C H A N A KYA N AT I O N A L L AW

UNIVERSITY

PROJECT OF INSURANCE LAW ON

INTERPRETATION OF STATUTES IN REFERNECE TO
INSURANCE LAW

SUBMITTED TO :
Dr. SHAIWAL SATYARTHI
(Assistant Professor, Law)

SUBMITTED BY : Aishwarya shree

1
 511
th
VIIIth SEM ,4 year

ACKNOWLEGMENT

I owe a great many thanks to a great many people who helped me in writing this project .My
deepest thanks Dr. Shaiwal Satyarthi for guiding and correcting the documents of mine with
attention and care. He had taken the pain of going through my project and making the correction
whenever needed .
I express my thanks to Prof. Dr. A. Lakshminath, Vice Chancellor, CNLU for extending his
support .
I would to thank my institution and faculty and without whom the project would have been a
distant dream. I also extend my heartiest gratitude to my family, friends and well-wishers.

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RESEARCH METHODOLOGY
Method of Research

The researcher has adopted a purely doctrinal method of research. The researcher has
made extensive use of the library at the Chanakya National Law University and also the
internet sources.

Aims and Objectives:

The aim of the project is to present a detailed study of the Interpretation Of Insurance Clauses.

Scope and Limitations:

The project deals with Interpretation Of Insurance Clauses.

Sources of Data:

The following secondary sources of data have been used in the project-

1. Books

2. Websites

Method of Writing:

The method of writing followed in the course of this research paper is primarily
analytical.

Mode of Citation

The researcher has followed a uniform mode of citation throughout the course of this
research paper

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CONTENTS

Introduction4

Interpretation of statutes...5

Nature of Insurance..12

Interpretation of insurance law.17

Conclusion21

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 INTRODUCTION

It is a well established fact that the legislature is highest law making body and the court is merely
an interpreter of the law. But actually the fact is by interpreting the law the court can make
comprehensive changes in the actual implementation and overall maneuver of the law. This can
be easily be gathered by analyzing the statutory interpretation made by Indian judiciary and its
effect on India and its citizens as a whole. Many times the use of language in the legislation even
does not carry the clear cut meaning in dictionaries. It contains many alternative meanings
applicable in different contexts and for different purposes so that no clear field for the application
of a word becomes identified. In such a situation, importance of interpretation comes into
picture. For proper and healthy application of law, it is important to have uniform expansion of
language or words used by the authorities/law-makers. In a case, if one judge takes the narrow
view and the other the broad one, the law will connote different things for different persons and
soon there will be race for window shopping for justice. Moreover, we always need to keep in
mind that articulating a law is not equal to the execution of law. For the purpose of execution,
proper understanding of law or statute is utmost important and better understanding is only
possible through proper interpretation of the statute. It can be seen that insurance being a social
security legislation and not merely a contract. Therefore it must be seen that this welfare
legislation is interpreted beneficially and in whose favour the law has been made. Therefore
principle of which must be applied is beneficial construction is also known as liberal
construction. It means interpretation of a statute in the widest possible meaning of the language
permitted

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 INTERPRETATION OF STATUTES

It is a well established fact that the legislature is highest law making body and the court is merely
an interpreter of the law. But actually the fact is by interpreting the law the court can make
comprehensive changes in the actual implementation and overall maneuver of the law. This can
be easily be gathered by analyzing the statutory interpretation made by Indian judiciary and its
effect on India and its citizens as a whole.

The living example of such effect is interpretation of Part III (Fundamental Rights) of Indian
Constitution and especially Article 21(1), wider and liberal interpretation of this article by the
Honble Supreme Court of India has granted many fundamental beneficial rights to the citizens
of the country and even ensured actual execution of these rights by liberally interpreting the
concept of locus standi with further evolution of Public Interest Litigation through which any
public spirited person can file a petition on behalf of those who has no access to Court. Such
evolutions with an important art of interpretation have ensured principles of rule of law and
equal justice or justice at door step in the developing country like India. But here it is important
to mention that the manner and expansion of interpretation by judiciary has been criticized by
many and termed as over judicial activism with interference in the field of legislature. This
point has been discussed in detail in the subsequent submission.

