -------------
3 Dadra and nagar havely 1000000 --------------
4 Daman and diu 14
1000000 ----------------
5 Delhi 2500000 900000
6 Lakshadweep 600000 ------------
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
particulars mentioned in item ( e) in regard to the items of expenditure for

15
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].

16
Commission's guidelines regarding maintenance of
account of expenses and inspection thereof:

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

17
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 - 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

18
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 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

19
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:

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

20
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 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

21
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 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.

22
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. Nor would the amount be taken -into consideration in
calculating the total expenses of the successful candidate for detennining
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.

23
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)].

24
The maximum amount of election expenditure which may be incurred by
the candidates for 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

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

25
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 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
10
LR. Shivaramagowdav. T.M. Chandrashekar, (1999) 1 SCC 666.

26
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 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

27
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 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.

28
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. 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.

29
 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”.

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."

30
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 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

31
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

32
Court, which was delivered on
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.

Expenses 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

33
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.

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

34
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.

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

35
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, 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

36
 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.

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.

37
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 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.

38
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 election expenses if the telephone exchange does not
charge any thing for local calls.16

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 Gounder
15
Chuni Lai Singh Raguvanshiv. Gajadhar and Others, 1969, DEC 464 SC.
16
AmarNath v. Lakshman Singh and others, 1968 DEC 130 SC.

39
 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,
17
Shivrama Sawnt Bhonsale v. Pratap Rao Deo Rao Bhonsale, 17 ELR 37.

40
no such starting point or ending date were prescribed. The words used
were expenses incurred by "the 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

41
prescribed prohibitory dates in anticipation of his being declared elected.
18

CHAPTER-9
BURDEN OF PROOF OF EXCESSIVE EXPENDITURE.
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
18
Gajanan Krishnaji Bapat v. Dattaji Raghobaji Meghe, (1995) 5 SCC 347 : AIR 1995 SC
2284.

42
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.

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)

19
R. Puthunainar Alhithan v. P.H. Pandian (1996) 3 SCC 624: AIR 1996 SC 1599.

43
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 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

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

44
 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 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
21
Common Cause a Registered Society v. Union of India and others, JT
1996 (3) SC 706: (1996) 2 SCC 752.

45
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
be suitably raised to.

46
 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

47
 strongly.

• 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

48
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

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

49
 • 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:

'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

50
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).'.

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.

51
 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:

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.

52
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.

Pre-Conditions for Public Funding

• Political Party regulation to ensure internal democracy

53
 • 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

54
 • Encourage private resource mobilization

• Prevent fragmentation

• 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

55
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 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.

56
 • 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.

BIBLIOGRAPHY

INTERNET:
1) http//www.google.com/election commission of india/ppl file
(visited on 22nd May,2008).

57
 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.

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

58