NATIONAL LAW UNIVERSITY ODISHA

INTERPRETATION OF STATUTES

PROJECT ON:
THE ROLE OF LATER STATUTES IN INTERPRETING INDIAN STATUTES

SUBMITTED TO:
Dr. Abhik Majumdar
(Assistant Professor of Law)
Mr. Soubhagya Sundar Nanda
(Research Associates cum Teaching Assistant)

SUBMITTED BY:
Manvi Khanna (2016/BBA. LLB/031)
Mandeep Singh Shaktawat (2016/B.A.,LL.B/057)
Siddharth Anand Panda (2016/B.A.,LL.B/099)

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 TABLE OF CONTENTS

Introduction .......................................................................................................................... 3
Research Methodology.......................................................................................................... 4
Taxation Matters ................................................................................................................... 5
Arbitration and Civil Matters ................................................................................................ 8
Service Matters & Labour Laws .......................................................................................... 11
Conclusion .......................................................................................................................... 13

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 INTRODUCTION

A legislation cannot be read in isolation and a judge may be required to take judicial notice of
various legal, social, economic and other aspects in which a society operates and interpret the
legislation accordingly Many a times in order to understand and interpret statute a Court has to
consider various contexts which may not be found in a statute itself. 1 The Courts in such
situations where there is any ambiguity or doubt resorts to external aids of interpretation. The
history of legislation, the Statement of Object and Reasons, the enactments which are repealed,
assistance of later statutes, the parliamentary debates, dictionary commentaries etc. are external
aids to construction.2

It is within the authority of the Legislature to amend an earlier Act or to declare its meaning by
enacting a new Act and the Legislature is even competent to so declare a meaning that the
“declaration offended the plain language of the earlier Act”. In such cases, the later statute
operates directly by its own force and not merely as an aid to construction of the earlier statute.
But a legislation proceeding upon an erroneous assumption of the existing law without directly
amending or declaring the law is ineffective to change the law. A later statute, is therefore,
normally not used as an aid to construction of an earlier one.

But when an earlier act is ambiguous a later act in certain circumstances serves as parliamentary
exposition of the former. 3 In Cape Brandy Syndicate v IRC, it was held by Lord Sterndale that
subsequent legislation on the same subject may be looked into in order to correctly interpret the
earlier act where the earlier Act is ambiguous. This aid to construction is of help only earlier
4
enactment is ambiguous i.e. fairly and equally open to diverse meanings.

In State of Bihar v. SK Roy5, RAMASWAMI J. said that it is a well recognized principle that
subsequent legislation may be looked at in order to see what is the proper interpretation to be put

1
The Interpretation of Statutes, The Law Commission and The Scottish Law Commission, Law Commission No.
21, 1974, ¶ 46, https://www.scotlawcom.gov.uk/files/3912/7989/6877/rep11.pdf.
2
G. P. SINGH, PRINCIPLES OF STATUTORY INTERPRETATION, 249-253 (8th ed. 2001).
3
Id.
4
Cape Brandy Syndicate v. Inland Revenue Commission, [1921] 1 KB 64.
5
AIR 1966 SC 1995.

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upon the earlier act where the earlier act is obscure or ambiguous or readily capable of more than
one interpretation.

The following project deals with how this rule of interpretation has been interpret in context of
Indian Statutes. It will be majorly dealing with application of this rule in taxation, civil matters,
arbitration and service matters and how have Indian Courts used this aid of interpretation to
resolve the ambiguity.

RESEARCH METHODOLOGY

This project will be a doctrinal study. The exploration of the topic will be done in a thoroughly
categorical and systematic manner. The principal and auxiliary information used in the project
will be utilized and broken down in an all-encompassing way so as to fit perfectly into the mould
of the project. The exploration of the project topic” The role of later statutes in interpreting
Indian statutes” will be done elaborately and discussed logically so as to provide better
coherence and understanding. Bluebook 20th edition citation format will be strictly adhered to in
the research project.

RESEARCH QUESTIONS

1. How the later law has been used to interpret the ambiguity in earlier law, in taxation
matters?
2. How the later law has been used to interpret the ambiguity in earlier law, arbitration and
civil matters?
3. How the later law has been used to interpret the ambiguity in earlier law, in service
matters and labour law matters?

