A legislative device seeking to confer overriding effect upon a particular provision over other conflicting provisions; non obstante clauses are now standard technique in legislative drafting. Unequivocally these clauses are considered as interpretative tool to exhume legislative intent. Their operation, jurisprudentially examined, is however not untrammelled. This paper attempts to enlist and discuss certain key variables in the light of which unambiguous non obstante clauses are now being judicially circumscribed in terms of their overriding effect. The inquiry, which examines the decisions of the Indian courts as a case study, reveals that construing the true ambit of a given non obstante clause is beset with appraisal of a number of internal and external aids of statutory interpretation which consequently renders the outcome of each such construction as fact-specific conclusion rather than a categorical enunciation of the legal position. The paper, thus titled as “circumscribing non obstante clauses”, seeks to implore the readers the limitations which inhibit even such significantly omnipotent clauses. Even though the inquiry is specific to decisions of Indian courts, since these decisions are set on standard commonwealth interpretative rules, the article expects to provide meaningful insights across jurisdictions.
Principles of statutory interpretation accommodate a wide variety of legislative instruments. Savings provisions, repeal provisions, etc. are different facets of legislative devices intended to convey a particular effect in interpretation and application of statutory enactments. “Non obstante” clause is one such device intended to effectuate a particular legislative intent underlying a statutory provision. Across time the principles relating to interpretation of these clauses have been crystallised and have attained finality; meaning thereby that the import and tenor of these devices carries a fixed and unequivocal effect such that the determination of legislative intent is expedient and without deviation. This article seeks to revisit these salutary principles from an “exception” perspective where the objective is to enlist the key variables in light of which, the effect of these clauses is regulated. The inquiry is principally “precedent-based”, the design being to cull out the judicial opinion on the subject. As a caveat, all the decisions referred in the article are of Indian courts.
II. Understanding non obstante clauses
The expression “non obstante clause” refers to a statutory provision intended to give an overriding effect over other provisions or enactments.1 The Supreme Court in Union of India v. G.M. Kokil2 explained that “a non obstante clause is a legislative device which is usually employed to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions”. In simpler terms, “it is equivalent to saying that in spite of the provision or Act mentioned in the non obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment.”3 The proposition that the provisions employing these clauses carry wide and overarching effect over other provisions sought to be subdued, has also been judicially endorsed inasmuch as the Supreme Court enunciated this aspect in Orient Paper and Industries Ltd. v. State of Orissa4 in inter alia the following terms:
“12. This sub-section overrides ‘any provision to the contrary in any other law’. These words are an expression of the widest amplitude engulfing all rules having the force of law, whichever be the source from which they emanate — statutory, judicial or customary — the only exception, in the context, being the Constitution of India. This means, once brought into force, the sub-section will, subject to the Constitution, operate with full vigour, notwithstanding any statute or judicial decision or any other rule recognising any right or interest or grant inconsistent with or contrary to the provisions of the sub-section.”
Having construed their tenor and ambit, it is pertinent to appreciate the rationale for employing non obstante clauses in statutory enactments which perhaps lies in the legislative acknowledgment of an actual or perceived conflict between different legislations or, alternatively, the legislature intends that the scope of a particular provision should not be whittled down in any circumstance for any known or unknown reason.5 In order to enumerate the principles for determining the priority of applying the respective legislations, the non obstante clause operates as a kind of tie-breaker provision i.e. in the event of conflict between two statutory provisions seemingly applicable to a particular situation, owing to its overriding effect, the provision carrying the non obstante clause will be given effect to.6 To exemplify further, the tenor of a non obstante clause is directly at variance with a “subject-to” clause with “the latter conveying the idea of a provision yielding place to another provision or other provisions to which it is made subject”7. In other words, while a subject-to clause renders the provision subservient to another, a non obstante clause gives superior effect to the provision.8
III. Restricting operation of non obstante clauses
Having noted the generally perceived notion of the superior effect accompanying non obstante clauses, we shift the analysis to the theme underlying this article. In this part we attempt to enumerate some of the general exceptions which limit the operation of these clauses.
(A) Non obstante clauses deal with conflict amongst similarly placed legislative instruments alone
The first and foremost limitation imposed on the non obstante clauses is that they are consigned to resolve conflict amongst similarly placed legislative instruments alone. This aspect is succinctly brought out by the decision of the Supreme Court in Sharda Deviv. State of Bihar9 wherein the expression “notwithstanding anything to the contrary in any enactment for the time being in force” was construed as not covering a Letters Patent10 and thus not overriding its provisions. The rationale for this limitation, in view of this author, is perhaps the fact that non obstante clauses apply only in the event of inconsistency in which situation the issue arises with respect to giving overarching status to one of the conflicting instruments.
(B) Overriding effect of non obstante clauses can be curtailed by designating them as only being clarificatory in substance
In a wide array of situations the legislative intent of employing non obstante clause has been considered as not ruling out a specific conflict but only in the manner of a general protection.11 This aspect was specifically adverted to by the Supreme Court in Dominion of India v. Shrinbai A. Irani12 where it was recognised that even a non obstante clause can “be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the legislature by way of abundant caution and not by way of limiting the ambit and scope of the operative part of the enactment”. This is so when “the words of the enactment are clear and are capable of only one interpretation on a plain and grammatical construction of the words thereof”, and in such cases “a non obstante clause cannot cut down that construction and restrict the scope of its operation”.13 This decision has been followed subsequently and in a number of cases non obstante clauses have been held to be not carrying any sui generis application, but only a provision enacted “by way of abundant caution”.14 This proposition is an important acknowledge of the fact that notwithstanding its ordinary overriding effect, a non obstante clause is not without bounds and can be limited in certain circumstances depending upon the scheme of the enactment and the expressions employed in the statute. In fact, by majority, a larger Bench of the Supreme Court in its recent decision has taken note of the relevant factors to conclude that a non obstante clause in a constitutional provision can also be used by way of abundant caution.15 This aspect is crucial for this inhibition on the application of non obstante clauses, which in various situations significantly curtails their overriding effect.
