INTEPRETATION OF STATUTES-1, Study notes of Intellectual Property (IP)

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Subject: Interpretation of statutes Semester: seventh semester Compilation date: 22 November, 2005 to 5th^ December, 2005. Author: J.Vasanth Adithya E-mail: vasanth.adithya@gmail.com Preface

This is a compilation of notes and lectures on the subject titled “INTERPRETATION OF STATUTES”. It is a ready-to-use gist for law students and the primary objective of this gist is to enable the reader to understand the in-depths of the subject and to provide exam oriented information. This has been a new initiative from GOODWORD and we hope that it will definitely be of some use to law students and to others who are interested in this subject. Suggestions and additions to the compilation are welcomed. Wishing you all the best! J.Vasanth Adithya Author CONTENTS

The term interpretation means “To give meaning to”. Governmental power has been divided into three wings namely the legislature, the executive and the judiciary. Interpretation of statues to render justice is the primary function of the judiciary. It is the duty of the Court to interpret the Act and give meaning to each word of the Statute. The most common rule of interpretation is that every part of the statute must be understood in a harmonious manner by reading and construing every part of it together. The maxim “ A Verbis legis non est recedendum ” means that you must not vary the words of the statute while interpreting it. The object of interpretation of statutes is to determine the intention of the legislature conveyed expressly or impliedly in the language used. In Santi swarup Sarkar v pradeep kumar sarkar, the Supreme Court held that if two interpretations are possible of the same statute, the one which validates the statute must be preferred. Kinds of Interpretation There are generally two kind of interpretation; literal interpretation and logical interpretation.

Literal interpretation Giving words their ordinary and natural meaning is known as literal interpretation or litera legis. It is the duty of the court not to modify the language of the Act and if such meaning is clear and unambiguous, effect should be given to the provisions of a statute whatever may be the consequence. The idea behind such a principle is that the legislature, being the supreme law making body must know what it intends in the words of the statute. Literal interpretation has been called the safest rule because the legislature’s intention can be deduced only from the language through which it has expressed itself. The bare words of the Act must be construed to get the meaning of the statute and one need not probe into the intention of the legislature. The elementary rule of construction is that the language must be construed in its grammatical and literal sense and hence it is termed as litera legis or litera script. The Golden Rule is that the words of a statute must prima facie be given their ordinary meaning. This interpretation is supreme and is called the golden rule of interpretation. In Ramanjaya Singh v Baijnath Singh, the Election tribunal set aside the election of the appellant under s 123(7) of the Representation of People’s Act, 1951 on the grounds that the appellant had employed more persons than prescribed for electioneering purpose. The appellant contended that the excess employees were paid by his father and hence were not employed by him. The Supreme Court followed the

The Supreme Court held that literal interpretation must be made and hence rejected the application as invalid. In Raghunandan Saran v M/s Peary Lal workshop Pvt Ltd, the supreme court validated 14 ( 2) of the Delhi Rent Control Act 1958 and provided the benefit of eviction on account of non payment of rent. The Supreme Court adopted grammatical interpretation. Exceptions to the rule of literal interpretation Generally a statute must be interpreted in its grammatical sense but under the following circumstances it is not possible:- Logical defects A) ambiguity B) inconsistency C) incompleteness or lacunae D) unreasonableness Logical interpretation If the words of a statute give rise to two or more construction, then the construction which validates the object of the Act must be given effect while interpreting. It is better to validate a thing than to invalidate it or it is better the Act prevails than perish. The purpose of construction is to ascertain the intention of the parliament. The mischief rule The mischief rule of interpretation originated in Heydon’s case. If there are two interpretations possible for the material words of a statute, then for sure and true interpretation there are certain considerations in the form of questions.

The following questions must b considered.

