Golden Rule of interpretation is that the grammatical ordinary sense of the words is to be adhered unless that would lead to absurdity or inconsistency. Where the words In question are ambiguous and are reasonably capable of more than one meaning, courts must adopt the construction which may suppress the mischief and advance the remedy.

Beneficial construction involves giving the widest meaning possible to the statutes. When there are two or more possible ways of interpreting a section or a word, the meaning which gives relief and protects the benefits which are purported to be given by the legislation should be chosen.

A beneficial statute is a class of statute which seeks to confer a benefit on individuals or class of persons by relieving them of an onerous obligation under contracts entered into by them or which tend to protect persons against oppressive act from individuals with whom they stand in certain relations. Laws which are enacted with the object of promoting the general welfare and facing urgent social demands receive beneficial legislation. Examples of statutes include The Factories Act, Industrial Disputes Act, etc. A beneficial statute has to be construed in its correct perspective so as to fructify the legislative intent. Although beneficial legislation does receive liberal interpretation, the courts try to remain within the scheme and not extend the benefit to those not covered by the scheme. There is no set principle of construction that beneficial legislation should always be retrospectively operated although such legislation is either expressly or by necessary intendment not made retrospective.

In Budhan v. Nabi Bux AIR 1970 S.C. 1980 case, the Court observed that the object of every legislation is to advance public welfare. Justice and reason constituted the great general legislative Intent In every piece of legislation.

In Tola Ram v. the State of Bombay, AIR 1954 S.C. 496 case, the Court observed: “It is a well-settled rule of construction of penal statutes that if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes a penalty.”

In Commissioner of Income Tax Punjab v K.V. Trans Co. (P) Ltd., 1970 (2) S.C.C. 192 case, the Court said: “It is said that in a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. However, while construing the provisions of a taxing statute, if two views are possible the view which is favourable to the assessee must be accepted.”

In Munni Devi v. Hem Prakash, 1981 All. Civil Journal (25) case, the Court observed that the rules of procedure are said to be the handmaid of justice. It is settled law, that procedural provisions should not be used as traps to catch litigants unaware, they should be construed so as to advance the cause of justice.

In B Shah v Presiding Officer, AIR 1978 SC 12 case,  Labour Court applied the rule of beneficial construction in construing section 5 of the Maternity Benefit Act, 1961, which makes the employer liable to pay maternity benefit to a woman worker at the rate of average daily wage for the period of her actual absence immediately preceding and including the day of her delivery and for six weeks immediately following that day. The court held that Sundays must also be included and held that the Act was intended not only to subsist but also make up for her dissipated energy and take care of the child. The Act was read in the light of Article 42.

In Sheela Barse v. Union of India, AIR 1986 SC 1773 case, a petition was filed by a social worker seeking the release of children below 16 years who were detained in jails. It was observed by the Supreme Court that clause (f) of Article 39 provides that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment. Although Acts are on the statute book, in some states the Acts have not brought into force. The Supreme Court held that this piece of legislation is for the fulfillment of a constitutional obligation and a beneficial statute. Ordinarily, it is a matter for the State Government to decide as to when a particular statute should be brought into force but in the present setting we think that it is appropriate that without delay every state should ensure that the Act is brought into force and administered in accordance with its provisions.

Conclusion:

Laws which are enacted with the object of promoting the general welfare and facing urgent social demands receive beneficial legislation. A beneficial statute has to be construed in its correct perspective so as to fructify the legislative intent. Although beneficial legislation does receive liberal interpretation, the courts try to remain within the scheme and not extend the benefit to those not covered by the scheme.

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The rule of harmonious construction is used to avoid any inconsistency and repugnancy within a section or between a section and other parts of a statute. The rule follows a very simple premise that every statute has a purpose and intent as per law and should be read as a whole. The interpretation consistent with all the provisions of the statute should be adopted. In the case in which it shall be impossible to harmonize both the provisions, the court’s decision regarding the provision shall prevail. This principle is also used to resolve conflicts between two separate acts and in the making of statutory orders and rules. But if a person has two remedies, one being general and the other being specific, they continue to hold good for the concerned person until he elects one of them.

This doctrine is associated with two Latin maxims:

The first maxim is Generalia specialibus non derogant:  The general rule to be followed in case of conflict between two statutes is that the later repeals the earlier one. In other words, a prior special law would yield to a later general law, if either of the two following conditions is satisfied:

1. The two are inconsistent with each other.
2. There is some express reference in the later to the earlier enactment.

If either of these two conditions is fulfilled, the later law, even though general, would prevail.

The second maxim is Generalibus specialia derogant: The OSBORN’S Law Dictionary defines this maxim as, “Special things derogate from general things.”

In Union of India v. B.S. Aggarwal AIR 1998 S.C. 1537 case, the Court held that the interpretation which is consistent with all the provisions and makes the enactment consistent shall prevail. The doctrine follows a settled rule that an interpretation that results in injustice, hardship, inconvenience, and anomaly should be avoided.

The interpretation with the closest conformity to justice must be picked.

The Supreme Court laid down 5 main principles of the ‘Doctrine of Harmonious Construction’-

• In CIT v. Hindustan Bulk Carriers, (2003) 3 SCC 57, p. 74 case, the Court held that the courts must avoid a ‘head of clash’ of contradictory provisions and they must construe the contradictory provisions so as to harmonize them.
• In the same case, the Court held that courts must keep in mind that the interpretation which reduces one provision to a useless standing is against the essence of ‘Harmonious Construction’.
• To harmonize the provisions is not to render them fruitless or destroy any statutory provision.
• In Sultana Begum v. Premchand Jain, AIR 1997 SC 1006, pp. 1009, 1010  case, the Court held that when it is not possible to completely reconcile the differences in contradictory provisions, the court must interpret them in such a way so as to give effect to both provisions as much as possible.
• The provision of one section cannot be used to render useless the other provision, unless the court, despite all its efforts, finds a way to reconcile the differences.
• To harmonize is not to destroy any statutory provision or to render it fruitless.

In the State of U.P. v. Renusagar Power Co., AIR 1988 SC 1737, p. 1751 case, the Court observed that a familiar approach in all such cases is to find out which of the two apparently conflicting provisions is more general and which is more specific and to construe the more general one so as to exclude the more specific.

In Venkataramana Devaru v. State of Mysore, AIR 1958 895 case, Venkatarama Iyer, J., observed: “The rule of construction is well settled that when an enactment there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is what is known as the rule of harmonious construction.”

In M.S.M. Sharma v. Krishna Sinha, AIR 1959 SC 395, p. 410 case, the same rule was applied by the Court to resolve the conflict between Articles 19(1)(a) and 194(3) of the Constitution and it was held that the right of freedom of speech guaranteed under Article 19(1)(a) is the read as subject to powers, privileges, and immunities of a House of the Legislature which are those of the House of Commons of the United Kingdom as declared by the latter part of Article 194(3).

