Final Projconcept Of ‘mischief Rule’ect Body

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Introduction-

Aim and ObjectiveThe aim of this project is to understand the concept of „mischief rule‟ by understanding the history and reason for its existence while referring to the Heyden‟s case. Objective of this project is to look into important aspects like „advantages‟ and „disadvantages‟, relevance in modern times (specifically, in India) and a comparison with the other two rules, i.e – The Golden Rule and The Literal Rule.

Research MethodologyResearch will be doctrinal in nature. All the data and statistics to be presented in the project will be taken from the pre-established research from notable writers. The idea is to gather information from such writers and online database, study and compare them and to present such theories and data in the project.

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History of Mischief rule – Haydon’s Case: The „Mischief rule‟ was established in the Hayden‟s case. The facts of the case were – There was an academic institute called „Ottery‟ which used to give tenancy of certain manor to a person called as „Ware‟. Also, the heir of such person was known as ware as well. The tenancy was established by copyhold, an ancient device for giving a parcel of a manor to a tenant, usually in return for agricultural services, which was something like a long-running lease with special privileges for each party. Ware and his son held their copyhold to have for their lives, subject to the will of the lord and the custom particular to that manor. The Wares‟ copyhold was in a parcel also occupied by some tenants at will. Later, the college then leased the same parcel to another man, named Heydon, for a period of eighty years in return for rents equal to the traditional rent for the components of the parcel. Less than a year after the parcel had been leased to Heydon, Parliament enacted the Act of Dissolution. The statute had the effect of dissolving many religious colleges, including Ottery College, which lost its lands and rents to Henry VIII. However, a provision the Act kept in force, for a term of life, any grants made more than a year prior to the enactment of the statute. So, the question was whether the tenancy right of Hayden is valid or void, also what will be the validity of the lease? The ruling was based on an important discussion of the relationship of a statute to the pre-existing common law. The court concluded that the purpose of the statute was to cure a mischief resulting from a defect in the common law. Therefore, the court concluded, the remedy of the statute was limited to curing that defect. Judges are supposed to construe statutes by seeking the true intent of the makers of the Act, which is presumed to be pro bono publico, or intent for the public good. He laid out four important points to be concerned when such issue arises. Those points were – 1. What was the common law before the making of the Act? 2. What was the mischief and defect for which the common law did not provide?

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3. What remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth? 4. The true reason of the remedy. By the application of the rules laid above, it can be inferred that the tenancy right of Hayden is valid, because the Act of Dissolution clearly states a condition upon which the lease can exist and would not be terminated i.e. the time period criteria. But, concerning the validity of the lease which was granted to third person by Haydon, as the law did not provide for it, it was void.

Purposive approach: Mischief rule tries to find out the actual purpose of the statute when ambiguity arises. Such approach is called purposive approach. The purposive approach, sometimes referred to as "purposivism", purposive construction, purposive interpretation, or the "modern principle in construction" is an approach to statutory and constitutional interpretation under which common law courts interpret an enactment (that is, a statute, a part of a statute, or a clause of a constitution) in light of the purpose for which it was enacted. The historical source of purposive interpretation is the mischief rule established in Heydon's Case. Purposive interpretation was introduced as a form of replacement for the mischief rule, the plain meaning rule and the golden rule to determine cases. Purposive interpretation is exercised when the courts utilize extraneous materials from the pre-enactment phase of legislation, including early drafts, committee reports, white papers, etc. The purposive interpretation involves a rejection of the exclusionary rule. Purposive interpretation is a legal construction, which combines elements of both the subjective and objective. The subjective elements include the intention of the author of the text, whereas the objective elements include the intent of the reasonable author and the legal system‟s fundamental values.1

1

Barak, Aharon. Purposive Interpretation In Law. Princeton University Press (New Jersey), 2005, p. 88