Moving further, to understand everything about interpretation which has been gradually evolved
in modern context from ancient Indian rules with the help of follows up of different
rules/doctrines in different situations which has arisen for different statutes. In light of this
evolution, the utmost important aspect to understand for us is the meaning of term statute, the
very first term on which emphasis of the whole submission lies.

The word Statute generally is defined as the written will of the legislature solemnly expressed
according to the forms necessary to constitute it the law of the State. Normally, the term denotes

6
personification of authoritative blueprint and words used in the same constitute part of law.
These blueprints are chief source of law which is known as legislation. The other sources are
precedents and customs. Each of these sources finds its expression in a language or words used
by authorities. Many times the use of language in the legislation even does not carry the clear cut
meaning in dictionaries. It contains many alternative meanings applicable in different contexts
and for different purposes so that no clear field for the application of a word becomes identified.
In such a situation, importance of interpretation comes into picture. For proper and healthy
application of law, it is important to have uniform expansion of language or words used by the
authorities/law-makers. In a case, if one judge takes the narrow view and the other the broad one,
the law will connote different things for different persons and soon there will be race for window
shopping for justice. Moreover, we always need to keep in mind that articulating a law is not
equal to the execution of law. For the purpose of execution, proper understanding of law or
statute is utmost important and better understanding is only possible through proper
interpretation of the statute.

It is of general believed that the law is deemed to be what the Court interprets it to be. The very
concept of interpretation connotes the introduction of elements which are necessarily extrinsic
to the words in the statute.

The term interpretation is defined as the process by which the Courts seek to ascertain the intent
of the Legislature through the medium of the authoritative form in which it is expressed. As
everyone knows, administration of justice by Court is being conducted according to the law and
law requires having some rules of interpretation to ensure just and uniform decisions. The art of
correct interpretation only depend on the ability to read what is stated in plain language, read
between the lines, read through the provision, examining the intent of the Legislature and call
upon case laws and other aids to interpretation.

Such art as popularly known as the rules of interpretation has been evolved in about all legal
jurisprudence. Such an evolution is a result of many considerations starting from general scope,
purpose of the legislation mingled with intention of legislatures and from the legal rights of the
parties independent of the instrument or law in question to many other relevant particulars. In
simple words, this evolution is a logical process which is adopted for determining the true sense

7
of any form of language, the sense which their author intended to convey and to ensure justice as
the end result.

Indian historical rules of interpretation of statute have not got the due recognition in the present
study of rules of interpretation. Many few peoples are aware about the existence of such rules
even in India. But in actual, there are many modern rules whose foundation has been laid down
in ancient rules of interpretation. These ancient Indian rules are popularly known as Mimamsa
Rules of Interpretation.

These rules are primarily for Vedanta and have contributed a lot in formulation and development
of Hindu Law. The basic aim of these rules is to give interpretation of the Vedas, the earliest
scriptures of Hinduism, and to provide a philosophical justification for the observance of Vedic
rituals.

A basic discussion on six important Mimamsa rules is as follow:

1) Upakarma-Upasamhara-

This rule is basically to ensure unity of thought in the beginning as well as in the end and it
further indicates that statute should be read as a whole. There is one basic purpose or intent
which runs through the whole Statute. Moreover, in the very first instant, interpreter should look
into preamble and epilogue at the first;

2) Abhyasa

This rule is an indication of repetitive process, meaning thereby that what has been repeatedly
said is because of legislatures continuous effort to support his aim:

3) Apurvata,

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This rule is an indication of novelty or uncommon nature of the proof. It is to see by this rule
whether there is some thing novel to be achieved by the legislation;[11]

4) Phala,

This rule suggests that there is need to go through word to word of the statute because each
word has specific thing to add on or to indicate upon and the result achieved after doing all this
need to be clearly gone through to achieve a correct conclusion;[12]

5) Atharvada,

This rule indicates help of external aids is useful to interpret any statute. This rule is widely
followed in the modern context;[13]

6) Upapatti

This is the last but most important rule which in literal sense is known as logical deduction. This
rule has its importance in case of ambiguity in the enactment.[14]

These rules of interpretation are Indias one of great achievements, but regrettably few people in
our country are aware about the great intellectual achievements of ancestors and the intellectual
treasury they have bequeathed upon India. As rightly stated by Justice Katju[15] that Maxwell
and Craies usually get quoted on issue of Interpretation but Indian indigenous system of
interpretation is not been quoted even by Indian Lawyers in Indian Courts. Recently one of the
Supreme Court judgments, Ispat Industries Ltd. v. Commissioner of Customs, has refereed these
rules while deciding an appeal under the Customs Tariff Act, 1975. After submitting a historical
perspective, a detailed discussion on modern Indian context upon interpretation of statute
requires much focus for the purpose of present submission. The following part focuses upon the

9
same while enumerating different aspects of rules of interpretation applicable in Indian courts for
statutory interpretation.

