MODULE 5: CONSIDERATION OF VARIOUS IMPORTANT PRESUMPTIONS IN

INTERPRETATION

1.1 Presumption of Territorial Nexus principle

Q. When can territorial nexus be invoked?
Answer: When there is territorial application.

 “Territory” means boundaries and “Nexus” means relations. This doctrine is

invoked under two circumstances:
1. Whether a particular state has extra-territorial operation.
2. If there is a territorial nexus between the subject-matter of the Act
and the state making the law.
 It signifies that the object to which the law is applied need not be physically
located within the territorial boundaries, but what is necessary is that it
should have a sufficient territorial connection.
 The doctrine of territorial nexus is a concept described in Article 245 of the
Indian Constitution that determines how legislative powers are exercised by
the Centre and the States.
Article 245: Extent of laws made by Parliament and by the Legislatures of
States
(1) Subject to the provisions of this Constitution, Parliament may make
laws for the whole or any part of the territory of India, and the
Legislature of a State may make laws for the whole or any part of the
State
(2) No law made by Parliament shall be deemed to be invalid on the
ground that it would have extra territorial operation.
 This implies that state law cannot have extra-territorial operation. The
Doctrine of territorial nexus emanates from the Supreme Court
interpretation of this provision in context with extra-territorial operation of
a law made by state government in India.
 In simple words, the Doctrine of territorial nexus says that laws made by a
State legislature are not applicable outside the state, except when there is
a sufficient nexus between the State and the object.

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G.V.K. Inds. Ltd. and Anr. v. Income Tax Officer and Anr. [(2011) 4 SCC 36]
The Supreme Court has held that any law enacted by the Parliament with respect
to extra-territorial aspects or causes that have no nexus with India would be ultra
vires and would be law made for a foreign territory.

Degree of territorial Nexus

- Strict Nexus (e.g., s.2 of IPC)
- Significant Nexus (e.g., S.4(1) of IPC)
- Some Nexus (e.g., s. 4(2) & (3) of IPC)

State of Bombay v. R.M.D.C. (1957)

 The State of Bombay levied taxes on lotteries and prize competitions.
 It was held valid because there is sufficient territorial nexus between the
State of Bombay and Bangalore as it was printed and published in
Bangalore but had wide circulation in Bombay.
Test for territorial Nexus:
 The nexus should/must be real & not illusion or imaginary
 The liability sought to be imposed must be pertinent to that nexus.

Khyerbari Tea Co. Vs. State of Assam AIR 1964 SC 925

Schedule VII, List II, Entry 56: Assam Taxation (on Goods Carried by Road or on
Inland Water-Ways) Act, 1961.
challenged.: constitutional validity of the said Act which deals with liability to tax.
S. 3: tax will be levied from the producer of tea carried by any means except
railways and airways …..
Facts:
 The company exported tea grown and manufactured in its own garden
within West Bengal.
 The booking station and the destination were both in West Bengal. Of the
total distance of 689 miles of total movement of transportation, only 2
miles of inland waterways lay in the State of Assam.

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Contention of Petitioner:
 The Act was ‘bad’ as it had extraterritorial operation.
 It was contended that ss. 3 and 34, were invalid and that the Assam
Legislature was incompetent to enact the said provisions which constituted
unreasonable restrictions on the freedom of trade guaranteed by Art. 301
and infringed Art. 19(1)(g) of the Constitution.
 It was said that to the petitioner it applied only because the tea was carried
over inland waterways in Assam for about a mile and a half only.
Held:
 Apparently, the argument is that this distance is too trivial.
 it is beyond question that if the goods were carried for any distance over
the territory of Assam, however short that distance might be, the Assam
Legislature would have full jurisdiction to impose a tax on such carriage.

Kaveri Water Dispute AIR 1992 SC 52

Challenged:
Constitutional Validity of Karnataka Cauvery Basin Irrigation Protection
Ordinance of 1991: subsequently made into an Act – by which Karnataka
could appropriate any amount of water for their use.
Relevant Fact:
 The Karnataka ordinance sought directly to nullify the order of the tribunal
passed on June 25, 1991, to release specified amount of water to Tamil
Nadu.
Held:
 Constitutional Bench of S C for advising President held that the effect of the
ordinance was to affect the flow of the waters of the Cauvery into the
territory of Tamil Nadu and Puducherry, which are the lower riparian
states.
 The court held that the ordinance had an extra-territorial operation, and on
that account was beyond the legislative competence of the state and was
ultra vires the provisions of Article 245(1) of the constitution.