In Special Reference No. 1 of 1964, AIR 1965 SC 745, p. 761 case it was decided that Article 194(3) is subordinate to Articles 21, 32, 211, and 226. This conclusion was also reached by recourse to the rule of harmonious construction.

Conclusion:

Statutes are drafted by the legislature and there is every possibility of situations of ambiguity, conflicts, anomalies, absurdities, hardships, repugnancy, redundancy etc. In such situations, the rules of interpretation of statutes are applied and the provisions are construed so as to give maximum effect to them and to render justice to the situation at hand. The rule of harmonious construction is used to avoid any inconsistency and repugnancy within a section or between a section and other parts of a statute or a conflict between two or more statues. It helps in simplifying complicated issues and makes delivering judgments much easier.

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It is axiomatic that there is no problem of interpretation when the legislative declaration is clear, direct, and precise. Interpretation is legitimate only in the case of ambiguity.  Let us understand what is meant by the words ‘clear’ and ‘ambiguous’. When X says to Y, “A big bundle of bills came this morning”, does Y know what X received? The statement is clear to X; to Y it may or may not be ambiguous. To objectively evaluate the statement is misleading and inaccurate. Y is only interested in learning what meaning X is trying to convey. A similar interest should motivate courts in the use of statutory materials.

The primary principle of interpretation is that a constitutional or statutory provision should be construed “according to the intent of they that made it.” Normally such intent is gathered from the language of the provision. If the language or phraseology employed by the Legislature is precise and plain and this by itself proclaims the legislative intent in unequivocal terms, the same intent must be given effect to, regardless of the consequences that may follow. But if the words used in the provision are imprecise, protean, evocative, and ambiguous or can reasonably bear meaning more than one, the rule of strict grammatical construction cannot be applied. In such cases, the real legislative intent helps in the interpretation of the statute. In such a case, the court has to see legislative history, the basic scheme or framework of the statute as a whole, each portion throwing light on the rest, the purpose of the legislation the object sought to be achieved, and the consequences that may flow from the adoption of one in preference to the other possible interpretation. Where two alternative constructions are possible, the court will choose the one which will be in accord with the other parts of the statute and representing the intention of legislature avoiding absurdity, confusion or friction, contradiction and conflict between its various provisions or undermines or tends to defeat or destroy any basic scheme or purpose of the enactment.

Principles Used to Find Intention of Legislature:

Certain principles of interpretation are formulated by the Superior Courts to find out the intention of the legislature.

Literal construction:

The rule of literal construction is considered to be the first and the most elementray rule of construction. According to this rule, it is the duty of the court to expound the law as it stands and not to modify, alter or qualify its language. The courts are bound by the legislature and once any legislature has expressed its intention in clear words they are binding. If the words are clear in a legislature they should be applied even though their intention may be different or the result is harsh or undesirable. If any provision is unambiguous, the legislative intent is clear and the other rules of construction are not clear they need not be called for any aid. They will be aided only when the legislative intention is not clear. Only when a statue is not exhaustive or it is ambiguous or uncertain the external aid may be looked into for the purpose of ascertaining the object for framing any statute in the legislature.

In Cartledge v. Japling € & Sons, 1963 AC 758 case, the Court said that: “whereby the use of clear and unequivocal language capable of only one meaning, anything is enacted by the legislature, it must be enforced however harsh or absurd or contrary to the common sense the result may be.”

Mischief rule (Heydon’s case):

The Mischief Rule is a certain rule that judges can apply in statutory interpretation in order to discover Parliament’s intention. The application of this rule gives the judge more discretion than the literal and the golden rule as it allows him to effectively decide on Parliament’s intent as it allows to effectively decide on the intention of the legislature. This rule was laid down by Lord Coke in Heydon’s (1584) 76 ER 637 case. Whenever there arises any question as to determine any interpretation in an enactment, the court will have to ascertain the intention of making them and they must be gathered from the words used in the statute. The decision should not rest on a literal interpretation. Literal construction should have a prima facie preference.

According to this rule, for the sure and true interpretation of all statutes in general, be they penal or beneficial, restrictive or enlarging of the common law; four things are to be considered –

1. What was the common law before the passing of the Act?
2. What was the mischief and defect for which the common law did not provide?
3. What remedy the Parliament hath resolved and appointed to cure the “disease of the Commonwealth”.
4. The true reasons for the remedy.

In Badshah v. Sou. Urmila Badshah Godse, AIR 2014 SC 869 case, the Supreme Court has held that a provision like Section 125 of CrPC is aimed at empowering the destitute and achieving social justice or equality and dignity of the individual. While dealing with the application under this provision the court should take into consideration only the purpose of statute but also the mischief which it seeks to suppress.

Words coupled together to take colour from each other:

When two or more words which have analogous meaning are coupled together, they are to be understood in proper sense and not in a wrong way. This rule will not apply in a case where the legislature has used more or wider words to widen the scope of any provision.

The Golden Rule:

It is the modification of the literal rule of interpretation. The literal rule emphasises on the literal meaning of legal words or words used in the legal context which may often lead to ambiguity and absurdity. The golden rule tries to avoid anomalous and absurd consequences from arising from literal interpretation. In view of the same, the grammatical meaning of such words is usually modified. If the language permits, it is open to the court using the golden rule to give the statute any meaning which promotes the intent of legislation. The object of this approach of interpretation is of giving effect to the spirit of the law as the mere mechanical and grammatical meaning may not be sufficient.

In Becke v. Smith (1836) 2 M & W 191 at page 195 case, Lord Parke B formulated the rule as follows: “it is a very useful rule, in the construction of the statute, to adhere to the ordinary meaning of the words used, and to the grammatical construction, unless that is variance with the intention of the legislature to be collected from the statute itself, or leads to any manifest absurdity or repugnance, in which case the language may be varied or modified, so as to avoid such inconvenience, but no further.”

Absurdity or hardship:

The court will have no power to give the language of a statue a meaning which is wider than the literal one, until there is any reason compelling to give another meaning. If while interpreting natural meaning results in any sought of repugnance, ambiguity, absurdity or hardship then the court must modify the aiming to the extent of injustice or absurdity caused and no further to stop the results. If a literal interpretation of a statute leads to absurdity, hardship or injustice, presumably not Intended, then a construction may be put upon it which modifies the meaning of the words and even the structure of the sentence. Again, however, the Court has no power to give the language of the statute a wider or narrower meaning than the literal one, unless there is compelling reason to give such other meaning. If the language is plain the fact that the consequence of giving effect to it may lead to some absurd result is not a factor to be taken into account in interpreting a provision, as it is for the Legislature to step in and remove the absurdity. If on either of two possible views hardship must result to one or the other party, then the considerations of hardship ought to be ignored.

