OFFICE OF PROFIT

The concept of disqualifying the holder of an office has developed as a necessary & inseparable part of a democratic government. The Government of India Act, 1935, made a clear & precise statement in this direction. Sub-section (1) of section 26 of the Government of India Act, 1935 provided disqualification for membership of the Federal Legislature

The expression  “office of profit”  has not been defined in the Constitution or in the Representation of People Act 1951.  

The word ‘profit’ does not necessarily mean any remuneration in cash. But it certainly means some kind of patronage or gain which is tangible or which can be perceived.”

It is a position in the government which cannot be held by an MLA or an MP. The post can yield salaries, perquisites and other benefits. The origin of this term can be found in the English Act of Settlement, 1701. Under this law, “no person who has an office or place of profit under the King, or receives a pension from the Crown, shall be capable of serving as a member of the House of Commons.

It was instituted so that there wouldn’t be any undue influence from the royal household in administrative affairs. 

According to Art 102(1)(a) and 191(1)(a) of the Constitution, an MP or MLA is barred from holding an office of profit as it can put them in a position to gain a financial benefit. 

Under the Representation of People Act too, holding an office of profit is grounds for disqualification. 

In Rajasthan, the State passes a Bill in October 2017 to make the posts constitutional, but the validity of this law has been challenged. Odisha too has appointed MLAs as chairpersons of district planning committees by amending an Act.

The Supreme Court struck down The Assam Parliamentary Secretaries (Appointment, Salaries, Allowances and Miscellaneous Provisions) Act, 2004 in July 2017 leading to a wave of resignations in Northeastern states. An office of profit is an office which is capable of yielding a profit or pecuniary gain.

Holding an office under the Central or State government, to which some pay, salary, emolument, remuneration or non-compensatory allowance is attached, is “holding an office of profit” for the purpose of Art 102.

The ECI examined the rich jurisprudence of office of profit and disqualification of a Member of Legislative Assembly and enlisted three determinative tests : test of pecuniary gain, executive nature of office, test of exercise of constitutional/ executive powers while functioning as parliamentary secretary.

The Supreme Court in its seminal decision in the Jaya Bachchan v. Union of India case developed the doctrine of ‘potential effect of an office’ to ascertain the nature of office.

According to the Supreme Court, Nature of the payment must be considered as a matter of substance rather than of form. Nomenclature is not important In fact, mere use of the word “honorarium” cannot take the payment out of the purview of profit, if there is pecuniary gain for the recipient.

Payment of honorarium, in addition to daily allowances in the nature of compensatory allowances, rent free accommodation and chauffeur driven car at State expense, are clearly in the nature of remuneration and a source of pecuniary gain and hence constitute profit.

If the “pecuniary gain” is “receivable” in connection with the office then it becomes an office of profit, irrespective of whether such pecuniary gain is actually received or not the office carries with it, or entitles the holder to, any pecuniary gain other than reimbursement of out of pocket/actual expenses, then the office will be an office of profit for the purpose of Article 102(1)(a).”

Too much reliance on the ‘potential doctrine’ by the ECI makes it more susceptible for challenge on that account alone. All four conditions have to be satisfied before an MP and MLA can be disqualified. a) An office; b) An office of profit; c) An office under the union or state government; d) An office exempt by law from purview of disqualificatory provisions. The EC was of the opinion that reimbursement of mere out-of-pocket expenses should not be held as profit.