Holding

Explanation 1 to Section 77(1) of the Representation of the People Act, 1951 is constitutionally valid and does not violate Article 14.

Summary

The petition challenged the constitutional validity of Explanation 1 to Section 77(1) of the Representation of the People Act, 1951, which exempts expenditures incurred by political parties or other persons (other than the candidate or his agent) from being counted towards the candidate's election‑expense ceiling. The petitioner argued that this provision allowed unlimited spending by parties, violated Article 14’s guarantee of equality, and undermined the purpose of limiting election expenses. The Union contended that the Explanation merely restored the pre‑Kanwar Lal Gupta position, applied uniformly to all parties, and was a permissible legislative policy not open to judicial review. The Court held that the classification of all political parties and similar entities in a single group is reasonable, bears a rational nexus to the statutory objective, and does not constitute arbitrary discrimination. It further clarified that Explanation 1 and Section 77(1) address distinct situations and the former does not render the latter nugatory. Consequently, the writ petition and accompanying civil miscellaneous petitions were dismissed, leaving the Explanation intact.

Issues considered

The constitutional validity of Explanation 1 to Section 77(1) of the Representation of the People Act, 1951 under Article 14.
Whether the provision permits unlimited election spending by political parties, thereby violating the principle of equality.
Whether the Explanation unduly interferes with the statutory ceiling on candidate expenditure under Section 77(3) and Rule 90 of the Conduct of Election Rules, 1961.
Whether legislative policy on election expenses is amenable to judicial review.

Legislation cited

Conduct of Election Rules, 1961s. Rule 90
Constitution of Indias. Art. 14
Representation of the People Act, 1951s. Sec. 123(6), s. Sec. 77(1), s. Sec. 77(3)
Representation of the People (Amendment) Act, 1974

Subjects

Article 14EqualityElection expenditure ceilingPolitical partiesRepresentation of the People ActConstitutional validityUnlimited spendingFree and fair elections

Judgment

622

DR. P. NALLA THAMPY TERAH
A
v.

UNION OF INDIA & ORS.

May 8, 1985
8
[Y.V. CHANDkACHUD, CJ, P.N. BHAGWATI, D.A. DESAI,
AMERENDRA NATH SEN AND V. BALAKRISHNA ERADI JJ.j

Constitution of India 1950, Art. 14 & Representation of People Act 1951,
c S. 77 (J), Explanation I-Scope of-Explained-Political parties spending
unlinlited money in election of their party candidates-conferment of power-
Whether vio 1ative of Art. 14 and unconstitutional.

Conduct of Election Rules, 1961, Rule 90. Election-Expenditure-lncur-
rence of-Applicability of ceiling-whether prevalent.
D

Section 77(1) of the Representation of the People Act, 1951 provides
that every candidate at an election shall, either by himself or by his election
agent, keep a separate and correct account of all expenditure in connection
with the election incurred or authorised by hint or by his election agent,
E between the date of publication of the notification calling the election and the
date of declaration of the result thereof, both dales inclusive. Section 77(3)
provides that the total of the said expenditure shall not exceed such amount a!
may be prescribed by the Rules framed under the Act. In Kanwar/al Gupta
[1975] 2 SCR 259 the Court observed that when the political party sponsoring
a candidate incurs expenditure in connectivn with his election, as distinguished
from expenditure on general party propaganda, and the candidate knowingly
F takes advantage of it or participates in the programme or activity or fails to
disavow the expenditure or cons~nts to it or acquiesces in it, it would be
reasonable to infer, save in special circumstances, that he impliedly authorised
the political party to incur such expenditure and he cannot escape the rigour
of the ceiling by saying that he has not incurred the expenditure, but his
G
political party has done so. In otder to get over the judgment in Kanwar/of
Gupta, the R~presentation of the People (Amendment) Ordinance. 1974 was
.,.
issued which was replaced by the Representation of the People (Amendment)
Act, 1974. Section 2 of the Amending Act added two Explanations to section
77(1). Explanation 1 provides that notwithstanding any judgment, order or
decision of any court to the contrary. any expenditure incurred or authorised
in connection with the election of a candidate by a political party or by any
H individual (other than tbe candidate or his election agent) shall not be deemed
to be, and shall not ever be deemed to 11ave been, expenditure in connection
with the election incurred or authorised by the candidate or by his election
agent for the purpose of gub·Section (I) of Section 77.
P.N.T. TEllAH P. UNION 623

In the writ petition under Art. 32 the petitioner challonged tho validity
of Explanation 1 to section 77(1) of tho Representation of the People Act, A
1951 on tho grounds: (i) that it enables political parties to spend unlimited
monies for the election of the candidates sponsored by them, (ii) that this is
arbitrary and violative of Art. 14 because it sanctions serious discrimination
between one political party or individual and another on the ba1i1 of money
power, (iii) that it not only permits but encourages and legitimh1es the influence
of big money in the electoral process and thus militates aaainst the fairness
and purity of the electoral process, (iv) that it denies to the citizen riaht to B
have full and effective participation in the electoral process and (v) that it
nullifies the salutary object of imposing a ceiling on a candidate's expenditure.

On behalf of the respondent-Union of India it was contended: (i) that
Explanation I to section 77(1) of the Act Wds introduced to restore the law as
expounded in the decisions of this Court prior to the decision in Kanwar/al
Gupta, (ii) that the expenditure incurred by political parties in connection with
c
the election of their candidates do not fall within the mischief of section 77(1)
read with section 123(6) of the Act, (iii) that Explanation 1 is not violative or
Art. 14 and (iv) that legislative policies bearing upon matters aovernioa
elections are not open to judicial review.