CARDINAL RULES OF INTERPRETATION

The rules of interpretation are soul of arid body of legislation. With respect to modern principles
of interpretation, Indian Courts have evolved number of rules of interpretation which can help
them to resolve any sort of difficulty. These rules have major role to play in proper and beneficial
implementation of law under the garb of different rule, expressions of interpretation. But before
detailed discussion upon rules and expressions, it is important to keep in mind that to interpret
any statute, three basic rules or processes are to be followed. These processes are:

1) Primary Rule of Interpretation:

This rule has following steps involved which an interpreter has to follow:

a. Read and analyze a section;

b. Ascertain the primary meaning of the words used;

c. Ascertain the grammatical, literal and plain meaning of the words used in the section.

This rule has further been explained in detail in the name of literal rule of interpretation in the
subsequent submission.

2) Secondary Rule of Interpretation:

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This rule is basically states about application of internal and external aids to ensure proper
interpretation of statute. Application of Internal and External aids has been explained in the
subsequent submission.

3) Final Rule of Interpretation:

Interpretation of every statute must be based upon the aforesaid primary and secondary rules.
But there may be a situation when conflict may arise on simultaneous application of above rules,
to avoid such conflict, final rule i.e. principle of harmonious construction come into picture. This
rule has further been explained in the subsequent submission. Every effort should be made to
ensure that all the primary and secondary rules are simultaneously satisfied.

Here, it is also to be focus that certain specific statutes have specific pattern of Interpretation as
enumerated in numerous case laws. To illustrate this point, following submission is important.

(1) For Penal Statute, it is always need to have a strict interpretation and with respect to mens
rea it is always presumed that it is required to prove in each case unless the statute specifically
provides for the absence of the same;

In the case of State of Andhra Pradesh v. Nagoti Venkataramana , it has been held by the
Supreme Court that in the interpretation of penal provisions, strict construction is required to be
adopted and if any real doubt arises, necessarily the reasonable benefit of doubt would be
extended to the accused.

(2) For Beneficial Statute such as Statutes related to Industry/workmen, it is always important to
have beneficial liberal interpretation.Presently, in the period of social welfare legislation,
beneficial interpretation has become important tool of interpretation of statute.

In the case of Secretary, H.S.E.B v. Suresh & Ors Etc. it has been held by the SC that the
Contract Labour Regulation Act being a beneficial piece of legislation as engrafted in the statute

11
book, ought to receive the widest possible interpretation in regard to the words used and unless
words are taken to their maximum amplitude, it would be a violent injustice to the framers of the
law.

(3) For Constitution, the basic spirit in form of social justice, equity fraternity etc. should run
throughout the interpretation and the interpretation of the Constitutional provisions should be
harmonious and liberal;

In the Case of Menaka Gandhi v. Union of India, the Supreme Court widened the protection of
life and liberty contemplated by Article 21 of the Constitution. The Court ruled that the mere
existence of an enabling law was not enough to restrain personal liberty. Such a law must also be
just, fair and reasonable. This wider interpretation ensured inclusion of many rights under Article
21.

(4) For Taxing Statute, Statutes imposing taxes or monetary burdens are to strictly construe. The
logic behind this principle is that imposition of taxes is also a kind of imposition of penalty
which can only be imposed if the language of the statute clearly says so; in many instances,
liberal or beneficial interpretation has an important role to play in taxing statutes interpretation.

In the case of, Calcutta Jute Manufacturing Co. v Commercial Tax officer the Supreme Court
held that in case of interpreting a taxing statute, one has to look into what is clearly stated. There
is no room of searching the intentions, presumptions1.