Clifford Chance Vs. D.C.I.T. (2009) BLR (428)

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Impugned Act: S. 9 (1) (vii) (c) of Income Tax Act, 1961

SC referred the case of Ishika vajra Industries Vs. CIT, 2007, which gave a narrow
meaning that –utilization & rendering has to be in India. – This was followed and
petitioners were charged with that part of service given in India.

Ashapura Minechem Vs. Assitt Director of IT (2010) 131 TTJ (Mumbai) 291
Contended that rendering of services did not happen in India and should be
given relaxation as per the above 2 judgements.
Meanwhile, Finance Act was passed which made an amendment where it
said that utilization should be in India.
Therefore, Overturning Clifford and Ishika Judgement, the court
Held: relaxation not to be granted.

1.2 Casus Omissus – jus dare vs. jus dicere

 The term casus omissus means “cases of omission”. Omission in a statute

cannot be supplied by construction. A matter which should have been
provided but actually has not been provided in a statute cannot be supplied
by the courts. To do so will be ‘legislation’ and not ‘construction’.
 The first and primary rule of the construction is that the intention of the
legislature must be found in the words used by the legislature itself. The
question is not what may be supposed and has been intended but what has
been said.
 The court only interprets the law and cannot legislate.

Jus dare vs. Jus dicere

Lord Denning brings out analogy between cloth and this ambiguity.

 ‘Jus dare’ means ‘to give or to make the law’. Jus dare belongs to the
legislature.

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  ‘Jus dicere’ means ‘to declare the law’. This phrase is used to explain the
power which the court has to expound the law; and not to make it i.e. jus
dare.

 The court interprets the law, it does not make the law. Judges ought to
remember that their office is jus dicere, and not jus dare; to interpret law,
and not to make law, or give law.

 In S.P. Gupta v. President of India AIR 1982 SC 149 the Supreme Court held
that when the language of a statute is clear and unambiguous there is no
room for application of the doctrine of Casus Omissus or of pressing into
service external aid in such a case.

Basvanna Toppo Vs. J. N. Dharwadkar (1986) 4 SCC 273

Rule 92(2) 0 - XXI , C.P.C.

Contention: . . . application & deposits within 30 days of such sale of . . . the

court shall set aside the execution of the sale.

Corresponding provision: Article 127 of Limitation Act, 1963 – Amendment

made in the Act, now it is 60 days

Held: By 2 judges Bench

- Supplied for omission

- 60 days finalized

P. K. Unni Vs. Nirmala Industries AIR 1990 SC 933

Overrules Bassavanna Judgement (3 Judges Bench): 30 days

Dadi Jagannadham vs. Jamullu Ramulu & Ors … AIR 2001 SC 2699

Courts held that cassus omissus cannot be presumed. (5 Judge Bench)

The question raised in this Appeal is whether the period of limitation for
making deposit, in an application to set aside sale of immovable property
under Order XXI Rule 89 of the Code of Civil Procedure, is 30 days from the

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 date of sale (being the period prescribed in Order XXI Rule 92(2) C.P.C.) or
60 days from the date of sale (as prescribed in Article 127 of the Limitation
Act).

It is very clear from the Statement of Objects and Reasons, which have been
set out hereinabove, that the period under Article 127 Limitation Act was
extended from 30 days to 60 days in order to give more time to persons to
make deposits.

The settled principles of interpretation are that the Court must proceed on
the assumption that the legislature did not make a mistake and that it did
what it intended to do. The Court must, as far as possible, adopt a
construction which will carry out the obvious intention of the legislature.

1.3 Presumption of Mens rea in criminal act and ruling out of mens rea

 While determining the meaning of particular words, the courts will make
certain presumptions about the law. If the statute clearly states the
opposite, then a presumption will not apply and it is said that the
presumption is rebutted.
 General ingredients of Penal provisions are:
- Actus reus
- Mens rea (‘guilty mind’)
- Punishment
 In statutory interpretation, certain presumptions are taken into account by
the court while interpreting the statutes. One of the presumptions is that a
criminal act in general requires the presence of mens rea. Mens rea is one
of the elements that has to be proved for a successful criminal prosecution.
 There are cases in which a statutory offence is committed but the
presumption requiring mens rea is not used to decide the case. There have
been many such cases in English as well as Indian courts.

Compartmental Situation in mens rea

I. Knowingly, intentionally, maliciously, fraudulently, unintentionally

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 II. Where mens rea is silent:
1. Mens rea is to be presumed for statutory offence. (expressly or
necessary implication.
2. Mens rea is not be presumed (Offence becomes a strict
interpretation offence, that is, prosecution needs prove only actus
reus.

