Interpretation of Statutes

(c)Rule of Harmonious Construction: It is a recognized rule of interpretation of statutes and deeds that the expressions used therein should ordinarily be understood in a sense in which they best harmonize with the object of the statute. The opposite of “harmony” is conflict. Thus, this rule is applied when there is a conflict between two provisions of a statute. Similarly, this Rule comes to our aid when there is conflict between the provisions of a statute and the object, which the legislature had in view.

Thus, where an expression is susceptible of a narrow or technical meaning, as well as a popular meaning, the court would be justified in assuming that the legislature used the expression in the sense, which would carry out its objects and reject that which renders it invalid.

It is a basic rule of interpretation that if it is possible to avoid a conflict between two provisions on a proper construction thereof, then it is the duty of the court to so construe them that they are in harmony with each other. The statute must be read as a whole and every provision in the statute must be construed with reference to the context and other clauses in the statute so as to make the statute a consistent enactment and not reduce it to a futility. But where it is not possible to give effect to both the provisions harmoniously, collision may be avoided by holding that one section which is in conflict with another merely provides for an exception or a specific rule different from the general rule contained in the other. A specific rule will override a general rule. This principle is usually expressed by the maxim, “generalia specialibus non derogant” .

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2026, 3(c) (New Scheme).

(c)Rule of Ejusdem Generis

The term ‘ejusdem generis’ means ‘of the same kind or species’. Simply stated, where specific words pertaining to a class or category or genus are followed by general words, the general words shall be construed as limited to the things of the same kind as those specified.

The rule of ejusdem generis is not an absolute rule of law but only a part of a wider principle of construction and therefore this rule has no application where the intention of the legislature is clear.

Exceptions:

1.If the preceding term is general, as well as that which follows, this rule cannot be applied.

2.Where the particular words exhaust the whole genus.

3.Where the specific objects enumerated are essentially diverse in character.

4.Where there is an express intention of legislature that the general term shall not be read ejusdem generis the specific terms.

This rule has to be applied judiciously. This rule may be understood as an attempt to settle a conflict between specific and general words.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2026, 4(c) (New Scheme).

(c)Difference Between Rule of Beneficial Construction and Rule of Exceptional Construction.

The Rule of Beneficial Construction helps in expanding the scope of beneficial legislation to favour the protected class, whereas the Rule of Exceptional Construction ensures that exceptions or deviations from the general law are not unduly extended beyond what the statute clearly provides.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2026, 3(c) (New Scheme).

(c)Noscitur a Sociis means that when two or more words that are susceptible of analogous meaning, are coupled together they are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is the meaning of the more general word being restricted to a sense analogous to that of the less general.

Examples of the principal of Noscitur a Sociis are as follows:

Fresh orange juice is not a fruit juice

While dealing with a Purchase Tax Act, which used the expression “manufactured beverages including fruit-juices and bottled waters and syrups”.

It was held that the description ‘fruit juices’ as occurring therein should be construed in the context of the preceding words and that orange-juice unsweetened and freshly pressed was not within the description. (Commissioners. v. Savoy Hotel, (1966) 2 All. E.R. 299)

Private Dispensary of a doctor is not a commercial establishment

In dealing with the definition of commercial establishment in Section 2 (4) of the Bombay Shops and Establishments Act, 1948, which reads, “commercial establishment means an establishment which carries on any business, trade or profession”, the word ‘profession’ was construed with the associated words ‘businesses and ‘trade’ and it was held that a private dispensary of a doctor was not within the definition. (Dr. Devendra M. Surti v. State of Gujrat, A.I.R. 1969 SC 63).

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2025, 3(c) (New Scheme).

(c)“ Absoluta Sententia Expositore Non Indiget ”

The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself. Thus, if the words of a statute are capable of one construction only, then it would not be open to the courts to adopt any hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act.

