BENEFECIAL CONSTRUCTION

INTRODUCTION
The etymological meaning of the word ‘interpretation’ which has been derived from a Latin word
‘interpretari’ is to translate, explain or expound. Interpretation is an art to ascertain the truth sense of
legislation, enactment or statute by attributing a natural or ordinary meaning to the words of the
same. Its object is to determine the legislative intent behind the statute or enactment that is either
conveyed expressly or impliedly by the legislature. The need of interpretation arises where the
language of statutory provision is ambiguous or different views regarding interpretation is possible
or where the object of statute gets defeated when the provision gives different meaning.
When one comes across any act/section that is ambiguous in nature, then the rules of
interpretation or construction are used that have been evolved by judiciary.
Generally, interpretation and construction are considered as synonymous. However, this is not
so. The former implies deriving the true meaning of a word and the latter one means deriving
conclusion on the basis of the true meaning of words or to determine the legal effect of words
used in the statute. Beneficial statutes (also known as remedial, welfare or social welfare
legislations) provides benefits, rights or privileges to a particular section of society or society at
large. Since such kind of statutes seek to achieve a specific object, so these legislations need to
be interpreted so as to achieve their inherent objects or purpose. Beneficial legislations are more
welfare- oriented and reflect a larger public interest. The beneficial rule of construction gives a
wider scope to match out with the legislative intent behind such beneficial statutes by giving
wider interpretation to the same.

TOOLS OF INTERPRETATION

1. STATUTORY
(act specifically defining specific word.) For example, for the immovable property, General Clauses
Act, 1897 and Transfer of Property Act 1882 can be referred.

2. NON-STATUTORY
It consists of rules of interpretation that can be applied to define the true meaning of words
MEANING OF ‘BENEFICIAL CONSTRUCTION’ OF STATUTE

The rule of Beneficial Construction of statute has an indispensable place in interpretation of statutes
and in the development and beneficial interpretation of socio – economic legislations. When an act has
been enacted for the protection of interests of one class or the other, then it becomes essential that it
should be interpreted in such a way that the interest of two opposite classes are protected. This has led
to the origin of the rule of Beneficial Construction.

Literal or grammatical interpretation is used where the language of statute is unambiguous in nature.
Where the language used in statute leads to more than one meaning, then the meaning which protects
the interests of the class (for which that statute has been enacted) should be chosen. This is known as
the rule of Beneficial Construction . When two or more views are possible, then it is duty of court to
interpret a provision, especially a beneficial legislation, liberally so as to give it wide meaning rather
1
than a restrictive meaning.

Therefore, Beneficial construction involves giving the widest possible meaning to the statutes. Where
the court has to chose between a wide meaning which in its opinion carries out the object of legislature
more fully, and a narrower meaning carries less fully or not at all, the court will often chose the
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former.
3
In Manohar lal Vs The State of Punjab , the appellant, who was a shopkeeper was convicted for
contravening the provisions of Sec 7 (1) of the Punjab Trade Employees Act, 1940. He raised the plea
that the Act was not applicable to him as he did not employ any stranger but that himself alone worked
in it and that the application of Sec 7 (1) to his shop would be violative of his fundamental rights.

Held: The main object of the Act was the welfare of the employees and to protect their as well as the
employers’ health by preventing them from over work. Such a restriction being in the interest of the
general public was reasonable within the meaning of Article 19 (6) of the Constitution.
Hence, the provisions of Sec 7 (1) were constitutionally valid.

4
Mahadev Lal v/s State of West Bengal -Supreme Court said that if the common purpose of a Statute is
to provide benefit to a particular class of persons, and that Statute contains such contradictory
provisions provide benefit to a certain specific class and other are harmful, then that provision shall be
accepted ‘, which provide benefit to the specific class.
NATURE OF RULE OF BENEFICIAL CONSTRUCTION
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‘Beneficial construction is tendency rather than a rule.’ According to Maxwell, modern Judgements
show the difference between Beneficial and Strict Interpretation. All Statutes are carefully interpreted
while considering the language used in them. The Criminal Statutes are specially interpreted while
considering their legislative intent. The nature of beneficial construction is remedial as it applies to
advance the remedy and suppress the mischief. in such cases the Court favors the persons for whose
benefit the statute is enacted. All this is done via liberal interpretation but not going outside the scope
of the Act. However, one of the important requirement of getting benefit (via beneficial construction) is
that one should fulfil the condition and comply with the statutory requirement. Supreme Court has held
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that a welfare Statute must, of necessity, receives a broad interpretation.