Liberal construction:

In construing a provision of a statute the Court should be slow to adopt construction which tends to make any part of the statute meaningless or ineffective.  It is necessary and legitimate to adopt the rule of liberal construction as to give a reason and meaning to all parts present in a statue and to make it effective and operative. The narrower and wider sense of a term is adopted and it depends on the provisions of the statute in which the term occurs depending on the various facts and circumstances of the case. If any words used in the provision are capable of only one construction, the doctrine of liberal construction cannot be of any help. The enactments related to procedures should be construed liberally in a manner as to render the enforcement of rights effective. This rule will apply to the interpretation of constitutional and statutory provision. Whether the narrower or the wider sense of a term should be adopted depends not only on the provisions of the statute in which that term occurs but also on facts and circumstances of each case.

This rule applies to the interpretation of constitutional and statutory provisions alike. Welfare, social and beneficial statutes are not to be construed strictly. Doubts are resolved in favour of the class of persons for whose benefit the statute is enacted. On the other hand penal and taxing statutes and statutes excluding Court’s jurisdiction should be strictly construed.

Harmonious construction:

Every statute has to be construed as a whole and the construction given should be a harmonious one. It is a cardinal rule of construction that when there are in a statute two provisions which are in such conflict with each other, that both of them cannot stand together, they should possibly be so interpreted that effect can be given to both and that a construction which renders either of them inoperative and useless should not be adopted except in the last resort.

The rule of harmonious construction applies and to different cognate acts such as the court fees or the civil procedure code.

Conclusion:

When the words of statutes are open to more than one interpretation, then the court will have to choose the intention of the legislature which is used in enacting a statute representing the true intention of the legislature. Thus, in this case, the court will look into the legal meaning or true meaning of all the statutory provisions. The usage of the intention of a legislature by every court should be justified by a proper reason and it should not be left open to statutes which are present.

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In the State of West Bengal v. Kesoram Industries Ltd., AIR 2005 SC 1646 case, the Court held that scrutiny of Lists I and II would reveal that the Constitution gives independent sources of taxation to the Union and the States and that there is no overlapping anywhere in the taxing power of the Union and States.

A tax is a mandatory fee or financial charge levied by any government on an individual or an organization, to collect revenue for public works providing the best facilities and infrastructure. It is a forceful extraction of money from the assessee (taxpayer) by the sovereign authority in which the taxpayer is not entitled to any assured benefit. In its wider sense, the word ‘tax’ includes all money raised by taxation including taxes levied by the Union and State Legislatures; rates, and other charges levied by local authorities under statutory powers. Tax includes any ‘impost’ general, special or local. It would thus include duties, cesses or fees, surcharge, administrative charges, etc. A broad meaning has to be given to the word “tax.” Since fiscal statutes fall in the category of statutes imposing pecuniary burdens, the charging sections are to be strictly construed. Hence before taxing any person it must be shown that he falls within the ambit of the charging section by clear words in the section.

Tax is a monetary burden on the taxpayer imposed under the authority of law. Thus, unless the imposition of the tax is clearly backed by law, no tax can be imposed. Taxing statutes may be defined as those statutes that impose taxes on the citizens. It is not practicable for the legislature to anticipate all the possible situations or conditions which may arise after the law is enacted. It is possible that the assessee might use some shortcomings in the law as a loophole and take advantage of it. As tax results in pecuniary burden so the benefit of the doubt is given to the assessee in case of any contradictions. Hence these statutes are enacted on the basis of trial and error method or on an experimentation basis.

Article 265 of the constitution mandates that no tax shall be levied or collected except by the authority of law. It provides that not only levy but also the collection of a tax must be under the authority of some law. The tax proposed to be levied must be within the legislative competence of the Legislature imposing the tax. The validity of the tax is to be determined with reference to the competence of the Legislature at the time when the taxing law was enacted. The law must be validly enacted i.e. by the proper body which has the legislative authority and in the manner required to give its Acts, the force of law. The law must not be a colourable use of or a fraud upon the legislative power to tax. The tax must not violate the conditions laid down in the constitution and must not also contravene the specific provisions of the constitution. No tax can be imposed by any bye-law, rule, or regulation unless the ‘statute’ under which the subordinate legislation is made specifically authorizes the imposition and the authorization must be express not implied. The procedure prescribed by the statute must be followed.

Principle of Strict Construction:

Statutes are normally drafted by legal experts who are experts in the particular branch of the law of which the statute was to be a part but even after taking care, there may be some ambiguity in the statute. Then the interpretation of such ambiguity of word or expression should be resolved by the Court. This process is called the interpretation of statutes. Tax laws are highly complex, complicated, and beyond the understanding of a tax-payer. The words and expressions used are not simple. Many sections contain subsections, clauses, sub-clauses. Many deeming provisions have been inserted. The meaning of an expression is extended by way of Explanation and is curtailed by way of the proviso, sometimes more than one provisos and explanations meaning differently. During the interpretation of taxing statutes, certain rules are used. The principle of strict construction is one of them

The manner in which the Income-Tax Act has been drafted leaves great scope for litigation. For this purpose, principles of interpretation have to be applied. These principles themselves are not infallible and would depend on the facts of each case. The two well-settled principles of interpretation, as applicable in taxing statutes, are: (a) Taxing enactments should be strictly construed and (b) the right to tax should be clearly established.

• In construing such Acts, we have no governing principle of the Act to look at. We simply have to go to the Act itself, to see whether the duty or tax claimed is that which the Legislature has enacted.
• There is no equity in tax, and the principle of strict or literal construction applies in interpreting tax statutes. Hence, on the plain language of the statute, if the assessee is entitled to two benefits, he has to be granted both these benefits; and
• If there are two reasonable interpretations of taxing statutes, the one that favors the assessee has to be accepted.

In Cape Brandy Syndicate v I.R.C. (1 KB 64, 71) case, Rowlatt J. observed: “In a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can look fairly at the language used.”

If the revenue satisfied the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is covered within the four corners of the provision of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intention of the legislature and by considering what was the substance of the matter.

In construing such Acts, we have no governing principle of the Act to look at. We have simply to go to the Act itself, to see whether the duty or tax claimed is that which the Legislature has enacted.

1. There is no equity in tax, and the principle of strict or literal construction applies in interpreting tax statutes. Hence, on the plain language of the statute, if the assessee is entitled to two benefits, he has to be granted both these benefits; and
2. If there are two reasonable interpretations of taxing statutes, the one that favors the assessee has to be accepted.

In Innamuri Gopalan and Maddala Nagendrudu v State of A. P.,  1964 2 SCR 888 case, the exemption was denied to the assessee on the ground that the intention of the notification was to avoid double taxation, and as this was not a case of double taxation no exemption could be granted. The Supreme Court held that on the plain language of the notification, the assessee was entitled to exemption, and since the intention was not reflected in plain words, it could not be taken into consideration. The Court also said: “In construing a statutory provision the first and foremost rule of construction is the literary construction. All that the court has to see at the very outset is what does the provision says. If the provision is unambiguous and if from the provision the legislative intent is clear, the court need not call into aid the other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear.”

