17 February 2018

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Explained Facts Judgement Politicians, their spouses and associates must reveal their sources of income

Explained Facts Judgement Politicians, their spouses and associates must reveal their sources of income

Case –
LOK PRAHARI, Petitioner versus union of India

The petition was filed in the context of alleged substantial increase in the assets of 26 Lower House and 11 Upper House members and 257 MLAs which was partially confirmed in a probe by the Central Board of Direct Taxes

The Supreme Court bench of Justice J Chelameswar and Justice Abdul Nazeer on Friday pronounced judgment in a writ petition filed by NGO Lok Prahari, seeking disclosure of the sources of income of candidates contesting elections at the time of filing...

Amendment of the RP Act of 1951 is a matter exclusively within the domain of the Parliament. It is well settled that no court could compel and no writ could be issued to compel any legislative body to make a law. It must be left to the wisdom of the legislature.

the prayers for the issue of the writ of mandamus to direct amendment in the Representation of People’s Act of 1951 to provide for rejection of nomination on the ground of furnishing of incorrect information in the said Form 26, as well as amendment to section 9A of the Act of 1951 to include contracts with any government or public company by any HUF/trust/partnership firm/private company in which a candidate or his dependents have a share or interest have not been granted in view of the settled position that a writ cannot be issued to a legislature to amend a law.

The writ petition seeks that State be compelled to make a law authorizing the collection of data pertaining to the financial affairs of the LEGISLATORS. The petitioner submits that the first step in the collection of data should be to call upon those who seek to get elected to a legislative body to make a declaration of - (i) their assets and those of their ASSOCIATES (which is already a requirement under Section 33 of the RP Act of 1951 etc.); and (ii) the sources of their Income.

Under Section 8(1) (m) of the RP Act of 1951, it is provided that persons convicted and Sentenced to imprisonment for not less than 6 months for offences under the provisions of various enumerated offences under Section 8 of the RP Act of 1951 are disqualified either for being chosen or continuing as a LEGISLATOR.

Petitioner seeks such a disqualification to be imposed even in the absence of a conviction under the provisions of the PC Act.
According to the petitioner, the assets of some of the members of the Parliament and the State legislatures (hereafter referred to as “LEGISLATORS”) and their ASSOCIATES grew disproportionately to their known sources of income (hereafter referred to as UNDUE ACCRETION OF ASSETS). The petitioner made representations to bodies like the Central Board of Direct Taxes and the Election Commission of India requesting them to examine the matter and take appropriate remedial measures. It appears that the petitioner annexed a (sample) list of certain LEGISLATORS whose assets increased more than 5 times after they got elected for the first time to the concerned legislative bodies. The petitioner believes that there is a need to Periodically examine the sources of income of the LEGISLATORS and their ASSOCIATES to ascertain whether there is an UNDUE ACCRETION OF ASSETS.

In the representation to the Chairperson of CBDT dated 30 June 2015, the petitioner stated, inter alia, “... As a result, the wealth of politicians has been growing by leaps and bounds at the expense of “We the People”. Evidently, no improvement in system and governance is Possible unless the role of money power in winning elections is curbed and the public representatives who misuse their position for amassing wealth are brought to book.
… A list of re-elected MPs and MLAs whose assets are increased more than five times (500%) after the previous election, provided by the ADR, is annexed herewith. Detailed information about the total income shown in the last Income Tax Return of these MPs/MLAs and their spouses and dependents is available in the affidavit in Form 26 filled with the nomination paper at the time of last election. These affidavits are available on the websites of the Election Commission of India as well as Chief Electoral Officers of the States. All that is required to be seen is as to whether the increase in assets is proportionate to the increase in income from the known sources in the intervening period. The CBDT is best equipped to do this exercise as part of responsibility cast upon them under the law. After completion of this exercise necessary follow up can be taken to serve as a lesson to them and  deterrent to others to desist from Converting public service into private enterprise.