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 TAXATION MATTERS

In relation to taxation matters the rule of interpretation that when an earlier act is ambiguous a
later act in certain circumstances serves as parliamentary exposition of the former has been used
in various circumstances. In Thiru Manickan and Co. v. State of Tamil Nadu, Section 15(b) of
the Central State Act, 1956 before amendment by Act No. 61 of 1972 did not specify as to whom
the State Sales Tax which is paid on declared goods, should be refunded if the goods are later
sold in the course of Inter State Trade and Commerce. The Amendment Act had a provision
stating that the refund of tax is to be made to the person making the sale in course of the
interstate trade and commerce. The amendment was used as a parliamentary exposition and to
clarify the intent contained in this section before the amendment and it was held that the person
making the sale in the course of interstate trade and commerce would be entitled to refund in
cases of prior to the amendment. The Court held that an amendment which is in a form of
clarification of the earlier ambiguous provision is a useful aid in interpreting the provision, even
when no retrospective effect is given to the provision. Legislature often by a result of an
amendment clarifies what has been implicit in earlier provision. 6

In Commissioner of Income Tax v. Kailash Distt. Co-operative Marketing and Supply Federation
Ltd, the question before the Court was that whether on the facts and circumstances of the case the
Tribunal was correct in holding that the income of the assessee from its activities under Section
80P (2) has to be deducted under Section 80P (1), irrespective of whether the agricultural
produce has been raised by members by self cultivation or by engaging labour as far as it belongs
to them. The exemption was claimed by the assessee under Section 80P of the Income Tax Act,
1861 in respect of sums obtained by the assessee in the marketing of the agricultural produce of
its members .The object of Section 80P(1) and (2) was to encourage and promote growth of Co-
operative Societies. It was held that the Court should look into subsequent amendment brought
about in clause (b) of Section 80 P (2) which was clarificatory in nature and made the intention

6
Thiru Manickan and Co. v. Sate of Tamil Nadu, AIR 1977 SC 518.

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of the legislature clearer. The words in Section 80P (2) were not agricultural produce grown by
its members but agricultural produce of its members. 7

In Commissioner of Income Tax M. P. v. Badri Prasad Agarwal, the question was with regard to
proper interpretation of Section 64 of the Income Tax Act, 1961. The issue was whether the loss
incurred by wife of the assessee in the firm in which he is also a partner is to be treated as the
loss of the assessee and set off against his income. The Court held that by the Finance Act, 1979,
Explanation 2 had been added in Section 64 which in specific terms said that for the purpose of
this section income included loss. Therefore in this case since the enactment was ambiguous
subsequent legislation was used as a parliamentary exposition of the former. The share of loss
incurred by the wife of the assessee in the firm in which he was also a partner was to be
deducted from the total income of the assessee. The Explanation added in Section 64 by the
Finance Act, 1979 serves as a parliamentary exposition of the meaning of the word "income" as
used in the unamended section, as the word in context of Section 64, was really ambiguous and
had given rise to diverse meanings. Under Section 64, in computing the total income of any
individual the income arising directly or indirectly to the spouse of such individual from the
membership of the spouse in a firm carrying on a business in which such individual is a partner
has to be included. 8

In Commissioner of Income Tax v. R.K.B.K. Ltd. and Ors. the question before the High Court
was whether the provision of Section 260A of the Income Tax Act 1961 has expressly or by
necessary implication excluded the provisions of Sections 4 -24 of the Limitation Act, 1963 i.e.
the High Court has beyond the limitation period has power to condone delay. Finance Act of
2009 had amended the Central Excise Act, 1944 and inserted Subsection 2A after Subsection 2
which states that the High Court may admit an appeal after the expiry of the period of one
hundred and eighty days referred to in Clause (a) of Sub-section (2), if it is satisfied that there
was sufficient cause for not filing the same within that period. The Court using the later statute
i.e. the amendment as an aid to construction of earlier statute held that the subsequent

7
Commissioner of Income Tax v. Kailash Distt. Co-operative Marketing and Supply Federation Ltd., ILR1990 2 HP
74.
8
Commissioner of Income Tax, Madhya Pradesh v. Badri Prasad Agarwal, (1983) 29 CTR MP 341.