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The mischief rule saw further development in the following cases – a) Corkery v Carpenter (1951). In a decision of the Court of King‟s Bench, the Court had to decide whether a bicycle could be classified as a carriage. According to S.12 of the Licensing Act 1872, a person found drunk in charge of a carriage on the highway can be arrested without a warrant. A man was arrested drunk in charge of a bicycle. According to the plain meaning rule a bike is not a carriage. Under the Mischief rule the bicycle could constitute a carriage. The mischief the act was attempting to remedy was that of people being on the road on transport while drunk. Therefore a bicycle could be classified as a carriage. b) In Smith v Hughes (1960), the defendant was charged under the Street Offences Act 1959 which made it an offence to solicit prostitution in a public place. The defendant was soliciting from within private premises (windows or on balconies) so they could be seen by the public without entering into the streets. The court applied the mischief rule holding that the activities of the defendant was within the mischief of the Act, and soliciting from within a house, is soliciting and molesting of the public. Therefore it is the same as if the defendant was outside on the street. c) In Royal College of Nursing of the UK v DHSS (1981), the Royal College of Nursing brought an action challenging the legality of the involvement of nurses in carrying out abortions. The Offences Against the Person Act 1861 makes it an offence for any person to carry out an abortion. The Abortion Act 1967 provided that it would be an absolute defence for a medical practitioner to carry out abortions provided certain conditions were satisfied. Advances in medical science meant surgical abortions were largely replaced with hormonal abortions and it was common for these to be administered by nurses. The courts were responsible for determining whether the nurses performing abortions were acting unlawfully as they were not medical practitioners. The courts found that the Act was intended to provide for safe abortions and that nurses could carry out such abortions.

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Present TimesModern courts continue to apply the rule in a more restricted manner, and generally with a greater regard for the integrity of the statutes which they are interpreting. Driedger puts it this way: “To this day, „‟Heydon‟s Case‟‟ is frequently cited. The courts still look for the “mischief” and “remedy”, but now use what they find as aids to discover the meaning of what the legislature has said rather than to change it.” Driedger goes on to argue that this modern use of the mischief rule ought to be understood as one of the components of what he characterized as the "modern" method of statutory construction, rather than a stand-alone rule serving (as it formerly had), as an alternative to the methods of construction proposed by the plain meaning rule and the golden rule.2 Let us look at a few English cases from 20th and 21st century1. Pepper (Inspector of Taxes) v Hart3 Pepper v Hart is a landmark decision of the House of Lords on the use of legislative history in statutory provisions. The court established the principle that when primary legislation is ambiguous then, in such circumstances, the court may refer to statements made in the House of Commons or House of Lords in an attempt to interpret the core meaning of the legislation. Facts of this case are, Hart and nine others were teachers at Malvern College, where from 1983 to 1986 they took advantage of a "concessionary fee" scheme, which allowed their children to be educated at rates one fifth of those paid by other pupils. They disputed the amount of tax they had to pay under the 1976 Finance Act, Section 63 of which said that: „The cash equivalent of any benefit chargeable to tax ... is an amount equal to the cost equivalent of the benefit, less so much (if any) of it as is made good by the employee to those providing the benefit ... the cost of a benefit is the amount of any expense incurred in or in connection with its provision, and (here and in those subsections) includes a proper proportion of any expense.‟ The Inland 2

Elmer Driedger, „‟The Construction of Statutes‟‟. Second Edition. Toronto: Butterworths, 1983, p. 75.

