Chapter 1

General Principles of Interpretation

Rules of interpretation are not rules of law.

Principles of interpretation have been devised to assist the courts in the interpretation of statutes where the words or the language used there are ambiguous and there is a doubt about the meaning thereof. For this purpose, the doubt as to the true meaning should be real, and not merely conjectural or fanciful. If the court does not think that the words or expressions are open to diverse interpretations, it is not entitled to say that there is ambiguity merely for the reason that some ingenious litigant could suggest another meaning. It is not for the courts to invent fancied ambiguities and stretch or pervert the language of the enactment in favour of the taxpayer.

CIT v Boots Company (I) Ltd. (1995) 214 ITR 175 (Bom)

Interpretation of statutes should conform to the well-laid down and well-settled principles and canons of interpretation. Jurisprudential thinking and development, over the years, have crystallised the manner and method of interpretation of statutes. Construction of statutes depends upon the nature of legislation to be interpreted, and, again the nature of provisions concerned within a particular legislation. For example, while interpreting welfare legislations, courts are generally guided by the principle of beneficial interpretation, where as in the case of fiscal or penal provisions, the rule of strict interpretation is generally resorted to. However, this principle is also not without exception, as shall be seen in following chapters.

The task of interpretation of a statutory enactment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. It is an attempt to discover the intent of the Legislature from the language used by it and it must always be remembered that language is at best an imperfect instrument for the expression of human thought and it would be idle to expect every statutory provision to be drafted with divine prescience and perfect clarity.

K.P. Varghese v. ITO (1981) 131 ITR 597 at pp. 604 to 606: AIR 1981 SC 1922 atp. 1927 and 1928 which referred the observations of Lord Denning in Luke v IRC (1963) 54 ITR 682 (HL), with approval

The modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy.

Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461, cited inK & SLake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309 at 312, 315.

Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place.

Reserve Bank of India v. Peerless General Finance & Investment Co. Ltd. and Others, (1987) 1 SCC 424: AIR 1987 SC 1023, 1987 SCR (2) 1.

It is an elementary duty of court to give effect to the intention of the Legislature as expressed in the words used by it and no outside consideration can be called in aid to find that intention. Recourse to extrinsic aid in interpreting a statutory provision would be fortified only within well recognised limits.

New Piece Goods Bazaar Co. Ltd. v CIT (1950) 18 ITR 516 (SC)

The Court is only concerned with interpretation of Statute and to apply if it is valid. It is not required to enter upon the discussion as to what the law should be.

Purshottam Govindji Halai v. Shree B.M. Desai, Additional Collector of Bombay, AIR 1956 SC 20: 1956 CrLJ 129: 1955(2) SCR 887: 1956(1) Mad LJ (SC) 51: 58 Bom LR 488.

A statute is neither a literary text nor a divine revelation. Its effect is, therefore, neither an expression laid on immutable emotional overtones nor a permanent creation of infallible wisdom. It is a statement of situation or rather a group of possible events within a situation and as such it is essentially ambiguous. [See Statutory Interpretation : 43 Har. L.R. 863 (868)].

It must be presumed that the legislator understands and correctly appreciates the need of his people that its laws are directed to problems made manifest by experience and its discretion based upon adequate grounds.

Middleton v Texas Power and Light Co. (1918) 249 US 152.

It is not proper to regard a word, a clause or a sentence occurring in a judgement of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment.

Madhav Rao Jivaji Rao Scindia Bhadur v Union of India AIR 1971 SC 530, at page 578 (at page 320 of 198 ITR)

There was a time, observed Lord Reid, when it was thought almost indecent to suggest that judges make law — they only declare it .... But we do not believe in fairy tales any more. (The Judge as Law Maker p. 22) In Countries such as the United Kingdom where Parliament, as the legislative organ, is supreme and stands at the apex of the constitutional structure of the State, the role played by judicial law-making is limited. In the first place, the function of the courts is restricted to the interpretation of laws made by Parliament, and the courts have no power to question the validity of parliamentary statutes, the Diceyan dictum holding true that the British Parliament is paramount and all powerful. In the second place, the law enunciated in every decision of the courts in England can be superseded by an Act of Parliament. As Cockburn CJ. observed in Canon Selwyn, ex parte (1872) 36 JP 54:

"In traditional English Law, there is no judicial body in the country by which the validity of an Act of Parliament could be questioned. An act of the Legislature is superior in authority to any court of law."