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amendment of the Central Excise Act provided an additional external aid to construction of
Section 260A of the Income-tax Act.9

In Commissioner of Income Tax, Bangalore v. J.H. Gotla, the question before the Court was
whether the assessee would be entitled to carry forward and set-off losses against share of
income of his wife and minor children. The Court held that in view of amendment and circular
the intention of the law maker becomes clear. If it is interpreted as such that the right would be
available to wife or minor if they themselves were assessed but the right would be completely
lost if the individual in whose total income the loss is to be included is not permitted to carry
forward the loss under Section 24(2) it would result of the strict literal construction it is apparent
that that could not have been the intent of the Parliament. The Court held that assessee in the
present case is entitled to set-off his loss against income of his wife and minor children and the
income of wife and minor children included in assessee's total income under Section 16 (3) of
the Income Tax Act. On considering of the scheme of the Act and the provisions therein it is
clear that the share income of the wife and minor children included in the assessee's total income
under Section 16(3) of the Act would be regarded as business income derived from business
carried on by the assessee and it would be from a 'business carried on by him for the purpose of
carrying forward and set off such loss under Section 24(2) of the Act. 10

9
Commissioner of Income Tax v. R.K.B.K. Ltd. and Ors.,[2011]331ITR269(Cal).
10
Commissioner of Income Tax, Bangalore v. J.H. Gotla, 1989 SCR (2) 737.

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 ARBITRATION AND CIVIL MATTERS

It is one of the well-known canons of interpretation of statutes that when an earlier enactment is
truly ambiguous in that is open to diverse meanings, the earlier enactments may in certain
circumstances serve as the parliamentary exposition of the former. 11 In Anand Bros Pvt. Ltd. v.
Union of India12, the issue before the Supreme Court was whether a non-speaking award under
the Arbitration Act, 1940 has been correctly set aside on the ground that the Arbitrator had not
recorded ‘findings’ as was required under the contract between the parties. Hence, the court
referred to the provisions of the Arbitration and Conciliation Act, 1996, which repealed the
Arbitration Act, 1940, to hold that the obligation to record ‘findings’ must be understood not
only in light og the law laid down by the court but also the statutory prescription under the 1996
Act which now mandates recordings of reasons by the arbitrator.

In Ghanshyam Dass v Dominion of India13, the question as to whether notice under Section 80 of
Civil Procedure Code 1908 was invalid for want of identity of the plaintiffs was addressed by the
apex court. The decision in SN Dutt v Union14 of India merely reiterated that section 80,
according to its plain meaning, requires that there should be identity of the person who gives the
notice with the person who brings the suit. It was contended that the language of Section 424 of
the Code of 1882, the predecessor of Section 80 of the present Code which was substantially in
the same terms, was imperative and absolutely debarred the Courts from entertaining a suit
without complying with the provisions of the section.

The court held that in the ultimate analysis, the question as to whether a notice under Section 80
of the Code is valid or not is a question of judicial construction. The Court applied the rule of
strict compliance in dealing with the question of identity of the person who issues the notice with
the person who brings the suit. The Court adopted the rule of substantial compliance in dealing
with the requirement that there must be identity between the cause of action and the reliefs
claimed in the notice as well as in the plaint. As already stated, the Court has held that notice
under this section should be held to be sufficient if it substantially fulfils its object of informing

11
Ram Krishna Ram Nath v Janpath Sabha, AIR 1962 SC 1073.
12
Anand Bros Pvt. Ltd. v. Union of India, (2014) 9 SCC 212.
13
Ghanshyam Dass v Dominion of India, (1984)3 SCC 46.
14
SN Dutt v Union, AIR 1961 SC 1449

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the parties concerned of the nature of the suit to be filed. On this principle, it was held that
though the terms of the section have to be strictly complied with, that does not mean that the
notice should be scrutinized in a pedantic manner divorced from common sense. The point to be
considered is whether the notice gives sufficient information as to the nature of the claim such as
would the recipient to avert the litigation.