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[1992] UKHL 3

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Revenue, attempting to tax this benefit, argued that the "cost" of the benefit meant an average of the cost of providing it. Hart and his fellow teachers disputed this and argued that it was instead marginal cost, saying that other than food, stationery, laundry and similar there was no cost to the school due to the children's presence that would not be there already. Initially, the judgment went into the favour of Hart and others, as it was held that the "concessionary fee" covered all costs incurred by the school in the course of educating those particular pupils. But when the case was taken to High Court, court decided to look into the debate of the houses while the above mentioned Finance Act was being enacted, during which, ministers had made statements in the House of Commons which supported the idea that such "benefits" should be excluded from tax. And Hart‟s plea was dismissed. Lord Griffiths on the purposive approach: "The days have passed when the courts adopted a literal approach. The courts use a purposive approach, which seeks to give effect to the purpose of legislation and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted." Lord Brown Wilkinson: "My Lords, I have come to the conclusion that, as a matter of law, there are sound reasons for making a limited modification to the existing rule (subject to strict safeguards) unless there are constitutional or practical reasons which outweigh them. In my judgment, subject to the questions of the privileges of the House of Commons, reference to Parliamentary material should be permitted as an aid to the construction of legislation which is ambiguous or obscure or the literal meaning of which leads to an absurdity. Even in such cases references in court to Parliamentary material should only be permitted where such material clearly discloses the mischief aimed at or the legislative intention lying behind the ambiguous or obscure words. In the case of statements made in Parliament, as at present advised I cannot foresee that any statement other than the statement of the Minister or other promoter of the Bill is likely to meet these criteria." This case law also faced criticism. During its review, it was questioned whether the statement made by minister was included into the meaning of statute or not, or whether such statement was accepted by the majority of house or not. Academic Aileen Kavanagh questioned the logic used; the House of Lords was essentially saying that, where a minister has made a statement about an act's intent that was not questioned by Parliament, that statement can be used as evidence. However, there are many reasons why Members of Parliament might

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not question a statement, and this does not necessarily indicate that they approve of it; in the case of the Finance Act, for example, it could simply be that as the statement was not going to be added to the statute, they found no reason to actively oppose it.4 2. A v Hoare5 D, known as the Lotto rapist (convicted of several sexual assaults, including rape) attempted to rape V in 1989. He was given a life sentence. At that time, he was not worth suing for damages. In 2004, on day release from prison he bought a lottery ticket and won £7 million. So in 2005, V sued for personal injury, but the claim was rejected by the High Court because her claim had been brought after the six-year limit imposed by the Limitation Act 1980. The Limitation Act 1980 requires a claimant to bring an action against her assailant for injury within 6 months. However, Parliament could not have intended to exclude those who had been intentionally injured. Courts had a discretion under s 33 of the Act to extend the time in the claimants' favour. Time ran from when the claimant knew of the injury, which was both a subjective and objective test not whether the claimant considered it serious enough to justify proceedings but whether she would 'reasonably' have done so. Once it had been ascertained what the claimant knew and what she should be treated as having known, the actual claimant dropped out of the picture.

4 5

Kavanagh (2005) p. 98 [2008] HL

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Indian ContextWithin the context of law, the mischief rule is a rule of statutory interpretation that attempts to determine the legislator's intention. Originating from a 16th century case in the United Kingdom, its main aim is to determine the "mischief and defect" that the statute in question has set out to remedy, and what ruling would effectively implement this remedy. When material words are capable of bearing two or more constructions the most firmly established rule for construction of such words "of all statutes in general" is the rule laid down in Heydons case, also known as mischief rule. This rule is also known as purposive construction. The rules lay down that the court should adopt the construction which shall suppress the mischief and advance the remedy. In Indian context the rule was best explained in the case of Bengal immunity co. v State of Bihar. Facts of the case The appellant company is an incorporated company carrying on the business of manufacturing and selling various sera, vaccines, biological products and medicines. Its registered head office is at Calcutta and its laboratory and factory are at Baranagar in the district of 24 - Perganas in West Bengal. It is registered as a dealer under the Bengal Finance (Sales Tax) Act and its registered number is S.L. 683A. Its products have extensive sales throughout the Union of India and abroad. The goods are dispatched from Calcutta by rail, steamer or air against orders accepted by the appellant company in Calcutta. The appellant company has neither any agent or manager in Bihar nor any office, godown or laboratory in that State. On the 24th October, 1951 the Assistant Superintendent of Commercial Taxes, Bihar wrote a letter to the appellant company which concluded as follows :"Necessary action may therefore be taken to get your firm registered under the Bihar Sales Tax Act. Steps may kindly be taken to deposit Bihar Sales Tax dues in any Bihar Treasury at an early date under intimation to this Department". On the 18th December, 1951 a notice was issued by the Superintendent, Commercial Taxes, Central Circle Bihar, Patna, calling upon the appellant company (i) to apply for registration and (ii) to submit returns showing its turnover for the period commencing from the 26th January, 1950 and ending with the 30th September, 1951. This notice was issued under section 13(5) of the Bihar Sales Tax Act, 1947 (hereinafter called the Act) read with rule 28. It was drawn up according to Form No. 8 prescribed by the rules and was headed "Notice of hearing under section 13(5)'. The reason for issuing this notice, as recited therein, was that on information which had come to his possession the

