INTERPRETATION OF STATUTES ,

DE E DS AND DOCUME NT S

CHAPT E R - 4(PART- II )

COR POR AT E AND ALLIE D LAWS

CS PEER MEHBOOB

Email: cs.peer06;@gmail.com

Mob.:8447283435

I N T E R P R E TA T I O N O F S TA T U T E S ,

D E E D S A N D D O C U M E N T S

Statutes Instrument Documents

Written law

including

ordinance, order,

by-laws, rules,

regulations, and

notifications etc.

Sec.3 of Indian

Evidence Act,

1872

Any matter expressed or

described upon any substance

by means of letters, figures or

marks intended to be used

for the purpose of recording

that matter.

Formal document

having legal effect

or legal

enforceability

Sec.2(14) of Stamp Act,

1899:Instrument includes

every document by which

any right or liability is or

purports to be created ,

extended, extinguished or

recorded

Interpretation

Process of finding the real meaning of law

and ascertaining the instruction of legislature

GE NE R AL CLASSIFICAT ION OF

INT E R PR E TAT ION

Legal

(When there is an

Actual Rule of Law)

Doctrinal

(When the purpose

to discover the real

and true meaning of

statue)

Authentic Usual

When the rule of

interpretation is

derived from the

legislature itself

When interpretation

comes from some

other source e.g.

custom, precedent

etc.

Grammatical Logical

For eg.

May/Shall,

and/or

Go beyond words

to discover the

true intention of

statute

Example: Section 105-Proxy

Any member of company entitled to attend and vote at a meeting of the company shall be

entitled to appoint another person as his proxy to attend and vote instead of himself; but a proxy

so appointed SHALL NOT HAVE ANY RIGHT TO SPEAK in the meeting.

Q. Whether a proxy can submit his views in writing?

A. As per the litral languange of Section 105, it seems that proxy is prohibited only from

speaking in the GM, and there is no prohibition on submitting the views in writing. However,

logically, the proxy should not be allowed to submit his views in writing because this will allow

him to obstruct the flow of the meeting, and this will defeat the purpose of Section 105.

L I T E R A L V I S - À - V I S F U N C T I O N A L

I N T E R P R E TA T I O N

Literal Interpretation Functional Interpretation

When the interpretation regards

verbal expression of law as

conclusive

(It does not look beyond words,

only reads words. Don’t apply

logic)

When the interpretation departs

from the letter of law and seeks

elsewhere for some more

satisfactory evidence, for finding

true intention of statute.

(logical)

Interpretation Construction

Art of finding the true sense of

the words expressed in the

statute.

Drawing construction-that lie

beyond the direct expression of

the words used.

PR IMARY & SE CONDARY RULE S

OF INT E R PR E TAT ION

Primary Rules Secondary Rules

Literal Effect of Usage

Reasonable Noscitur a sociis

Harmonious

Beneficial

Exceptional

Ejusdem Generis

(when general word is written

alongwith specific words, then

general words shall be interpreted

as per the specific words)

(Noscitur a sociis: when there is a

word to interpret, then it should

interpreted alongwith word it has

been used. E.g. Plant &

Machinery)

P R I M A RY R U L E S O F I N T E R P R E TA T I O N

(i) Literal Construction

Statutes shall be read in their ordinary, natural and grammatical meaning, so that

they may have the effect in their widest amplitude.

Where two interpretations are possible-narrower & wider, then if narrower

meaning fails to achieve the purpose of legislation, one should adopt the wider one.

Literal meaning shall be given to the language of the statute, unless the language

is ambigous or unlessthe literal sense results in defeating the purpose of statute.

[Example-Sec.105 of CA, 2013]

In case of plain words capable of only one meaning or interpretation, no

explanation of them is required. (Absolta sententia expositor non indiget).

It is not the duty of the Court to stretch the words used by the legislature to fill in the

gaps or omissions in the provisions of an Act.

Nothing shall be added to or taken away from statue, unless there is adequate ground

to justify that legislature/law maker intended something not specified.

If two interpretations are possible of a clause-one is mere mechanical and literal and

second one emerges from the settling in which clause appears then second is accepted.

Words of the statue shall be considered in their popular meaning and not in their

technical meaning.

EXAMPLE

Text of Section 102

Notice of every general meeting of the company shall be given to

every member of the company.