It is a cardinal rule of construction that a statute must be construed literally and grammatically giving the words their ordinary and natural meaning. Therefore, the language used in the statute must be construed in its grammatical sense. The correct course is to take the words themselves and arrive if possible, at their meaning without reference to cases, in the first instance. If the phraseology of a statute is clear and unambiguous and capable of one and only one interpretation, then it would not be correct to extrapolate these words out of their natural and ordinary sense. When the language of a statute is plain and unambiguous it is not open to the courts to adopt any other hypothetical construction simply with a view to carrying out the supposed intention of the legislature.

Thus, it is the primary duty of the court to interpret the words used in legislation according to their ordinary grammatical meaning in the absence of any ambiguity or doubt. Normally, where the words of a statute are in themselves clear and unambiguous, then these words should be construed in their natural and ordinary sense and it is not open to the court to adopt any other hypothetical construction. This is called the rule of literal construction.

This principle is contained in the Latin maxim “ absoluta sententia expositore non indiget ” which literally means “an absolute sentence or preposition needs not an expositor”. In other words, plain words require no explanation.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 3(c) (New Scheme).

(c)Rule that suggests ‘Plain Word requires no explanation’

This Rule is called “Rule of Literal Construction”.

It is a cardinal rule of construction that a statute must be construed literally and grammatically giving the words their ordinary and natural meaning. Therefore, the language used in the statute must be construed in its grammatical sense. The correct course is to take the words themselves and arrive if possible, at their meaning without reference to cases, in the first instance.

If the phraseology of a statute is clear and unambiguous and capable of one and only one interpretation, then it would not be correct to extrapolate these words out of their natural and ordinary sense. When the language of a statute is plain and unambiguous it is not open to the courts to adopt any other hypothetical construction simply with a view to carrying out the supposed intention of the legislature.

This principle is contained in the Latin maxim “ absoluta sententia expositore non indiget ” which literally means “an absolute sentence or preposition needs not an expositor”. In other words, plain words require no explanation.

Sometimes, occasions may arise when a choice has to be made between two interpretations- one narrower and the other wider or bolder. In such a situation, if the narrower interpretation would fail to achieve the manifest purpose of the legislation, one should rather adopt the wider one.

Technical words are to be understood in a Technical sense only

This point of literal construction is that technical words are understood in the technical sense only.

In construing the word ‘practice’ in the Supreme Court Advocates Act, 1951, it was observed that practice of law generally involves the exercise of both the functions of acting and pleading on behalf of a litigant party. When legislature confers upon an advocate the right to practice in a court, it is legitimate to understand that expression as authorizing him to appear and plead as well as to act on behalf of suitors in that court. (Ashwini Kumar Ghose v. Arabinda Bose AIR 1952 SC 369).

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 3(c) (New Scheme).

(c)Noscitur a Sociis means that when two or more words that are susceptible of analogous meaning, are coupled together they are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is the meaning of the more general word being restricted to a sense analogous to that of the less general.

Examples of the principal of Noscitur a Sociis are as follows:

Fresh orange juice is not a fruit juice .

While dealing with a Purchase Tax Act, which used the expression ‘ manufactured beverages including fruit-juices and bottled waters and syrups ’ .

It was held that the description ‘fruit juices’ as o ccurring therein should be construed in the context of the preceding words and that orange-juice unsweetened and freshly pressed was not within the description. ( Commissioners. Vs. Savoy Hotel, (1966) 2 All. E.R. 299 )

Private Dispensary of a doctor is not a commercial establishment

In dealing with the definition of commercial establishment in section 2 (4) of the Bombay Shops and Establishments Act, 1948, which reads, ‘ commercial establishment means an establishment which carries on any business, trade or profession ’, the word ‘profession’ was construed with the as sociated words ‘business’ and ‘trade’ and it was held that a private dispensary of a doctor was not within the definition. ( Dr. Devendra M. Surti Vs. State of Gujrat, A.I.R. 1969 SC 63 )

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2023, 5(c) (Old Scheme).

(d)The Rule of Ejusdem Generis will not apply in the following situations:

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2022, 4(d) (Old Scheme).

(d)Mischief Rule/ Heydon’s Rule: Where the language used in a statute is capable of more than one interpretation, the most firmly established rule for construction is the principle laid down in the Heydon’s case. This rule enables, consideratio n of four matters in constituting an Act:

(1)what was the law before making of the Act,

(2)what was the mischief or defect for which the law did not provide,

(3)what is the remedy that the Act has provided, and

(4)what is the reason for the remedy.