Sweet Vs. Parsley [1969] 1 All ER 347

 Law: The Dangerous Drug Act, 1965 provides that if a person is concerned in
the management of any premises used for the purpose of smoking cannabis
or cannabis resin or of dealing in cannabis resin (whether by sale or
otherwise), he shall be guilty of an offence.

 Facts: Appellant sublet a house reserving for herself a room. She used to visit
the house occasionally to collect letters and rent, and to see that everything
was well. On one occasion in her absence the police searched the house and
found receptacles (hollow objects used to contain something) containing
cannabis and LSD hidden in the garden and cigarette ends containing cannabis
in the kitchen.

 Held: The conviction was later quashed by the House of Lords on the grounds
that knowledge of the use of the premises was essential to the offence. Since
she had no such knowledge, she did not commit the offence.

Warnes Vs. metropolitan Magistrate (could not find details)

R. Vs. Cugullery [1961] 1 WLR 858.

 S. 1(1) of Prevention of Crime Act, 1953:

 If any person without lawful authority or reasonable excuse in public place

have an offensive weapon.
 Mens rea was presumed and he was acquitted.

Deena Anne Astaben Vs. Common Wealth of Virginia, October, 2003

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  Code of 18.2-308 (1B)

Trial Court convicted and rejected mens rea.

Sarju Prasad vs. State of U.P. (1961) SC 631

 S. 7 & S. 16 of Prevention of Food Adulteration Act, 1954

 Contention of Sarju: Absence of mens rea
 Actus reus of selling adulterated food is mentioned in the provision.

Held: Therefore, Sarju Prasad was convicted

Mens rea of a company / a body corporate

Question: Whether company could be implicated for the acts of its officers
u/provision.

1. M V. Javali Vs. Mahajan Borewell Co. (1997) 8 SCC 72

2. Commissioner Ass. IT Bangalore Vs. Velliappa Textiles Ltd. AIR (2004) SC
86
3. ANZ Grindlays Bank ltd. Vs. D.E. [(2004) 6 SCC 531]

Case 1. 276 (B), 278 (B) of IT Act - 2 Judge Bench,

Case 2. 276 (c) & 278 (B) of IT Act – 3 Judge Bench

Case 3. 5 Judge Bench [3:2 majority] – Overruled Vellappa and Upheld Javali Case.

Held: Fine applicable to company; Imprisonment - natural person

Meridian Global Funds Management Vs. Securities Commission (1995) 3 FLLER

911 – Decided by Privy Council Case

Impugned provision: S. 20 (3) & (4) of New Zealand Securities (Amendment) Act,
1980. – Any person who becomes a substantial security holder, such person has
to send notice to the Commission that he is a SSH.

(*SSH - Any person who acquires 5% or more shares in a public company).

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Facts:

 Meridian was part of a syndicate bidding to take over NZ company, Euro

National Corp Ltd
 Ng – Senior Portfolio Officer & Koo – Chief Investment Officer of Meridian
Global used funds of the company to buy 49% of shares in Euro national Co.
 But Meridian failed to disclose to the Securities Commission of New
Zealand that they had become a ‘substantial security holder’ of over 5%
because Koo and Ng wanted to hide the transaction from their superiors.
 The Commission imposed fines against Koo, Ng and the Meridian.
 The company argued it was not liable because it had not known about it.

Heron J held: Meridian knew it was a substantial property holder, because as

employees the knowledge of Koo and Ng was attributable to the company.

The NZ Court of Appeal held: Koo’s knowledge should be attributable because he

was the ‘directing mind and will’ of the company.

This case has outlined the constructive or interpretative approach to the

corporate liability. The conventionally followed “directing mind and will’ test was
rejected by the Privy Council in Meridian, which, instead gave a limelight to the
rules of attribution. The primary, general and special rules of attribution.

(*attribution - the action of regarding something as being caused by a person or

thing.)

An analogy was drawn btw the said case and an incident where a company driver
kills someone in road accident, should the company be held responsible for that?

1.4 Presumption against redundancy – Legislature does not intend to alter the
existing law

 Each word in a statute has meaning, so interpretations which would render

certain statutory language redundant or otherwise superfluous are
disfavored.

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 The essence of presumption against redundancy is that every single phrase
or word of a statute has to be given effect as possessing its own
independent meaning.
 In Visitor Amu v. K.S.Mishra (2007), the Supreme Court has held that: “It is
well settled principle of interpretation of the statute that it is incumbent
upon the Court to avoid a construction… The Courts always presume that
the legislature inserted every part thereof for a purpose and the legislative
intent is that every part of the statute should have effect.
 The legislature is deemed not to waste its words or to say anything in vain
and a construction which attributes redundancy to the legislature will not
be accepted except for compelling reasons.

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