Q. Whether it is complusory to notice of general meeting to every

preference shareholders even if preference shareholders doesn’t have

the right to vote in GM?

( 2 ) R E ASONABLE CONST RUCT ION

Words of statute should be interpreted in such a manner, so as to result in the

sensible meaning.

To find out whether an activity is ultra vires the MOA, the words of the object

clause shall be reasonably construed-neither with rigidity nor with laxity.

If giving plain meaning to the words will not be fair or reasonable then it

becomes the duty of the court to depart from the dictionary meaning and adopt the

construction which will advance the remedy and suppress the mischief.

Reasonable construction shall be adopted in accordance with the object of the

statute. EXAMPLE-SECTION 105

3. HARMONIOUS

CONSTRUCTION

When there is a doubt about the meaning of words of statute these words these should be

understood in the sense in which they harmonize with object of statute.

Where there are two or more provisions in the Act, which are seemingly contradictory to each

other, then they should be interpreted in such a manner which gives effect to all of them, without

nullifying any of those provisions.

The Court’s duty is to give effect to all provisions, if possible.

If it is impossible to avoid inconsistency then provision which are enacted or amended later in

this point of time shall prevail..

This rule is applied when there is a real conflict and one provision is not made subject to other.

E.g. Harmonise preamble with the provisions of Act

Section 185 of CA, 2013 Section 186 of CA, 2013

A company shall not give any

loan to its own directors or to

directors of its holding co. or to

‘any person’ in whom director has

any interest.

A company can/may give loan to

any person or body corporate

within the limit of 60% of its

PUC+Free Reserves+ Securities

Premium or 100% Free

Reserves+ Securities Preimum,

whichever is higher

M E A N I N G O F

N O T E W I T H S TA N D I N G A N Y T H I N G

C O N TA I N E D I N T H I S A C T

Q. Discuss the meaning of-

1. Notwithstanding anything contained in this Act, and

2. Subject to other provisions of this Act

“Notwithstanding anything contained in this Acct” is a non obstente clause; and if there is an inconsistency or departure between non-obstente clause and other provisions of the Act, then the provisions as contained in the non-obstente clause shall prevail over provisions.[K. Parasurmiah vs. Pakari Lakshman]

Against the above non-obstente clause, the term “subject-to” is used in the provision of an Act to convey the intention of the legislature that particular provision is yielding/giving place to the other provisions(over itself) to which it is made “subject to”

Thus it can be concluded that the effect of non-obstente clauses (i.e. notwithstanding) is opposite to provision which includes the term “subject to”

( 4 ) BE NE FICIAL CONST RUCT ION

Where the language of statute is capable of more than one construction, the rule of beneficial construction shall apply.

Rule of Beneficial ocnstruction is also called as –Mischief Rule or Hyden Rule or purposive construction.

Following four matters shall be considered while making interpretation under this Act:

1. What was the old law before making the new law,

2. What was the mischief for which earlier law did not provide,

3. What is the new remedy that new Act/Law has provided

4. What is the reason for providing the new remedy.

This rule shall be used only when the words used in statute are ambiguous and are capable of more than one meaning.

E XCE PT IONAL CONST RUCT ION

This rule has three different aspects:

(i) Common Sense Rule:

If no sensible meaning can be assigned to a word or phrase, or if it would defeat the real

object of the statute, it would defeat the real object of the statute, it would be eliminated.

(But as a general rule, it is better for at thing to have effect than to be made void.)[For e.g.

Sec.152(7)(b)(iv) of the Companies Act, 2013]

(ii) Conjuctive and Disjunctive words (and/or)

In general every “and” is read as “and” and every “or” is read as “or”

“And” is conjunctive by nature.

“or” is disjunctive by nature

But opposite meaning is assigned to these words if the literal reading produces absurd

result, and the intention of legislature is otherwise quite clear.

(iii) May/shall:

“May” is directory in nature.

“Shall” is mandatory in nature

“May”

(a) If a provision containing “may” gives a power coupled with duty, it becomes mandatory,

and such may will be read as ‘Will’.

(b) If a provision containing ‘may’ is meant for advancing the remedy and suppressing the

mischief, or if only directory meaning defeat the very intention of the Act, then the

mandatory meaning shall be assigned to itand it should mean a “command”.

