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Q. What do you understand by Beneficial Construction? Explain the statement, "Beneficial construction is a tendency rather than a rule".

A general rule of interpretation is that if a word used in a statute excludes certain cases in its common meaning, it should not be constrained unnecessarily to include those cases. An exception to this rule is that when the objectives of the statute are not met by excluding the cases, then the word may be interpreted extensively so as to include those cases. However, when a word is ambiguous i.e. if it has multiple meanings, which meaning should be understood by that word? This is the predicament that is resolved by the principle of Beneficial Construction. When a statute is meant for the benefit of a particular class, and if a word in the statute is capable of two meanings, one which would preserve the benefits and one which would not, then the meaning that preserves the benefit must be adopted. It is important to note that omissions will not be supplied by the court. Only when multiple meanings are possible, can the court pick the beneficial one. Thus, where the court has to choose between a wider mean that carries out the objective of the legislature better and a narrow meaning, then it usually chooses the former.  Similarly, when the language used by the legislature fails to achieve the objective of a statute, an extended meaning could be given to it to achieve that objective, if the language is fairly susceptible to the extended meaning. This is quite evident in the case of B Shah vs Presiding Officer, AIR 1978, where Section 5 of Maternity Benefits Act, 1961 was is question, where an expectant mother could take 12 weeks of maternity leave on full salary. In this case, a women who used to work 6 days a week was paid for only 6x12=72 days instead of 7x12=84 days. SC held that the words 12 weeks were capable of two meanings and one meaning was beneficial to the woman. Since it is a beneficial legislation, the meaning that gives more benefit to the woman must be used.

It is said by MAXWELL, that Beneficial Construction is a tendency and not a rule. The reason is that this principle is based on human tendency to be fair, accommodating, and just. Instead of restricting the people from getting the benefit of the statute, Court tends to include as many classes as it can while remaining faithful to the wordings of the statute. For example, in the case of Alembic Chemical Works vs Workmen AIR 1961, an industrial tribunal awarded more number of paid leaves to the workers than what Section 79(1) of Factories Act recommended. This was challenged  by the appellant. SC held that the enactment being a welfare legislation for the workers, it had to be beneficially constructed in the favor of worker and thus, if the words are capable of two meanings, the one that gives benefit to the workers must be used.

Similarly, in U Unichoyi vs State of Kerala, 1963, the question was whether setting of a minimum wage through Minimum Wages Act, 1948 is violative of Article 19 (1) (g) of the constitution because the act did not define what is minimum wage and did not take into account the capacity of the employer to pay. It was held that the act is a beneficial legislation and it must be construed in favor of the worker. In an under developed country where unemployment is rampant, it is possible that workers may become ready to work for extremely low wages but that should not happen.

Q. What do you understand by Strict Construction? If there is an ambiguity in a word in a penal statute, what interpretation should be given and why? Explain why a taxing statute should be strictly constructed?

Strict Construction
Strict construction refers to a particular legal philosophy of judicial interpretation that limits or restricts judicial interpretation. Strict construction requires the court to apply the text as it is written and no further, once the meaning of the text has been ascertained. That is, court should avoid drawing inference from a statute or constitution.  It is important to note that court may make a construction only if the language is ambiguous or unclear. If the language is plain and clear, a judge must apply the plain meaning of the language and cannot consider other evidence that would change the meaning. If, however, the court finds that the words produce absurdity, ambiguity, or a literalness never intended, the plain meaning does not apply and a construction may be made. Strict construction occurs when ambiguous language is given its exact and technical meaning, and no other equitable considerations or reasonable implications are made. Strict construction is the opposite of liberal construction, which permits a term to be reasonably and fairly evaluated so as to implement the object and purpose of the document.

Applicability in Penal Statutes
A Penal Statute must be constructed strictly. This means that a criminal statute may not be enlarged by implication or intent beyond the fair meaning of the language used or the meaning that is reasonably justified by its terms. It is fundamentally important in a free and just society that Law must be readily ascertainable and reasonably clear otherwise it is oppressive and deprives the citizen of one of his basic rights. An imprecise law can cause unjustified convictions because it would not be possible for the accused to defend himself against uncertainties. Therefore, an accused can be punished only if his act falls clearly into the four corners of the law without resorting to any special meaning or interpretation of the law. For example, in Seksaria Cotton Mills vs State of Bombay, 1954, SC held that in a penal statute, it is the duty of the Courts to interpret the words of ambiguous meaning in a broad and liberal sense so that they do not become traps for honest unlearned and unwary men. If there is honest and substantial compliance with an array of puzzling directions that should be enough, even if on some hyper critical view of the law other ingenious meanings can be devised.