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Superintendent was satisfied that the appellant company was liable to pay tax but had nevertheless wilfully failed to apply for registration under the Act. Suffice it to say that while the appellant company denied its liability on the ground, inter alia, that it was not resident in Bihar, it carried on no business there, none of its sales took place in Bihar and that it did not collect any sales tax from any person of that State, the Bihar Sales Tax authorities maintained that under section 33, which was substantially based on article 286 of the constitution and was inserted in the Act by the President's Adaptation Order promulgated on the 4th April, 1951, all sales in West Bengal or any other State under which the goods had been delivered in the State of Bihar as a direct result of the sale for the purpose of consumption in that State were liable to Bihar Sales Tax. Eventually on the 29th May, 1952 the Assistant Superintendent of Sales Tax, Bihar called upon the appellant company to comply with the notice by the 14th June, 1952 and threatened that, in default of compliance, he would proceed to take steps for assessment to the best of his judgment. The appellant company by its letter dated the 7th June, 1952 characterized the notice under section 13(5) as ultra vires and entirely illegal and called upon the Superintendent to forthwith rescind and cancel the same. On the 10th June, 1952 the appellant company presented before the High Court at Patna a petition under article 226 claiming the reliefs hereinbefore mentioned. The respondents did not file any affidavit in opposition controverting any of the allegations of facts made in the petition and it must, accordingly, be taken that those facts are admitted as correct by the respondents. The High Court dismissed the petition on the 4th December, 1952 but on the next day issued a certificate, under article 132(1) of the Constitution, that the case involved a substantial question of law as to the interpretation of the constitution. Hence the present appeal. The principal question is whether the tax threatened to be levied on the sales made by the appellant company and implemented by delivery in the circumstances and manner mentioned in its petition is leviable by the State of Bihar. This was done by construing article 286 whose interpretation came into question and the meaning granted to it in the case of The State of Bombay v. The United Motors (India) Ltd. was overruled. It raises a question of construction of article 286 of the Constitution. It is a sound rule of construction of a statute firmly established in England as far back as 1584 when Heydon's case was decided that "......... for the sure and true interpretation of all Statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered :-

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1. What was the common law before the making of the Act? 2. What was the mischief and defect for which the common law did not provide? 3. What remedy the Parliament hath resolved and appointed to cure the disease of the Common wealth. 4. The true reason of the remedy; and then the office of all the judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico". This rule is equally applicable to the construction of article 286 of our Constitution. In order to properly interpret the provisions of that article it is, therefore, necessary to consider how the matter stood immediately before the Constitution came into force, what the mischief was for which the old law did not provide and the remedy which has been provided by the Constitution to cure that mischief. Interpretation The position with respect to taxation on sales or purchases of goods that prevailed in the country had better be stated in the language of Patanjali Sastri, C.J. who delivered the majority judgment in the State of Bombay v. The United Motors (India) Ltd.8 it was not necessary that the sale should take place within the territorial limits of the State in the sense that all the ingredients of a sale, like the agreement to sell, the passing of title, delivery of the goods, etc., should have a territorial connection with the State and that, broadly speaking, local activities of buying and selling carried on in the State in relation to local goods would be a sufficient basis to sustain the taxing power of the State, provided of course that such activities ultimately resulted in a concluded sale to be taxed. By Government of India Act, 1935 the Provincial Legislatures enacted Sales Tax laws for their respective Provinces, acting on the principle of territorial nexus; that is to say, they picked out one or more of the ingredients constituting a sale and made them the basis of their sales tax legislation. Whether the territorial nexus put forward as the basis of the taxing power in each case would be sustained as sufficient was a matter of doubt not having been tested in a Court of law. And such claims to taxing power led to multiple taxation of the same transaction by Provinces and cumulation of the burden falling ultimately on the consuming public. This situation posed to the Constitution makers the problem of restricting the taxing power on sales or purchases involving interState elements but they had to maintain the State power of imposing non-