In IRC v. F. S. Securities Ltd., (1964) 2 All ER 691 HL case, the Court held that in case of income tax legislation, if the words of the Act on the construction results in double taxation of the same income, that result will be avoided by adopting another construction which may be reasonably open.

In the case of C.I.T. v B. M. Kharwar, 1966 60 ITR 370 Guj case, the assessee transferred some machinery of a firm to a private limited company. He sought to avoid the liability to be taxed on the excess realized over the written down value of the machinery on the plea that the substance of the transaction was only a step to readjust the business relation of the partners inter se. The Supreme Court rejected this contention holding that while the taxing authorities were entitled to determine the true legal relation resulting from a transaction to unravel the device adopted by a party, the legal effect of a transaction could not be displaced by probing the “substance of the transaction”.

In Commissioner of Income Tax v. Orissa State Warehousing Corporation, 1993 201 ITR 729 Orissa the court has held that: “While interpreting a taxing statute, equitable considerations are entirely out of place. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute, in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency. One has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing has to be read in, nothing is to be implied. One can only look fairly at the language used. In case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to what is just or expedient. The expressed intention must guide the court. If the intention of the Legislature is clear and beyond doubt, then the fact that the provisions could have been more artistically drafted cannot be a ground to treat any part of a provision as otiose. Though in recent times there has been change from emphasis on grammatical meaning to intention of the Legislature or purpose of statute, yet if the words are ambiguous, uncertain or any doubt arises as to the terms employed, the court has a paramount duty to put upon the language of the Legislature a rational meaning. In the past, the judges and lawyers spoke of a golden rule by which statutes were to be interpreted according to the grammatical and ordinary sense of the word. They took the grammatical or literal meaning unmindful of the consequences. Even if such a meaning gave rise to unjust results which the Legislature never intended, the grammatical meaning alone was held to prevail. They said that it would be for the Legislature to amend the Act and not for the court to intervene by its innovation. During the last several years, the golden rule has been given a farewell. Now the words of the statute are examined rationally. If the words are precise and 9 cover the situation at hand, there is no necessity to go any further. The court expounds those words in the natural and ordinary sense of the words.”

In the case of State of Haryana and others v. Bharti Teletech Limited, (2014) 3 SCC 556, the Supreme Court while dealing with Haryana General Sales Tax Rules, 1975, on the applicability of exemption with regard to Interpretation of taxing/ fiscal statute, observed that: “It is clear as crystal that a statutory rule or an exemption notification which confers benefit on the assessee on certain conditions should be liberally construed but the beneficiary should fall within the ambit of the rule or notification and further if there are conditions and violation thereof are provided, then the concept of liberal construction would not arise. Exemption being an exception has to be respected regard being had to its nature and purpose. There can be cases where liberal interpretation or understanding would be permissible, but in the present case, the rule position being clear, the same does not arise.”

Limitation to the Rule of strict construction:

The principle of strict construction applicable to taxing statute does not, however, mean that where the subject falls clearly within the letter of the law, the court can avoid the tax by putting a restricted construction on the same supposed hardship or on the grounds that the tax, or penalty imposed is heavy or oppressive. The rule of strict construction does not negative the applicability of the well-known principle that a person who claims an exemption has to establish it, and there is ample authority for the view that this principle applies to exemptions granted in tax laws as well. The Courts, in dealing with the taxing statute, will not presume in favour of any special privilege of exemption for taxation.

It is to be noted that the rule of strict construction applies primarily to the charging provisions in the taxing statute and has no application to the machinery provisions. Machinery provision means the procedure for the calculation and collection of taxes. These are to be construed by the ordinary rules of construction. While construing the machinery section of a taxing statute, it should be strictly observed that the construction should effectuate the liability imposed by the charging section of the statute and at the same time, it should render the machinery workable.

Conclusion:

Tax is a monetary burden on the taxpayer imposed under the authority of law. Thus, unless the imposition of the tax is clearly backed by law, no tax can be imposed. In construing Taxing Statutes, we have no governing principle of the Act to look at. We have simply to go to the Act itself, to see whether the duty or tax claimed is that which the Legislature has enacted. In construing a statutory provision of taxing Acts the first and foremost rule of construction is the literary construction. All that the court has to see at the very outset is what does the provision says. If the provision is unambiguous and if from the provision the legislative intent is clear, the court need not call into aid the other rules of construction of statutes.

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Demands of a welfare State, development in technology, change in aspirations and expectations of a developing society, the complex world situation with interdependence and hostility among nations necessitate new legislation on some such topics that they could not have been within the contemplation of framers of the Constitution. In such a situation, the subject of legislation may not squarely fall in any specific entry in the three Lists. In such a situation Parliament would have the power to legislate on the subject in the exercise of residuary powers of legislation under Article 248 and Entry 97 of List I. Under the Government of India Act 1935, residuary power of legislation was given neither to the Federal Legislature nor to the Provincial Legislature. It was left to the discretion of the Governor-General to assign these powers to either Legislature.

As was stated in the Constituent Assembly by Jawaharlal Nehru, Chairman of the Union Powers Committee: “We think that residuary powers of legislation should remain with the Centre. In view however of the exhaustive nature of the three lists draw up by us, the residuary subjects could only relate to matters which, while they may claim recognition in the future, are not at present identifiable and cannot, therefore, be included now in the lists.”

According to Article 248 of the Constitution, Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List and such power shall include the power of making any law imposing a tax not mentioned in either of those lists. This article assigns residuary powers of legislation exclusively to the Union Parliament. Entry 97 of Union List also lays down that Parliament has exclusive power to make laws with respect to any matter not enumerated in List II or III. The rationale behind the residual power is to enable the parliament to legislate on any subject, which has escaped the scrutiny of the house, and the subject which is not recognizable at present. But, the framers of the Constitution intended that recourse to residuary powers of legislation should be the last resort and not the first step. In past, several states have demanded that the residuary powers, including those of taxation, should be vested in the States. In the defence of its decision to transfer the residuary powers to the Concurrent List rather than to the States List, the Centre pointed to the strong unitary bias of the country’s federal structure

In Sat Pal & Co. v. Lt. Governor of Delhi AIR 1979 SC 1550  Case, the Court observed that the Parliament would have power to legislate on the subject in the exercise of residuary powers under Entry 97 of List I and it would not be proper to circumscribe, corrode or whittle down its power by saying that the subject of legislations was present to the minds of the farmers of the Constitution because apparently it falls in one the entries in List II and thereby deny power to legislate under Entry 97.

In I. C. Golaknath v. State of Punjab, AIR 1967 SC 1643 case, the Supreme Court had held that the power of the Parliament to amend the Constitution was derived from Article 248 read with Entry 97 of List I and that Article 368 dealt only with the procedure for amendment.

In Keshavanand Bharti v. State of Kerala, AIR 1973 SC 1461case, the Supreme Court held that Article 368 should be held to include both the power and procedure for amendment and there is no case for invoking a residuary power for the constitutional amendment.