1. What was the common law before making the Act?
2. What was the mischief and defect for which the common law did not provide a remedy?
3. What is the remedy resolved by the parliament to cure the disease of the common wealth?
4. The true reason of the remedy. The judge should always try to suppress the mischief and advance the remedy. The mischief rule says that the intent of the legislature behind the enactment should be followed. Rule of casus omissus Generally, the court is bound to harmonize the various provisions of an Act passed by the legislature during interpretation so that repugnancy is avoided. Sometimes certain matters might have been omitted in a statute. In such cases, they cannot be added by construction as it amounts to making of laws or amending which is a function of legislature. A new provision cannot be added in a statute giving it meaning not otherwise found therein. A word omitted from the language of the statute, but within the general scope of the statute, and omitted due to inadvertence is known as Casus Omissus. In Padma Sundara Rao v State of Tamil Nadu it was held that the cassus omissus cannot be supplied by the court except in the case of a clear necessity and when reason for it is found within the four corners of the statute itself. Rule of ejusdem generis

CHAPTER 2

INTERNAL AID OF INTERPRETATION

INTRODUCTION

Statute generally means the law or the Act of the legislature authority. The general rule of the interpretation is that statutes must prima facie be given this ordinary meaning. If the words are clear, free from ambiguity there is no need to refer to other means of interpretation. But if the words are vague and ambiguous then internal aid may be sought for interpretation. INTERNAL AIDS

1. Context If the words of a statute are ambiguous then the context must be taken into consideration. The context includes other provisions of

the statute, its preamble, the existing state of law and other legal provisions. The intention behind the meaning of the words and the circumstances under which they are framed must be considered.

2. Title Title is not part of enactment. So it cannot be legally used to restrict the plain meaning of the words in an enactment. Long title The heading of the statute is the long title and the general purpose is described in it. E.g. Prevention of Food Adulteration Act, 1954, the long title reads as follows “An Act to make provisions for the prevention of adulteration of food”. In Re Kerala Education bill, the Supreme Court held that the policy and purpose may be deduced from the long title and the preamble. In Manohar Lal v State of Punjab, Long title of the Act is relied as a guide to decide the scope of the Act. Short Title The short title of the Act is purely for reference only. The short title is merely for convenience. E.g. The Indian Penal Code, 1860. 3.Preamble The Act Starts with a preamble and is generally small. The main objective and purpose of the Act are found in the Preamble of the Statute. “Preamble is the Act in a nutshell. It is a preparatory statement. It contains the recitals showing the reason for enactment of the Act. If the language of the Act is clear the preamble must be ignored. The preamble is an intrinsic aid in the interpretation of an ambiguous act.

7. Definition/ Interpretation clause The legislature can lay down legal definitions of its own language, if such definitions are embodied in the statute itself, it becomes binding on the courts. When the act itself provides a dictionary for the words used, the court must first look into that dictionary for interpretation. In Mayor of Portsmouth v Smith, the court observed “The introduction of interpretation clause is a novelty.”

8. Conjunctive and Disjunctive words The word “and” is conjunctive and the word “or” is disjunctive. These words are often interchangeable. The word ‘and’ can be read as ‘or’ and ‘or’ can be read as ‘and’.

9. Gender Words’ using the masculine gender is deemed to include females too.

10. Punctuation Punctuation is disregarded in the construction of a statute. Generally there was no punctuation in the statutes framed in England before

Punctuation cannot control, vary or modify the plain and simple meaning of the language of the statute.

11. Explanations IN certain provisions of an Act explanations may be needed when doubts arise as to the meaning of the particular section. Explanations are given at the end of each section and it is part and parcel of the enactment.
12. Exceptions and savings clause

To exempt certain clauses from the preview of the main provisions, and exception clause is provided. The things which are not exempted fall within the purview of the main enactment. The saving clause is also added in cases of repeal and re-enactment of a statute.

13. Schedules Schedules form part of a statute. They are at the end and contain minute details for working out the provisions of the express enactment. The expression in the schedule cannot override the provisions of the express enactment. Inconsistency between schedule and the Act, the Act prevails. ( Ramchand textiles v sales tax officer)
14. Illustrations Illustrations in enactment provided by the legislature are valuable aids in the understanding the real scope.
15. Meaning of the words The definition of the words given must be construed in the popular sense. Internal aid to construction is important for interpretation.

RULES OF INTERPRETAION

A) Presumption In enactment of a consolidating Act, the presumption is that the parliament is intended to alter the existing law. The further presumption is that the words used in the consolidating Act bear the same meaning as that of the enactment for which consolidation is made. However, if the words have origin in different legislations, then the same meaning cannot be sustained. B) INCONSISTENCY In case of inconsistency between the provisions of a consolidating Act, it is pertinent to refer to different previous enactments with reference to dates of enactment in chronological order. For the purpose of enactment of a consolidating Act it is in order to refer to previous laws, existing laws, judicial decisions, common law etc. Just because certain terms of a non- repealed statute are used in the consolidating statute, it does not mean that the non-repealed statute and general laws are affected by the consolidating statute. A consolidating statute is not simply a compilation of different earlier statutes, but enacted with co-ordination and for the changing present social circumstances. In this context a consolidating statute may also be an amendment act. E.g. Arbitration and Conciliation Act, 1996. In Galloway v Galloway, it was argued as per a 26 (1) of the matrimonial clauses Act, 1950, the term “children” is limited to legitimate children only.

