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Rs 40,000 loan hide: Orissa High Court saves Sarpanch from ouster

The Orissa High Court held that mere non-disclosure of loan liabilities in an election affidavit does not automatically invalidate the election unless it materially affects the result.

Orissa High CourtOrissa High Court set aside the disqualification order. (Image generated using AI)

The Orissa High Court recently set aside the disqualification order passed against a Sarpanch, holding that mere non-disclosure of loan liabilities in an election affidavit does not automatically invalidate the election unless it materially affects the result.

Justice R K Pattanaik allowed the plea filed against the orders of the civil judge (junior division) and the Additional District Judge, Kamakhyanagar, which had declared her election void.

“Even though there has been nondisclosure regarding loan account and dues outstanding against the petitioner and her husband in the affidavit filed at the time of nomination, in absence of any substantial defect and that such non-disclosure shown to have materially affected the election result by influencing the voters, any such decision by the learned courts below cannot be sustained in law,” the court noted.

Justice R K Pattanaik allowed the plea filed by the disqualified sarpanch. Justice R K Pattanaik allowed the plea filed by the disqualified sarpanch.

‘Not every non-disclosure invalidates nomination’

  • A candidate must have to disclose his assets and liabilities including loans, while filing the nomination paper.
  • It is the settled law that concealment or suppression of information, such as pending criminal cases or financial liabilities deprives voters of an informed choice and can be a ground for setting aside an election.
  • It may even be a case of corrupt practice, if concealment or suppression of any such vital information has taken place. But it is equally a settled law that while not every non-disclosure automatically invalidates a nomination.
  • A substantial non-disclosure, which is likely to affect the voter’s perception of the candidate’s integrity, can be considered a defect of a substantial character rendering the nomination invalid. Any such decision on disqualification is, therefore, subject to ‘substantial defect rule’ and not that each and every nondisclosure is to nullify a nomination.
  • In other words, if the undisclosed bank loan is substantial, the omission is likely to be considered a substantial defect under the Act justifying the rejection of nomination or setting aside the election, as it violates the voter’s right to know about the candidate’s financial standing.
  • It is pleaded that the petitioner was having loan with outstanding dues for an amount of Rs 40,554 against her.
  • It is also alleged that the husband of the petitioner is a loanee in Service Cooperative Societies Ltd., the fact, which was concealed by her in the affidavit vis-a-vis government dues payable to the financial institutions shown as ‘nil’.
  • Except the above, there is no pleading to the effect that the nondisclosure of the above information regarding the loan dues pending against the petitioner and her husband has in a way significantly affected the result of the election.

‘Materially affects results’

  • As earlier discussed, each and every non-disclosure does not amount to substantial non-compliance thereby materially affecting the result of the election.
  • If a large extent of assets or huge loan outstanding dues is not revealed by a candidate, it would amount to suppression of facts and for such nondisclosure, it would invite disqualification.
  • Such breach in observance of the provisions of the Act by not disclosing the assets of high value or financial liabilities for a huge amount could lead to a conclusion that there has been concealment of facts and it amounts to undue influence even to qualify as a corrupt practice adopted by the returned candidate.
  • Declaring an election as void must have to be on the basis of any such mistake, error, illegality or informality which has led to a situation that materially affected the result of the election.

Case

  • The petitioner was elected Sarpanch of Kankadahad Gram Panchayat in 2022.
  • Her election was challenged by a rival candidate on the ground that she had failed to disclose outstanding loan liabilities in her nomination affidavit, allegedly attracting disqualification under Section 25(1)(w) of the Odisha Grama Panchayats Act, 1964.
  • Both the trial court and the appellate court had upheld the disqualification, prompting the petitioner to approach the High Court.

Ashish Shaji is a Senior Sub-Editor at The Indian Express, where he specializes in legal journalism. Combining a formal education in law with years of editorial experience, Ashish provides authoritative coverage and nuanced analysis of court developments and landmark judicial decisions for a national audience. Expertise Legal Core Competency: Ashish is a law graduate (BA LLB) from IME Law College, CCSU. This academic foundation allows him to move beyond surface-level reporting, offering readers a deep-dive into the technicalities of statutes, case law, and legal precedents. Specialized Legal Reporting: His work at The Indian Express focuses on translating the often-dense proceedings of India's top courts into clear, actionable news. His expertise includes: Judicial Analysis: Breaking down complex orders from the Supreme Court and various High Courts. Legal Developments: Monitoring legislative changes and their practical implications for the public and the legal fraternity. Industry Experience: With over 5 years in the field, Ashish has contributed to several niche legal and professional platforms, honing his ability to communicate complex information. His previous experience includes: Lawsikho: Gaining insights into legal education and practical law. Verdictum: Focusing on high-quality legal news and court updates. Enterslice: Working at the intersection of legal, financial, and advisory services. ... Read More

 

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