SCOPE OF BENEFICIAL CONSTRUCTION

Beneficial construction widens the scope of construction and allows the court to choose the
construction that protects the interest of that class for whose protection the act/legislation is enacted
and to meet the intention of legislature. Similarly, it applies to many welfare legislations like Rent
controls, Tenancy Act, Hindu Adoption and Maintenance Act etc. and Socio – economic Legislation
like Unfair Labour Practice Act, Labour Act, Maternity Benefit Act, Minimum wages Act, Motor
Vehicles Act, Industrial Disputes Act, Contract etc. The scope of this rule extends to even criminal
statutes.
7
In Tola Ram v. State of Bombay that if two meanings emerge while construction of penal statutes, the
courts must lean towards that construction which exempt the subject from penalty rather than the one
which imposes penalty.

8
In Alembic Chemical Works Co. Ltd. v Workmen , the issue was that the industrial tribunal provided
the workmen with more number of leaves than the factory act. So, the company filed an appeal against
it. The Supreme Court dismissed the same on the ground that the factories act is a welfare legislation
and it should be constituted in the favor of Workman, if there is any ambiguity in the provisions of the
said act.
LIMITATIONS OF RULE OF BENEFICIAL CONSTRUCTION

The Beneficial construction being one of the subsidiary rule of interpretation applies as per the statutes
and not applicable with every statute in general. It should not be construed such that it brings within its
ambit a benefit which was not intended by legislature. The Control of Rent and Eviction Acts seek to
protect tenants from unjust evictions and it is a principle that in case of any ambiguity, such acts should
be interpreted in favor of tenants. However, one restriction that the benefit conferred on the tenants
under these Acts can only be enjoyed on strict compliance of statutory provisions of the same.

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In Shyam Sunder v. Ram Kumar , the court highlighted the following grounds/instances where the
rule of beneficial construction would not be applicable:

 When word used in Statute is capable of only one meaning.

 When Court finds that application of rule of benevolent construction, would re-legislate a
provision of statute by way of substitution, addition or change in the words in Statute.
 If the provision of statute is plain not ambiguous and does not give rise to any doubt.

Therefore, beneficial construction has to be applied with a few safeguards.

State of West Bengal Vs. Kesoram Industries Ltd. & Ors
INTRODUCTION

The said case primarily revolves around four matters in issue, namely coal, tea plantation, brick-
earth matters and minor minerals. This case discusses the matters relating to a few entries in the
Union and State lists under the seventh schedule of the constitution of India, which identify with
a few matters of taxation and also the levy of cess. It also explains the separation of taxation powers
of Union and States.

FACTS

In this case, initially, the proceedings were between Kesoram Industries Ltd. and Coal India Ltd. The
case went to the Calcutta High Court through writ petition. The State of West Bengal turned felt
wronged by the decision of the divisional bench of Calcutta High Court which had struck down some
of the levies by way of cess on coal as unconstitutional for want of legislative competence. The High
Court placed reliance mainly on two decisions of this Court, namely, India Cement Ltd. and Ors. v.
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State of Tamil Nadu and Ors , (Seven- Judges Bench decision) and Orissa Cement Ltd. V. State of
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Orissa and Ors . (Three-Judges Bench decision). In both these decisions the levy of cess impugned
therein was struck down as unconstitutional. The provisions of the West Bengal Primary Education
Act, 1973 and the West Bengal Rural Employment and Production Act, 1976, which levied cess were
amended by the West Bengal Taxation Laws (Amendment) Act, 1992 with effect from 1-4-1992.
Cesses were sought to be levied upon certain lands and buildings in the State for raising funds for the
purpose of providing primary education throughout the State and to provide for employment in rural
areas.