The court held that the Section 80 of the Code is but a part of the Procedure Code passed to
provide the regulation and machinery, by means of which the Courts may do justice between the
parties. It is therefore merely a part of the adjective law and deals with procedure alone and must
be interpreted in a manner so as to subserve and advance the cause of justice rather than to defeat
it. Section 80 of the Code is but a part of the Procedure Code passed to provide the regulation
and machinery, by means of which the Courts may do justice between the parties. It is therefore
merely a part of the adjective law and deals with procedure alone and must be interpreted in a
manner so as to subserve and advance the cause of justice rather than to defeat it. In Sangram
Singh v. Election Tribunal, Kotah15 Vivian Bose, J. in his illuminating language dealing with the
CPC said: “It is procedure, something designed to facilitate justice and further its ends: not a
penal enactment for punishment and penalties; not a thing designed to trip people up. Too
technical a construction of sections that leaves no room for reasonable elasticity of interpretation
should therefore be guarded against (provided always that justice is done to both sides) lest the
very means designed for the furtherance of justice be used to frustrate it.”

Section 8(1) of the West Bengal (Requisition and Acquisition) Act, 1948 provides for a reference
to the court against the award of the Collector. Section 8(2) of the same Act as originally enacted
provided that the provisions of the Land Acquisition Act, 1894 shall mutatis mutandis
apply in respect of any reference made under section 8(1). In holding that the words ‘in respect
of any reference’ include the step of making an application for reference and are not confined to
the stage of proceedings after reference is made and that the period of limitation prescribed by
section 18(2) of the Land Acquisition Act, 1894 applies to applications for reference made an.
der section 8(2) of the West Bengal (Requisition) Act, 1948 the Supreme Court in Kajari Lal
Agarwala v. Union of India16 relied upon West Bengal Act, 8 of 1954 which amended section

15
Sangram Singh v. Election Tribunal, Kotah and Anr. [1955] 2 S.C.R. 11
16
Kajari Lal Agarwala v. Union of India, AIR 1966 SC 1538.

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8(2) by specifically providing that section 18(2) of the Land Acquisition Act, 1894 shall apply in
respect of any reference made under section 8(1). It was pointed out that the amended provision
retained the words “in respect of any reference” which supported the view that these words even
in the unamended section included the stage of making of an application for reference under
section 18(2) of the Land Acquisition Act, 1894. The Court held that the amendment was
unnecessary and it only made specitic what was already implicit in the section.

Section 4A of the Mines and Minerals (Regulation and Development) Act, 1957 did not,
before amendment in 1986, specifically provide for notice to the lessee before directing
premature termination of his lease. Even so it was held in Assam Sillimanite and Co. v. State of
Tamil Nadu17 that notice was impliedly necessary and the amendment supported
this construction.

17
Assam Sillimanite and Co. v. State of Tamil Nadu, AIR 1977 SC 518.

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 SERVICE MATTERS & LABOUR LAWS

In relation to Service matters and matters relating to Labour laws, it is to be observed that
resorting to presumptive rules is not always permissible. When a court declares that the plain-
meaning rule applies with the effect of precluding interpretation because the statute is clear and
unambiguous, or, put a little differently, admits of but one meaning, it is simply employing literal
interpretation to the exclusion of other aids. While this does have the effect of preventing
recourse to the rule-of-interpretation, it is open to serious criticism and we do not choose to stand
behind it. As it has been effectively pointed out many times, the very process of determining that
a statutory provision admits of but one meaning actually involves a choice of meaning.

The courts, fortunately, have not been content to permit the "letter to kill." When we consider the
celebrated Trinity Church18 case, Congress had in 1885 proscribed the encouragement-of
importation of aliens to perform "labor or services of any kind" in the United States by
agreement made previous to importation. A proviso excluded professional artists, lecturers,
singers and domestic servants but made no mention of ministers of the gospel. The church
corporation made a contract with an English clergyman to come over and serve as rector and
pastor of the church. He came and served: The Government sought, unsuccessfully, to recover
the penalty prescribed by the act. The Court was not constrained to stand upon a literal
interpretation of the words used; it looked to the language of the title (which referred only to
"labor") to the evil or "mischief" which was intended to be remedied by the act, to the economic
and social context as reflected in the appeal to Congress for legislation and to the reports of the
cognizant Congressional committees and concluded that all pointed to a legislative intent simply
to control the influx of cheap, unskilled labor from abroad. The point, in short, is that a court is
not compelled by what appears to be a clear, literal interpretation to forego taking into account
the common law or statutory background, the social matrix, legislative history and the
consequences of a literal interpretation viewed in relation to the policy of a measure,
apprehended from consideration of the language of the measure and the other matters noted here.