1 http://www.lawyersclubindia.com/articles/print_this_page.asp?article_id=5430

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 NATURE OF INSURANCE ACT

Insurance may be described as a social device to reduce or eliminate risk of life and property.
Under the plan of insurance, a large number of people associate themselves by sharing risk,
attached to individual. The risk, which can be insured against include fire, the peril of sea, death,
incident, & burglary. Any risk contingent upon these may be insured against at a premium
commensurate with the risk involved. Insurance is actually a contract between 2 parties whereby
one party called insurer undertakes in exchange for a fixed sum called premium to pay the other
party on happening of a certain event. Insurance is a contract whereby, in return for the payment
of premium by the insured, the insurers pay the financial losses suffered by the insured as a result
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of the occurrence of unforeseen events. With the help of Insurance, large number of people
exposed to similar risks makes contributions to a common fund out of which the losses suffered
by the unfortunate few, due to accidental events, are made good. An insurer is a company selling
the insurance; an insured or policyholder is the person or entity buying the insurance. The
insurance rate is a factor used to determine the amount to be charged for a certain amount of
insurance coverage, called the premium. According to J.B. Maclean, Insurance is a method of
spreading over a large number of persons a possible financial loss too serious to be conveniently
borne by an individual. What is insurance law? Insurance law is the name given to practices of
law surrounding insurance, including insurance policies and claims. Insurance regulation that
governs the business of insurance is typically aimed at assuring the solvency of insurance
companies. Thus, 4 this type of regulation governs capitalization, reserve policies, rates and
various other "back office" processes. Need for insurance All assets have some economic value
attached to them. There is also a possibility that these assets may get damaged/destroyed or
become non-operational due to risks like breakdowns, fire, floods, earthquake etc. Different
assets are exposed to different types of risks like a car has a risk of theft or meeting an accident, a
house is exposed to risk of catching fire, a human is exposed to risk of death/accident. Hence
insurance is required for the following reasons:

Insurance acts as an important tool in providing a sense of security to the society on a whole.
In case the bread earner of a family dies, the family suffers from direct financial loss as family's
income ceases. Life insurance is one alternate arrangement that offers some respite to the family
from financial distress.

The basic need of insurance arises as risks are uncertain and unpredictable in nature. Getting
insurance for an asset does not mean that the asset is protected against risks or its exposure to
risk is reduced, but it actually implies that in case the asset suffers any loss in value due to such
risk, the insurance company bears the loss and compensates the insured by making payment to
him.

Insurance acts as a useful instrument in promoting savings and investments, particularly within
the lower income and middle income families. These savings are used as investments to fuel
economic growth.

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Types of insurance Insurance business is divided into following types of business namely: 1)
Life Insurance, and 5 2) General Insurance a. Marine insurance b. Fire insurance c. Motor
vehicle insurance d. Miscellaneous insurance 3) Reinsurance2

United Nations Declaration of Human Rights 1948 provides: - Every one has a right to
adequate standard of living for health and well being of himself and his family, including
food, clothing, housing, medical care, necessary social services and the right to security
in the event of unemployment, sickness, disability, widowhood, or other lack of
livelihood in circumstances beyond his control.

Under a socialistic system the responsibility of full security would be placed upon the
state to find resources for providing social security. In the capitalistic left to the
individuals. The society provides instruments which can be used in securing this aim.
Insurance is one of aim. In capitalistic society too there is a tendency to provide some
social security by the state under some schemes where members are required to
contribute.

In India, Article 41 of our Constitution requires the State (with in limits of its economic
capacity and development) to make effective provision for securing the right to work, to
education and to provide public assistance in case of unemployment, old age, sickness
and disablement.

Part of the obligations under Article 41 are met by the State through the mechanism of
Life Insurance.

Where breadwinner of family dies, familys income stops to that extent, affecting the
economic condition. Life Insurance provides such alternate arrangement as we have
discussed above. Otherwise another family would have been pushed into the lower strata
of society. The lower strata creates a cost on society. Poor people cost the nation by way
of subsidies etc.

2 http://taxguru.in/wp-content/uploads/2012/11/insurance-hb-1101.pdf

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 Life insurance helps in restoration of the adverse economic condition so caused.