Apart from cess on coal bearing land, there were cesses on tea plantation land as well, which were of
a similar nature as the cess on coal-bearing land and were brought into the court via writ petitions.
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The conflicts between earlier decisions of the Supreme Court itself drove the three-judge bench to
allude the matters to a constitutional bench for proper directions. Along with them, the other remaining
matters were additionally put before the constitutional bench.
ISSUES RAISED

1) Whether the West Bengal Taxation Laws (Amendment) Act 1992 was intra vires the
constitution. Or not?
2) Whether the impugned cess within the subject matter of the state list affects any entry of the
Central list.
3) Whether the impugned statutes imposing cess are in pari materia with the statutes which have
been held ultra vires by this Court in India Cement and Orissa Cement case?
4) Whether there exists a distinction between a general subject of legislation and taxation?
5) Whether taxation falls within the residuary powers of the parliament or not?

ARGUMENTS

By appellant:

 The learned counsel for the appellant i.e., State of West Bengal has submitted that having
regard to the real nature of the levy, it clearly falls within the legislative field of Entry 49 in List
II.
 The purpose of levying fee, as per the Preamble to the relevant legislation, is public benefit.
The cesses have been levied by the State Government for securing of welfare to the people by the State
as is enshrined in Part IV of the Constitution of India by providing communication facilities, removal
of illiteracy and rural employment to the poor living below the poverty line. The impugned legislations
levying the cess, do not encroach upon the field covered by the Central legislation

By respondents

 According to the respondents, the cess sought to be levied by the impugned State Legislation
was in the nature of fee.
 Challenges to the validity of levy on tea were made on many grounds. It was submitted:
 firstly, that to bring the levy within the field of Entry 49 of List II it must be directly
upon the land but the levy in question was a tax on production of tea, a subject
covered by Entry 84 of List I
  secondly, that a tax on land must be a constant figure whereas the impugned levy
varies from year to year based as it is on the quantity of tea produced in a tea estate
in a given year
 thirdly, that the definition of 'tea estate' further establishes the absence of any nexus
between 'cess' and the "land”
 fourthly, that the levy is clearly invalid in view of the Seven-Judges Bench decision
of this Court in India Cement and the three- Judges Bench decision in Orissa
Cement.

 Contentions regarding Brick-Earth Matters were that brick-earth is a minor mineral to which the
Mines and Minerals Development and Regulation Act, 1957, applies and by virtue of Section 2
of the Act by reference to Entry 54 in Schedule I of the Constitution, the field relating to such
minor minerals is covered by the Central Legislature and hence the State Legislations are
incompetent to levy the impugned cess.
 the levy is on the dispatch of minor minerals fee sale.
 the process of manufacturing bricks does not involve any dispatch of the brick-
earth inasmuch as the brick-earth is consumed then and there, on the brickfield
itself, in the process of manufacturing of bricks, and there being no dispatch of
brick-earth, the cess is not leviable.
 the State Government is not empowered to levy any cess on either the extraction
or on the dispatch of brick-earth. The same quantity of brick-earth is subjected
by Central Legislation to payment of royalty which is a tax.

 On behalf of the writ-petitioners, the SADA Cess Rules as also the legislative competence of the
State Legislature was challenged on the ground that the MMDR Act, 1957 the State
Legislature didn’t have power to enact the impugned law and levy the impugned cess.
 It was also submitted that the impugned cess would have the effect of adding to the royalty already
being paid which was ultra vires the power of the State Government as that power was exercisable
only by the Central Government.