Dismissing tho Writ Petition and C.M.Ps.,
D

HELD: I. Explanation I to section 77\1) or the Representation or the
People Act, 1951 neither suffers from any constitutional infirmity nor it violates
Art. 14. Explanation 1 classifies all political parties or associations in one aroup
and confers upon them the same or similar advantage. Political parties or,
politica1Iy n1otivated associations or bodies of persons or, individuals interested E
in pclitical happenings, are characterised by common attributes, the dominant
attribute being that they engage themselves in activities of a poJitical nature.
Elections constitute the core of such activities. A classification or this nature
bears reasonable relationship with the ohject of the statute that expenses in-
curred by those who falJ within the particular group should not be regarded as
expenditure incurred or authorised by the candidates or his election agent.
Classification has to be broadly reasonable in order to sustain the challenge of
F
unconstitutionality. One cannot dissect that process and discover shades
within shades to nuflify it on the ground of inequality. [636 G-H; 637 A; CJ

2. Explanation 1 to section 77(1) of the Act says lhat a political party
or any other association or any individual, other than the candidate or his
election agent, can incur expenses, without any limitation whatsoever, in G
connection with the election of a candidate. Such expenses are not deemed to
be expenditure in connection with the election incurred or authorised by the
candidate or by his election agent for the purpose of section 77(1 ). r636 E-P]

3. As independent candidate who contests an election without tho H
support of a political party, is at a considerable disadvantage as compared with
candidates supported by political parties. But, that does not violate tho rule of
equality. It is not the election law which cre,tes such inequalities. Inequalitie~
624 SUPREME COURT REPORTS [1985] SUPPL. s.c.R.
exist apart fro111 that Jaw and are implicit in the unequal positions in which the
A citizens find themselves. What the law does is to allow, in an equal measure,
all political _parties, associations or bodies or persons or individuals (other than
the candidate or his election agent) to incur expenses in connection with the
election of candidate, which need not be included in the return of election
expenses which the candidate is required to file. (637 C-E]

B 4. Preferring political parties for ex.clusion from the sweep of monetary
limits on election expenses, is not so unreasonable or arbitrary as to justify the
preference being struck down upon that ground because the statute neither
makes the afiluence of a political party and electoral standard for acquiring
eligibility prescribed by the Explanation nor is it an unwise policy to ensure
reasonable reduction in the number of contesting candidates, which can be
done by conferring special privileges upon political parties. Jn any democratic
c system of government political parties occupy a distinct and unique place. It is
through them that the people atttempt to voice or ventilate their grievances.
Considering the power which they wkld in the administration of governmental
affairs, a special conferment of benefits on them in the matter of modalities
governing the election process cannot be regarded as unreasonable or
arbitrary. [637 G-H; 638 B-C)
D
5. In Kanwar/al Gupta the Court drew a distinction between the expenses
incurred by a political party specifically in connection with the election of a
particular candidate and the expenditure incurred by it on general party
propaganda, the latter not being includible in the return of election expenses
which the candidate has to file. The rationale of that decision is that by reason
of the important position which political parties occupy they are entitled to
E incur expenditure for projecting their programn1es and popularising their
policies. Explanation I obliterates the dividing line drawn in Kanll'ar!al Gupta
between expenses incurred 'in connection with' the election of a particular
candidate and expenses incurred on 'general party propaganda'. All persons,
except the candidate and his election agent_, are now free to incur expenditure
of the former kind too, without the constraints of ceiling imposed upon election
F expenditure by section 77(3) read with Rule 90 of the Conduct of Election
Rules, 1961. (638 C-E)

6. Whether Explanation I restores the law as it was understood before
Kanwar/al Gupta or, it makes an innovation is irrelevant for deciding upon its
validity. Every law, whether restorative or innovative, has to be tested on the
touchstone of the Constitution. [638 G]
G
7. Election laws are not designed to produce economic equality amongst
citizens. They can, at best, provide an equal opportunity to all sections of
society to project their respective points of view on the occasion of elections.
[639 B]

11 8. If it is correct that different political parties have been treated equally
though they are situated unequally, or that individuals have been discriminated
against either inter se or in relation to political parties and associations, the
only method which would measure up to the required constitutional standard is
P.N,T. TERAH P, UNION 625

the one in which the State would have to allocate funds from its own exchequer
in order to enable the various candidates to contest elections. That would be A
the fairest form of fairness. (639 D·E]

9. Explanation I would not become unconstitutional for the reason that
it allegedly renders the_ main provisions in section 77(1) nugatory by taking
away with one hand what is given by the other. The Explanation does not
denude the section of its meaning and make it purposeless. Section 77( l) deals B
with the expenditure •incurred or authorised by' a candidate or his election
agent. in connection with the election. It is obligatory to keep a separate and
correct account of such expenditure. Explanation I deals with the expenditure
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. It is
not obligatory for the candidate or his election agent to keep a separate and
correct account of such expenditure, because such expenditure is not incurred or c
authorised by the candidate or his election ager:t and that such expenditure
cannot be deemed to be incurred or authorised by the candidate or his election
agent. Section 77(1) on the one hand and Explanation l on the other. deal
with two different situations wherefore. the latter cannot render the former
meaningless. [639 F-H; 640 A·B]
D
JO. Jf an expenditure which purports to have been incurred, fo rexample,
by a political party has in fact been incurred by the candidate or bis election
agent, Explanation 1 will not be attracted. 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)
that the Explanation will conie into play. For seeking protection under E
Explanation 1 it must be shown that the source of the t"xpenditure incurred was
not the cant'idate or his election agent. Explanation I does not create a fiction.
Jt deals with the realities of political situations. Jt does not provide that that
cxpCnditure in fact incurred or authorised by a candidate or his election agent,
shall not be deemed to be incurred or authorised by then1, if the amount is
defrayed by a political party. The object of the Explanation is to ensure that
the expenditure incurred, by a political party on its own, without using the F
funds provided by the candidate or his election agent shall not be deemed to be
expenditure incurred or authorised by the candidate or his election agent. If
the expenditure is incurred from out of the funds provided by the candidate oi'
his election agent section 77(1) and not Explanation I would apply, (640 C-H]