In Hari Krishna Bhargava v. Union of India, AIR 1966 SC 619 case, the Court held that Entry 97, List I, was not the first step in the discussion of such problems, but the last resort.

In Union of India v. H. S. Dhillon, AIR 1972 SC 1061 case, the Court held that once it is found that the subject-matter of the impugned legislation does not fall under any entry in List II or III then Parliament can take recourse to the residuary power, or it can be combined with any Entry in List I.

In Attorney General for India v. Amratlal Prajivandas, AIR 1994 SC 2179 case, the Supreme Court has observed that the test to determine the legislative competence of Parliament is this: whenever the competence of Parliament to enact a specific statue is questioned one must look to the entries in List II. If the said statue is not relatable to any of the entries in List II, no further inquiry is necessary as Parliament will be competent to enact the said statue either by virtue of the entries in List I and List III or by virtue of the residuary power contained in Article 248 read with entry 97, List I.

Sarkaria Commission

In past, several states have demanded that the residuary powers, including those of taxation, should be vested in the States. In the defence of its decision to transfer the residuary powers to the Concurrent List rather than to the States List, the Centre pointed to the strong unitary bias of the country’s federal structure.

The Sarkaria Commission on Centre-State relations, which submitted its report in 1988, had also rejected the suggestion that the residuary powers should be vested in the States, even though it endorsed the Supreme Court’s interpretation that these powers cannot be so expansively interpreted as to whittle down the power of the State legislatures. The Commission, however, backed the suggestion to transfer Entry 97 from the Union List to the Concurrent List.

Recommendations of Sarkaria Commission:

• The residuary power of legislation in regard to taxation remains with Parliament because, it said, the Constitution-makers did not include any entry relating to taxation in the Concurrent List so as to avoid Union-State frictions, double taxation, and frustrating litigation.
• The power to tax might be used not only to raise resources but also to regulate economic activity, and warned that there might be situations in which a State, in the garb of introducing a new subject of taxation, may legislate in a manner prejudicial to the national interest.
• It recommended the transfer of other residuary powers to the Concurrent List because, it felt, the exercise of such power by the States would be subject to the rules of Union supremacy that have been built into the scheme of the Constitution, particularly Articles 246 and 254.

Conclusion:

Demands of a welfare State, development in technology, change in aspirations and expectations of a developing society, the complex world situation with interdependence and hostility among nations necessitate new legislation on some such topics that they could not have been within the contemplation of framers of the Constitution. In such a situation, the subject of legislation may not squarely fall in any specific entry in the three Lists. In such a situation Parliament would have the power to legislate on the subject in the exercise of residuary powers under Article 248 and Entry 97 of List I. In past, several states have demanded that the residuary powers, including those of taxation, should be vested in the States. The Sarkaria Commission has rejected this suggestion.  In Union of India v. H. S. Dhillon, AIR 1972 SC 1061 case, the Court held that once it is found that the subject-matter of the impugned legislation does not fall under any entry in List II or III then Parliament can take recourse to the residuary power, or it can be combined with any entry in List I.

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The Constitution of India distributes the legislative powers amongst Centre and States, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has not, in respect of the subject-matter of the statue, or in the method of enacting it, transgressed the limits of its constitutional powers. Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect.

When the transgression is disguised, covert and indirect, then the expression “colourable legislation” has been applied to such transgression in certain judicial pronouncements. It means that although a legislature in passing a statute purports to act within the limits of its powers, yet in substance and in reality it transgresses those powers, the transgression being veiled by what appears on proper examination to be a mere pretence or disguise. Thus when interpreting such statute the substance of the Act that is material and not merely its form or its outward appearance. The court will scrutinise the law to ascertain whether the legislature by device purports to make a law, which though in form appears to be within its sphere, in effect and substance reaches beyond it. The whole doctrine of colourable legislation is based on the maxim that you cannot do indirectly what you cannot do directly.

In K.C. Gajapati Narayan Deo v. State of Orissa. AIR 1953 SC 375 case, the Court held that the legislature can not violate the constitutional prohibition by employing an indirect method. The Court observed: “if the constitution of a state distributes the legislative spheres marked out by specific legislative entries or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case in respect to the subject matter of the statute or in the method of enacting it, transgressed the limits of the constitutional power or not. Such transgression may be patent, manifest and direct, but may also be distinguished, covered, and indirect and it is the latter class of cases that the expression ‘colourable legislation’ has been applied in certain judicial pronouncements.”

In G. Nageshwar v. A.P. S.R.T.C, Air 1958 SC 308 case, the Court held that If legislature has power to make the law, its motives in making the latter are irrelevant.

In K.C. Gajapati Narayan Deo v. State of Orrisa. AIR 1953 SC 375 case, the Court held that the rule of colourable legislation has no application if the legislature making the law has the competence to make that law.

In B.R. Shankararayana v. the State of Mysore, AIR 1966 SC 1571 case, the Court held that the doctrine of colourable legislation is relevant only in connection with the question of legislative competence.

In J. K. Commercial Corpn. Ltd., Kanpur v. Union of India, (1983) All CJ 325 case, the Court held that the doctrine of colourable legislation confines itself to the question of competency of a particular legislature to enact a particular law. It does not any question of bona fides or mala fides on the part of the legislature.

Conclusion

The Constitution distributes legislative powers between the State Legislatures and Parliament, and each has to act within its sphere. In respect of particular legislation, the question may arise whether the legislature has transgressed the limits imposed on it by the constitution. Such transgression may be patent, manifest or direct, but it may also be disguised, covert, or indirect. It is to this latter class of cases that the expression colourable legislation. The underlying idea is that although apparently, a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be mere pretence or disguise. If that is so, the legislation in question is invalid. The doctrine of colourable legislation really postulates that legislation attempts to do indirectly what it cannot do directly.

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The doctrine of ‘pith and substance’ is applied when the legislative competence of a legislature with regard to a particular enactment is challenged with reference to the entries in the various lists i.e., a law dealing with a subject in one list is also touching on a subject in another list. In such a case, what has to be ascertained is the pith and substance of the enactment- the true character and nature of the legislation. If on examination of the statute, it is found that the legislation is in substance one on a matter assigned to the legislature enacting that statute, then it must be held valid in its entirety even though it may trench upon matters beyond its competence i.e., on a matter included in the list belonging to the other legislature. Incidental encroachment is not prohibited.  The doctrine is firmly supported by Article 246 of the Constitution. In ascertaining the substance of the impugned legislation one must have regard to the enactment as a whole, to its object, and to the scope and effect of its provision.