Some of the legislation passed by the Govt. of India to protect the rights and to provide
benefits to the common man as a part of its efforts to provide social security to its
dominions is discussed in brief below:

(a) Workman Compensation Act 1923: This perhaps was the earliest act to be enacted for the
benefits of the workers. Before this Act was passed workers who met with accidents while
performing their duty not only lost their limbs or lives but also were denied any medical aid and
more often than not were simply removed from the job and lost their livelihood placing them and
their families in great difficulty. By passing this act the liability of employer was fixed and he is
now required by law to pay compensation to victims of accidents while on duty. The amount of
compensation has been fixed in accordance with the extent of injury, disability and linked to the
workers salary and age on the date of accident.

(b) Employee State Insurance Act 1948:

The purpose behind this legislation was to provide medical aid to workers and their families
working in industries located in certain notified areas. Under this act a part of the salary a small
amount (at present 1.75%) is deducted from the workmans salary and some part is contributed
by the Employer (at present 4.75%) and the same is deposited with the Employee State Insurance
corp. With the funds thus collected and with more contributions from the state and Central Govt.,
Dispensaries and Hospitals have been set up all over the country where the worker members and
their families are provided health care free of cost. Under this scheme regular periodic payment
are made to workers if they are unable to attend duty due to illness and there is provision for
payment of pension in the case of permanent partial disability or death.

(c) Motor Vehicle Act 1988: The Motor Vehicle Act was amended in 1988 to make Third Party
Liability Insurance compulsory thus no uninsured vehicle is allowed to ply the roads or in any
public place in India. The need of this enactment was felt due to the growing number of vehicles
and the increasing number of accidents causing injury and death of the people involved in the
accident and not being able to get relief from the owner/ driver of the vehicle because of long
protracted legal battle involved, which many victims could not afford. The Act now provides that

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irrespective of the fact that the fault was of the driver/ owner or not (Nofault) the victim of an
accident will be entitled to a payment of Rs. 50,000/- in case of death and Rs. 25,000/- in the
case of grievous bodily injury. Motor Accident Claim Tribunals (MACT) have been set up by the
State Government to provide speedy redressal of Third Party claims. Damage to property of
Third party is also covered and the limit is Rs.6,000/-. Motor Vehicle Act also provides for the
creation of a Solatium Fund to cater to the victims of Hit and Run cases. The fund is created by
the contribution from Insurance companies, state and central Government and the victims of Hit
& Run cases are entitled to receive Rs.25,000/- in case of death and Rs.12,500/- in the case of
grievous bodily injury.

(d) Public Liability Act 1991:

The Bhopal Gas tragedy of 1984, which resulted in many deaths and caused untold suffering to
lakhs of people prompted the enactment of this legislation. To recap the incident, poisonous gas
escaped from the manufacturing plant of Union Carbide leading to one of the worst industrial
disasters of recent times. The victims even now; 17 years later are yet to get adequate relief and
continue to suffer. The public liability act now makes it compulsory for all individuals,
companies, industries involved in handling of hazardous substances to insure against any
untoward happening so that immediate succor is made available to the victims from the
Insurance companies. Other than passing legislations to improve social security the Government
also initiated certain schemes under which Insurance is provided to the economically and
socially backward people and workers of the unorganized sector at highly subsidized rates. Some
of the schemes introduced by the Govt. of India are

(e) (PASSS) Personal Accident Social Security Scheme: Introduced in 1985 for the benefit of
Poor families i.e. (whose income does not exceed Rs. 7,200 per year). The scheme provided for a
payment of Rs.3,000/- in the event of death due to an accident of any person in the age group of
18 to 60 who is the earning member of the poor family. The premium is borne by the Central
Government and the expenses for implementation of the scheme by the state Government.

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(f) (NAIS) National Agricultural Insurance Scheme or the (RKBY) Rashtriya Krishi Bima Yojna
introduced in 1999 with the objective of providing Insurance coverage and financial support to
farmers in the event of failure of crops as a result of calamities, pests and diseases. The premium
is low and 50% subsidy in premium is allowed to small & marginal farmers which are shared by
the Central and State Government.