11. The reason why the expression 'shall not be deemed to be' is used G
in Explanation I is that Parliament wanted to get over the effect of the judg-
n1ent of this Court in Kanwar/a/ Gupta's case. Similalry, the expression 'sha11
not ever be deemed to have been' is used in the Explanation, to get over the
effect of that judgment retrospectively, except to the extent mentioned in
clauses {a) and (b) of tho Proviso to the Explanation. (641 B-C]
H
12. The limited range of Explanation I ought not to be enlarged. The
ceiling placed on election expenses is a basic commandment of the Act, not a
626 SUPlll!Mll COURT RIPORTI (1985) SUPPL. 8.C.R. '

piou1 edict. 111 object i1 to keep a check on the expenditure incurred by
A candidates on their own elections, directly or through their election agents.
They cannot be permitted to resort to subterfuges in order to evade the restraint
imposed by section 77(1) and 77(3) of the Act. Homage to the principle of free
and fair elections bas to be real, not formal. [641 C-DJ

13. The Court is not to lay down policiea in matters pertainina to
elections. The Court cannot negate a law oo the ground that it does not
B approve of the policy which underlies it. The Court might have its own
preferences and perceptions but, they cannot be used for invalidatine laws.
[641 E-F]

14. The right to contest an election or to vote at it is not a Common
Law right. [641 G]
c
15. The question as regards the constitutional validity of Explanation 1
has to be determined regardless of the consideration as to whether the said
Explanation restores the law as it stood before the decision of tbts Court in
Kanwar/al Gupta or whether it introduces a new provision altogether. [642 E]

D 16. Inft.uencc of big money on the election process is roaarded universally
as an evil of great magnitude.

Kanwar Lal Gupta v. Amar Nath Chawla, [1975] 2 SCR 259 explained.

Rananjaya Singh v. Baijnath Singh [1955] 1 SCR 671; Ram Dayal v. Brijraj
E Singh f\970] 1 SCR 530; Magraj Patolia v. R.K. Bir/a (1971) 2 SCR 118; Smt.
Indira Gandhi v. Raj Narain (1976] 2 SCR 347; Lok Sabha Debates Vol. XLVII,
Nos. 21-27, 12·20 December, 1974 page 279; Vala/ Nagaraj v. R. Dayanand
Sagar [1975] 2 SCR 384, 399; Tata Iron & Steel Co. Ud. AIR 1958 Bombay 155;
Indian Iron and Steel Co. Ltd AIR 1958 Calcutta 234; Report of the Santhanam
Committee on Prevention of Corruption 1962, Section 11, 'Social Climate'
F Paragraph 11.5; Report of the Expert Committee on •Companies and MRTP Acts'
1978, Chapter XIII pages 99-104; Jyoti Basu v. Debi Ghosal [1982] 3 SCR 318,
326, 327; Halbury's Law of England, Fourth Edition, Volume 15, Paragraph 721,
referred to.

ORIGINAL JURISDICTION : Writ Petition No. 1177 of 1979.
G
Under Article 32 of the Constitution of India.

Soli J. Sorabjee, Harish N. Salve and Laxmi Kant Pandey for
the Petitioner.
H
K. Parasaran, Attorny General, 1'.S. Krishnamurty Iyer ii,nd
Miss A. Subhashini for the Respondents.
P.N.T. TERAH v. UNION (Chandrachud, C.J.) 627

The Judgment of the Court was delivered by
A
CHANDRACHUD C.J. The petitioner, Dr. P. Nalla Thampy
Thera, is not an intermeddler or busy body. He is a public-spirited
citizen whose motives in filing this petition are to be admired even
if his contentions may not merit acceptance. By this petition under
Article 32 of the Constitution, he challenges the validity of Explana·
B
- tion 1 to section 77(1) of the Representation of the People Act, 1951
(hereinafter referred to as "the Act") which gives a carte blanche to
political parties to spend unlimited monies for the election of the
candidates sponsored by them. In practice, insofar as our little
knowledge of political affairs goes, sky is the limit for such expendi·
ture : Some call it millions, some call it billions. c
The particular provision of the statute which is under conside·
ration here, has a short, though significant history. A judgment of
this Court led to its enactment. That judgment, to which one of
us, Bhagwati J, was a party, was delivered on October 3, 1974 in D
Kanwar Lal Gupta v. Amar Nath Chawla.(1) Section 77(1) of the
Act, as it stood then, read thus :

"Every cadidate al an election shall, either by him·
self or by his election agent, keep a separate aod correct
account of all expenditure in connection with the election E
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 dates inclusive."
F
Section 77( 3) provides that the total of the said expenditure shall
not exceed such amount as may be prescribed, that is to say, the
amount prescribed by the Rules framed under the Act. The
expenditure prescribed for a Parliamentary constituency in the Union
Territory of Delhi was Rs. 10,000. The question before the Court in
Kanwar Lal Gupta was whether the successful candidate, Amar Nath
G
Chawla, had incurred or authorised expenditure in connection with
his election exceeding the ceiling of Rs. 10,000. Noting that what
section 77(1) prohibited was not only the incurring but also the
authorising of excessive expenditure and that such authorising may H
be implied or express, the Court observed :
(I) (1975)2 S,C R 259.
6211 SUPllllll COUll.T lllPORTS [1985] 1Wl'PL. s.c.R,

"When the political party sponiorin; a candidate
A incurs expenditure in connection wirh hi• election, as
distinguished from expenditure on general party propa-
ganda, and the candidate knowingly takes advantage of ii
or participates in the programme or activity or fails to
disavow the expenditure or consents to it or acquiesces in
it, it would be reasonable to infer, save in special circum-
B stances, that he impliedly authorised the political party to
incur such expenditure and he cannot escape the rigour of
the ceiling by saying that he has not incurred the expendi-
-
ture, but his political party has done so. A party candi-
date does not stand apart from his political party and if
c the political party does not want the candidate to incur
the disqna!ification, it must exercise control over the
expenditure which may be incurred by it directly to pro-
mote the poll prospects of the candidate. The same
proposition must also held good in case of expenditure
incurred by friends and supporters directly in connection
D with the election of the candidate. This is the only
reasonable interpretation of the provision which would
carry ont its object and intendment and suppress the mis-
chief and advance the remedy by purifying our election
process and ridding it of the pernicious and baneful
E influence of big money."

