INTERPRETATION OF STATUTES - PowerPoint Presentation

1. INTERPRETATION OF STATUTES1

2. INTERPRETATION OF STATUTES Bangalore Water Supply and Sewerage Board Vs. A. Rajappa and Ors. - AIR 1978 SC 548)Lord Denning has stated the judge's task in reading the meaning of enactments: The English language is not an instrument of mathematical precision. When a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament- and then he must supplement the written words so as to give " 'force and life' to the intention of legislature. A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases. Constitution bench judgment of the Hon’ble Supreme Court in the case Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Ors. - 2018(361)ELT577(S.C.)It is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite 'referents' are bound to be, in many cases lacking in clarity and precision and thus giving rise to controversial questions of construction. 2

3. INTERPRETATION OF STATUTES Constitution bench judgment of the Hon’ble Supreme Court in the case Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Ors. - 2018(361)ELT577(S.C.)An Act of Parliament/Legislature cannot foresee all types of situations and all types of consequences. It is for the Court to see whether a particular case falls within the broad principles of law enacted by the Legislature. Here, the principles of interpretation of statutes come in handy. In spite of the fact that experts in the field assist in drafting the Acts and Rules, there are many occasions where the language used and the phrases employed in the statute are not perfect. Therefore, Judges and Courts need to interpret the words. In doing so, the principles of interpretation have been evolved in common law. It has also been the practice for the appropriate legislative body to enact Interpretation Acts or General Clauses Act. In all the Acts and Regulations, made either by the Parliament or Legislature, the words and phrases as defined in the General Clauses Act and the principles of interpretation laid down in General Clauses Act are to be necessarily kept in view. If while interpreting a Statutory law, any doubt arises as to the meaning to be assigned to a word or a phrase or a Clause used in an enactment and such word, phrase or Clause is not specifically defined, it is legitimate and indeed mandatory to fall back on General Clauses Act. Notwithstanding this, we should remember that when there is repugnancy or conflict as to the subject or context between the General Clauses Act and a statutory provision which falls for interpretation, the Court must necessarily refer to the provisions of statute. 3

4. INTERPRETATION OF STATUTES Constitution bench judgment of the Hon’ble Supreme Court in the case Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Ors. - 2018(361)ELT577(S.C.)The purpose of interpretation is essentially to know the intention of the Legislature. Whether the Legislature intended to apply the law in a given case; whether the Legislature intended to exclude operation of law in a given case; whether Legislature intended to give discretion to enforcing authority or to adjudicating agency to apply the law, are essentially questions to which answers can be sought only by knowing the intention of the legislation. Apart from the general principles of interpretation of statutes, there are certain internal aids and external aids which are tools for interpreting the statutes. The long title, the preamble, the heading, the marginal note, punctuation, illustrations, definitions or dictionary clause, a proviso to a section, explanation, examples, a Schedule to the Act etc., are internal aids to construction. The external aids to construction are Parliamentary debates, history leading to the legislation, other statutes which have a bearing, dictionaries, thesaurus. It is well accepted that a statute must be construed according to the intention of the Legislature and the Courts should act upon the true intention of the legislation while applying law and while interpreting law. If a statutory provision is open to more than one meaning, the Court has to choose the interpretation which represents the intention of the Legislature.4

5. INTERPRETATION OF STATUTES Constitution bench judgment of the Hon’ble Supreme Court in the case Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Ors. - 2018(361)ELT577(S.C.)The well settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense.In applying Rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose. Not only that, if the plain construction leads to anomaly and absurdity, the court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. The plain meaning rule' suggests that when the language in the statute is plain and unambiguous, the Court has to read and understand the plain language as such, and there is no scope for any interpretation.In construing penal statutes and taxation statutes, the Court has to apply strict Rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocent might become victims of discretionary decision making. Insofar as taxation statutes are concerned, Article 265 of the Constitution3 prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because State cannot at their whims and fancies burden the citizens without authority of law. In other words, when competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the Legislature. 5

6. INTERPRETATION OF STATUTES Constitution bench judgment of the Hon’ble Supreme Court in the case Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Ors. - 2018(361)ELT577(S.C.)That strict interpretation does not encompass strict-literalism into its fold. It may be relevant to note that simply juxtaposing 'strict interpretation' with 'literal rule' would result in ignoring an important aspect that is 'apparent legislative intent'. With certainty, we can observe that, 'strict interpretation' does not encompass such literalism, which lead to absurdity and go against the legislative intent. The other tools of interpretation, namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential inferences while considering a taxation statute. Every taxing statue including, charging, computation and exemption Clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. 6

