COMMON CAUSE-A REGISTERED SOCIETY versus UNION OF INDIA & ORS.

Citation: [1996] 3 S.C.R. 1208 · Decided: 04-04-1996 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Case Allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
COMMON CAUSE-A REGISTERED SOCIETY 
v. 
UNION OF INDIA & ORS. 
APRIL 4, 1996 
B 
(KULDIP SINGH AND FAIZAN UDDIN, JJ.J 
Companies Act, 1956 : Section 293A read with Section 13A, Income 
Tax Act, 1961-Section 77, Representation of People Act, 1950 : Election 
funding-Need for transparency-Mandatory provisions of law-ViolaJion of 
C by political parties-Prevention of 
D 
Income Tax Act, 1961 : Sections 13A, 139(48), 142(1) & 276CC: 
Election funding-Role of money powei-Curbing of-Statutory obligations of 
political parties-Need for strict enforcement. 
Represrntation of People Act, 1950 : Section 77(1), Explanation 
I-Benefit of-Election expenditure incun·ed or authorised by candidate and 
his political party-Accountability f01--0nus of proof on the candidate. 
Constitution of India, 1950 : Article 324 : Election Commissio1t-Su-
E perintendence and control of conduct of election-Includes power to direct 
political parties to submit details of election expenditure. 
Section 293A(l) of the Companies Act, 1956 bars government com-
panies, and other companies in existence for less than three financial 
years, from contributing any amount to any political party. Sub-section (2) 
F 
restricts such contribution fron1 eligible co1npanies in any financial yt:ar 
to five per cant of its average net profits by a resolution of the Board of 
Directors. Sub-section (4) mandates disclosure of such donation in their 
profit and loss account. 
Section 13A of the Income Tax Act, 1961, requires a political party 
G to keep proper books of accounts, maintain record of each voluntary 
contribution in excess of Rs. 10,000 and to get its accounts audited to be 
eligible for exemption from income tax. Section 139(48) makes it 
obligatory for the Chief Executive Otncer of every political party to furnish 
a return of income for each year. Section 142(1) provides for enquiry before 
H assessment. Failure to furnish a return of income has been made a 
1208 
• 
COMMON CAUSE v. U.0.L 
1209 
criminal offence punishable under section 276CC of the Act. 
Section 77(1) of the Representation of the People Act, 1950 requires 
every candidate at an election, either by himself or by his electi<in agent, 
A 
to keep a separate and correct account of all expenditure in connection 
with the election incurred or authorised by him or by his election agent. 
Explanation I thereto excepts from the provisions of sub-section (1) any B 
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. 
Article 324 of the Constitution of India vests in the Election Com-
C 
mission the superintendence, direction and control of the preparation of 
the electoral rolls for, and the conduct of elections to, Parliament and to 
the legislature of every State. 
It was submitted for the petitioner Common Cause Society that the 
cumulative effect of the three statutory provisions, section 293A of the D 
Companies Act, section 13A of the Income Tax Act and section 77 of the 
Representation of People Act is to bring transparency in the election 
funding, that these mandatory provisions of law are being violated by the 
political parties with impunity, that the elections in the country are being 
fought with the help of money power which is gathered from black sources, E 
that once elected to power it becomes easy to collect tons of black money 
which is used for retaining power and re- election, that this vicious circle 
has totally polluted the basic democracy in country, that neither the 
political parties nor the 'companies show the contributions/donations in 
their account books in patent violation of law, that the political parties 
have not been filing returns of income as ret1uired and that the income tax F 
department did not issue notices to the political parties from 1979 till-date . 
. 
The intervener submitted that the corruption in quest of political 
office and tlie corruption in the mechanics of survival in power had 
thoroughly vitiated our lives and our times and sullied our institutions so 
much so that the corruption was the root cause of all the problems faced G 
by the society and the country, and that unless the statutory provisions 
meant to bring transparency in the functioning of the democracy are 
strictly enforced and the election-funding is made transparent, the vicious 
circle cannot be broken and the corruption canno

Excerpt shown. Read the full judgment & AI analysis in Lexace.