On November 7, 1974, Bill No. 104 of 1974 was introduced in
the Lok Sabha in order to get over the judgment in Kanwar Lal
Gupta. The Statement of Objects and Reasons of that Bill reads
thus :
JJ
"STATEMENT OF OBJECTS AND REA~ON~

Section 77 of the Representation of the People Act,
1951 provides that the total of the expenditure in connec-
G tion with an election incurred or authoriied by the
candidate or his election agent between the date of
publication of the notification calling the election and the
date of declaration of the result thereof shall not exceed
such amount as may be prescribed. Rule 90 of the Con-
H duct of Elections Rules, 1961, seeks to lay down the
maximum election expenses for a parliamentary
constituency and an Assembly constituency in respect of
P.N.T. TERAH v. UNION (Chandrachud, C.J.) 629

various States and the Union territories. Clause (6) of
section 123 of the Representation of the People Act has A
specifically included the incurring or authorizing of
expenditure in contravention of section 77 as a corrupt
practice, which, if established, would not only vitiate the
election, but also result in disqualifying the candidate for
a period of ~ix years under section 8A of the iaid Act. B
In the Election Law, the emphasis has been
on imposing a curb on an individual incurring
expenditure in connection with his election in
excess of the prescribed limit, The provision contained
in section 77 of the Act is very specific in this respect c
and the intention that the curb is on the expenditure
incurred or authorized by the candidate has found
support in the judicial pronouncements on the point.
The expression "incurred or authorized" bad not been
construed so as to bring within its purview the expendi- D
ture incurred by a political party in its campaign or by
any person other than the candidate unless incurred by
such third person as the candidate's agent. In other
words, the provisions of section 77 and clause (6) of
section 123 have been intended and understood to be
restraints on the candidate's election expenditure and not E
on the expenditure of a political party.

However, in the recent case of Kanwar Lal Gupta v.
J..N. Chawla and Others (Civil Appeal No. 1549 of 1972
decided on 3rd October, 1974), the Supreme Court has F
interpreted the aforementioned expression "incurred or
authorized" as including within its scope expenses incur-
red by a political party or other person referred to above.
In view of the effect which such interpretation might have
particularly with reference to the candidates against whom
G
election petitions are pending, it became urgently
necessary to clarify the intention underlying the provisions
contained in section 77 of the Representation of the
People Act, 1951, namely, that in computing the maxi·
mum amount"under that section any expenditure incurred H
or authorized by any other person or body of persons
or political parties should not be taken into account.
As Parliament was not in session, the President
630 SUPREME COURT REPORTS (1985) SUPPL. S.C.R.

promulgated on 19th October, 1974, the Representation
A of the People (Amendment) Ordinance, 1974.

The Bill seeks to replace this Ordinance."

By section 2 of the Amending Act, which is called. The
B Representation of the People (Amendment) Act, 1974, two
Explanations were added to section 77(1 ), out of which Explanation
I is directly relevant for our purpose. Those Explanations read
thus :

c "Explanation J.-Nothwithstanding any judgment,
order or decision of any court to the contrary, any
expenditure incurred or authorized in connection with the
election of a candidate by a political party or by any
other association or body of persons or by any individual
{other than the candidate or his election agent) shall
D not be deemed to be, and shall not ever be deemed
to have been, expenditure in connection with the
election incurred or authorized by the candidate or
by his election agent for the purposes of t.iis sub·
section :
E
Provided that nothing contained in the Explanation
shall affect-

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

G
(b) any judgment, order or decision of a High Court
whereby the election of any such candidate bas been
declared void or set aside before the commencement of
the said Ordinance if no appeal has been preferred to the
H Supreme Court against such judgment, order or decision
of the High Court before such commencement and the
period of limitation for filing such appeal has expired
before such commencement.
P.N.T. TERAH P. UNION (Chandrachud, C.J.) 631

Explanation 2. - For the purposes of Explanation 1,
"political party" shall have the same meaning as in the A
Election Symbols (Reservation and Allotment) Order,
1968, as for the time being in force."

The argument of Mr. Sorabjee, who appears on behalf of the
petitioner, may be summed up thus : (I) It is the essence of fair B
elections that any individual or any political party, howsoever small,
should be able to contest an election on a footing of equality with
any other individual or political party, howsoever rich and well
financed it may be, and no individual or political party should be
able to secure an advantage over others by reason of its superior
financial strength. (2) The rationale of imposing a limit on
c
expenditure incurred or authorised by a candidate in an election is
to eliminate, as far as possible, the pernicious influence of big money
in the electoral process which leads to the worst form of political
corruption. Limitation on election expenditure is imperative for
ensuring the purity of the electoral process. (3) It is indisputable that D
availability of large funds and resources to an individual backed by
a political party supporting him would confer greater and undue
advantage on him over an individual who is without any Jinks with
affluence or wealth. (4) Such a consequence is anti-democratic
because it denies to the citizen the right to have full and effective
E
participation in the electoral process. (5) E~planation l to section
77(1) strikes at the very heart of democracy inasmuch as is not only
permits but encourages and legitimises the influence of big money
in the electoral process and thus militates against the fairness and
purity of the electoral process. Furthermore, it makes a mockery of
and nullifies the salutary object of imposing a ceiling on a candi- F
date's expenditure, which provision is a beneficent provision enacted
in the interests of purity and genuineness of the democractic process.