In Subramanyam Chettiar v. Muthuswami Goudan case, Gwyer, C.J, AIR 1941 FC 47 (51) in explaining the validity of the doctrine of pith and substance said: “It must inevitably happen from time to time that legislation though purporting to deal with a subject in one List touches also upon a subject in another List, and the different provisions of the enactment may be so closely interwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule has been evolved whereby the impugned statute is examined to ascertain its ‘pith and substance’ or its ‘true nature and character’ for the purpose of determining whether it is legislation with respect to matters in this list or that”

In Prafulla Kumar v. Bank of Commerce, AIR 1947 PC 60  case, the constitutional validity of the Bengal Money Lenders Act, 1940, which has provided for limiting the amount and the rate of interest recoverable by a lender on any loan, was challenged on the ground that it was ultra vires the Bengal Legislature. The High Court of Calcutta held that the Act was intra vires the Provincial Legislature, but on appeal to the Federal Court the decision of the High Court was reversed and the Act was held to be ultra vires the law-making powers of the Bengal Legislature….On appeal to the Privy Council, it was contended on behalf of the appellant that the Act was valid as it dealt with ‘moneylending’ and ‘money lenders’ in the province- a matter within the exclusive competence of the Provincial Legislature under List II, Entry 27. On behalf of the respondent – creditor, it was contended that the Act as affected the right of provincial Legislature, or at least that much of the Act as affected the right of promissory noteholders to recover the full amount due on their promissory notes. The respondent relied upon Entry 28 of List I, which assigned to the Federal Legislature exclusive authority to make laws with respect to “cheques, bills of exchange, promissory notes, and other like instruments”. During the judgment, Lord Porter said “What in pith and substance is the effect of the enactments of which complaint is made. After having ascertained the true character of law, the court must point out in which of the three Lists an Act of that nature truly falls.”

In the State of Bombay v. Balsara (1951) 2 SCR 682, case the Court observed: “The doctrine of ‘pith and substance’ means that if an enactment substantially falls within the legislative powers of a legislature expressly conferred by the constitution, the enactment cannot be held to be invalid, merely because it incidentally encroaches on matters assigned to another legislature.”

In the State of Gujarat v. Shantilal Mangaldas, AIR 1969 SC 634 case, the Court held that the doctrine of pith and substance is wholly irrelevant in determining whether the statute infringes any fundamental right.

In A. S. Krishna v. State of Madras AIR 1957 SC 297 case, the Court held that the extent of encroachment of legislation on matters beyond its competence may be an element in determining whether the legislation is colourable but whether that is not the position, that is the statute is found in substance to relate to a topic within the competence of the legislature, then the fact of (incidental) encroachment does not affect the vires of the law even as regards the area of encroachment.

In Vijay Kumar Sharma v. State of Karnataka, AIR 1990 SC 2072  case, the Supreme Court has held that the doctrine of pith and substance applies even when Parliament and State legislatures legislate in the same List, i.e., the Concurrent List but with respect to different Entries. The Court has said that the doctrine is relevant for the purpose of determining whether a law of Parliament or an existing law and a law of the State legislature are on the same matter in the Concurrent List of they pertain to different matters. If the pith and substance of the two laws is the same then Article 254(1) applies otherwise it does not.

Conclusion:

The Constitution provides segregation of powers among the Centre and the states, but it is inevitable that ancillary (incidental) encroachments are bound to take place during the enactment of laws. When such incidental encroachment of legislative powers takes place,  courts with the aid of the doctrine of pith and substance decide the validity and legitimacy of an enactment. It also helps the court to find the true nature of the subject matter of the Act and gives the power to allocate it to a suitable list. It is very necessary for the court to examine its scope and effects, whether the allocation is genuine or not.   

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According to Black’s Law Dictionary, Repugnancy could be defined as an inconsistency or contradiction between two or more parts of a legal instrument (such as a statute or a contract).

The concept of Doctrine of Repugnancy is included in the Article 254 of the Constitution of the constitution. According to this Article any law made by the State legislature on subject-matter enlisted in List III would be valid only in the absence of any contrary law passed by the Centre government. Article 254 was included as a mechanism to resolve this repugnancy between the powers of the Parliament and State legislatures.

The Doctrine of Repugnancy deals with the distribution of powers between the Central and State legislatures. This doctrine reflects the quasi-federal structure of the Constitution. It has clearly laid down the powers of the Parliament and State legislature to avoid inconsistencies and conflicts.

M. Karunanidhi v. Union of India  AIR 1979 SC 898 Case:

In this case, the Court has explained the Doctrine of Repugnancy and said that

1. Where the provisions of a Central Act and a State Act in the Concurrent List are fully inconsistent and are absolutely irreconcilable, the Central Act will prevail and the State Act will become void in view of the repugnancy.
2. Where however a law passed by the State comes into collision with a law passed by Parliament on an Entry in the Concurrent List, the State Act shall prevail to the extent of the repugnancy and the provisions of the Central Act would become void provided the State Act has been passed in accordance with clause (2) of Article 254.
3. Where a law passed by the State Legislature while being substantially within the scope of the entries in the State List entrenches upon any of the Entries in the Central List, the constitutionality of the law may be upheld by invoking the doctrine of pith and substance if on an analysis of the provisions of the Act it appears that by and large, the law falls within the four corners of the State List and entrenchment, if any, is purely incidental or inconsequential.
4. Where, however, a law made by the State Legislature on a subject covered by the Concurrent List is inconsistent with and repugnant to a previous law made by Parliament, then such a law can be protected by obtaining the assent of the President under Article 254(2) of the Constitution. The result of obtaining the assent of the President would be that so far as the State Act is concerned, it will prevail in the State and overrule the provisions of the Central Act in their applicability to the State only.

Such a state of affairs will exist only until Parliament may at any time make a law adding to, or amending, varying or repealing the law made by the State Legislature under the proviso to Article 254.

Now, the conditions which must be satisfied before any repugnancy could arise are as follows:

1. That there is a clear and direct inconsistency between the Central Act and the State Act.
2. That such an inconsistency is absolutely irreconcilable.
3. That the inconsistency between the provisions of the two Acts is of such nature as to bring the two Acts into direct collision with each other and a situation is reached where it is impossible to obey the one without disobeying the other.

Thereafter, the court laid down following propositions in this respect:

1. That in order to decide the question of repugnancy it must be shown that the two enactments contain inconsistent and irreconcilable provisions, so that they cannot stand together or operate in the same field.
2. That there can be no repeal by implication unless the inconsistency appears on the face of the two statutes.
3. That where the two statutes occupy a particular field, but there is room or possibility of both the statutes operating in the same field without coming into collision with each other, no repugnancy results.
4. That where there is no inconsistency but a statute occupying the same field seeks to create distinct and separate offences, no question of repugnancy arises and both the statutes continue to operate in the same field.” 