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discriminatory taxes on goods imported from other States, while upholding the economic unity of India by providing for the freedom of inter-State trade and commerce. In their attempt to harmonize and achieve these somewhat conflicting objectives, they enacted articles 286. The above chaos was to cure this mischief of multiple taxation and to preserve the free flow of inter-State trade or commerce in the Union of India regarded as one economic unit without any provincial barrier that the Constitution makers adopted article 286 in the Constitution which runs as follows :286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (a) Outside the State; or (b) In the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation. - For the purposes of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce : Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provision of this clause continue to be levied until the thirty-first day of March, 1951. (3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent". In clause (1)(a) of article 286 the mischief of multiple taxation as cured based on nexus theory. In clause (1)(b) they considered sales or purchases from the point of view of our foreign trade and placed a ban on the States' taxing power in order to make our foreign trade free from any interference by the States by way of a tax impost. In clause (2) they looked at sales or purchases in

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their inter-State character and imposed another ban in the interest of the freedom of internal trade. Finally, in clause (3) the Constitution makers' attention was riveted on the character and quality of the goods themselves are they placed a fourth restriction on the States' power of imposing tax on sales or purchases of goods declared to be essential for the life of the community. The States' legislative power with respect to a sale or purchase may be hit by one or more of these bans. Thus, take the case of a sale of goods declared by Parliament as essential by a seller in West Bengal to a purchaser in Bihar in which goods are actually delivered as a direct result of such sale for consumption in the State of Bihar. A law made by West Bengal without the assent of the President taxing this sale will be unconstitutional because (1) it will offend article 286(1)(a) as the sale has taken place outside the territory by virtue of the Explanation to clause (1)(a), (2) it will also offend article 286(2) as the sale has taken place in the course of inter-State trade or commerce and (3) such law will also be contrary to article 286(3) as the goods are essential commodities and the President's assent to the law was not obtained as required by clause (3) of article 286 . This was the interpretation given to Honble J Das. The Legislatures of the States were empowered by article 246(3) read with Entry 54 of List II to make a law with respect to taxes on sales or purchases of goods and hence the State Legislatures considered themselves free to make a law imposing tax provided they had some territorial nexus with such sales or purchases. This resulted in prejudicing the interests of the ultimate consumers and also hampered the free flow of inter-State trade or commerce. So the Constitution makers had to cure that mischief. The first thing that they did was to take away the States' taxing power with respect to sales or purchases which took place outside their respective territories. This they did by clause (1)(a). If the matter had been left there, the solution would have been imperfect, for then the question as to which sale or purchase takes place outside a State would yet have remained open. So the Constitution makers had to explain what an outside sale was and this they did by the Explanation set forth in clause (1). It is quite obvious that it created a legal fiction. Legal fictions are created only for some definite purpose. Here the avowed purpose of the Explanation is to explain what an outside sale referred to in sub-clause (a) is. The judicial decisions referred to in the dissenting judgment in The State of Travancore-Cochin v. Shanmugha Vilas Cashew Nut Factory9 and the case of East End Dwellings Co. Ltd. v. Finsbury Borough Council10 clearly indicate that a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. It should further be remembered that the dominant, if not the sole, purpose of article 286 is to place restrictions on the legislative powers of the States by article 286 by imposing several bans.