Thomas J. [in Cheney v Conn (1968) 1 All ER 779 (Ch. D) atp. 782] referred to a parliamentary statute as the highest form of law .... which prevails over every other form of law.

The position is substantially different under a written Constitution such as the Constitution of India, which represents the supreme law of the land, envisages three distinct organs of the State, each with its own distinctive functions. In this scheme of Constitution, the Parliament and the State Legislature in India enact the law and the executive Government implements it, the judiciary sits in judgment not only on the implementation of the law by the executive but also on validity of the legislation sought to be implemented. One of the functions of judiciary in India is to examine the competence and validity of legislation, both in point of legislative competence as well as is consistency with fundamental rights.

When a statute is declared unconstitutional by Courts in India, it cannot be enforced unless constitutional sanction is obtained therefor by a constitutional amendment or an appropriately modified version of the statute is enacted which accords with constitutional prescription. The range of judicial review recognised in the judiciary of India is perhaps the widest and the most extensive known to the world of law. The power extends even to examining the validity of an amendment to the Constitution, for, now, it has been repeatedly held that no constitutional amendment can be sustained which violates the basic structure of the Constitution.

His Holiness Kesavananda Bharathi Sripadagalvaru v State of Kerala (1973) Suppl. SCR 1; Indira Nehru Gandhi v Raj Narain (1976) 2 SCC 347; Minerva Mills Ltd. v Union of India (1980) 2 SCC 591 and in Sampath Kumar (S.P.) v Union of India (1987) 1 SCR 435.

However to be entirely fair to the English Courts, they often resort to the doctrine of Ultra Vires to strike down a legislation or subordinate legislation or an exercise of power holding the such unfair result could never have been intended by the legislation.

Defective legislation

The construction of the Act must be taken from the bare words of the Act.

"…...We cannot fish out what possibly may have been the intention of the Legislature; we cannot aid the Legislature's defective phrasing of the Statute; we cannot add, and mend, and, by construction, make up deficiencies which are left there. If the Legislature did intend that which it has not expressed clearly; much more, if the Legislature intended something very different; if the Legislature intended something pretty nearly the opposite of what is said, it is not for Judges to invent something which they do not meet with in the words of the text (aiding their construction of the text always, of course, by the context); it is not for them so to supply a meaning, for, in reality, it would be supplying it: the true way in these cases is, to take the words as the Legislature have given them, and to take the meaning which the words given naturally imply, unless where the construction of those words is, either by the preamble or by the context of the words in question, controlled or altered; and, therefore, if any other meaning was intended than that which the words purport plainly to import, then let another Act supply that meaning, and supply the defect in the previous Act.

Crawford v. Spooner, Moore's Indian Appeals, Volume 4 (1846 to 1850) 179.

Judicial legislation

Legislation in the garb of interpretation – Legisputation – Permissibility.

"…..Speaking frankly, Sec. 35(3) has a mechanistic texture, a set of punitive pigeon holes, but we may note that words grow in content with time and circumstance, that phrases are flexible in semantics, that the printed text is a set of vessels into which the court may pour appropriate judicial meaning. That statute is sick which is allergic to change in sense which the times demand and the text does not countermand. That court is superficial which stops with the cognitive and declines the creative function of construction. So, we take the view that 'quarrying' more meaning is permissible out of Sec. 35(3) and the appeal provisions, in the brooding background of social justice, sanctified by Art. 38, and of free legal aid enshrined by Art. 39A of the Constitution. ……."

"Wide as the power may be, the order must be germane to the Act and its purposes, and latitude cannot transcend those limits. Judicial 'Legisputation' to borrow a telling phrase of J. Cohen, is not legislation but application of a given legislation to new or unforeseen needs and situations broadly falling within the statutory provision. In that sense, 'interpretation is inescapably a kind of legislation'. This is not legislation stricto sensu but application, and is within the court's province."

V.C. Rangadurai v. D. Gopalan & Others, 1979 1 SCR 1054.

"We are mindful that a strictly grammatical construction is departed from in this process and a mildly legislative flavour is imparted by this interpretation. The judicial process does not stand helpless with folded hands but engineers its way to discern meaning when a new construction with a view to rationalisation is needed."

C.I.T. v. B.N. Bhattacharjee, 1979 (3) SCR 1133: AIR 1979 SC 1725.