(g) Hut Insurance Scheme: Introduced in 1988, for the benefit of very poor families (i.e. those
whose annual income does not exceed Rs.4,800/-p.a.). The scheme provides that in case of
destruction of Hut due to fire, compensation of Rs.1,000/ - for hut & Rs.500/- for belongings
shall be paid. The premium is borne by the Central Government. In addition, to the above
schemes the Government has also introduced insurances at subsidized rates for farmers (cattle
Insurance), for women (Raj Rajeshwari Mahila Kalyan Yojna), for the girl child (Bhagyashree
child welfare policy) and Gramin Personal Accident policy etc. for the benefits of the common
people. These shall be discussed later on in the course (under GIC Products) but all this goes to
show how through legislations or through Govt. sponsored schemes the Insurance sector acts as a
tool for implementation of social security measures3.

3 http://www.nios.ac.in/media/documents/vocinsservices/m2--f2.pdf

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 INTERPRETATION OF INSURANCE CONTRACT

It can be seen that insurance being a social security legislation and not merely a contract.
Therefore it must be seen that this welfare legislation is interpreted beneficially and in whose
favour the law has been made. Therefore principle of which must be applied is beneficial
construction is also known as liberal construction. It means interpretation of a statute in the
widest possible meaning of the language permitted. The mischief in the language is remedied by
liberal and beneficial construction. Beneficial construction is an interpretation to secure remedy
to the victim who is unjustly denied of relief. Such beneficial construction is mainly applicable in
social welfare and labour legislations. Beneficial construction a. Wider Meaning In Beneficial
construction, wider meaning is given instead of the usual and natural meaning of the language of
the statute. Such wider meaning helps the victim secure relief unjustly denied to him. In Forsdike
v Colquhoun, the court held that if an enactment requires that public houses are to be closed at
certain hours on Sundays then it means that it does not include Christmas days. Here beneficial
construction is to be given to exempt Christmas from Sundays so that on Christmas day public
houses need not be closed. In Re Hale, the words soldier being in actual military service was
held to include a territorial officer who has received orders to join his unit. Statutes granting
power are sometimes broadly interpreted. In M/s Ethiopian Airlines v M/s STIC Travels Pvt Ltd,
the Supreme court held that the object of beneficial legislation, in case of ambiguities, is resolved
by granting rather than denying the benefit.

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In Steel Authority of India v National Union Water Front Workers, the rule of literal
interpretation is to be given a go by, only when provisions are vague or obscurely worded. b.
Suppression of mischief The duty of the judge is to make construction of a statute so as to
suppress the mischief and advance the remedy. In John Calder ( Publications) Ltd v Powell, By
Sec1 (1) of the obscene publications Act,1959, the court gave a wide interpretation to the term
depravity and corruption not merely confining them to sexual matters but to other matters
too. c. Industrial legislation In Industrial legislations, the application of beneficial construction is
more witnessed. d. Jurisdictional/ procedural requirements Provisions relating to procedural
requirements namely giving of notice often receive beneficial construction. Statute relating to
the jurisdiction or procedure of the court has received beneficial construction. e. Genus includes
Species The language of the statute is generally extended to new things which could not have
been known at the time of enactment. If the Act deals with genus, species is also included.
E.g. Bicycles were considered to be carriages under the highway Act, 1835. f. De minmus non
curat lex The law does not concern itself with trifles or negligible things or acts. While
interpreting trivial acts are ignored. The objectives which the legislature is presumed not to
intend must be avoided. E.g. To break from prison would not apply to a prisoner who broke
out of prison while it was on fire to save his life. Beneficial construction or liberal construction
has been receiving more attention as most of the legislations are social welfare legislations and
hence rules of beneficial interpretation has become an important branch of study. When the
literal meaning of the statute defeats the objective of the legislature, the court may depart from
the dictionary and instead give it a meaning which will advance the remedy and suppress the
mischief. This supports the initial and modern approach that is to effectuate the object and
purpose of the act. The main objective by extending the meaning of the statute is to ensure that
its initial purpose (public safety, maintenance of law and order) is justified. This rule looks into
the reasons as per why the statute was initially enacted and promotes the remedial effects by
suppressing the mischief. Though the rule almost covers the main grounds of the statute but
cannot be applied to Fiscal statutes. When a word is ambiguous i.e. if it has multiple meanings,
which meaning should be understood by that word? This is the predicament that is resolved by
the principle of Beneficial Construction. When a statute is meant for the benefit of a particular
class, and if a word in the statute is capable of two meanings, one which would preserve the
benefits and one which would not, then the meaning that preserves the benefit must be adopted.