7. INTERPRETATION OF STATUTES Constitution bench judgment of the Hon’ble Supreme Court in the case Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Ors. - 2018(361)ELT577(S.C.) Any ambiguity in a taxation provision, therefore, is interpreted in favour of the subject/assessee. The statement of law that ambiguity in a taxation statute should be interpreted strictly and in the event of ambiguity the benefit should go to the subject/Assessee may warrant visualizing different situations. For instance, if there is ambiguity in the subject of tax, that is to say, who are the persons or things liable to pay tax, and whether the revenue has established conditions before raising and justifying a demand. Similar is the case in roping all persons within the tax net, in which event the State is to prove the liability of the persons, as may arise within the strict language of the law. There cannot be any implied concept either in identifying the subject of the tax or person liable to pay tax. That is why it is often said that subject is not to be taxed, unless the words of the statute unambiguously impose a tax on him, that one has to look merely at the words clearly stated and that there is no room for any intendment nor presumption as to tax. It is only the letter of the law and not the spirit of the law to guide the interpreter to decide the liability to tax ignoring any amount of hardship and eschewing equity in taxation. Thus, we may emphatically reiterate that if in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/assessee. But, in a situation where the tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue 7

8. INTERPRETATION OF STATUTES However, it is necessary to look into the mischief against which the statute is directed, other statutes in pari materia and the state of the law at the time. Hon’ble Supreme Court in the case of Macquarie Bank Limited Vs. Shilpi Cable Technologies Ltd. reported in : AIR 2018 SC 498 that “It is thus clear on a reading of English, U.S., Australian and our own Supreme Court judgments that the 'Lakshman Rekha' has in fact been extended to move away from the strictly literal Rule of interpretation back to the Rule of the old English case of Heydon, where the Court must have recourse to the purpose, object, text, and context of a particular provision before arriving at a judicial result. In fact, the wheel has turned full circle. It started out by the Rule as stated in 1584 in Heydon's case, which was then waylaid by the literal interpretation Rule laid down by the Privy Council and the House of Lords in the mid 1800s, and has come back to restate the Rule somewhat in terms of what was most felicitously put over 400 years ago in Heydon's case.” Hon’ble Supreme Court in the case of District Mining Officer and Ors. vs. Tata Iron and Steel Co. and Ors. reported in AIR2001SC3134 “the process of construction combines both literal and purposive approaches. In other words the legislative intention i.e., the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed.Hon’ble Supreme Court in the case of U.P. Bhoodan Yagna Samiti, U.P. Vs. Braj Kishore and Ors. reported in AIR1988SC2239 it is clear that when one has to look to the intention of the Legislature, one has to look to the circumstances under which the law was enacted, the Preamble of the law, the mischief which was intended to be remedied by the enactment of the statute. 8

9. INTERPRETATION OF STATUTES Hon’ble Gujarat High Court in the case of Siddharth Enterprises Versus Nodal Officer - 2019 (29) G.S.T.L. 664 (Guj.) held that the right to carry forward Cenvat credit for not being able to file the Form GST TRAN-1 within the due date offends the policy of the Government to remove the cascading effect of tax by allowing the input tax credit as mentioned in the Objects and Reasons of the Constitution 122nd Amendment Bill, 2014. The Objects and Reasons of the Constitution 122nd Amendment Bill, 2014 clearly set out that it is intended to remove the cascading effect of taxes and to bring out a nationwide taxation system. The cascading of taxes, in simple language, is ‘tax on tax’. The denial of carry forward of tax paid on stock on the appointed day may lead to cascading effect of tax because the GST will again have to be paid on the Central Excise duty already suffered on the stock. It is an established principle of law that it is necessary to look into the mischief against which the statute is directed, other statutes in pari materia and the state of the law at the time.In M Pentiah and Ors. v. Muddala Veeramallappa and Ors. - [1961]2SCR295, a reference was made to observations made by Lord Davey, in Canada Sugar Refining Company v. R. 1898 AC P.375, it reads as follows that Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject matter. In R.S. Raghunath v. State of Karnataka and Anr. - AIR1992SC81 it has been observed - "Not part of a Statute and no word of a Statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place". 9

10. INTERPRETATION OF STATUTES Kailash Chandra and Ors. Vs. Mukundi Lal and Ors. - AIR 2002 SC 829 - A provision in the statute is not to be read in isolation. It has to be read with other related provisions in the Act itself, more particularly, when the subject matter dealt with in different sections or parts of the same statute is the same or similar in a nature.Interpretation should not render any provision redundant or nugatory. it is incumbent on the court to avoid a construction, if reasonably permissible on the language, which would render a part of the statute devoid of any meaning or application. Chief Information Commissioner Versus State Of Manipur - 2012 (286) E.L.T. 485 (S.C.). Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual.A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word.If a statute is looked at, in the context of its enactment, with the glasses of the statute maker , provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. Reserve Bank of India vs. Peerless General Finance and Investment Co. Ltd. and Ors. - AIR 2009 Cal 14010