-
The impugned provision, far from suppressing the mischief of bane-
ful influence of big money directly promotes it and thereby sullies the
purity of the electoral process. Consequently, it goes against the
'basic requirement of the Constitution' and violate~ a basic and G
essential feature of the Constitution and, consequently, is arbitrary.
(6) The impugned provision is further 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
B
wealth of affiuence of the political party supporting the candidate the
decisive factor in the outcome of elections. It introduces wealth and
affluence as a measure of a candidate's qualifications or prospects of
632 SUPllEME COURT REPORTS (1985) SUPPL. s.c.k.

success, which is to 'introduce a capricious or irrelevant factor'.
A (7) Once the franchise is granted to the electorate, provisions may
not be made nor conditions imposed which are inconsistent with
article 14 of the Constitution, irrespective of the fact that the right of
franchise is not a fundamental right guaranteed in Part III of the
Constitution.
B
Shri Krishnamoorthy Iyer, who appears on behalf of the Union
of India, contends that Explanation I to section 77(1) of the Act was
introduced in order to restore the Jaw as ~xpounded in the decisions
of this Court, prior to the decision in Kanwar Lal Gupta. Those
decisions, according to learned counsel, are : Rananjaya Singh v.
c Baijnath Singh('), Ram Dayal v. Brijraj Singh(') and Magraj Patolia
v. R.K. Bir/a('). It is urged that though these decisions have been
considered in Kanwar Lal Gupta, the Court was not right in holding
that the view taken in those decisions was not at variance with the
view taken by it. In support of this argument, our attention was
D drawn to the observations made by Beg J. in Smt. Indira Gandhi v.
Rqj Narain(') to the following effect :

"After examining the catena of cases, I think, with
great respect, that the decision of this Court in Kcmwar
Lal Gupta's case could be understood to point in a direc-
E tion contrary to that in which the previous cases were
decided. Hence, it appears to me that the amendment
made by Act 58 of 1974 by adding the Explanation I to
Section 77 of the Act could be justified as merely an
attempt to restore the Jaw as it had been understood to
be previous to the decision of the Court in Kanwar Lal
F Gupta's case."

Counsel also relies on various decisions of the High Courts in which

G
it was held, prior to the introduction of Explanation I to section
77(1), that the expenses incurred by political parties in connection
with the election of their candidates do not fall within the mischief
of section 77(1) read with section 123(6) of the Act. The provision
-
contained in Explanation I is attempted to be justified by the respon-
dents on the ground that political parties have come to stay in our

H (I) [1955) 1 S.C.R. 671,
(2) [197011 S.C.R. 530.
(3) [1971) 2 S.C.R. llS.
(4) [1976} 2 S.C.R. 347.
P,N,T. TERAH v. UNION (Chandrachud, C.J.) 633

country, that they are indispensable for the proper functioning of
democracy and, therefore, no exception can be taken if a political A
party incurs expenditure to ensure the success of the candidates
sponsored by it. Explanation 1 treats all political parties equally
and no violation of Article 14 is involved. Counsel contended finally
that legislative policies bearing upon matters governing elections are
not open to judicial review. B
The principal theme of the petitioner's argument is 'purity of
the election process'. All other arguments converge upon that theme
and are intended to give strength and succour to it. There is a vast
amount of literature on the need to preserve the purity of elections.
There is a perceptible awareness amongst political observers, if not c
amongst active politicians, that one of the ways to ensure that elec-
tions are free and fair is to weed out the influence of big money
which, to use an expression which has become a household word, is
more black than white. The Lok Sabha Debates, while Explanation
1 was being added to section 77(1) of the Act, show that there was a
D
consensus amongst the Members of the House that election expenses
must be effectively controlled, which was also reflected in the fact
that in almost all countries of the world where representative form of
Government prevails, provisions as to election expenses are invaria-
bly made. On October 18, 1979, the Election Commission of India
circulated a letter to all recognised national and State parties, pro- E
posing revision of the maximum limits of election expenses. In the
'Notes' appended to that letter, the Commission says that the election
"expenditure should be at such reasonably low level as not to defeat
the very purpose of fixing a ceiling on election expenses, i.e. curbing
the influence of 'money power' on elections". While the Janata
Government was in power, it had introduced Bill No. 153 of 1977 to
amend the Act by deleting, inter a/ia, Explanation 1 which was
introduced in Section 77(!) by Amending Act 58 of 1974. The State•
ment of Objects and Reasons of that Bill, insofar as it relates to the
proposed deletion of Explanation 1 says : "It is considered that the
amendments made in the Representation of People Act, 1951 . far G
from ensuring free and fair elections may have the effect of increasing
money power. It is, therefore, proposed to amend the Act to restore
the position that obtained earlier". The Bill eventually lapsed.

In Kanwar Lal Gupta one of us, Bhagwati J., observed : II

(1) Vol. XLVll, No. 21-27, 12-20 December, 1974 page 279,
634 SUPREMB COURT REPORTS (1985] SUPPL. s.c.11..

"The other objective of limiting expenditure is to
A eliminate, as far as possible, the influence of big money in
the electoral process. If there were no limit on expendi·
ture, political parties would go all out for collecting
contributions and obviously the largest contributions
would be from the rich and affluent who constitute but a
fraction of the electorate. The pernicious influence of big
B
money would then play a decisive role in controlling the
democratic process in the country. This would inevitably
lead to the worst form of political corruption and that in
its wake is bound to produce other vices at all levels."
(P. 266)
c
In Vato/ Nagaraj v. R. Dayanand Sagar(1) Krishna Iyer l, speaking
for the Court, observed :

"Money power casts a sinister shadow on our
D elections and the political payoff of undue expenditure in
the various constituencies is too alluring for parties to
resist temptation. . ..... The likely evasion of the
law by using big money through political parties is a
source of pollution of the Indian political process. To
channel funds into the campaign for specific candidates
E
getting around the requirements of the law by establishing
party committees is all too familiar in this and some other
countries."