The rule then directs that the courts must adopt that construction which ‘shall sup press the mischief and advance the r emedy’. Therefore, even in a case where the usual meaning of the language used falls short of the whole object of the legislature, a more extended meaning may be attributed to the words, provided they are fairly susceptible of it. If the object of any enactment is public safety, then its working must be interpreted widely to give effect to that object. Thus, in the case of Workmen’s Compensati on Act, 1923 the main object being provision of compensation to workmen, it was held that the Act ought to be so construed, as far as possible, so as to give effect to its primary provisions.

However, it has been emphasized by the Supreme Court that the ru le in Heydon’s case is applicable only when the words used are ambiguous and are reasonably capable of more than one meaning [CIT v. Sodra Devi (1957) 32 ITR 615 (SC)].

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, December 2021, 3(d) (Old Scheme).

(a)According to section 2(45) of the Companies Act, 2013, Government company means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.

In the given question, since NMDC, UPPL and KGRL are themselves Government companies (being subsidiaries of the Central Government and State Governments respectively), their shareholding in BUL effectively represents indirect holding of the Central and State Governments.

Aggregating their holdings:

15 + 10 + 10 = 35 crore out of 50 crore = 70%, which is well above the 51% threshold.

Thus, BUL qualifies as a Government Company under section 2(45), since more than 51% of its paid-up capital is held, in aggregate, by the Central Government and State Governments (through their respective Government company subsidiaries).

According to section 139(7), notwithstanding anything contained in subsection (1) or sub-section (5), in the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments, the first auditor shall be appointed by the Comptroller and Auditor-General of India (CAG) within sixty days from the date of registration of the company and in case the Comptroller and Auditor- General of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board to appoint such auditor within the next thirty days, it shall inform the members of the company who shall appoint such auditor within the sixty days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting.

Thus, as per facts of the question, CAG was required to appoint the first auditor with 60 days from the date of registration of company i.e. 60 days from 1.4.2026, which falls on 31.5.2026.

However, the Board of directors appointed the first auditors which is incorrect. Thus, the appointment of first auditor by the Board of directors is not valid.

The objection of members of the company is partially correct, since Board of Directors cannot validly appoint first auditor of a government company. However, their contention that only the members can appoint the first auditor is also not correct.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2026, 1(a) (New Scheme).

(b)(i) According to section 57 of the Limited Liability Partnership Act, 2008 read with the relevant Schedules, an unlisted public company may convert into an LLP in accordance with the provisions of this Chapter and the Fourth Schedule.

As per section 58(1), the Registrar, on satisfying that a firm, private company or an unlisted public company, as the case may be, has complied with the provisions of the Second Schedule, the Third Schedule or the Fourth Schedule, as the case may be, shall, subject to the provisions of this Act and the rules made thereunder, register the documents submitted under such Schedule and issue a certificate of registration in such form as the Registrar may determine stating that the limited liability partnership is, on and from the date specified in the certificate, registered under this Act.

In this question, ABC Aeromatics Ltd. (unlisted public company) has applied for conversion into Limited Liability Partnership. The company is facing regulatory action, a show cause notice, under the Companies Act, 2013, for alleged failure to comply with applicable accounting standards.

In terms of the above provisions and information regarding the pending regulatory action initiated by the issue of show cause notice, the Registrar if satisfied that the company has complied with the provisions of the Act and the Fourth Schedule, may allow ABC Aeromatics Ltd. to proceed with its conversion.

(ii)Effect of registration: According to section 58 of the Limited Liability Partnership Act, 2008,

Notwithstanding anything contained in any other law for the time being in force, on and from the date of registration specified in the certificate of registration issued under the respective Schedule, as the case may be,-

(a)there shall be a LLP by the name specified in the certificate of registration registered under this Act;

(b)all tangible (movable or immovable) and intangible property vested in the firm or the company, as the case may be, all assets, interests, rights, privileges, liabilities, obligations relating to the firm or the company, as the case may be, and the whole of the undertaking of the firm or the company, as the case may be, shall be transferred to and shall vest in the limited liability partnership without further assurance, act or deed; and

(c)the firm or the company, as the case may be, shall be deemed to be dissolved and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2026, 5(b) (New Scheme).

