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The case were referred to the Full Bench by a Division Bench a ter doubting the correctness of
the view expressed in Dilip N. Shro f v. Joint Commissioner of Income Tax, Mumbai[1], which
was contrary to the dictum laid down in Chairman, SEBI v. Shriram Mutual Fund and
another[2]. The revenue contended that Section 11 AC of the Central Excise Act, 1944 (Central
Act 1 of 1944) should be read as penalty for statutory o fence and the authority imposing
penalty has no discretion in the matter of imposition of penalty and in such cases the
adjudicating authority was duty bound to impose penalty equal to the duties so determined.
On the other hand, the Respondents contended that Section 11 AC should be construed in
such a manner that some amount of discretion should be read into the Section, so as to give
e fect to the statutory intention.


1. The question considered by a Full Bench of the Hon'ble Supreme Court was as to whether
Section 11 AC of the Central Excise Act, 1944, inserted by the Finance Act, 1996, with the
intention of imposing mandatory penalty on persons who evaded payment of tax should
be read to contain mens rea as an essential ingredient and whether there is scope for
levying penalty below the prescribed minimum.
2. Whether the absence of speci c reference to mens rea, in the said section, is a case of casus


The Full Bench of the Hon'ble Supreme Court a ter considering the relevant statutory
provisions as well as the con licting decision and the various precedents on the principle of
casus omissus held that since the language of the statute is clear it has to be interpreted
strictly and that the adjudicating authority has no discretion to levy duty less than what is
legally and statutorily leviable. The Full Bench held that Dilip Shro f's case[3] was not correctly
decided and that Chairman, SEBI's case[4] had analysed the legal position in the correct
perspective. Directing the cases to be decided in the light of the ndings of the Full Bench.

Reasoning 1/6

It is a well-settled principle in law that the court cannot read anything into a statutory
provision or a stipulated condition which is plain and unambiguous. A statute is an edict of
the legislature. The language employed in a statute is the determinative factor of legislative
intent. Similar is the position for conditions stipulated in advertisements.

Words and phrases are symbols that stimulate mental references to referents. The object of
interpreting a statute is to ascertain the intention of the legislature enacting it.[5] The
intention of the legislature is primarily to be gathered from the language used, which means
that attention should be paid to what has been said as also to what has not been said. As a
consequence, a construction which requires for its support, addition or substitution of words
or which results in rejection of words as meaningless has to be avoided. As observed in
Crawford v. Spooner[6], the courts cannot aid the legislature's defective phrasing of an Act,
they cannot add or mend, and by construction make up de ciencies which are le t there.[7]

It is contrary to all rules of construction to read words into an Act unless it is absolutely
necessary to do so.[8] Rules of interpretation do not permit the courts to do so, unless the
provision as it stands is meaningless or of doubtful meaning. The courts are not entitled to
read words into an Act of Parliament unless clear reason for it is to be found within the four
corners of the Act itself.[9] While interpreting a provision the court only interprets the law and
cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law,
it is for the legislature to amend, modify or repeal it, if deemed necessary.[10] The legislative
casus omissus cannot be supplied by judicial interpretative process.

Two principles of constructionone relating to casus omissus and the other in regard to
reading the statute as a whole, appear to be well-settled. Under the rst principle a casus
omissus cannot be supplied by the court except in the case of clear necessity and when reason
for it is found in the four comers of the statute itself but at the same time a casus omissus
should not be readily inferred and for that purpose all the parts of a statute or section must be
construed together and every clause of a section should be construed with reference to the
context and other clauses thereof so that the construction to be put on a particular provision
makes a consistent enactment of the whole statute. This would be more so ifliteral
construction of a particular clause leads to manifestly absurd or anomalous results which
could not have been intended by the legislature. Where to apply words literally would defeat
the obvious intention of the legislation and produce a wholly unreasonable result[11], we
must do some violence to the words and so achieve that obvious intention and produce a
rational construction[12].

A casus omissus ought not to be created by interpretation, save in some case of strong
necessity. Where, however, a casus omissus does really occur, either through the inadvertence
of the legislature, or on the principle quod enim semel aut bis existit praeter sunt legislators, 2/6

the rule is that the particular case, thus le t unprovided for, must be disposed of according to
the law as it existed before such statute casus omissus et oblivioni datus dispositioni
communis juris relinquitur.[13]

Ratio Decidendi

Levy of penalty under Section 11AC of Central Excise Act, 1944 is a mandatory penalty and
legislative casus omissus cannot be supplied by judicial interpretative process.