The decision of the Bombay High Court in Tata Iron & Steel
F Co. Ltd.( 2 ) exhibiting "considerable uneasiness of mind and a sinking
feeling in the heart", expressed the view that any attempt on the
part of any business house to finance a political party is likely to
contaminate the very spring of democracy. Jn Indian Iron and Steel
Co. Ltd.,(') the Calcutta High Court pointed out the dangers involved
in political parties being financed for election purposes by large
G business houses. The High Court observed : "in the bid for political
favouritism by the bait of money, the company who will be the
highest bidder may secure the most unfair advantage over the rival
trade companies". The Court lamented that such a state of affairs
H
---- ·-------
(1) )1975] 2 S.C.R. 384 399.
(2) A.I.R. 1958 Bombay 155.
(3) A.l.R. 1958 Calcutta 234.
P.N.T. TERAH '· UNION (Chandrachud, C.J.) 635

will mark the advent of the voice of the big business in politics and
pollute the political life of the country. A
The Report of the Santhanam Committee on Prevention of
Corruption(') says :

"The public belief in the prevalance of corruption at
high political levels has been strengthened by the manner
B
in which funds are collected by political parties, especially
at the time of elections. Such suspicions attach not only
to the ruling party but to all parties, as ofien the opposi-
tion can also support private vested interests as well
members of the Government party. It is, therefore, c
essential that the conduct of political parties should be
regulated in this matter by strict principles in relation
to collection of funds and electioneering. It has to be
frankly recognised that political parties cannot be run and
elections be fought without large funds. But these funds
should come openly from the supporters or sympathisers
D
of the parties concerned.

If even one family in three pays one rupee a year to
a political party, the total annual contribution will be
more than what is needed for all legitimate purposes of all E
political parties in India. It is the reluctance and
inability of these parties to make small collections on a
wide basis and the desire to resort to short cuts through
large donations that constitutes the major source of
corruption and even more of suspicion of corruption."
F
The Report of the Expert Committee headed by Justice Sacher
on 'Companies and MRTP Acts' deals(') extensively with the evils
flowing out of the donations made to political parties by big business
houses and points out the dangers involved in allowing the money
power to play a role in the electoral process of our country. G
(paragraph 13.12). The Committee recommended that section 293A
of the Companies Act which prohibited contribution by companies
to political parties should be further strengthened in the manner
indicated by it in paragraph 13.18.
H
(I) 1962 Section 11, 'Social Climate', paragraph 11.5.
(2) 1978, Chapter XIII, pages 99-104.
SUPREME COURT REPORTS ( 1985] SUPPL. S.C.R.

In England, before the passing of the Representation of the
A People Act, 1949, the view had been expressed that expenses
incurred without the authority of the candidate or election agent for
promoting or procuring the election of a candidate might
not require to be returned as election expenses, provided the
expenses were incurred by persons who were outsiders not agents,
and accordingly did not have any part in the conduct or management
8 of the election. Jt is now provided by the aforesaid Act that certain
expenses with a view to promoting or procuring the election of a
candidate at an election must not be incurred by any person other
than the candidate, his election agent and persons authorised in
writing by the election agent. If any person incurs, or aids, abets,
c counsels or procures any other person to incur, any expenses in
contravention of this provision, he is guilty of a corrupt practice.
(See Halsbury's Laws of England, Fourth Edition, Volume 15,
paragraph 721).

We have referred to this large data in order to show that the
D influence of big money on the election process is regarded universally
as an evil of great magnitude. But then, the question which we, as
Judges, have to consider is whether the provision contained in
Explanation I suffers from any constitutional infirmity and, parti-
cularly, whether it violates Article 14. On that question we find it
E difficult, reluctantly though, to accept the contention that Explana-
tion l offends against the right to equality. Under that provision,
(i) a political party or (ii) any other association or body of persons
or (iii) any individual, other than the candidate or his election agent,
can incur expenses, without any limitation whatsoever, in connection
with the election of a candidate. Such expenses are not deemed to
F be expenditure in connection with the election, incurred or autho-
rised by the candidate or by his election agent for the purposes of
section 77(1). It is urged that, by reason of this provision, aflluent
political parties get an unequal and unfair advantage over other
parties or associations which do not command the same money
G power and therefore, the guarantee of equality is violated. The
answer to this contention is that Explanation I classifies all political
parties or associations in one group and confers upon them the
same or similar advantage. Political parties or, politically motivated
associations or bodies of persons or, individuals interested in political
H happenings, are characterised .by common attributes, the
dominant attribute being that they engage themselves in activities
of a political nature. Elections constitute the core of such activities,
A classification of this nature bears reasonable relationship with the
F.N.T. TERAH v. UNION (Chondrachud, C.J.) 637

object of the statute that expenses incurred by those who fall within
the particular group should not be regarded as expenditure incurred A
or authorised by the candidate or his election agent. It is then no
answer to say that all political parties are not equally situated in the
wealth which they command. Were such an argument open, the limil
set upon election expenses by Rule 90 shall also have to be regarded
as violative of the guarantee of equality because, a fairly large number B
of contesting candidates, particularly the independents, would not be
in a position to spend as large an amount as rupees one lakb, which
is the permissible limit in large constituencies. Classification has to
be broadly reasonable in order to sustain the challenge of unconstitu-
tionally. One cannot dissect that process and discover shades
within shades to nullify it on the ground of inequality. It is a stark c
fact of life that an independent who contests an election on his own,
that is, without the support of a political party, is at a considerable
disadvantage as compared with candidates supported by political
parties. But, that does not violate the rule of equality. It is not the
election Jaw which creates such inequalities. Inequalities exist apart
D
from that Jaw and are, unfortunately, implicit in the unequal positions
in which the citizens find themselves. What the law does is to allow,
in an equal measure, all political parties, associations or bodi~s of
persons or individuals (other than the candidate or bis election agent)
to incur expenses in connection with the election of a candidate,
which need not be included in the rcturu of election expenses which E
the candidate is required to file.