If a provision containing “May” is meant for advancing the

remedy and suppressing the mischief, or if only directory meaning

defeat the very intention of the Act, then the mandatory meaning

shall be assigned to it, and it should mean a ‘command’.

Against the Government the word ‘shall’ is to be construed as

‘may’, unless a contrary intention of ‘Law maker’ is manifest.

RULE OF EJUSDEM GENERIS

‘General words’ following the ‘specific words’ are to be construed /interpreted with

reference to the specific words that precede them.

For e.g.: Arms, ammunition, gun powder or “any other goods.”

In above sentence, words, -”any other goods” means good of similar nature.

Example:

In case of- “Ashbury Railway Carriage & Iron Co.Ltd. Vs. Riche”-the object clause

stated- “to make and sell or give on hire the railway carriages…………….& to act as

mechanical and engineers and general contractors.”

COURT HELD that words “General Contractors” shall be construed in harmony

with ‘mechanical engineers’. Interpretation of the words-”General Contractors” shall

be made as per the words “mechanical egineers’ and the words ‘General Contractors’

do not include Financing activity.

E.g. Sec.271 of CA,2013, Circumstances under which a company can be wound

up

S E C O N DA R Y R U L E S O F I N T E R P R E TA T I O N

1. Effect of usage-

(a) Optima legum interpret consuetudo- i.e. custom is the best interpretor of law.

(b) Contempranea exposito optima et fortissmo in lege- i.e. the best way to interpret a

document/statute is to read it as it would have been read when made. In other words, read the

law the way it was written, when it was actually written.

2. Noscitur a sociis-(known by its associated words)

Associate words shall be read and understood in common sense manner.

Commercial establishment-means an establishment which carries on any business, trade or profession.

The term profession shall be construed interpreted with the associated words ‘business and trade”

and it was held that private dispensary for charitable purpose does not fall in the definition of

commercial establishment.

Two or more words which are coupled together and can have PARALLEL OR SIMILAR

MEANING should be understood in COGNATE SIMILAR SENSE

A I D T O

I N T E R P R E TA T I O N / C O N S T R U C T I O N

S.

No.

Internal Aids External Aids

1. LONG TITLE HISTORICAL SETTINGS

2. PREAMBLE CONSOLIDATING STATUTES & PREVIOUS

LAW

3. DEFINITIONS USAGE

4. MARGINAL NOTES EARLIER & LATER ACTS AND ANALOGOUS

ACTS

5. PROVISOS EARLIER ACT EXPLAINED BY LATER ACT

6. EXPLANATIONS REFERENCE TO REPEAL PART OF THE ACT

7. ILLUSTRATIONS DICTIONARY DEFINITIONS

8. SCHEDULES USE OF FOREIGN DECISION

9 READ THE STATUTE AS A WHOLE

I N T E R N A L A N D E X T E R N A L A I D F O R

I N T E R P R E TA T I O N

INTERNAL AID FOR INTERPRET ATION / CONSTRUCTION

Every statute law contains its Title, Preamble, Heading, Marginal Notes, Definitional Sections,

Illustrations etc.

LONG TITLE –(COFEPOSA ACT)

An Act can have what is known as ‘Short Title’ and also a ‘Long Title’.

The ‘Short title’ merely identifies the Act and is chosen merely for convenience. Long Title

describe the Act and does not merely define it.

It is now settled that the long title of an Act is a part of the Act. We can therefore refer to it to

ascertain the object, scope and purpose of the Act.

COFEPOSA ACT

CONSERVATION OF FOREIGN EXCHANGE AND P

REVENTION OF SMUGGLING ACTIVITIES ACT

Two type of detention

Punitive: (IPC)

Preventive: COFEPOSA( moths detention)

PREAMBLE (E.G. COMPETITION ACT, 2002)

Preamble expresses the scope, object and purpose of the Act more comprehensively than

the long title.

The Preamble of Competition Act says that

To promote and sustain competition, to protect consumers, to prohibit on the agreements

having appreciable adverse effect on competition in India, Free Entry and free exit for all.

The preamble contains-1. the ground, 2. the cause of making the statute, and 3. the

evil which is sought to be remedied by it.

Like the long title, the preamble of a statute is also a part of the statute and can

legitimately be used for contructing it.

