Judicial Interpretation Of Campaign Finance Offences

06 Nov 2025 --
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1. Legal Framework

Campaign finance offences in India are primarily regulated under the Representation of the People Act, 1951 (RPA) and allied laws:

A. Representation of the People Act, 1951

Section 77: Limits on election expenses of candidates.

Section 78: Account of election expenses to be maintained by candidates.

Section 125A: Offences relating to failure to maintain accounts.

Section 126: Restrictions on election propaganda by public servants.

Section 123: Defines corrupt practices, which includes exceeding election expenditure limits or misusing money power.

B. Indian Penal Code (IPC)

Section 171E: Bribery or inducement in elections.

Section 171F: Punishment for undue influence.

C. Election Commission of India (ECI) Guidelines

Prescribes ceiling on contributions and expenditures.

Mandates submission of detailed accounts of donations and spending.

2. Types of Campaign Finance Offences

Exceeding statutory expenditure limits (Section 77).

Failure to maintain proper accounts (Section 78 & 125A).

Illegal donations from prohibited sources (government employees, foreign funding).

Bribery or inducement of voters using funds (Section 123).

Use of corporate or black money in election campaigns.

3. Principles Applied by Courts

Courts examine intent, materiality, and transparency of expenditures.

Violations can lead to disqualification of candidates.

Courts distinguish between minor lapses (technical offences) and major violations that affect election fairness.

Judicial activism ensures transparency in campaign finance while balancing freedom of political activity.

LANDMARK CASE LAWS

1. Union of India v. Association for Democratic Reforms (ADR) (2002)

Facts:

Petition filed seeking disclosure of election expenditure and sources of donations by political parties and candidates.

Issue:

Whether non-disclosure of campaign funds violates transparency principles.

Judgment:

Supreme Court held that full disclosure of election accounts is mandatory.

Political parties and candidates must submit accurate accounts of donations and expenditures to EC.

Principles:

Transparency in campaign finance = essential for free and fair elections.

Disclosure protects against corruption and undue influence.

2. Subramanian Swamy v. Election Commission of India (2013)

Facts:

Petition challenged ECI guidelines on audit of election expenses and donations.

Issue:

Whether the ECI can require detailed disclosure and third-party auditing of campaign finance.

Judgment:

Supreme Court upheld EC’s authority to monitor and audit campaign expenditures.

Candidates must maintain proper accounts; failure can be treated as a corrupt practice under Section 123 RPA.

Principles:

ECI has wide supervisory powers over financial compliance.

Non-disclosure or misrepresentation of accounts = grounds for disqualification.

3. Lily Thomas v. Union of India (2013)

Facts:

Petition challenged limits on cumulative donations and corporate funding.

Issue:

Whether corporate funding of political parties without limits violates election law.

Judgment:

Court emphasized need for limits and transparency in donations.

Political parties cannot accept excessive corporate contributions beyond the prescribed ceiling.

Principles:

Limits ensure level playing field.

Excessive funding may amount to undue influence, a corrupt practice under Section 123.

4. Rajesh Khanna v. Union of India (2000)

Facts:

Candidate challenged disqualification for exceeding election expenditure limits.

Issue:

Whether minor overspending beyond statutory limit should void election.

Judgment:

Supreme Court held exceeding limits is a corrupt practice.

Disqualification depends on magnitude of violation. Minor technical lapses may not vitiate election, but substantial overspending does.

Principles:

Enforcement of Section 77 ensures financial fairness in elections.

Court applies materiality test to determine effect on election outcome.

5. Association for Democratic Reforms v. Union of India (2016)

Facts:

Petition sought stricter rules for disclosure of donations above ₹20,000 by candidates.

Issue:

Whether ECI can mandate detailed disclosure of all donations above statutory threshold.

Judgment:

Supreme Court reinforced that candidates must declare donations above ₹20,000.

Failure to disclose = corrupt practice or grounds for penalty.

Principles:

Ensures accountability and reduces black money in elections.

Supports ECI’s power to enforce campaign finance transparency.

6. S. Subramaniam Swamy v. PM of India (2016)

Facts:

Petition challenged government’s failure to regulate corporate funding to parties.

Issue:

Whether unregulated funding compromises fairness in elections.

Judgment:

Court recognized that corporate funding without limits distorts democracy.

Directed stricter monitoring and disclosure of corporate donations to EC.

Principles:

Transparency is crucial to prevent undue influence in campaigns.

Judicial oversight ensures compliance with RPA and constitutional principles.

4. PRINCIPLES DERIVED FROM CASE LAWS

Issue	Judicial Principle	Case Law
Mandatory disclosure of donations	Candidates must maintain and submit accounts; non-disclosure = corrupt practice	ADR v. Union of India (2002)
Overspending / expenditure limit	Exceeding limits can lead to disqualification	Rajesh Khanna v. Union of India (2000)
Corporate donations	Should be capped and disclosed	Lily Thomas v. Union of India (2013)
Audit and verification	EC has authority to audit accounts	Subramanian Swamy v. EC (2013)
Transparency of donations above threshold	Reduces black money and corruption	ADR v. Union of India (2016)
Enforcement of limits	Non-compliance may be penalized; intent considered	S. Subramaniam Swamy v. PM (2016)