11. INTERPRETATION OF STATUTES – DEFINITION CLAUSE Where in a definition section of a statute a word is defined to mean a certain thing, wherever that word is used in that statute, it shall mean what is stated in the definitions unless the context otherwise requires. Due weight ought to be given to the words "unless the context otherwise requires". The subject matter and the context in which a particular word is used are of great importance and it is axiomatic that the object underlying the Act must always be kept in view in construing the context in which a particular word is used. N.K. Jain and Ors. vs. C.K. Shah and Ors. - MANU/SC/0308/1991. A particular expression is often defined by the Legislature by using the word 'means' or the word 'includes'. Sometimes the words 'means and includes' are used. The use of the word 'means' indicates that "definition is a hard-and-fast definition, and no other meaning can be assigned to the expression than is put down in definition. The word 'includes' when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. The words 'means and includes', on the other hand, indicate "an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions. - P. Kasilingam and Ors. vs. P.S.G. College of Technology and Ors. - MANU/SC/0265/1995. An expression not having been defined in the Constitution, it must be given the meaning which it ordinarily bears in the English language and as understood in ordinary parlance - Commissioner of Wealth Tax, Andhra Pradesh vs. Officer-in-charge (Court of Wards), Paigah -MANU/SC/0232/1976.11

12. INTERPRETATION OF STATUTES –Explanation & ProvisoThe object of an Explanation to a statutory provision is-a) to explain the meaning and intendment of the Act itself, b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, ande) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same. A proviso may serve four different purposes:1) qualifying or excepting certain provisions from the main enactment;2) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable;3) it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and4) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision.S. Sundaram Pillai and Ors. vs. `R. Pattabiraman and Ors. (24.01.1985 - SC) : MANU/SC/0387/198512

13. INTERPRETATION OF STATUTES Nositur a Sociis means that when two words are capable of being analogously defined, then they take colour from each other. The term ejusdem generis is a facet of Nositur a Sociis. The aforesaid principle means that the general words following certain specific words would take colour from the specific words. - Commissioner Of Trade Tax, U.P. Versus Kartos International - 2011 (268) E.L.T. 289 (S.C.)All the rules of procedure are the handmaids of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the statute, the provisions of CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice. The mortality of justice at the hands of law troubles a Judge's conscience and points an angry interrogation at the law reformer. The procedural law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a residuary power in Judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. Justice is the goal of jurisprudence, procedural, as much as substantive. No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner for the time being by or for the court in which the case is pending, and if, by an Act of Parliament the mode of procedure is altered, he has no other right than to proceed according to the altered mode. A procedural law should not ordinarily be construed as mandatory, the procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. A Procedural prescription is the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice.Sambhaji and Ors. Vs. : Gangabai and Ors. - 2009(240)ELT161(S.C.)13

14. INTERPRETATION OF STATUTES Interpretation unduly restricting the scope of a beneficial provision to be avoided so that it may not take away with on hand what the policy gives with the other. - UNION OF INDIA Versus SUKSHA INTERNATIONAL & NUTAN GEMS & ANR. - 1989 (39) E.L.T. 503 (S.C.). Mere fact that a condition is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve. - MANGALORE CHEMICALS & FERTILIZERS LTD. Versus DEPUTY COMMISSIONER -1991 (55) E.L.T. 437 (S.C.) Lex Non Cogit Ad Impossiblia – The law does not compel a person to do that which he cannot possibly perform.De Minimis Non Curat Lex – The law does not concern itself with trifles.Nemo DebetBisVexari Pro Una EtEadem Causa – A man shall not be vexed twice for one and the same cause.Issuance of a show cause notice in a particular format is a mandatory requirement of law. Each and every communication or order could not be construed as a show cause notice. Allegations must be clearly mentioned and it should not be vague. 14

15. INTERPRETATION OF STATUTES COMMISSIONER OF C. EX., BANGALORE Versus BRINDAVAN BEVERAGES (P) LTD. reported in 2007 (213) E.L.T. 487 (S.C.) that “The show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice.” If the show cause notice is issued on one ground it cannot be confirmed on other ground. Demand confirmed cannot exceed the duty demanded in notice. In the matter of classification of goods, if two views are possible, the view that benefits the assessee should be adopted. It is a well-settled principle of law that if there is ambiguity with regard to the rate of tax to be collected, the benefit should go to the assessee. - Mauri YeastIndiaPvt. Ltd. v.State of U.P. reported in [2008] 14 VST 259 (SC) A specific entry in the schedule to a taxing statute would override a general entry. Speedway Rubber Co. V. Commissioner, Central Excise and others reported in [2004] 137 STC 503 (SC)Wrong classification of the goods in question by the respondents at one stage, does not operate as estoppel/res judicata against them for claiming the classification under the correct tariff heading/subheading of the GST tariff at a late stage. 15