A.P. v. J.B. Educational Society (Appeal (civil) 976-978 of 1999 in Supreme Court) Case:

In Govt. of A.P. v. J.B. Educational Society (Appeal (civil)976-978 of 1999 in Supreme Court) case, the court held that:

1. There is no doubt that both Parliament and the State Legislature are supreme in their respective assigned fields. It is the duty of the court to interpret the legislation made by Parliament and the State Legislature in such a manner as to avoid any conflict. However, if the conflict is unavoidable, and the two enactments are irreconcilable, then by the force of the non-obstante clause in clause (1) of Article 246, the parliamentary legislation would prevail notwithstanding the exclusive power of the State Legislature to make a law with respect to a matter enumerated in the State List.
2. With respect to matters enumerated in List III (Concurrent List), both Parliament and the State Legislature have equal competence to legislate. Here again, the courts are charged with the duty of interpreting the enactments of Parliament and the State Legislature in such manner as to avoid a conflict. If the conflict becomes unavoidable, then Article 245 indicates the manner of resolution of such a conflict.”

The Court also said that:

1. Where the legislations, though enacted with respect to matters in their allotted sphere, overlap and conflict. Second, where the two legislations are with respect to matters in the Concurrent List and there is a conflict. In both situations, parliamentary legislation will predominate, in the first, by virtue of the non-obstante clause in Article 246(1), in the second, by reason of Article 254(1).
2. Clause (2) of Article 254 deals with a situation where the State legislation having been reserved and having obtained President’s assent, prevails in that State; this again is subject to the proviso that Parliament can again bring a legislation to override even such State legislation.

In National Engg. Industries Ltd. v. Shri Kishan Bhageria, AIR 1988 SC 329 case, the Supreme Court held that the provision of the Rajasthan Shops and Commercial Establishment Act, 1958 (State law) were not repugnant but supplemental to the provisions of the Industrial Disputes Act, 1947 (Central law) insofar as the former provided safeguards to the workman in addition to those provided in the latter. The Court further observed: “In order to raise a question of repugnancy two conditions must be fulfilled. The State law and the Union law must operate in the same field and one must be repugnant or inconsistent with the other. These are cumulative conditions. … the best test of repugnancy is that if one prevails, the other cannot prevail”.

In Sajjan Singh v. The State of Rajasthan (1965) 1 SCA 875 case, the Court held that for determining the constitutional validity of an impugned Act, it would relevant to inquire what the pith and substance of the impugned Act is.

Conclusion:

There are some subject-matters where the powers and interest of both the union and the state governments collide and a proper and logical mechanism to counter any inconsistency or conflict needs to be in place to ensure the efficiency of governance. Doctrine of repugnancy thus provides for an effective mechanism to deal with any such inconsistencies. we see that Doctrine of Repugnancy is firmly entrenched in our constitutional scheme and is here to stay for a long time to come.

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The term ‘Interpretation’ is derived from Latin term ‘interpretari’ which means to explain or to understand or translate. Interpretation means the art of finding out the true sense of enactment by giving the words of the enactment their natural and ordinary meaning.  Thus interpretation is a process through which one ascertains the true and correct intention of the law making bodies as is laid in the form of statutes. The Court is not expected to interpret arbitrarily and therefore there have been certain principles which have evolved out of the continuous exercise by the Courts. These principles are sometimes called ‘rules of interpretation’. This process is commonly adopted by the courts for determining the exact intention of the legislature. Because the objective of the court is not only merely to read the law but is also to apply it in a meaningful manner to suit from case to case.

According to Salmond: “by interpretation or construction is meant, the process by which the courts seek to ascertain the meaning of the legislature through the medium of authoritative forms in which it is expressed.”

Jurists take the help of both Rules and Aids in the interpretation of Statutes. There are three rules of interpretation of statutes- Literal, Golden and Mischief. An Aid, on the other hand is a device that helps or assists. For the purpose of construction or interpretation, the court has to take recourse to various internal and external aids.

In B. Prabhakar Rao and others v State of A.P. and others , AIR 1986 SC 120 case, O. Chennappa, Reddy J. has observed : “Where internal aids are not forthcoming, we can always have recourse to external aids to discover the object of the legislation. External aids are not ruled out. This is now a well settled principle of modern statutory construction.”

Internal Aids:

Internal aids mean those aids which are available in the statute itself, though they may not be part of enactment. These internal aids include, long title, preamble, headings, marginal notes, illustrations, punctuation, proviso, schedule, transitory provisions, etc. When internal aids are not adequate, court has to take recourse to External aids. External Aids may be parliamentary material, historical background, reports of a committee or a commission, official statement, dictionary meanings, foreign decisions, etc.

Headings:

There are two kinds of headings in a statute, those prefixed to a section and those prefixed to a group or set of sections. The headings prefixed to a group of set of sections serve as a preamble to those sections. Headings are not passed by the Legislature but they are subsequently inserted after the Bill has become law.

In Bhinka v. Charan Singh, AIR 1959 SC pp.960, 966 case, the Court held that the view is now settled that the Headings or Titles prefixed to sections or group of sections can be referred to in construing an Act of the Legislature. Conflicting opinions have been expressed on the question as to what weight should be attached to the headings.

In Toronto Corporation v. Toronto Rly Co., Ibid, p. 324 case, the Court observed that “A Heading is to be regarded as giving the key to the interpretation of the clauses ranged under it, unless the wording is inconsistent with such interpretation.

In Qualter Hall & Co. v. Board of Trade, Ibid, p. 392 case, the Court observed that the headings might be treated “as preambles to the provisions following them.

In M/s. Frick India Ltd. v. Union of India, AIR 1990 SC pp.689, 693 case, the Supreme Court expressed itself as follows: “It is well settled that the headings prefixed to sections or entries (of a Tariff Schedule) cannot control the plain words of the provisions; they cannot also be referred to for the purpose of construing the provision when the words used in the provision are clear and unambiguous; nor can they be used for cutting down the plain meaning of the words in the provision. Only in the case of ambiguity or doubt the heading or sub-heading may be referred to as an aid in construing the provision but even in such a case it could not be used for cutting down the wide application of the clear words used in the provision.”

In Bhinka v. Charan Singh, AIR 1959 SC pp.960, 966  case, the Court observed: “The heading prefixed to sections or sets or sections in some modern statutes are regarded as preambles to those sections. They cannot control the plain words of the statute but they may explain ambiguous words.”

In Krishnaiah v. State of A.P. AIR 2005 AP 10 case, it was held that headings prefixed to sections cannot control the plain words of the provisions. Only in the case of ambiguity or doubt, heading or sub-heading may be referred to as an aid in construing provision.

In Durga Thathera v. Narain Thathera, AIR 1931 All 597 case,the court held that the headings are like a preamble which helps as a key to the mind of the legislature but do not control the substantive section of the enactment.

In Godrej & Boyce Mfg. Co. Pvt. Ltd. V. Municipal Corporation of Greater Bombay, AIR 1992 Bom 104 case, the Court held that for interpretive purposes, headings and titles are of use only when they shed light on some ambiguous word or phrases. They are but tools available for the resolution of a doubt. But they cannot undo or limit that which the text makes plain.

Limitations of Headings as Internal Aid to Construction:

• Headings can neither cut down nor extend the plain meaning and scope of the words used in the enacting part.
• Headings cannot control the clear and plain meaning of the words of an enactment.