(a)1. Functions and Duties of National Financial Reporting Authority [NFRA]

Section 132(1A) of the Companies Act, 2013, provides that National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed.

Further section 132(2) read with rule 4, 6 to 9 of the National Financial Reporting Authority Rules 2018 lays down the functions and duties that NFRA shall perform, namely:

The Authority shall protect the public interest and the interests of investors, creditors and others associated with the companies or bodies corporate by establishing high quality standards of accounting and auditing and exercising effective oversight of accounting functions performed by the companies and bodies corporate and auditing functions performed by auditors.

Without prejudice to the generality, the Authority in particular shall:

(a)Maintain details of particulars of auditors appointed in the companies and bodies corporate governed by NFRA;

(b)Recommend accounting standards and auditing standards for approval by the Central Government;

(c)Monitor and enforce compliance with accounting standards and auditing standards;

(d)Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service;

(e)Promote awareness in relation to the compliance of accounting standards and auditing standards;

(f)Co-operate with national and international organisations of independent audit regulators in establishing and overseeing adherence to accounting standards and auditing standards; and

(g)Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.

2.As per section 132(4)(c) of the Companies Act 2013, where professional or other misconduct is proved, NFRA have the power to make order for:

(A)imposing penalty of:

times of the fees received, in case of firms.

(B)debarring the member or the firm from:

I.being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate; or II. performing any valuation as provided under section 247, for a minimum period of six months or such higher period not exceeding ten years as may be determined by the National Financial Reporting Authority.

NFRA can take the above actions against the audit firm JJ & Co. based on its findings upholding the allegations raised by the group of (even) minority shareholders.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 5(a) OR (New Scheme).

(a)Functions and Duties of National Financial Reporting Authority [NFRA]

Section 132(1A) of the Companies Act, 2013, provides that National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed.

Further Section 132(2) read with rule 4, 6 to 9 of the National Financial Reporting Authority Rules, 2018 lays down the functions and duties that NFRA shall perform, namely:

The Authority shall protect the public interest and the interests of investors, creditors and others associated with the companies or bodies corporate by establishing high quality standards of accounting and auditing and exercising effective oversight of accounting functions performed by the companies and bodies corporate and auditing functions performed by auditors.

Without prejudice to the generality, the Authority in particular shall:

(a)Maintain details of particulars of auditors appointed in the companies and bodies corporate governed by NFRA;

(b)Recommend accounting standards and auditing standards for approval by the Central Government;

(c)Monitor and enforce compliance with accounting standards and auditing standards;

(d)Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service;

(e)Promote awareness in relation to the compliance of accounting standards and auditing standards;

(f)Co-operate with national and international organisations of independent audit regulators in establishing and overseeing adherence to accounting standards and auditing standards; and

(g)Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2025, 5(a) (New Scheme).

(b)(i) Special Notice: As per section 140(4) of the Companies Act, 2013, resolution for appointment of an auditor other than retiring auditor at an Annual General Meeting requires special notice.

As per section 115 of the Companies Act, 2013, read with rule 23 of Companies (Management and Administration) Rules, 2014:

Where, by any provision contained in this Act or in the Articles of Association of a company, special notice is required for passing any resolution, then the notice of the intention to move such resolution shall be given to the company by such number of members holding not less than 1% of the total voting power, or holding shares on which such aggregate sum not exceeding five lakh rupees, as may be prescribed, has been paid-up.

Rule 23 provides, a special notice required to be given to the company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not less than 5,00,000 rupees has been paid up on the date of the notice.

The afore-mentioned notice shall be sent by members to the company not earlier than 3 months but at least 14 days before the date of meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting.