In a historic and landmark judgement Supreme Court of India ruled that politicians, their spouses and associates to declare their sources of income, along with their assets, in order to qualify for contesting elections.

A clean and fair electoral process is a sine qua non for any democracy

Under Article 324 an Election Commission was established for the overall superintendence and control of elections

Article 324. Superintendence, direction and control of elections to be vested in an Election
Commission. - (1) The superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State and of elections to the offices of President and Vice-President held under this Constitution shall be vested in a Commission

Articles 102(e) and 191(e) authorize the Parliament to make laws by or under which other disqualifications can be prescribed to contest in an election to the Parliament or to the State  Legislature. Similarly, Articles 84(c) and 173(c) authorize the Parliament to prescribe other qualifications (by or under law) for securing the membership of the Parliament or the Legislature of the State respectively

Candidate is defined under Section 79(b) of the Representation of the People Act, 1951 - "candidate" means a person who has been or claims to have been duly nominated as a candidate at any election. However, the definition is only for the purpose of Parts VI and VII.

Very important –
Union of India v. Association for Democratic Reforms & Another, (2002) 5 SCC 294, Hereafter referred to as “ADR case” SC opined that “voter speaks out or expresses by casting vote” and such a speech is part of the Fundamental right under Article 19(1) (a).

SC held that for the effective exercise of his fundamental right, the voter is entitled to have all relevant information about the candidates at an election. This Court identified some of the
Important aspects of such information. They are
(i) Candidate’s criminal antecedents (if any),
(ii) Assets and liabilities,
(iii) Educational qualifications

This Court directed disclosure of various facts including information regarding the assets and liabilities of the candidates at an election and their respective spouses and dependents (collectively hereafter referred to for the sake of convenience as ASSOCIATES):

Subsequent20 to the said ADR judgment, Parliament chose to amend the RP Act of 1951 by introducing Section 33A. Parliament provided for the disclosure of certain limited Information regarding criminal antecedents of the candidates at an election, but not of all the information as directed by this Court (in para 48) of the abovementioned judgment

In other words, Parliament declared that other information required to be declared by the candidate by virtue of the directions issued in Union of India v. Association for Democratic Reforms & Another, (2002) 5 SCC 294 need not be given.

Court in ADR case took note of the fact that in certain democratic countries, laws exist 24 compelling legislators, officers and employees of the State to periodically make financial disclosure statements. But this Court did not issue any further direction in that regard. Hence the present writ petition.

If assets of a LEGISLATOR or his/her ASSOCIATES increase without bearing any relationship to their known sources of income, the only logical inference that can be drawn is that there is some abuse 25 of the LEGISLATOR’s Constitutional Office. Something which should be Fundamentally unacceptable in any civilized society and antithetical to a constitutional Government. It is a  phenomenon inconsistent with the principle of the Rule of Law And a universally accepted Code of Conduct expected of the holder of a public office in a Constitutional democracy.

Cromwell declared that such people are “enemies to all good governments”. The framers of the Constitution and the Parliament too believed so. The makers of the Constitution gave sufficient indication of that belief when they provided under Articles 102(1) (a) and 191(1) (a) that holding of any office of profit would disqualify a person either to become or continue to be a LEGISLATOR.

The most crude process by which a LEGISLATOR or his ASSOCIATES could accumulate assets is by resorting to activities which constitute offences under the Prevention of Corruption Act, 198826 (hereafter the PC Act). Gold is their God!

There are known cases of availing of huge amount of loans for allegedly commercial purposes from public financial institutions by LEGISLATORS or their ASSOCIATES either directly or through bodies corporate which are controlled by them; a notorious fact in a good number of cases. Such loan accounts become nonperforming assets 27 (NPAs) within the meaning of SARFAESI ACT in the hands of the financial institutions which advance loans. It is equally a widely prevalent phenomenon that borrowers (LEGISLATORS or even others) whose accounts have become NPAs are able to secure fresh loans in huge amounts either from the very same or other financial institutions.