JUDGMENT
With respect to the first issue, the Hon’ble Supreme Court held that West Bengal Taxation Laws
(Amendment) Act 1992 was intra vires the constitution. Merely because the quantum of coal produced and
dispatched or the, quantum of mineral produced and dispatched from the land is the factor taken into
consideration for determining the value of the land, it does not become a tax on coal or minerals. The
Central legislation has not placed any limitation on the power of the States to legislate in the field of
taxation on mineral rights/land. In either case, the impugned cess is covered by Entries 49 and 50 of List II.
With regard to the tea matters, the court upheld the decision given in Goodricke Group Ltd. and Ors.
v. State of West Bengal and Ors where the impugned levy on tea estates as levied by the West Bengal
Taxation Laws (Second Amendment) Act 1989, was s held to be intra vires the Constitution. The
impugned cess is a tax on tea-bearing land, a well-defined Classification and is covered by Entry 49 in
List II.
With regard to the brick earth matters, it was held that no detrimental effect was there on the
constitutional validity of the cess on the land /on mineral rights in brick earth. In either case,it would be
covered by Entries 49 or 50 in List II.
With regard to the minor-mineral matters, the levy of cess also falls within the scope of Entry 49 of
List II in as much as the levy on mineral rights does not contravene any of the limitations imposed by
the Parliament, it was also covered by Entry 50 of List II.

As far as second issue is concerned, it was held that even if the doctrine of pith and substance is
applied, it was held that the State legislature has not encroached upon the legislative field of the
Parliament having regard to the underlying object of the 1953 Act and the 1957 Act.

 With regard to third issue, as tax on lands and buildings in terms of Entry 49 of List II
of the Seventh Schedule of the Constitution of India can be levied on land as a unit and not
otherwise. As minerals bearing lands cannot be treated as an independent unit in respect of
which tax can be invoked, the impugned Acts were be held to be unconstitutional. Moreover, no
levy by way of cess can be imposed by reason of the impugned Acts either on the mining
leasehold or the tea estate containing standing crops as also houses and buildings, in view of the
definitions of 'land' and 'immovable property' contained in the Bengal Cess Act, 1880.

 Considering the fourth issue, SC held that in the scheme of the Lists in the Seventh
Schedule, there exists a clear distinction between the general subjects of legislation and heads
of taxation. As the fields of taxation are to be found clearly enumerated in Lists I and II, there
can be no overlapping. There may be overlapping in fact. Entries 52, 53 and 54 in List I are
general entries. Fields of taxation covered by Entries 49 and 50 in List II continue to remain
with State Legislatures.
 Entries in the three lists are not powers of legislation but fields. The primary power to tax may
be used for regulating an industry, commodity or any other activity. Power to regulate will not
include the power to tax. Union’s legislative power does not deprive state’s power to tax. The
provision for levying a cess, whether by tax or fee by state legislature, but without any intention
of regulation and control of the subject of levy does not encroach regulation and control or
development functions belonging to Central government due to the levy passed on to the buyer.

 With regard to fifth issue, the residuary power of legislation in the field of taxation
spelled out by Article 248(2) and Entry 97 In List I can be applied only to such subjects that are
not included in Entries 45 to 63 of List II. Thus, taxes on lands and buildings in Entry 49 of List
II cannot be levied by the Union.

Therefore, in this case, the Apex court dismissed the appeal of the State of West Bengal and allowed
the writ petitions. Also leave was granted in the Special Leave Petitions.

Observations regarding interpretation in this case

 Principles of interpretation on the conflicting entries cannot be placed in a straight-jacket formula.

Rule of interpretation will vary, depending upon the subject matter of legislation.
 The legislature drafts a piece of legislation by making the choicest selection of words so as to give
expression to its intention. The ordinary rule of interpretation is that the words used by the
legislature shall be given such meaning as legislature has chosen to assign them.

 The object underlying the legislative enactment is relevant for the purpose of upholding the
validity of a statute.
 The interpretation is the exclusive privilege of the Courts and they try to place such meaning on
the words as would effectuate the purpose of legislation avoiding absurdity, unreasonableness,
incongruity and conflict. That interpretation would be preferred which would avoid conflict
between two fields of legislation.
 The Entries in List I and List II must be so construed as to avoid any conflict. If there is
conflict, the correct approach is to find an answer to three questions step by step as under:

 Is it still possible to effect reconciliation between two Entries so as to avoid

conflict and overlapping?
 In which Entry the impugned legislation fails by finding out the pith and
substance of the legislation?

 Having determined the field of legislation wherein the impugned legislation fails
by applying doctrine of pith and substance, can an incidental trenching upon another
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field of legislation be Ignored?