Here, L Ltd. is having 2,000 members with paid-up capital of ₹ 1 crore, and it received a notice from its 50 members holding paid-up capital of ₹ 6 lakh, in aggregate, on 2nd July, 2022 for a resolution to be passed at the AGM to be held on 21st August, 2022.

As the members who gave the notice hold more than ₹ 5 lakh in the paid-up capital of the company, they were eligible to give such notice.

Further, the notice should have been given not earlier than 3 months but at least 14 days before the date of meeting - 21st August, 2022, and the notice was given on 2nd July, 2022 i.e., within the prescribed time limit.

Thus, it can be said that the said notice was made by adequate number of members within the prescribed time limit to L Ltd.

[ Note: In the given question 50 members are holding paid-up share capital of ₹ 6 lakh. In fact they are holding more than 1% of total voting power as the paid-up share capital of the company is ₹ 1 crore.

This can also be considered as fulfillment of the condition. Further, a presumption may be taken that these members are holding equity shares carrying voting rights in absence of any specific information given in the question regarding class of shares.]

(ii)Representation to members: Where notice is given of such a resolution and the retiring auditor makes with respect thereto representation in writing to the company (not exceeding a reasonable length) and requests its notification to members of the company, the company shall, -

(1)in any notice of the resolution given to members of the company, state the fact of the representation having been made; and

(2)send a copy of the representation to every member of the company to whom notice of the meeting is sent, whether before or after the receipt of the representation by the company.

Yes, as per section 140(4) of the Companies Act, 2013, the company was bound to send the representation made by SNS & Co., to its members.

However, if a copy of the representation is not sent as aforesaid because it was received too late or becaus e of the company’s de fault, a copy thereof shall be filed with the Registrar and the auditor may (without prejudice to his right to be heard orally) require that representation shall be read out at the meeting.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2023, 3(b) (Old Scheme).

(d)Normally a Proviso is added to a section of an Act to except something or qualify something stated in that particular section to which it is added. A proviso should not be, ordinarily, interpreted as a general rule. Usually, a proviso is embedded in the main body of the section and becomes an integral part of it.

The effect of the proviso is to qualify the preceding enactment which is expressed in terms which are too general.

It is a cardinal rule of interpretation that a proviso or exception to a particular provision of a statute only embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other. (Ram Narain Sons Ltd. vs. Assistant Commissioner of Sales Tax, AIR 1955 SC 765) .

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2022, 5(d) (Old Scheme).

(c)Interpretation of statutes is applied in various circumstances where the meaning of the law is not clear or straightforward. Courts use interpretation to ascertain and give effect to the true intention of the legislature. The main situations where statutory interpretation is applied include:

1.Ambiguity in Language: When the words or phrases used in a statute are ambiguous or capable of multiple interpretations, legal interpretation becomes necessary to determine their correct meaning.

2.Vagueness or Obscurity: If the language of the statute is vague or obscure, making it difficult to understand, courts interpret it to remove uncertainty.

3.Conflict Within the Statute: When different provisions of the same statute appear to conflict or contradict each other, interpretation helps resolve the inconsistency.

4.Silence or Omission: If the statute is silent on a specific issue or does not cover a particular situation, courts interpret to fill the gap.

5.Changing Social and Economic Conditions: Statutes may have been drafted long ago and may not explicitly address modern circumstances. Interpretation helps apply old laws to new contexts.

6.Technical or Unfamiliar Language: Interpretation is necessary when the statute uses technical terms or legal jargon unfamiliar to laypersons.

7.Effect of External Events or Agreements: Sometimes, interpretation

involves considering external factors like treaties or previous laws.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2026, 4(c) (New Scheme).

(d)(i) Historical Setting: The history of the external circumstances which led to the enactment in question is of much significance in construing any enactment. We have, for this purpose, to take help from all those external or historical facts which are necessary in the understanding and comprehension of the subject matter and the scope and object of the enactment. History in general and Parliamentary History in particular, ancient statutes, contemporary or other authentic works and writings all are relevant in interpreting and construing an Act.