18
Church of the Holy Trinity v. United States, 143 U.S. 457 (1892).

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When particular words forming part of the same class or same category are followed by general
words then the general words must be construed in the context of the particular words. It means
of the same kind or nature. According to this principal the words of a statute are to be understood
in their context especially when general words are used in summarizing or comprehensive
manner. If there is some kind of ambiguity the word has to be interpreted in the light of words
used earlier. In Woksmen of Dimakuchi v. Dimakuchi Tea Estate19 the problem arose regarding
the interpretation of “any person” whose service is not like worker or employer cannot be
considered as ‘workman’. So the rule was applied that when a particular word is followed by
general words the rule of interpretation is that these common words are limited to the same
species or the same category as the particular word.

Where does law-making responsibility lie? Again, the famous Holy Trinity case is an example.
The issue in Holy Trinity was whether a statute making it a crime to import aliens to perform
"labor or service" applied to a rector. Every attempt to rewrite the text was unavailing. "Labor"
might be limited to manual labor, but "service" is broader. "Service" could refer only to domestic
household labor, but that is doubtful. The statute itself refers to "labor or service of any kind."
The text also excludes skilled workers and non manual laborers in certain situations, which
compounds the difficulty of limiting the text to manual labor. It is more honest to confront the
fact that a text's plain meaning must sometimes be trumped to avoid its substantive impact and
that resolving the confrontation depends on the respective law-making responsibilities of
legislatures and courts.

Another problem is that legislature may have enacted a concept capable of change over time.
Those who emphasize legislative intent sometimes say that interpreters should attempt to "go
back" to the beliefs and hopes of the enacting legislature to see how it would decide the question
had it been presented. It is unclear that this "imaginative reconstruction" approach is either
consistent with legislatures' interpretive instructions or a sensible way of ascertaining the
meaning of statutory terms. In the face of changed circumstances, perhaps the better route would
be to imagine that the enacting legislature could be "brought forward" into the present and then
to ask how it would decide the question in light of new developments of law, fact, and policy.

19
Woksmen of Dimakuchi v. Dimakuchi Tea Estate, (1958) 1LLJ500 S.C.

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When circumstances have changed, backward-looking interpretation may produce absurd results,
and often it is fully plausible to think that members of the enacting legislature intended the
meaning of the statute not to be controlled by its original understanding. In such cases - signaled
most obviously by open-ended terms capable of change over time - it should be relatively
uncontroversial for courts to depart from original meaning; here meaning obviously shifts with
circumstances. More generally, the legislature will often have had no considered view on the
question of backward-looking or forward-looking interpretation. In these circumstances, reliance
on intent will lead to intractable problems. Something other than intent must be the basis for
decision. For all of these reasons, the notion of legislative intent is at best an incomplete guide to
statutory construction. If the legislative intent is ascertainable, it should be used to resolve
otherwise doubtful questions about statutory meaning. Nevertheless, difficult questions will often
remain.

CONCLUSION

In matters relating to taxation, the Indian Courts have liberally used the later statutes to interpret
the ambiguity in the provisions of the prior statute. Generally they have helped the assessee to
claim certain deduction or are in favour of his or her claim. The subsequent legislations or
amendments or circulars have clarified the intention of the legislature where there was ambiguity
in the previous provisions in matters of both direct taxation and indirect taxation. 20

In arbitration and civil matters the court must depend on the text and the context while
interpreting a provision. Statutes have to be construed so that every word has a place and
everything is in its place. One must construe equivocal provisions with some regard to common
sense and to the object with which it appears to have been passed. It shall be made by looking at
the definition as a whole in the setting of the entire Act and by reference to what preceded the
enactment.

20
Commissioner of Income Tax v. P. Doraiswamy Chetty, (1990) 86 CTR (SC) 192.

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