Liberal and Beneficial Interpretation of Welfare Legislation Cannot Surpass the Limitations Placed by the Statute
Dalco Engineering Private Ltd. v. Satish Prabhakar Padhye, CIVIL APPEAL NO.1886 OF 2007 and Fancy Rehabilitation Trust v. Union of India, CIVIL APPEAL NO. 1858 OF 2007. Date of Judgment 31-03-10
Two instances relating to actions taken by companies incorporated under the Companies Act were under scrutiny in this judgment, which it was argued that are in violation of the provisions of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. [PDA]
The termination of service of an employee and termination of contract held by a trust for the welfare of the disabled were under scanner. The major issue was whether a company incorporated under the Companies Act fall within the purview of Sec. 47 of the PDA. Section 47 warrants that “(1) No establishment shall dispense with, or reduce in rank, an employee who acquires a disability during his service”. The expression establishment is defined on Sec. 2 (k) inter alia “…a corporation established by or under a Central, Provincial or State Act …”
The pivot of the case was whether a company incorporated under the Companies Act can be treated as an establishment under a Central Act.
Court distinguished between companies established by an Act and under an Act and held that ‘a company is not established under the Companies Act.’
The interpretation angle
This is an interesting case for a student of interpretation of statutes as three notions of statutory interpretation was argued in this case
1. beneficial interpretation
2. use of marginal note
3. legislative intention
One of the arguments was hinged on the principle of beneficial interpretation of a welfare statute. It was canvassed that the expression “establishment” in Sec. 47 has to be read liberally to include companies registered under the Companies Act taking into consideration the objectives of the Act. While endorsing the fact that social welfare legislation should be treated differently, court drew the interpretational limits. Interpretation, the court said, cannot stretch beyond the limit intended by the legislation however beneficially it may be interpreted. The interpretation shall not militate against the very Act.
By using the marginal note and legislative intentions as borne out from the Act as a whole, the court found that including companies incorporated under the Act as ‘establishment’ will run against the legislative intent.
"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.