In short the preamble of the Act discloses the primary intention of the law maker.

Preamble can only be in as aid to construction if the language of the staute is not clear.

DEFINITIONAL CLAUSES

Every statutes contain ‘definitions’ of certain words and expression used in the body of statute. If a word or phrase is defined as having a particular meaning in the Act, it is that meaning alone which must be given in to it in interpreting every section of that Act, unless there be anything repugnant in the context, the court cannot ignore the statutory definition and try to extract what it considers to be the true meaning of the expression independently of it.

Two purposes of a definition clause-

(i) To provide a key to the proper interpretation of the Act, and

(ii) To shorten the language of the enacting part by avoiding repetition of the same words contained in the definition part every time the legislature wants to refer to the expressions contained in the definition.

The definition of a word or expression in the definition section may either be restricting of its ordinary meaning or may be extensive of the same.

(a) When a word is defined to ‘mean’ such and such definition is ‘prima facie’

restrictive and exhaustive. We must restrict the meaning of the word to that

given in the definition section.

(b) But where a word is defined to ‘include’ such and such the definition is ‘prima

facie’ extensive. Here, the word defined is not restricted to the meaning

assigned to it BUT has extensive meaning (i.e. covering a large area), which also

includes the meaning assigned to it in the definition section.

(c) We may also find a word being defined as ‘means and includes’ such and such-

Here again the definition would be exhaustive.

HEADING AND THE TITLE OF CHAPTER

In every Act, a number of its sections applicable to any particular object are

grouped together sometimes in the form of Chapters, prefixed by Heading and

Title.

These “Heading Title” prefixed to sections or groups of sections can

legitimately by referred to for the purpose of construing the Act or its parts.

However, there is a conflict of opinion about the weightage to be given to them

MARGINAL NOTES

Generally held view is that- the Marginal Notes appended to a section cannot be used for

constructing the section.

In CIT vs. Ahmed bhai Umar bhai & Co.- SC had declared-”Marginal notes in any Indian

statute or any Act of Parliament cannot be referred to for the purpose of constructing the

statute and the same view has been taken in many other case.

However, marginal notes appended to articles of the CONSTITUTION OF INDIA have

been held to be part of the CONSTITUTION as passed by the constituent assembly and

therefore have been made use of in constructing the articles.

ILLUSTRATIONS

We would find that many, through not all, sections have illustrations appended to them, these illustrations follow the text of the section and therefore, do not form a part of the sections.

However, illustrations do form a part of the statute and are considered to be of relevant value in constructing the text of the sections.

PROVISO

Normal Function of a proviso is to except something out of the Act or to qualify something stated in the Act which would be within its preview, if the proviso were not there, the effect of the proviso is to qualify the preceding Act which is expressed in terms which are too general.

EXPLANATION

An Explanation is at times appended to a section to explain the meaning of the text of the section. An

exception may be added to include something within the section or to exclude something from it.

Explanation should be so read as to harmonise with and clear up any ambiguity in the main section.

SCHEDULES

Schedules form part of an Act. Therefore they must be read together with the Act for all purposes of

construction.

However, the expression in the schedule cannot control or prevail over the express Act.

If there appears to be any inconsistency between the schedule and the main Act, the main Act shall

always prevail..

READ THE STATUTE AS A WHOLE

It is the elementary principle that construction of a statute is to be of all its parts taken together and

not of one part only

EXTERNAL AIDS

Society does not function in a void. Everything done has its reason behind its background, the

particular circumstances prevailing at the time and so on.

These factors apply to the Act as well. These factors are called as ‘External Aids of Construction’

1. Historical Settings

The history of the external circumstances which led to the Act in question is of much significance in

construing. We have for the purpose, to take help from all those external or historical facts which are

necessary in the understanding and comprehension of the subject matter and the scope and the objects of

the Act.

2. Consolidating Statutes & Previous Law

Preamble to many statutes contain expressions such as ‘An Act to Consolidate” the previous law etc. In

such a case the Courts may stick to the presumption that is not intended alter the law.

3. Usage

4. Earlier, Later Acts and Analogous Acts: E.g. Consumers Protection Act and Competition Act

5. REFERENCE TO REPEAL PART OF THE ACT

6. DICTIONARY DEFINITIONS

7. USE OF FOREIGN DECISION