Conclusion:

The heading is a shorthand reference tool which provides a quick and brief idea about the contents or of the general subject-matter involved. There is a very rare use of headings in the interpretation of statutes.

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The term ‘Interpretation’ is derived from Latin term ‘interpretari’ which means to explain or to understand or translate. Interpretation means the art of finding out the true sense of enactment by giving the words of the enactment their natural and ordinary meaning.  Thus interpretation is a process through which one ascertains the true and correct intention of the law making bodies as is laid in the form of statutes. The Court is not expected to interpret arbitrarily and therefore there have been certain principles which have evolved out of the continuous exercise by the Courts. These principles are sometimes called ‘rules of interpretation’. This process is commonly adopted by the courts for determining the exact intention of the legislature. Because the objective of the court is not only merely to read the law but is also to apply it in a meaningful manner to suit from case to case.

According to Salmond: “by interpretation or construction is meant, the process by which the courts seek to ascertain the meaning of the legislature through the medium of authoritative forms in which it is expressed.”

Jurists take the help of both Rules and Aids in the interpretation of Statutes. There are three rules of interpretation of statutes- Literal, Golden and Mischief. An Aid, on the other hand is a device that helps or assists. For the purpose of construction or interpretation, the court has to take recourse to various internal and external aids.

In B. Prabhakar Rao and others v State of A.P. and others , AIR 1986 SC 120 case, O. Chennappa, Reddy J. has observed : “Where internal aids are not forthcoming, we can always have recourse to external aids to discover the object of the legislation. External aids are not ruled out. This is now a well settled principle of modern statutory construction.”

Internal Aids:

Internal aids mean those aids which are available in the statute itself, though they may not be part of enactment. These internal aids include, long title, preamble, headings, marginal notes, illustrations, punctuation, proviso, schedule, transitory provisions, etc. When internal aids are not adequate, court has to take recourse to External aids. External Aids may be parliamentary material, historical background, reports of a committee or a commission, official statement, dictionary meanings, foreign decisions, etc.

Preamble:

The preamble of a statute like the long title is a part of the Act and is an admissible aid to construction. Although not an enacting part, the preamble is expected to express the scope, object and purpose of the Act more comprehensively than the long title. It may recite the ground and cause of making the statute, the evils sought to be remedied or the doubts which may be intended to be settled.

The preamble usually mentions the general object and intention of the legislature in passing enactment, and is considered as a key to the understanding of it. The preamble may be in brief and simple form or its recitals it may set out the main objects of the Act, its scope and purpose and the mischief to be remedied. It is an admissible aid to construction when a provision is ambiguous, obscure, indefinite, it cannot however, control plain meaning of provision. It is to be noted that the preamble serves as a preface to the Act. It is a part of the Act but not an enacting part. Preamble is said to be a necessary but not an indispensable part for there are Acts which do not contain preamble.

In Brett v. Brett, (1826) 162 ER 456 case, Sir John Nicholl observed: “It is to the preamble more specifically that we are to look for the reason or spirit of every statute, rehearsing this, as it ordinarily does, the evils sought to be remedied, or the doubts purported to be removed by the statute, and so evidencing, in the best and most satisfactory manner, the object or intention of the Legislature in making or passing the statute itself.”

In Powell v. Kempton Park Racecourse Co., (1899) A.C. 143, 157 case, Lord Halsburry L.C. made the following pronouncement on the subject: one that preamble affords useful light as to what a statute intends to reach, and another that if an enactment is itself clear and unambiguous, no preamble can qualify or cut down the enactment.

In Burakar Coal Co. Ltd. v. Union of India, AIR 1961 SC pp.954, 956, 957 case, Mudholkar J. enunciated the principle and observed: “It is one of the cardinal principles of construction that where the language of an Act is clear, the preamble may be resorted to explain it. Again, where very general language is used in an enactment which, it is clear must be intended to have a limited application, the preamble may be used to indicate to what particular instances, the enactment is intended to apply. We cannot, therefore, start with the preamble for construing the provisions of an Act, though we could be justified in resorting to it, nay, we will be required to do so, if we find that the language used by Parliament is ambiguous or is too general though in point of fact parliament intended that it should have a limited application.”

In Kesavananda Bharati v. State of Kerala, AIR 1973 SC 1461case, wherein the apex court strongly relied on the Preamble to the Constitution of India in reaching a conclusion that the power of the Parliament to amend the constitution under Article 368 was not unlimited and did not enable the Parliament to alter the Basic Structure of the Constitution. The Court observed: “If the language in an ordinary statute is not plain and clear, then the preamble may have effect either to extend or restrict the language used in the body of the enactment.

In Rashtriya Mill Mazdoor Sangh v. NTC (South Maharashtra), AIR 1996 SC 710 case, the Supreme Court while interpreting certain provisions of the Textile Undertakings (Take over of Management) Act, 1983 held that when the language of the Act is clear, preamble cannot be invoked to curtail or restrict the scope of an enactment.

Limitation of Preamble as Internal Aid:

• The preamble can be resorted to only when the language of a provision is reasonably capable of alternative construction. i.e. when the provision is ambiguous, obscure, indefinite.
• The preamble cannot either restrict or extend the meaning and scope of the words used in the enacting part.
• In case of conflict between Preamble and a section, the section shall prevail over the preamble.
• The preamble cannot be regarded as a source of any substantive power or of any prohibition or limitation.
• A preamble retrospectively inserted into an earlier Act is not of much assistance for gathering the intention of the original Act. Similarly, it seems the repeal of a preamble simpliciter will not affect the construction of the Statute.

The Preamble of the Constitution of India:

The Preamble of the Constitution like the Preamble of any statute furnishes the key to open the mind of the makers of the Constitution more so because the Constituent Assembly took great pains in formulating it so that it may reflect the essential features and basic objectives of the Constitution. The Preamble is a part of the Constitution. The Preamble embodies the fundamentals underlining the structure of the Constitution.

The Constitution, including the Preamble, must be read as a whole
and in case of doubt interpreted consistent with its basic structure to
promote the great objectives stated in the preamble.

In Indira Nehru Gandhi (Smt.) v. Raj Narain, AIR 1975 SC 2299 case, the Court held that the Preamble can neither be regarded as the source of any substantive power nor as a source of any prohibition or limitation.

In Kesavananda v. State of Kerala, AIR 1973 SC 1461, and Minerva Mills Ltd. v. Union of India, AIR 1980 SC pp.1789, 1798, 1806 cases, the Court strongly relied upon the Preamble in reaching the conclusion that the power of amendment conferred by Article 368 was limited and did not enable Parliament to alter the basic structure or framework of the Constitution.

Conclusion:

The preamble sets out the main objects of the Act, its scope and purpose and the mischief to be remedied. It is an admissible aid to construction when a provision in enactment is ambiguous, obscure, indefinite, it cannot however, control plain meaning of provision. In case of conflict between Preamble and a section, the section shall prevail over the preamble.

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