20
Omissions will not be supplied by the court, only when multiple meanings are possible, can the
court pick the beneficial one. Thus, where the court has to choose between a wider mean that
carries out the objective of the legislature better and a narrow meaning, then it usually chooses
the former. Similarly, when the language used by the legislature fails to achieve the objective of a
statute, an extended meaning could be given to it to achieve that objective, if the language is
fairly susceptible to the extended meaning. This is evident in the case of B Shah vs. Presiding
Officer, AIR 1978, 2 1 where Section 5 of Maternity Benefits Act, 1961 was is question, where
an expectant mother could take 12 weeks of maternity leave on full salary. In this case, a woman
who used to work 6 days a week was paid for only 6x12=72 days instead of 7x12=84 days. SC
held that the words 12 weeks were capable of two meanings and one meaning was beneficial to
the woman. Since it is a beneficial legislation, the meaning that gives more benefit to the woman
must be used. Beneficial Construction is a tendency and not a rule. The reason is that this
principle is based on human tendency to be fair, accommodating, and just. Instead of restricting
the people from getting the benefit of the statute, Court tends to include as many classes as it can
while remaining faithful to the wordings of the statute. For example, in the case of Alembic
Chemical Works vs. Workmen AIR 1961, an industrial tribunal awarded more number of paid
leaves to the workers than what Section 79(1) of Factories Act recommended. This was
challenged by the appellant. The Supreme Court held that the enactment being a welfare
legislation for the workers, had to be beneficially constructed in the favour of worker and thus, if
the words are capable of two meanings, the one that gives benefit to the workers must be used.
Similarly, in U.Unichoyi vs. State of Kerala, the question was whether setting of a minimum
wage through Minimum Wages Act, 1948 is violative of Article 19(1)(g) of the Constitution
because the Act did not define what is minimum wage and did not take into account the capacity
of the employer to pay. It was held that the Act is a beneficial legislation and it must be construed
in favour of the worker. In an under developed country where unemployment is rampant, it is
possible that workers may become ready to work for extremely low wages but that should not
happen4.

4 http://sip.ucoz.com/Executive/Module_1/GCL/interpretation_of_statutes.pdf

21
CONCLUSION

Insurance has become the necessity tool for our life. It not only provides security but also saving
for future. At younger age the necessity may not be felt but as the man grows old it starts feeling
the responsibility towards his family. The insurance also helps the economic development of the
country as Government gets the huge funds at nominal rate of interest for longer period.
Moreover, if the people are taking care for themselves about their present and future needs then
Government will spend their funds in more productive manner.But actually the fact is by
interpreting the law the court can make comprehensive changes in the actual implementation and
overall maneuver of the law. This can be easily be gathered by analyzing the statutory
interpretation made by Indian judiciary and its effect on India and its citizens as a whole. Many
times the use of language in the legislation even does not carry the clear cut meaning in
dictionaries. It contains many alternative meanings applicable in different contexts and for
different purposes so that no clear field for the application of a word becomes identified. In such
a situation, importance of interpretation comes into picture. For proper and healthy application of
law, it is important to have uniform expansion of language or words used by the authorities/law-
makers. In a case, if one judge takes the narrow view and the other the broad one, the law will
connote different things for different persons and soon there will be race for window shopping

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for justice. Moreover, we always need to keep in mind that articulating a law is not equal to the
execution of law. For the purpose of execution, proper understanding of law or statute is utmost
important and better understanding is only possible through proper interpretation of the statute. It
can be seen that insurance being a social security legislation and not merely a contract. Therefore
it must be seen that this welfare legislation is interpreted beneficially and in whose favour the
law has been made

BIBLIOGRAPHY

WEBSITES

http://www.lawyersclubindia.com/articles/print_this_page.asp?article_id=5430
http://taxguru.in/wp-content/uploads/2012/11/insurance-hb-1101.pdf

http://www.nios.ac.in/media/documents/vocinsservices/m2--f2.pdf
http://sip.ucoz.com/Executive/Module_1/GCL/interpretation_of_statutes.pdf

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CONCLUSION

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