Though Explanation I clubs associations, bodies of persons
and certain individuals together with political parties, it is plain that
the benefit conferred by that provision goes largely, though not F
exclusively, to political parties. It is the political parties which
sponsor candidates, that are in a position to incur large election
expenses which often run into astronomical figures. We do not
consider that preferring political parties for exclusion from the
sweep of monetary limits on election expenses, is so unreasonable
or arbitrary as to justify the preference being struck down upon that G
ground. In the first place, the statute does not make the affluence
of a politiclll party an electoral standard for acquiring eligibility
prescribed by the Explanation. Secondly, it is not an unwise policy,
to the extent that we can examine the wisdom of legislative policies,
to ensure reasonable reduction in the number of contesting candi· H
dates, which can be done by conferring special privileges upon
political parties. It is a matter of common !\n<;>w!edge that in the
638 SUPREME COURT REPORTS (1985] SUPPL. s.c.R.

recent elections to the Lok Sabha and the Legislative Assemblies,
A the printing of the ballot papers posed a serious problem to the
Election Commission since, the number of contesting candidates in ....
certain constituencies was absurdly large. In any democratic
system of Government, political parties occupy a distinct and unique
place. They are looked upon as guardian angels by their members
B though, occasionally, they fail to discharge the benign role of a
guardian, leave alone the angelic part of it. It is through
them that the generality of people attempt to voice or ventilate
their grievances. Considering, also, the power which they wield
in the administration of Governmental affairs, a special confer·
ment of benefits on them in the matter of modalities governing the
c election process cannot be regarded as unreasonable or arbitrary.
That may, perhaps, help explain why in Kanwar/al Gupta the Court
drew a disti01ction between the expenses incurred by a political
party specifically in connection with the election of a particular
candidate and the expenditure incurred by it on general party propa·
ganda, the latter not being includible in the return of election
D
expenses which the candidate has to file. The rationale of that
decision, though not expressed in so many words, is that by reason
of the important position which political parties occupy in the
democratic set up, they are entitled to incur expenditure for pro·
jecting their programmes and popularising their policies. Explanation
E I only takes one step ahead, important though. It obliterates the
dividing line drawn in Kanwar/al Gupta, between expenses incurred
'in connection with' the election of a particular candidate and
expenses incurred on 'general party propaganda'. All persons, except
the candidate and his election agant, are now free to incur
expenditure of the former kind too, without the constraints of
F ceiling imposed upon election expenditure by section 77(3) read
with Rule 90 of the Conduct of Election Rules, 1961. Whether
Explanation I restores the law as it was understood before
Kanwar/al Gupta or, it makes an innovation is irrelevent for
G deciding upon its validity. Every law, whether restorative or
innovative, has to be tested on the touchstone of the
Constitution.

It is evident that a certain cl ass of individuals has been included
in Explanation I out of abundent caution, so as to avoid the
H challenge that they have been discriminated against in comparison
with political parties and associations or bodies of persons. It is
true that individuals cannot match their spending ability with the
P.N.T. TBRAH v. UNiON (Ghandrachud, C.J.) 639

financial prowess of political parties or trade unions. But, that takes
one back to the same point, though in a different garb : All political A
parties are not equally aflluent and therefore those that command
big money get an unfair advantage over the others. Election laws
are not designed to produce economic equality amongst citizens.
I They can, at best, provide an equal opportunity to all sections of
society to project their respective points of view on the occasion of
elections. The method, somewhat unfortunate, by which law has
B
achieved that purpose, is by freeing all others except the candidate
and his election agent from the restriction on spending, so long as
the expenditure is incurred or authorised by those others. The
argument, that individuals are not able to reap the benefit of Explana-
tion I effectively by reason of the paucity funds at their command, c
has the same answer as the argument that every contesting candidate
cannot afford to spend as large a sum as rupees one lakh and, there•
-: fore, those who can spend that much have an uniair advantage over
those who cannot. If the argument that different political parties
have been treated equally though they are situated unequally, or that
individuals have been discriminated against either inter se or in
D
relation to political parties and associations to correct, the only
method which would measure up to the required constituational
standard is the one in which the State would have to allocate funds
from its own exchequer in order to enable the various candidates to
contest elections. That would be the fairest form of fairness. But, E
that is a far cry.

Counsel for the petitiones urged that Explanation I renders
the main provision in section 77( I) nugatory, by taking away with
one hand what is given by the other. Assuming that this is so, the F
Explanation would not become unconstitutional for that reason. The
argument really hears upon the interpretation of the section and the
Explanation, and not upon the validity of the Explanation. We do
not agree that the Explanation denudes the section of its meaning
and makes it purposeless. Section 77(1) deals with the expenditure
'incurred or authorised by' a candidate or his election agent, in G
connection with the election. It is obligatory to keep a separate and
correct account of such expenditure. Explanation I deals with the
expenditure 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. It is not obligatory for the candi· H
date or his election agent to keep a separate and correct account of
~uch expen<)jture, That is because of two reasops. ln the first
640 SUPREME COURT REPORTS [1985] SUPPL. s.c.R.

place, such expenditure is not incurred or authorised by the candidate
A or his election agent and therefore, in the very nature of things, they
cannot keep an account of that expenditure. Secondly, the argument
that expenditure of the kind described in Explanation I must be
deemed to be incurred or authorised by the candidate or his election
agent, is met by the provision in the Explanation that it shall not
B be so deemed. Section 77(1) on the one hand and Explanation I on
the other, deal with two different situations wherefor, the latter
cannot render the former meaningless.