16. INTERPRETATION OF STATUTES – DOCTRINE OF READING DOWN The rule of "reading down" a provision of law is now well recognised. It is a rule of harmonious construction in a different name. It is resorted to smoothen the crudities or ironing the creases found in a statute to make it workable. In the garb of 'reading down', however, it is not open to read words and expressions not found in it and thus venture into a kind of judicial legislation. The rule of reading down is to be used for the limited purpose of making a particular provision workable and to bring it in harmony with other provisions of the statute. It is to be used keeping in view the scheme of the statute and to fulfil its purposes.First attempt should be made by the courts to uphold the charged provisions and not to invalidate it merely because one of the possible interpretation leads to such a result, howsoever attractive it may be. Thus, where there are two possible interpretations, one invalidating the law and the other upholding, the latter should be adopted. For this, the courts have been endeavouring, sometimes to give restrictive or expansive meaning keeping in view the nature of the legislation, may be beneficial, penal or fiscal etc. Cumulatively, it is to sub-serve the object of the legislation. Old golden rule is of respecting the wisdom of legislature, that they are aware of the law and would never have intended for an invalid legislation. This also keeps courts within their track and checks individual zeal of going wayward. Yet in spite of this, if the impugned legislation cannot be saved the courts shall not hesitate to strike it down. Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear to be in defiance of the Constitution. Calcutta Gujrati Education Society and Ors. vs. Calcutta Municipal Corporation and Ors. : MANU/SC/0631/200316

17. INTERPRETATION OF STATUTES - THE GENERAL CLAUSES ACT, 1897 In all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context the meaning of the term should be as defined in Section of the Act. “affidavit” shall include affirmation and declaration in the case of persons by law allowed to affirm or declare instead of swearing. “document” shall include any matter written, expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means which is intended to be used, or which may be used, for the purpose of recording that matter. “immovable property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.“movable property” shall mean property of every description, except immovable property.Expressions referring to “writing” shall be construed as including references to printing, lithography, photography and other modes of representing or reproducing words in a visible form.Section 9- Commencement and termination of time.— In any Central Act or Regulation made after the commencement of this Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word “from”, and, for the purpose of including the last in a series of days or any other period of time, to use the word “to”.Section 10 - Computation of time.— Where, by any Central Act or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open. Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877), applies. 17

18. INTERPRETATION OF STATUTES - THE GENERAL CLAUSES ACT, 1897 Section 11 - Measurement of distances.—In the measurement of any distance, for the purposes of any Central Act or Regulation made after the commencement of this Act, that distance shall, unless a different intention appears, be measured in a straight line on a horizontal plane.Section 12. Duty to be taken pro rata in enactments.—Where, by any enactment now in force or hereafter to be in force, any duty of customs or excise, or in the nature thereof, is leviable on any given quantity, by weight, measure or value of any goods or merchandise, then a like duty is leviable according to the same rate on any greater or less quantity. Section - 13. - Gender and number.—In all Central Acts and Regulations, unless there is anything repugnant in the subject or context,— (1) words importing the masculine gender shall be taken to include females; and (2) words in the singular shall include the plural, and vice versa.Section 26. Provision as to offences punishable under two or more enactments.—Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offenceSection - 27. Meaning of service by post.—Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression “serve” or either of the expressions “give” or “send” or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.18

19. INTERPRETATION OF STATUTES - PRECEDENTIAL VALUE OF DECISIONS With reference to the precedential value of decisions, in State of Orissa & Ors. v. Md. Illiyas : (2006) 1 SCC 275 : "According to the well-settled theory of precedents, every decision contains three basic postulates: (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically flows from the various observations made in the judgment" Union of India v. Amrit Lal Manchanda & Anr. - (2004) 3 SCC 75 - "Observations of courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for Judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes." Islamic Academy of Education & Anr. v. State of Karnataka & Ors., -(2003) 6 SCC 697 : "The ratio decidendi of a judgment has to be found out only on reading the entire judgment. In fact, the ratio of the judgment is what is set out in the judgment itself. The answer to the question would necessarily have to be read in the context of what is set out in the judgment and not in isolation. In case of any doubt as regards any observations, reasons and principles, the other part of the judgment has to be looked into. By reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment."19