The interpretation was rejected by Lord Radcliff and gave a liberal interpretation to include illegitimate children also. CODIFYING STATUTE A codifying statute is a statute which states exhaustively the whole of the law upon a particular subject. The maker of law incorporates in the enactment both the pre-existing statutory provisions and the common law relating to the subject. The purpose of a codifying statute is to present uniform, orderly and authoritative rules on a particular subject. When once the law has been codified, it cannot be modified gradually from day to day, as the changing circumstances of the community. Any modifications to it whether of a minor matter or a major amendment must be made by the legislature (bank of England v vagliano brothers) Lord Hershell interprets a codifying statute as follows:- “ The object of a codifying Act is to end the conflict of decisions .A codifying statute does not exclude reference to earlier case laws on the subject for the purpose of true interpretation of the words. The reference of the previous legislations is for the reason of removal of ambiguity. The aim of a codifying statute is to declare the law on the subject so that the judge, by true interpretation of words decides the meaning within the parameter of such law. In Subba Rao v Commissioner of Income Tax , the Supreme Court held that the Income Tax Act, 1922 is a self-contained code exhaustive with the matters dealt with therein, and its provisions show An intention to depart from common rule law “qui facet per alium facit per se”. The preamble of the Act states it to be an act to consolidate and amend. Therefore the court should try to find out the true scope of the code and matters dealt with exhaustively therein. To conclude, the difference between a consolidating and codifying statutes are that the aim of a consolidating statute is to enact a

CHAPTER 4

STRICT CONSTRUCTION OF TAXING STATUTES

INTRODUCTION

Statutes imposing taxes or monetary burdens are to strictly construed. The logic behind this principle is that imposition of taxes is also a kind of imposition of penalty which can only be imposed if the language of the statute unequivocally says so. Any kind of intendment or presumption as to tax does not exist. TAX AND FEE In case of a fee, there is a specific service rendered to the fee payer. ( Quid pro quo) , whereas for the tax payer no direct services are rendered but the service assumes the form of public expenditure rendered to the public at large. Rules of interpretation 1 Charging Section The section that charges the tax must have clear words. Before taxing any individual it must be clearly established that the person to be taxed falls within the purview of the charging section by clear words. There is no implication of the law. If a person cannot be brought within the four corners of the law, he is free from tax liability. In Calcutta Jute Manufacturing Co. v Commercial Tax officer, the Supreme Court held that in case of interpreting a taxing statute, one has to look into what is clearly stated. There is no room for searching the intentions, presumptions or equity. In Mathuram Agarwal v State of Madhya Pradesh, the Supreme Court held that words cannot be added or substituted to find a meaning in a statute so as to serve the intention of the legislature. Every taxing statute must contain three aspects; subject of tax, person to be taxed and the rate of tax.

2. Strict and favourable construction Taxing enactment should be strictly construed and the right to tax should be clearly established. Equitable construction should not be taken into account. Courts should not strain words and find unnatural meaning to fill loopholes. If the provision can be interpreted in two ways, then the one favoring the assessee must be taken into consideration. In Saraswati Sugar mills v Haryana State Board, The Supreme Court held that every Act of the parliament must be read according to the strict natural construction of its words.
3. Clear Intention to impose or increase tax The intention to impose or increase tax or duty must be clear and in unambiguous language.
4. Prospective operation The cardinal principle of tax laws is that the law to be applied to assessee is the law in force in the assessment year unless otherwise provided expressly or by necessary implication. No retrospective effect to fiscal statute is possible unless the language of the language of the statute is very clear and plain. In Reliance Jute Industries Ltd v Commercial Tax officer, Fiscal Statute are generally not retrospective otherwise expressly provide by necessary implications.
5. Meaning in common parlance. In finding out the meaning of a taxing statute, the meaning in common usage, parlance special in commercial and trade circles must be considered. In Annapurna Biscuit Manufacturing Co. v Commissioner of Sales tax, the Supreme Court held that statute imposing a tax should be