While we are on this question, we would like to point out that
c if an expenditure which purports to have been incurred, for example,
by a political party, has in fact been incnrred by the candidate or his
election agent, Explanation I will not be attracted. 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) that the Explanation will
D come into play. The candidate cannot place his own funds in the
power or possession of a political party, or a trade union or some
other person and plead for the protection of Explanation I. The
reason is that, in such a case, the incurring of the expenditure by
those others, is a mere facade. In truth and substance, the expcndi·
ture is incurred by the candidate himself because, the money is his.
E What matters for the purpose of Explanation I 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 I would apply. In other words, it must be
F shown, in order that Explanation I may apply, that the source of the
expenditure incurred was not the candidate or his election agent.
What is important is to realise that Explanation 1 does not create a
fiction. It deals with the realities of political sitnations. It does not
provide that the expenditure in fact incnrred or authorised by a
candidate or his election agent, shall not be deemed to
G be incurred or authorised by them, if the amonnt is defrayed by a
political party. That would be tantamount to creating a fiction.
The object of the Explanation is to ensure that the expenditure
incurred, for example, by a political party on its own, that is, without
using the funds provided by the candidate or his election agent shall
H not be deemed to be expenditnre incurred or authorised by the
candidate or bis election agent. If the expenditure is incurred
from out of the funds provided by the candiate or his election agent
.. ~

P.N.T. TERAH v. UNION (Chandrachud, C.l.) 641

section 77(1) and not Explanation I would apply. It is necessary to
make this clarification since, the use in Explanation 1 of expressions A
which are generally used when the legislative intent is to create a
fiction, is apt to cause confusion and misunderstanding. The reason
why the expression "shall not be deemed to be" is used in Explana·
tion I is that the Parliament wanted to get over the effect of the
judgment of this Court in Kanwar Lal Gupta. Similarly, the reason B
why the expression "shall not ever be deemed to have been" is used
in the Explanation is that the intention of the Parliament was to get
over the effect of that judgment retrospectively, except to the extent
mentioned in clauses (a) and (b) of the Proviso to the Explanation.

It is essential that the limited range of Explanation I ought c
not to be enlarged. The ceiling placed on election expenses is a
basic commandment of the Act, not a pious edict. Its object is to
keep a check on the expenditure incurred by candidates on their own
elections, directly or through their election agents. They cannot be
permitted to resort to subterfuges in order to evade the restraint D
imposed by sections 77(1) and 77(3) of the Act. Homage to the
principle of free and fair elections has to be real, not formal.

The petitioner is not unjustified in criticising the provision
contained in Explanation 1 as diluting the principle of free and fair
elections, which is the cornerstone of any democratic polity. But, it E
is not for us to lay down policies in matters pertaining to elections.
If the provisions of the law violate the Constitution, they have to be
struck down. We cannot, however, negate a law on the ground
that we do not approve of the policy which underlies it. Can the
Court, for example, strike down Rule 90 on the ground that the F
limit of rupees one Iakh is too high in the Indian context ? We may
have our own preferences and perceptions but, they cannot be used
for invalidating laws.

Insofar as election laws are concerned, there is yet another
impediment to contend with. The right to contest an election or to G
vote at it is not a Common Law right. As observed by Chinnappa
Reddy, J. in lyoti Basu v. Debi Ghosal('):

"A right to elect, fundamental though it is to
democracy, is, anomalously enough, neither a funda· H

(1) [1982] 3 S,C.R. 318, 326, 327.
642 SUPRBMB COURT RIPOii.TS (1985] luPPL. s.c.R,

mental right nor a Common Law Right. It is pur• and
A simple, a statutory right. So is the right to be elected.
So is the right to dispute an election. Outside of statute,
there is no right to elect, no right to be elected and no
right to dispute an election. Statutory creations they are,
and therefore, subject to statutory limitation. Concepts
B familiar to Common Law and Equity must remain stran-
gers to Election Law unless statutorily embodied. A
Court has no right to resort to them on considerations of
alleged policy because policy in such matters as those
relating to the trial of election disputes, is what the
statute lays down .... We have already referred to the
c Scheme of the Act. We have noticed the necessity to rid
ourselves of notions based on Common Law or Equity.
We see that we must seek an answer to the question
within the four corners of the Statut1. What does the
Act say?"
D
What does the Act say ? It sayi through l!xplanation I that persons
other than the candidate or his election agent may, on their own,
release their purse strings and never tie them again.

E
We have already said that the question as regards the constitu-
tional validity of Explanation 1 has to be determined regardless of
the consideration as to whether the said Explanation restores the law
as it stood before the decision of this Court in Kanwar Lal Gupta
or whether it introduces a new provision altogether. We have
F decided upon the constitutionality of the Explanation on its own
terms. It is, therefore, unnecessary to consider the pre-Explanation
decisions of this Court in Rananjaya Singh v. Baijnath Singh, Ram
Dayal v. Brijraj Singh and Magraj Patolia v. R.K. Bir/a, except to
extract a passage from the last of these three cases, wbich reads
G thus:

"Now coming to the corrupt practice of incurring
expenditure beyond the prescribed limit, in several deci-
H sions this Court has ruled that it is not sufficient for the
petitioners to prove merely that the expenditure more
than the prescribed limit had been incurred in connection
with the election,' be must go further and prove that th~
P.N.T. TERAH v. UNION (Chandrachud, C.J.) 643

- excess expenditure was incurred with the consent or under
theauthority of the returned candidate or his election
agent."
A

In the result, the Writ Petition and the Civil Miscellaneous
Petitions are dismissed. There will be no order as to costs.

A.P.J. Petition dismissed.
B