On casus omissus itself, Indian law is di cult to ascertain, as there are parallel lines of
authority. In a 1952 decision[14] the Supreme Court followed Lord Simonds[15] approach that
the power will not be exercised when the alteration proposed is far-reaching, or when the
legislation in question requires strict construction as a matter of law. Several other cases
support this view[16]. On the other hand, the Court in Dadi Jagannatha[17] (overruling
Nirmala Industries) and SR Bommai cautiously took the opposite view. However, the most
authoritative precedent in support of the broader conception of casus omissus, OS Singh[18] is
somewhat unpersuasive, as it appears to have misread certain cases that it relies on for its
conclusion. These lines of authority cannot be easily reconciled, and if the Supreme Court is to
resolve the matter, it is likely to consider the matter afresh.

One recent development that is of great interest in this context is a decision of Justice Katju in
Rajbir Singh Dalal v. Chauhari Devi Lal University[19]. In this decision, Justice Katju has
continued his strong criticism of the use of traditional principles of statutory interpretation.
He has suggested that casus omissus, known as adhyahara in the Mimamsa school of
interpretation permits courts to add words to a legal text. The Court has further observed that
this is superior to Maxwell's principles in this respect since Maxwell does not go into any
further detail and does not mention sub-categories coming under the general category of
casus omissus. This decision may require reconsideration, and in any event has to be read in
light of the current case we discussed, the judgment that rea rms the narrow view of casus
omissus. It is perhaps time for the Supreme Court to settle the exact scope of the doctrine.


The opinion of the Indian courts, it is said, has been to allow reading of words into the statue
but only when the situation is dire and the words are so vague and ambiguous that literally
there is a need for the courts to make sense of the statute.

The Supreme Court in a leading case has also been of the view that a casus omissus cannot be
supplied by the Court except in the case of clear necessity and when reason for it is found in
the four corners of the statute itself.[20] 3/6

But the court should not so interpret a statute as to create a casus omissus when there is really

As observed by a constitution bench, when the words of a law extend not to an inconvenience
rarely happening, but due to those which o ten happen, it is good reason not to strain the
words further than they reach, by saying it is casus omissus, and that the law intended quae
frequentius accidunt.[22] But, on the other hand, it is no reason, when the words of a law
do enough extend to an inconvenience seldom happening, that they should not extend to it
as well as if it happened more frequently, because it happens but seldom.[23]

[1] [2007 (8) SCALE 304]

[2] [(2006) 5 S.C.C. 361].

[3] [2007 (8) SCALE 304]

[4] [(2006) 5 S.C.C. 361]

[5] Institute of Chartered Accountants of India v. Price Waterhouse 1977 6 SCC 312.

[6] (1846) 6 MOO PC1

[7] State of Gujarat v. Dilipbhai Nathjibhai Patel, [1998]2SCR56

[8] Stock v. Frank Jones (Tipton) Ltd 1978 (1) ALL ER 948

[9] Per Lord Loreburn, L.C. in Vickers Sons

[10] CST v. Popular Trading Co., 2000(117)ELT531(SC)

[11] L.J. in Artemiou v. Procopiou (1965) 3 ALL ER 539 All ER p. 544 I

[12] Lord Reid in Luke v. IRC (1963) AC 557

[13] Buller, J. in Jones v. Smart 1785 (1) TR 44:99 ER 963 ER p. 967

[14] Hira Devi v. District Board, Shahjahanapur, [1952] 1 SCR 122

[15] Inco Europe v. First Choice Distribution, [2000] 2 All ER 109

[16] P.K. Unni v. Nirmala Industries, (1990) 2 SCC 378; Baliram Waman Hiray v. Justice B. Lentin,
(1988) 4 SCC 419.

[17] Dadi Jagannadham v. Jammulu, (2001) 7 SCC 71)

[18] OS Singh v. Union of India, (1996) 7 SCC 37)

[19] (2008) 9 SCC 284

[20] Commissioner of Sales Tax, M.P. v. Popular Trading Company, Ujjain 2000 (5) SCC 511. 4/6