Securing of contracts of high monetary value either from Government (Central or State) or other bodies corporate which are controlled by Government is another activity which enables LEGISLATORS and their ASSOCIATES to acquire huge assets. It is worth mentioning here that
Section 7(d) 28 of the RP Act of 1951 initially provided that any person who has a share or interest in a contract for the supply of goods or for the execution of any works or performance of any services either by himself or through any person or body of persons in trust for him or for his benefit etc. is disqualified. However, by amendment of Act 58 of 1958, the said provision was dropped and Section 9A 29 was introduced which enables the ASSOCIATES of the LEGISLATORS either directly or through a body corporate to acquire such contracts.

Abnormal increase in the personal assets of the LEGISLATORS and their ASSOCIATES is required to be examined in juxtaposition to the above mentioned activities. Further, it is also necessary to examine whether such benefits were received by taking undue advantage of the office of the LEGISLATOR

Manifold and undue accretion of assets of LEGISLATORS or their ASSOCIATES by itself might be a good ground for disqualifying a person either to be a LEGISLATOR or for Seeking to get re-elected as a LEGISLATOR. Statutes made by the Parliament are silent in this regard. But Section 169(1)38 of the RP Act of 1951 authorizes the central government to Make rules for carrying out the purposes of the Act. If the nation believes that those who are elected to its legislative bodies ought not to take undue advantage of their election to The LEGISLATURE for accumulation of wealth by resorting to means, which are inconsistent with the letter and spirit of the Constitution and also the laws made by the legislature, appropriate prescriptions are required to be made for carrying out the purpose of the RP Act of 1951. The purpose of prescribing disqualifications is to preserve the purity of the electoral process. Purity of electoral process is fundamental to the survival of a healthy democracy. We do not see any prohibition either under the Constitution or the laws made by the Parliament disabling or stipulating that the central government should not make rules (in exercise of the powers conferred by the Parliament under Section 169 of the RP Act of 1951 read with Articles 102(1) (e) and 191(1) (e) of the Constitution) providing for such disqualification. On the other Hand, Parliament under Section 169 of the RP Act of 1951 authorized the Government of India to make rules for carrying out the purposes of the Act.

There is a need to make appropriate provision declaring that the UNDUE ACCRETION OF ASSETS is a ground for disqualifying a LEGISLATOR even without prosecuting the LEGISLATOR for offences under the PC Act. It is well settled that a given set of facts may in law give rise to both civil and criminal consequences. For example; in the context of employment under State, a given set of facts can give rise to a prosecution for an offence and also simultaneously form the basis for disciplinary action under the relevant Rules governing the service of an employee

The information regarding the sources of income of the CANDIDATES and their ASSOCIATES, would in our opinion certainly help the voter to make an informed choice of the candidate to represent the constituency in the LEGISLATURE. It is, therefore, a part of the fundamental right under Article 19(1) (a) as explained by this Court in ADR case.

This Court and the High Courts are expressly authorized by the Constitution to give appropriate directions to the State and its instrumentalities and other bodies for enforcement of Fundamental Rights. On the other hand, nobody has the fundamental right to be a LEGISLATOR or to contest an election to become a LEGISLATOR. They are only constitutional rights structured by various limitations prescribed by the Constitution and statutes like the RP Act of 1951.

Prayers 1(2) and 3, insofar as petitioner seek directions in the nature of mandamus to consider amendment of the RP Act of 1951 cannot be granted.

In prayer 1(1) 54 , the petitioner seeks a direction to respondent Nos.1 and 2 to make changes in Form 26 prescribed under Rule 4A of the RULES, which would provide for calling upon the CANDIDATES to declare their sources of income along with the sources of the income of their respective ASSOCIATES

The prescription such as the one sought by the petitioner regarding the disclosure of the sources of income of the CANDIDATE and his/her ASSOCIATES in a nomination could certainly be made by making appropriate Rules.

