Appeal No 853 of 1968
Appeal under section 116 A of the Representation of the People Act 1951 from the judgment and order dated January 15 1968 of the Delhi High Court Himachal Bench in COP No 4 of 1967
CB Agarwala SK Bagga and section Bagga for the appellant
Sarjoo Prasad and Naunit Lal for the respondent
The Judgment of the Court was delivered by Hidayatullah CJ
This is an appeal against the judgment dated January 15 1968 of the High Court of Delhi Himachal Bench setting aside the election of the appellant to the Santokhgarh Assembly Constituency of Himachal Pradesh
The election has been set aside on the ground of corrupt practice under section 1236 of the Representation of People Act read with section 98b of the Act
By a notification dated January 13 1967 the electors of this constituency were invited to elect a member to the Assembly
The the last date of withdrawal was January 23 1967
Three candidates contested the election
The appellant was an independent candidate opposed by the respondent who was a Congress nominee and one Shanti Swarup Jansangh candidate
The poll took place throughout the constituency on February 18 1967
Votes were counted four days later at Una and the result was declared at follows Vidya Sagar Joshi Appellant 8437 votes Surinder Nath Gautam 7695 votes Election Petitioner Shanti Swarup 2067 votes 1267 ballots were rejected as invalid
Thus the present appellant was returned with a margin of 742 votes
The returned candidate filed his return of election expenses showing an expenditure of Rs 186205P
The limit of expenditure in this constituency was Rs 2000 
One of the contentions of the election petitioner was that he had filed a false return of his election expenses that he had spent an amount exceeding Rs 2000 in the aggregate and therefore contravened the provisions of section 77 3 86 of the Representation of People Act 1951 and therefore committed corrupt practice under section l236 of the Act
The election petitioner therefore asked that his election be declared void
There were other grounds also on which the election was challenged but we need not refer to them since no point has been made before us
The main item on which the expenses were said to be false was a deposit of Rs 500 as security and Rs 200 as application fee which the returned candidate had made with the Congress party on or before January 2 1967
The fee was not returnable but as this payment was made before the notification calling upon the voters to elect a member to the Assembly nothing turns upon it
The returned candidate was denied the Congress ticket on or about January 10 1967
This was also
before the said notification
According to the rules of the Congress party the security deposit was refundable to a candidate if he or she was not selected
It was however provided in the same rules that if the candidate contested the election against the official Congress candidate the security deposit would be forfeited
The returned candidate chose to stand as an independent candidate against the official Congress nominee and incurred the penalty of forfeiture
This was after the date for the filing of the nomination paper January 20 1967
He had time till January 23 1967 to withdraw from the contest
If he had done so the deposit would have presumably been returned to him
As he became a contesting candidate the forfeiture of the deposit became a fact
The case of the election petitioner was that if this deposit were added to the election expenses the limit of Rs 2000 was exceeded and therefore this amounted to a corrupt practice under section 1236 read with section 773 of the Representation of People Act
The High Court held in favour of the election petitioner and hence the appeal
Section 77 of the Representation of People Act provides as follows
 Section 77
Account of election expenses and maximum thereof 1  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 dates inclusive
The account shall contain such particulars as may be prescribed
87 3 The total of the said expenditure shall not exceed such amount as may be prescribed
The third sub section creates a bar against expenditure in excess of the prescribed amount
In this case the prescribed amount was Rs 2000 
Section 1236 provides that the incurring or authorising of expenditure in contravention of section 77 is a corrupt practice
 Therefore if the amount of Rs 500was added to the election expenses as declared by the returned candidate he would be guilty of a corrupt practice under the two sections quoted above
The question therefore is whether this amount can be regarded as an election expense
The first sub section of section 77 discloses what the candidate has
to declare as part of his election expenses
It speaks
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 dates inclusive
 In the present case therefore the critical dates were January 13 1967 and February 22 1967
The amount in question was paid before the first date
It was liable for confiscation not on the date on which the Congress ticket was refused to the returned candidate but on January 23 1967 when he did not withdraw from the  contest and offered himself as a contesting candidate against the official Congress candidate
In other words the payment was made before the period marked out by section 77  1  but the expenditure became a fact between the two
dates
The contention of the returned candidate was that this was not an expenditure within the meaning of section 771 of the Representation of People Act and this is the short question which falls for consideration in the present case
Section 77 as flamed now departs in language from the earlier provision on the subject which was rule 117
It read 117
Maximum election expenses No expense shall be incurred or authorised by a candidate or his election agent on account of or in respect of the conduct and management of an election in any one constituency in a State in excess of the maximum amount specified in respect of that constituency in Schedule V The words conduct and management of election are not as wide as the words
all expenditure in connection with election incurred or authorised by him which now find place in section 77
The question thus is what meaning must be given to the words used in section 77
The critical words of section 77 are expenditure  in connection with election  and incurred or authorized  Expenditure  means the amount expended and expended  means to
pay away lay out or spend
It really represents money out of pocket a going out
88 Now the amount paid away or paid out need not be all money which a man spends on himself during this time
It is money in connection with  his election
These words mean not so much as consequent upon  as having to do with 
All money laid out and having to do
with the election is contemplated
But here again money which is liable to be refunded is not to be taken note of
The word incurred  shows a finality
It has the sense of rendering oneself liable for the amount
Therefore the section regards everything for which the candidate has rendered himself liable and of which he is out of pocket in connection with his election that is to say having to do with his election
The candidate here put out this money for his election since he was trying to obtain a congress ticket