(ii)Use of Foreign Decisions: Foreign decisions of countries following the same system of jurisprudence as ours and given on laws similar to ours can be legitimately used for construing our own Acts. However, prime importance is always to be given to the language of the Indian statute. Further, where guidance can be obtained from Indian decisions, reference to foreign decisions may become unnecessary.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, December 2021, 4(d) (Old Scheme).

(c)This doctrine is based on the concept that a statute or a document is to be interpreted by referring to the exposition it has received from contemporary authority. The maxim “ Contemporanea Expositio est optima et fortissinia in lege ” means “contemporaneous exposition is the best and strongest in the law.” This means a law should be understood in the sense in which it was understood at the time when it was passed.

The maxim “ optima legum interpres est consuetude” simply means, “Custom is the best interpreter of law”. Thus, the court was influenced in its construction of a statute of Anne by the fact that it was that which had been generally considered as the true one for one hundred and sixty years. (Cox Vs. Leigh 43 LJQB 123).

In this regard, it is to be noted that this maxim is to be applied for construing ancient statutes, but not to Acts that are comparatively modern.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 4(c) (New Scheme).

(d)Doctrine of Contemporanea Expositio

This doctrine is based on the concept that a statute or a document is to be interpreted by referring to the exposition it has received from contemporary authority. The maxim “ Contemporanea Expositio est optima et fortissinia in lege ” means “contemporaneo us exposition is the best and strongest in the law .” This means a law should be understood in the sense in which it was understood at the time when it was passed.

This maxim is to be applied for construing ancient statutes, but not to Acts that are comparatively modern.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2023, 4(d) (Old Scheme).

(d)Sometimes an explanation is added to a section of an Act for the purpose of explaining the main provisions contained in that section. If there is some ambiguity in the provisions of the main section, the explanation is inserted to harmonise and clear up the ambiguity in the main section. Something may added to or something may be excluded from the main provision by insertion of an explanation. But the explanation should not be construed to widen the ambit of the section.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2022, 4(d) (Old Scheme).

(d)Principles of Grammatical Interpretation and Logical Interpretation: In order to

ascertain the meaning of any law/ statute the principles of Grammatical and Logical Interpretation is applied to conclude the real meaning of the law and the intention of the legislature behind enacting it.

Meaning: Grammatical interpretation concerns itself exclusively with the verbal expression of law. It does not go beyond the letter of the law, whereas Logical interpretation on the other hand, seeks more satisfactory evidence of the true intention of the legislature. In other words, the emphasis in grammatical interpretation is on “w hat the law says” and the logical interpretation seeks on the other hand, seeks to ascertain “ what the law means”.

Application of the principles in the Court: In all ordinary cases, the grammatical interpretation is the sole form allowable. The Court cannot delete or add to modify the letter of the law. However, where the letter of the law is logically defective on account of ambiguity, inconsistency or incompleteness, the Court is under a duty to travel beyond the letter of law so as to determine the true intentions of the legislature. So that a statute is enforceable at law, however, unreasonable it may be. The duty of the Court is to administer the law as it stands rather it is just or unreasonable.

The Court shall administer the law as it stands and shall not attempt an alternative interpretation based on logic that is ostensibly just or reasonable.

However, if there are two possible constructions of a clause, the Courts may prefer the logical construction.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2022, 3(d) (Old Scheme).

(d)Preamble affords help in the matter of construction, if there is an ambiguity in the law.

Courts refer to the preamble as an aid to construction in the following situations:

Situation 1: Where there is any ambiguity in the words of an enactment the assistance of the preamble may be taken to resolve the conflict.

Situation 2: Where the words of an enactment appear to be too general in scope or application then courts may resort to the preamble to determine the scope or limited application for which the words are meant.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2023, 3(d) (Old Scheme).

(c)Usage or practice developed under the statute is indicative of the meaning recognized to its words by contemporary opinion. A uniform notorious practice continued under an old statute and inaction of the Legislature to amend the same are important factors to show that the practice so followed was based on correct understanding of the law. When the usage or practice receives judicial or legislative approval it gains additional weight.