The next question is whether the respondents could be compelled to make appropriate Rules for the above-mentioned purpose.

The Government of India, functioning as a statutory body for prescribing rules under the RP Act of 1951, is amenable to writ jurisdiction under Article 32 for the enforcement of the fundamental right under Article 19(1) (a) of the voter to know the relevant information with respect to the candidates.

Respondent Nos.1 and 2 are constitutionally obliged to implement the directions given by this Court in exercise of its jurisdiction under the Constitution. It may also be noticed that
Section 169(1) of the RP Act of 1951 obligates the Government of India to make Rules after consulting the Election Commission.

In the light of the law declared by this Court in ADR case and PUCL case, we do not see any legal or normative impediment nor has any tenable legal objection been raised before us by any one of the respondents, for issuance of the direction relating to the changes in FORM 26 (declaration by the CANDIDATES).

Bench said, we are of the opinion the prayer 1(1) should be granted and is accordingly granted. We direct that Rule 4A of the RULES and Form 26 appended to the RULES shall be suitably amended, requiring CANDIDATES and their ASSOCIATES to declare their sources of income.

In prayer 1(3) (ii), the petitioner seeks a direction for establishment of a permanent mechanism to inquire/ investigate into the disproportionate increase in the assets of LEGISLATORS during their tenure as LEGISLATORS

In order to effectuate the constitutional and legal obligations of LEGISLATORS and their ASSOCIATES, their assets and sources of income are required to be continuously monitored
To maintain the purity of the electoral process and integrity of the democratic structure of this country. Justice Louis D. Brandeis, perceptively observed: “the most important political
Office is that of the private citizen.

The State owes a constitutional obligation to the people of the country to ensure that there is no concentration of wealth to the common detriment and to the debilitation of democracy.
Therefore, it is necessary, as rightly prayed by the petitioner, to have a permanent institutional mechanism dedicated to the task. Such a mechanism is required to periodically collect
Data of LEGISLATORS and their respective ASSOCIATES and examine in every case whether there is disproportionate increase in the assets and recommend action in appropriate
Cases either to prosecute the LEGISLATOR and/or LEGISLATOR’S respective ASSOCIATES or place the information before the appropriate legislature to consider the eligibility of such LEGISLATORS to continue to be members of the concerned House of the legislature.

Further, data so collected by the said mechanism, along with the analysis and recommendation, if any, as noted above should be placed in the public domain to enable the voters of such LEGISLATOR to take an informed and appropriate decision, if such LEGISLATOR chooses to contest any election for any legislative body in future.

We are also of the opinion that the nondisclosure of assets and sources of income of the
CANDIDATES and their ASSOCIATES would constitute a corrupt practice falling under heading ‘undue influence’ as defined under Section 123(2) of the RP Act of 1951

The bench ordered an investigation/inquiry into the disproportionate increase in the assets of MPs/MLAs/MLCs named in the list annexed to the petition as well as the establishment of a permanent mechanism to investigate other legislators whose assets have increased by more than 100% by the next election.

The prayer of the petitioner seeking a direction that non-disclosure of assets and the sources of income by candidates, their dependents and associates shall amount to ‘undue influence’ for the purpose of Section 123(2) of the Act of 1988 and that the election of such a candidate can be declared null and void under Section 100(1) (b) of the Act of 1951 has also been allowed

Relief by way of information under Form 26 regarding any contracts with the government of the candidate or his dependents, either directly or through a HUF/trust/partnership/private company has also been granted.

To further modify Form 26 to require information on the provisions in sections 8A, 9, 9A, 10 and 10A of the Representation of Peoples Act regarding disqualification which may render a candidate ineligible to contest has also been permitted.

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Saturday, February 17, 2018

Tags – Election Reform India MP MLA Spouse Dependent Source of Income Form 26