Though the function of the Courts is only to expound the law and not to legislate, nonetheless the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law. In such circumstances, it is the duty of the court to mould or creatively interpret the legislation by liberally interpreting the statute.

Directorate of Enforcement v. Deepak Mahajan, 1994 (3) SCC 440: AIR 1994 SC 1775.

When a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament … and then he must supplement the written word so as to give 'force and life' to the intention of the legislature. A Judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases.

Seaford Court Estates Ltd. v. Asher [(1949) 2 All ER 155, 164.

Though the above observations of Lord Denning were disapproved in appeal by the House of Lords in Magor and St. Mellons v. Newport Corpn. [(1951) 2 All ER 839 (HL)] Sarkar, J. speaking for the Constitution Bench in M. Pentiah v. Muddala Veeramallappa [(1961) 2 SCR 295 : AIR 1961 SC 1107] adopted that reasoning of Lord Denning. Subsequently also, Beg, C.J. in Bangalore Water Supply and Sewerage Board approved the observations of Lord Denning stating thus:

"Perhaps, with the passage of time, what may be described as the extension of a method resembling the 'arm-chair rule' in the construction of wills, Judges can more frankly step into the shoes of the legislature where an enactment leaves its own intentions in much too nebulous or uncertain a state."

Bangalore Water Supply and Sewerage Board v. A. Rajappa, (1978) 2 SCC 213: 1978 SCC (L&S) 215 : AIR 1978 SC 548.

Creative Interpretation

When the Court looks at both the literal language as well as the purpose or object of the statute in order to better determine what the words used by the draftsman of legislation mean.

While examining a particular statute for finding out the legislative intent it is the attitude of Judges in arriving at a solution by striking a balance between the letter and spirit of the statute without acknowledging that they have in any way supplemented the statute would be the proper criterion. The duty of Judges is to expound and not to legislate is a fundamental rule. There is no doubt a marginal area in which the courts mould or creatively interpret legislation and they are thus finishers, refiners and polishers of legislation which comes to them in a state requiring varying degrees of further processing.

Corocraft Ltd. v. Pan American Airways Inc.,(1968) 3 WLR 714 : (1968) 2 All ER 1059 : (1969) 1 QB 616] WLR, p. 732 approved in State of Haryana v. Sampuran Singh [(1975) 2 SCC 810].

But by no stretch of imagination a Judge is entitled to add something more than what is there in the statute by way of a supposed intention of the legislature. It is, therefore, a cardinal principle of construction of statutes that the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed.

Union of India v. Elphinstone Spinning and Weaving Co. Ltd. and Ors, 2001 (4) SCC 139.

It is, however, becoming increasingly fashionable to start with some theory of what is basic to a provision or a chapter or in a statute or even to our Constitution in order to interpret and determine the meaning of a particular provision or rule made to subserve an assumed "basic" requirement. I think that this novel method of construction puts, if I may say so, the cart before the horse. It is apt to seriously mislead us unless the tendency to use such a mode of construction is checked or corrected by this Court. What is basic for a section or a chapter in a statute is provided: firstly, by the words used in the statute itself; secondly, by the context in which a provision occurs, or, in other words, by reading the statute as a whole; thirdly, by the preamble which could supply the "key" to the meaning of the statute in cases of uncertainty or doubt; and, fourthly, where some further aid to construction may still be needed to resolve an uncertainty, by the legislative history which discloses the wider context or perspective in which a provision was made to meet a particular need or to satisfy a particular purpose. The last mentioned method consists of an application of the Mischief Rule laid down in Heydon's case long ago.

Venkatachalam v. Deputy Transport Commissioner, (1977) 2 SCC 273

By way of introduction to the issue of statutory construction I should say that in my judgment it is nowadays misleading — and perhaps it always was — to seek to draw a rigid distinction between literal and purposive approaches to the interpretation of Acts of Parliament. The difference between purposive and literal construction is in truth one of degree only. On received doctrine we spend our professional lives construing legislation purposively, inasmuch as we are enjoined at every turn to ascertain the intention of Parliament. The real distinction lies in the balance to be struck, in the particular case, between the literal meaning of the words on the one hand and the context and purpose of the measure in which they appear on the other. Frequently there will be no opposition between the two, and then no difficulty arises. Where there is a potential clash, the conventional English approach has been to give at least very great and often decisive weight to the literal meaning of the enacting words.

Oliver Ashworth Ltd. V. Ballard Ltd., [1999] 2 All ER 791.