RELEVANCE OF EXPLANATION – JUDICIAL INTERPRETATION

[Dr. Sanjiv Agarwal]

Many a times, we find that statutory provisions do carry an explanation or more than one explanations which are a sort of addendum to the main provision. Their objective is to clarify the doubt's which may creep in while reading the provisions. Such explanations could be clarificatory or declaratory and retrospective or prospective. Explanation explains the meaning and effect of main provision. It clears up any doubt or ambiguity in it. Ultimately, however, intention of legislature is paramount, and a mere use of legal cannot control or deflect such a function.

Let's understand the relevance and importance the relevance and importance of 'explanations' from few judicial pronouncements.

In Katira Constructions Ltd. v. Union of India and Others 2013 (3) TMI 416 - GUJARAT HIGH COURT , it was held that Parliament had power to enact a law, including taxing law, with retrospective effect, when such provision create a levy for the first time, the same must be reasonable and the retrospectively must be justified on the basis of reasons for which amendment was necessary. The wisdom of Parliament in enacting a statute cannot a questioned in the court of law.

It was also held that an “explanation” was introduced by the legislature for clarifying some doubts or removing confusion which may be possible from the existing provision and to explain the meaning and effect of the main provision and to clear up any doubt or ambiguity in it. The purpose of the explanation would be to fill up the gap left in the statute, to express a mischief and making explicit which was implicit and would not normally expand the scope of main provision. An explanation is introduced by the legislature for clarifying some doubts or removing confusions which may be possible from the existing provisions.

In Dattatraya Govind Mahajan v. The State of Maharashtra, 1977 (1) TMI 148 - Supreme Court of India , the Supreme Court emphasised that while a traditional function of an explanation is to expound the meaning and effect of the provision which it explains, ultimately it is the intention of the legislature which matters :

"It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity in it. But ultimately it is the intention of the legislature which is paramount and mere use of a label cannot control or deflect such intention. It must be remembered that the legislature has different ways of expressing itself and in the last analysis the words used by the legislature alone are the true repository of the intent of the legislature and they must be construed having regard to the context and setting in which they occur. Therefore, even though the provision in question has been called an Explanation, we must construe it according to its plain language and not on any a priori considerations."

In Maharashtra Chamber of Housing Industry v. Union of India 2012 (1) TMI 98 - BOMBAY HIGH COURT, it was held that explanations to statutory provisions can be of different genres. An explanation may in certain situations provide no more than a clarification of legislative intent by providing a legislative understanding of the meaning of the main provision. But all explanations to statutory provisions need not be clarificatory. There is nothing to prevent the legislature to enact an explanation which is not clarificatory but expansive. As a matter of constitutional principle, there is no fetter on the power of the legislature to enact an explanation which while expounding the content of the main provision actually expands the purview and ambit of the provision. The question is not one of constitutional fetter, but purely one of statutory interpretation. This is, however, subject to the limitation on the legislative competence of the legislature which enacts the law.

In Delhi Chit Funds Association v. Union of India 2013 (4) TMI 630 - DELHI HIGH COURT, it was held that an 'explanation' explains the meaning and effect of the main provision. It clears up any doubt or ambiguity in it. Ultimately, however, intention of legislature is paramount, and a mere use of a label cannot control or deflect such a function. Every clause of the statute should be so construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or services of statutes relating to the subject matter.

This is the principle laid down by a Constitution Bench of the Supreme Court inDattatraya Govind Mahajan v. The State of Maharashtra, 1977 (1) TMI 148 - Supreme Court of India. In S. Sundaram Pillai, etc. v. P. Lakshminarayana Charya and Ors. - 1985 (1) TMI 306 - Supreme Court of India a three-Judge Bench of the Supreme Court considered the object of an Explanation and observed as follows :

"52.    Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is -

1. to explain the meaning and intendment of the Act itself,
2. where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve,
3. to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful,
4. an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and
5.  it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same."

Discussions to this article

[Debtosh Dey]

Ref Dr Sanjiv Agarwal's article on 'Relevance of Explanation - Judicial interpretation'.  How would you view Explanation (b) to section 6(1) of Income Tax Act on 'Residence in India', if section 115C(e) referred in it, is considered for the term 'resident' which is defined u/s 2(42) in terms of section 6 itself ? (Resubmitted with correction of earlier query statement)

[Bharat Agarwal]

The Supreme Court has also held that where the explanation goes to expand the existing provision, it can only be interpreted prospectively. Therefore, one has to first determine whether any additional liability or charge is created through explanation and then decide its applicability.