In this connection, we have to bear in mind two Latin maxims:

(i)‘ Optima Legum interpres est consuetude ’ (the custom is the best interpreter of the law); and

(ii)‘ Contemporanea Expositio est optima et fortissinia in lege ’ (the best way to interpret a document is to read it as it would have been read when made).

Therefore, the best interpretation/ construction of a statute or any other document is that which has been made by the contemporary authority. Simply stated, old statutes and documents should be interpreted as they would have been at the time when they were enacted/ written.

Contemporary official statements throwing light on the construction of a statute and statutory instruments made under it have been used as contemporanea expositio to interpret not only ancient but even recent statutes in India.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2023, 2(c) (Old Scheme).

(b)A clause that begins with the words ‘ notwithstanding anything contained ’ is called a nonobstante clause. Unlike the ‘ subject to ’ clause, the notwithstanding clause has the effect of making the provision prevail over others. When this term is used then the clause will prevail over the other provision(s) mentioned therein. ( K. Parasurammaiah Vs. Pakari Lakshman AIR 1965 AP 220)

A notwithstanding clause can operate at four levels.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, November 2023, 3(b) (Old Scheme).

(c)Difference and Relationship between Interpretation and Construction

The two terms- ‘Interpretation’ and ‘ Construction ’, are used interchangeably to denote a process adopted by the courts to ascertain the meaning of the legislature from the words with which it is expressed, these two terms have different connotations.

Interpretation is the art of ascertaining the meaning of words and the true sense in which the author intended that they should be understood.

Thus, where the Court adheres to the plain meaning of the language used by the legislature, it would be ‘interpretation’ of the words, but where the meaning is not plain, the court has to decide whether the wording was meant to cover the situation before the court. Here, the court would be resorting to ‘construction’. Conclusions drawn by means of construction are within the spirit though not necessarily within the letter of the law.

In practice construction includes interpretation and the terms are frequently used synonymously.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 3(c) (New Scheme).

(c)It is a basic rule of interpretation that if it is possible to avoid a conflict between two provisions on a proper construction thereof, then it is the duty of the court to so construe them that they are in harmony with each other. But where it is not possible to give effect to both the provisions harmoniously, collision may be avoided by holding that one section which is in conflict with another merely provides for an exception or a specific rule different from the general rule contained in the other. A specific rule will override a general rule. This principle is usually expressed by the maxim, “ generalia specialibus non derogant ”.

However, this rule can be adopted only when there is a real and not merely apparent conflict between provisions, where the words of a statute, on a reasonable construction thereof, admit of one meaning only then such natural meaning will prevail. The court shall not attempt an interpretation based on equity and harmonious construction.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2024, 4(c) (New Scheme).

(c)(i) Purpose of inclusion of ‘definition’ of certain words and expressions in the body of any statute

The legislature has the power to embody in a statute itself the definitions of its language and it is quite common to find in the Statutes ‘definitions’ of certain words and expressions used in the body of the statute.

When a word or phrase is defined as having a particular meaning in the enactment, it is that meaning alone which must be given to it in interpreting a Section of the Act unless there be anything repugnant in the context. This is called an exhaustive definition. The Court cannot ignore an exhaustive statutory definition and try and extract what it considers to be the true meaning of the expression independently of it.

The purpose of a definition clause is two-fold: (i) to provide a key to the proper interpretation of the enactment, and (ii) to shorten the language of the enacting part by avoiding repetition of the same words contained in the definition part every time the legislature wants to refer to the expressions contained in the definition.

(ii)Restrictive and extensive definitions: The definition of a word or expression in the definition section may either be restricting of its ordinary meaning or may be extensive of the same.

When a word is defined to ‘mean’ such and such, the definition is ‘prima facie’ restrictive and exhaustive, we must restrict the meaning of the word to that given in the definition section.

But where the word is defined to ‘include’ such and such, the definition is ‘prima facie’ extensive: here the word defined is not restricted to the meaning assigned to it but has extensive meaning which also includes the meaning assigned to it in the definition section.

We may also find a word being defined as ‘means and includes’ such and such. In this case, the definition would be exhaustive.

On the other hand, if the word is defined ‘to apply to and include’, the definition is understood as extensive.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 4(c) (New Scheme).