If a penal provision is capable of two reasonably possible constructions, then the one that exempts the accused from penalty must be used rather than the one that does not. Whether a particular construction achieves the intention of the statute or not is not up to the court to think about in case of penal statutes. It is not apt for the court to extend the scope of a mischief and to enlarge the penalty. It is not competent for the court to extend the meaning of the words to achieve the intention of the legislature. If a penal provision allows accused to go scot-free because of ambiguity of the law, then it is the duty of the legislature and not of the courts to fix the law. Unless the words of a statute clearly make an act criminal, it cannot be construed as criminal. Chinubhai vs State of Bombay, AIR 1960, is an important case in this respect. In this case, several workers in a factory died by inhaling poisonous gas when they entered into a pit in the factory premises to stop the leakage of the gas from a machine. The question was whether the employer violated section 3 of the Factories Act, which says that no person in any factory shall be permitted to enter any confined space in which dangerous fumes are likely to be present.  The Supreme Court, while construing the provision strictly, held that the section does not impose an absolute duty on the employer to prevent workers from going into such area. It further observed  that the fact that some workers were present in the confined space does not prove that the employer permitted them to go there.  The prosecution must first prove that the workers were permitted to enter the space to convict the accused.

Applicability in Taxing Statutes
Tax is the money collected from the people for the purposes of public works. It is a source of revenue for the government. It is the right of the govt to collect tax according to the provisions of the law. No tax can be levied or collected except by the authority of law.  In general, legislature enjoys wide discretion in the matter of taxing statutes as long as it satisfies the fundamental principle of classification as enshrined in Article 14. A person cannot be taxed unless the language of the statute unambiguously imposes the obligation without straining itself.  In that sense, there is no reason why a taxing statute must be interpreted any differently from any other kind of statute. Indeed, SC, in the case of CIT vs Shahazada Nand and Sons, 1966, observed that 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 any notions which be entertained by the Courts as to what is just or expedient. 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 say. 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.

Lord Russel in Attorney General vs Calton Ban, 1989, illustrated categorically as, "I see no reason why special canons of construction should be applied to any act of parliament and I know of no authority for saying that a taxing statute is to be construed differently from any other act."

However, as with any statute, a fiscal or taxing statute is also susceptible to human errors and impreciseness of the language. This may cause ambiguity or vagueness in its provisions. It is in such cases, the task of constructing a statute becomes open to various methods of construction.  Since a person is compulsorily parted from his money due to tax, imposition of a tax is considered a type of imposition of a penalty, which can be imposed only if the language of the provision unequivocally says so. This means that a taxing statute must be strictly constructed. The principle of strict interpretation of taxing statutes was best enunciated by Rowlatt J. in his classic statement in Cape Brandy Syndicate v I.R.C. -  "In a taxing statute one has to look merely at what is clearly said. There is no room for any intention. 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 by any reasonable meaning of the words, it is possible to avoid the tax, then that meaning must be chosen. There is no scope for any inference or induction in constructing a taxing statute. There is no room for suppositions as to “spirit” of the law or by way of “inference”. When the provision is reasonably open to only one meaning then it is not open to restrictive construction on the ground that the levy of tax, is oppressive , disproportionate, unreasonable or would cause hardship. There is no room for such speculation. The language must be explicit. Similarly, penalty provision in a taxing statute has to be specifically provided and cannot be inferred.

In A. V. Fernandes vs State of Kerala, AIR 1957, the Supreme Court stated the principle that if the revenue satisfies 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 does not fall within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter.

This does not mean that equity and taxation are complete strangers.  For example, in the case of CIT vs J H Kotla Yadgiri, 1985, SC held that since the income from business of wife or minor child is includable as income of the assessee, the profit or loss from such business should also be treated as the profit or loss from a businesss carried on by him for the purpose of carrying forward and set-off of the loss u/s. This interpretation was based on equity. However, it does not permit any one to take the benefit of an illegality. This is illustrated in the case of CIT vs Kurji Jinabhai Kotecha,AIR 1977, where Section .24(2) of IT Act was constructed as not to permit assessee to carry forward the loss of an illegal speculative business for setting it off against profits in subsequent years. This proves that even a taxing statute should be so construed as to be consistent with morality avoiding a a result that gives recognition to continued illegal activities or benefits attached to it.

The rule of strict construction applies primarily to charging provisions in a taxing statute and has no application to a provision not creating a charge but laying down machinery for its calculation or procedure for its collection. Thus,  strict construction would not come in the way of requiring a person claiming an exemption. The provisions of exemptions are interpreted beneficially.