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For clause 2 it was said that until Parliament by law made in exercise of the powers vested in it by clause (2) provides otherwise, no State can impose or authorise the imposition of any tax on sales or purchases of goods when such sales or purchases take place in the course of inter-State trade or commerce. It was decided that Bihar Sales Tax Act, 1947 in so far as it purports to tax sales or purchases that take place in the course of inter-State trade or commerce, is unconstitutional, illegal and void. The Act imposes tax on subjects divisible in their nature but does not exclude in express terms subjects exempted by the Constitution. In such a situation the Act need not be declared wholly ultra vires and void. Until Parliament by law provides otherwise, the State of Bihar do forbear and abstain from imposing sales tax on out-of-State dealers in respect of sales or purchases that have taken place in the course of inter-State trade or commerce even though the goods have been delivered as a direct result of such sales or purchases for consumption in Bihar. The State must pay the costs of the appellant in this Court and in the court below. Bhagwati, J. had agreed to the above interpretation. Dissenting Judgment: Venkatarama Ayyar, J. , Sinha, J. along Jagannadhadas, J. had declined the above interpretation. The Explanation to article 286(1)(a) of the Constitution has created a legal fiction as a result of which a transaction of sale or a purchase partaking of an inter-State character has been treated as a domestic transaction. The fiction has localized sales or purchases contemplated by the Explanation, by converting such transactions as would otherwise have been inter-State sales or purchases into sales or purchases inside one State in a sense in which it is placed in a class distinct and separate from what is referred to as sales or purchases "outside the State" in the main body of article 286(1)(a) which prohibits imposition of tax by any State. The main purpose of creating the fiction is to prevent multiple taxation of the same transaction, but, it may be added, not altogether to stop the taxation of such transactions. The next question is how far the legal fiction should be carried in its actual application. The fiction created by the Explanation brings such a sale within the taxing powers of the State within which such a sale is said to have taken place. Such a result is brought about not by holding that the Explanation has conferred positively the power on the relevant State to impose sales tax, but by holding that such an inside sale is beyond the scope of the prohibition contained in the main body of article 286(1)(a) which interdicts the imposition of tax on a sale "outside the State". The Explanation has got to be read as an integral part of article 286(1)(a) and thus read, it means negatively that a sale or purchase outside a State cannot be taxed; and by necessary implication, that a sale or purchase inside a State may be taxed by that State as

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falling outside the mischief of the prohibition directed against the imposition of a tax on a sale or purchase of goods outside a State; in other words, as soon as a sale or purchase of goods is declared to be outside the pale of the prohibition contained in article 286(1)(a), the State's power of imposing a tax contained in article 246 read with item 54 of List II of 7th Schedule comes into operation. The view of the former 3 judges goes beyond the purpose of the creation of the fiction which admittedly was to prevent multiple taxation. The view as propounded by them besides preventing multiple taxation goes to the length of prohibiting any imposition of sales tax by any State. Such was not the intention of the Constitution. Whereas the imposition of multiple sales tax on transactions of sale or purchase may be an obstacle to the free flow of inland trade and commerce, the imposition of sales tax by a single State in which the sale is deemed to have taken place by virtue of the Explanation cannot be predicated as having such an effect. Clause (2) of article 286 of the Constitution is subject to article 286(1)(a) read with the Explanation. Finally, the former view was adopted and it was declared that until Parliament by law provides otherwise, the State of Bihar do for bear and abstain from imposing Sales Tax on out-of-State dealers in respect of sales or purchases that have taken place in the course of inter-State trade or commerce even though the goods have been delivered as a direct result of such sales or purchases for consumption in Bihar.

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ConclusionAfter analysing the complete information from various primary and secondary sources, a final conclusion would be provided in the final draft of the research work.

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Bibliography1. 2. 3. 4.

Principles of Statutory Interpretation by Justice G P Singh Interpretation of Statutes by NS Bindra Interpretation of statutes by PM Bakshi Introduction to interpretation by Dr. Avtar Singh