(c)The term ‘ Ejusdem Generis ’ means of the same kind or species. Where specific words pertaining to a class or category or genus are followed by general words, the general words shall be construed as limited to the things of the same kind as those specified. The rule of ejusdem generis is not an absolute rule of law but only a part of a wider principle of construction and therefore this rule has no application where the intention of the legislature is clear.

Situations when the Rule of Ejusdem Generis is not applied by the Courts:

In the following situations, the term “Ejusdem Generis" is not applied by the Courts.

1.If the preceding term is general, as well as that which follows this rule cannot be applied.

2.Where the particular words exhaust the whole genus.

3.Where the specific objects enumerated are essentially diverse in character.

4.Where there is an express intention of legislature that the general term shall not be read ejusdem generis the specific terms.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 4(c) (New Scheme).

(c)Non-obstante: A clause that begins with the words “notwithstanding anything contained” is called a non-obstante clause. Unlike the “subject to” clause, the notwithstanding clause has the effect of making the provision prevail over others. When this term is used then the clause will prevail over the other provision(s) mentioned therein.

Illustration: A notwithstanding clause can operate at four levels in various Acts as tabulated under.

Without prejudice: When certain particular provisions follow general provisions and when it is stated that the particular provisions are without prejudice to those general provisions the particular provisions would not restrict or circumscribe the operation and generality of the preceding general provisions. In other words, the particular provisions shall operate in addition to and not in derogation of the general provisions.

Illustration: Section 4(3) of the Companies Act, 2013, "Without prejudice to the provisions of sub-section (2), a company shall not be registered with a name which contains......".

This implies that while registering (and deciding) the name of the company [as per section 4(3)], provisions of section 4(2) shall also be operative.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 3(c) (New Scheme).

(c)(i) A clause that begins with the words “notwithstanding anything contained” is called a non-obstante clause. When this term is used then the clause will prevail over the other provision(s) mentioned therein.

In the given question, although appointments to teaching posts are ordinarily required to be made through a Selection Committee, the Chancellor is empowered to make temporary appointments in cases of emergency.

Since the appointment has been made during an academic crisis, which constitutes an emergency, the Chancellor can make such temporary appointment without constituting a Selection Committee.

Thus, the appointment made by the Chancellor is valid, subject to the conditions attached to the temporary/emergency appointment.

(ii)When certain particular provisions follow general provisions and when it is stated that the particular provisions are without prejudice to those general provisions the particular provisions would not restrict or circumscribe the operation and generality of the preceding general provisions. In other words, the particular provisions shall operate in addition to and not in derogation of the general provisions.

Therefore, the power to suspend the licence is in addition to and independent of the penalty that may be imposed under section 20.

Hence, the contention of the licensee that suspension cannot be ordered once a penalty is imposed is not valid. The authority may impose the penalty and also suspend the licence, if otherwise permissible under the statute.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2026, 3(c) (New Scheme).

(c)Effect of usage: Usage or practice developed under the statute is indicative of the meaning recognized to its words by contemporary opinion. A uniform notorious practice continued under an old statute and inaction of the Legislature to amend the same are important factors to show that the practice so followed was based on correct understanding of the law. When the usage or practice receives judicial or legislative approval it gains additional weight.

In this connection, we have to bear in mind two Latin maxims:

(i)'Optima Legum interpres est consuetude ' (the custom is the best interpreter of the law); and

(ii)' Contemporanea exposito est optima et fortissinia in lege ' (the best way to interpret a document is to read it as it would have been read when made).

Therefore, the best interpretation/construction of a statute or any other document is that which has been made by the contemporary authority. Simply stated, old statutes and documents should be interpreted as they would have been at the time when they were enacted/written.

Contemporary official statements throwing light on the construction of a statute and statutory instruments made under it have been used as contemporanea expositio to interpret not only ancient but even recent statutes in India.

Therefore, in the given case, the long-standing and uniform administrative practice, supported by legislative inaction and judicial approval, would carry significant persuasive value in interpreting the term “processing unit.”

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2026, 4(c) (New Scheme).