If he had got the ticket and the money was refunded to
him this would not have counted as an expenditure since the expense would not have been incurred
When the candidate knowing that the money would be lost went on to stand as an independent candidate he was willing to let the money go and take a chance independently
The case of the appellant is that this money was not used in furthering the prospect of his election
On the other hand it was in fact used against him by the Congress Party as he was opposed to that party s candidate
He contends that such an expense cannot be regarded as expense in connection with the election
According to him the connection must be a connection of utility and not something which is of no use but rather against the chances of victory
In this connection the learned counsel draws our attention to Halsbury s Laws of England Third Edition Volume 14 at page 177 paragraph 314
It is stated there as follows While no attempt has been made by judges to define exhaustively the meaning of expenses incurred in the conduct or management of an election it has been said that if expenses are primarily or principally expenses incurred for the promotion of the interests of the candidate they are election expenses
 It will be seen that the above passage refers to expenses incurred in the conduct or management of an election
The learned counsel for the appellant and respondent relied upon two decisions of this Court
Reliance was also placed upon two decisions of the Election Tribunals
The decisions of the Election Tribunal are of the same Bench and concern Rule 117
They need not be considered
The two cases of this Court may be noticed
In Haji Aziz and Abdul Shakoor Bros vs Commissioner of Income Tax Bombay City1 the question arose under the Indian 1  89 Income tax Act
A firm importing dates was found to have breached some law and a penalty was imposed on it under the Sea Customs Act
The firm sought to treat the penalty as expenses and they were disallowed by this Court
Learned Counsel for the appellant relied on this case and claimed that the same principle applies and this penalty cannot be said to be an expenditure in connection with the election
The analogy is not apt because not only the prescriptions of the two laws are different but the underlying principle is different also
In Income tax laws the expenditure must be laid out wholly or exclusively for the purpose of the business etc
Breaking laws and incurring penalty is not carrying on business and therefore the loss is not for the purposes of business
Here the expenditure is to be included if it is incurred in connection with the election and the payment to secure the seat is an expenditure in connection with the election
The ruling therefore does not apply
In the second case a congress candidate had paid a sum of Rs 500 of which Rs 100 were subscription for membership and Rs 400 were a deposit
Later he paid Rs 500 as donation to the Congress
He failed to include the two sums of Rs 500 each in his return of expenses
The Tribunal found that both the sums were spent in connection with the election and by including them the limit was exceeded
This Court affirmed the decision of the Tribunal
The case was decided under r 117
The two sums were considered separately
The contention was that under section 123 7 and r 117 the candidate was nominated only on November 16 1951 and the first sum was paid on September 12 1951
The question then arose when the candidate became a candidate for the application of the Rule and section 1237
It was held that the candidate became a candidate when he unequivocally expressed his intention by making the payment
The question of commencement of the candidature is now obviated by prescribing the two terminii between which the expense is to be counted
In so far as the case goes it supports our view
It is risky to quote the decision because the terms of the law on which it was declared were entirely different
We can only say that there is nothing in it which militates against the view taken by us here
On the whole therefore the judgment under appeal is correct
The appeal fails and will be dismissed with costs
Appeal dismissed


Summary:
The appellant applied for a Congress ticket for election to the Legislative Assembly and deposited certain sums which according to the rules of the Congress Party was refundable if the candidate was not selected but the deposit was to be forfeited if he contested the election against the official Congress candidate
The appellant was denied the Congress ticket
Thereafter the notification inviting electors to elect a member to the Assembly was issued and the last date for filing nomination papers and for withdrawing from the contest was fixed
The appellant contested the election against the respondent who was the official Congress nominee and incurred the penalty of forfeiture
The appellant was declared elected and he filed his return of election expenses
The respondent challenged the appellant s election on the ground that he had committed corrupt practice under section 1236 of the Representation of People Act 1951 for not having included the sum deposited by him in seeking the Congress ticket in his return and by adding this sum to the return of election expenses filed the prescribed amount was exceeded thereby contravening section 773 of Act
The High Court held in favour of the election petitioner
Dismissing the appeal this Court HELD Section 77 as framed now departs in language from the earlier provision on the subject which was r 117
The words conduct and management of election  are not as wide as the words all expenditure in connection with election incurred or authorised by him  which now find place in section 77 with election  and incurred or authorised  Expenditure  means the amount expended and expended  means to pay away lay out or spend
It really represents money out of pocket a going out
The amount paid away or paid out need not be all money which a man spends on himself during this time
It is money in connection with  his election
These words mean not so much as consequent upon  as having to do with 
All money laid out and having to do with the election is contemplated
But here again money which is liable to be refunded is not to be taken note of
The word incurred  shows a finality
It has the sense of rendering one self liable for the amount
The words are not equivalent to conduct or management of an election  and the expenses need not be for promotion of the interest of the candidate
Therefore the section regards everything for which the candidate has rendered himself liable and of which he is out of pocket in connection with his election that is to say having to do with his election
87 G 88 B In this case the appellant put out the money for his election since he was trying to obtain a Congress ticket
If he had got the ticket and the money was refunded to him this would not have counted as an expenditure since the expense would not have been incurred
When the appellant knowing that the money would be lost went on to stand as an independent candidate he was willing to let the money go and take a 85 chance independently
So the amount was an expenditure within the meaning of the section
88 C D Haji Aziz and Abdul Shakoor Bros vs Commissioner of Income tax Bombay City   distinguished