(C) Application of non obstante clause can be ruled out in the wake of its specific language
Further, even though the general tenor of the non obstante clause is to give overriding effect, its actual effect must be perceived based upon a close reading of actual clause. The decision of the Supreme Court in Central Bank of India v. State of Kerala16 is an appropriate illustration on this point. This case dealt with an apparent conflict between non obstante clauses under two sets of debt recovery and tax legislations. The relevant provisions of the debt recovery legislations carried the phrase “the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force”. On similar lines, by way of a non obstante clause, the relevant provisions in the tax legislations created a first charge on tax on the property of a dealer covered under these legislations. The question of law framed by the Supreme Court in this background was as under:
“2. Whether Section 38-C of the Bombay Sales Tax Act, 1959 (for short ‘the Bombay Act’) and Section 26-B of the Kerala General Sales Tax Act, 1963 (for short ‘Kerala Act’) and similar provision contained in other State legislations by which first charge has been created on the property of the dealer or such other person, who is liable to pay sales tax, etc. are inconsistent with the provisions contained in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short ‘the DRT Act’) for recovery of ‘debt’ and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the Securitisation Act’) for enforcement of ‘security interest’ and whether by virtue of non obstante clauses contained in Section 34(1) of the DRT Act and Section 35 of the Securitisation Act, two central legislations will have primacy over State legislations are the questions which arise for determination in these appeals.”
Culling out the applicable principle to determine the conflict in such cases, the Supreme Court opined that “[w]hile interpreting non obstante clause, the court is required to find out the extent to which the legislature intended to do so and the context in which the non obstante clause is used”17. Further, upon an appraisal of the debt recovery legislations, the Court observed that “there is no provision in either of these enactments by which first charge has been created in favour of banks, financial institutions or secured creditors qua the property of the borrower”18 to conclude that “[i]n the absence of any specific provision to that effect, it is not possible to read any conflict or inconsistency or overlapping between the provisions of the DRT Act and the Securitisation Act on the one hand and Section 38-C of the Bombay Act and Section 26-B of the Kerala Act on the other.Further,the non obstante clauses contained in Section 34(1) of the DRT Act and Section 35 of the Securitisation Act cannot be invoked for declaring that the first charge created under the State legislation will not operate qua or affect the proceedings initiated by banks, financial institutions and other secured creditors for recovery of their dues or enforcement of security interest, as the case may be”.19 Refusing to give effect to non obstante clauses under the debt recovery legislations by implication, the Supreme Court declared the legal position inter alia in the following terms:
“131. The court could have given effect to the non obstante clauses contained in Section 34(1) of the DRT Act and Section 35 of the Securitisation Act vis-à-vis Section 38-C of the Bombay Act and Section 26-B of the Kerala Act and similar other State legislations only if there was a specific provision in the two enactments creating first charge in favour of the banks, financial institutions and other secured creditors but as Parliament has not made any such provision in either of the enactments, the first charge created by the State legislations on the property of the dealer or any other person, liable to pay sales tax, etc., cannot be destroyed by implication or inference, notwithstanding the fact that banks, etc. fall in the category of secured creditors.”20 (emphasis supplied)
This decision clearly reveals that presence of a non obstante clause in a legislation by itself is not sufficient to give it an overriding effect. The specific expressions employed in such clause as also the provisions under the rival enactments can serve as the material basis to restrict the operation of these clauses.
Limiting application of non obstante clause on account of subsequent enactments
The issue whether an enactment carrying a non obstante clause can nonetheless be overridden on account of a subsequent legislation is one which is yet to be settled but requires consideration in this analysis. This issue arises in an event an enactment carrying a non obstante clause comes into conflict with a subsequently enacted legislation without such non obstante clause; the bone of contention being the scope of the expression “for the time being in force” which generally finds place in non obstante clauses. On this point there appears a conflict amongst the High Courts.
Called upon to opine whether the provisions of the Gujarat Special Economic Zone Act, 2004 (GSEZA) and the exemption available thereunder from payment of sales tax were overridden by the amendment carried out to the Gujarat Value Added Tax Act effective from April 2008, the Gujarat High Court in Torrent Energy Ltd. v. State of Gujarat21 was in turn required to opine upon the scope of the non obstante clause in the former enactment. Declaring that the expression “for the time being in force” employed in the non obstante clause of the GSEZA “would include even the legislations made at a later point of time and such expression would be akin to the law for the time being in force”22, the High Court declared that the provisions of the GSEZA will continue to carry the overriding effect and the exemption therein notwithstanding the subsequent enactment/amendment.
At direct variance from the aforesaid is the decision of the Punjab and Haryana High Court in Paramjit Kumar Saroya v. Union of India23 where the controversy related to the prohibition on appearance of lawyers before the Tribunal under the Maintenance and Welfare of Parents and Senior Citizens Act, 2007. The said Act carried a non obstante clause in Section 17 prohibiting such appearance. At conflict was Section 30 of the Advocates Act, 1961 which was notified in 2011 and permitted rights of advocates to practise inter alia before all tribunals legally authorised to take evidence. The High Court refused to give effect to the non obstante clause under the 2007 Act inter alia stating its view as under:24
“The overriding provisions of the said Act under Section 3 in the context of Section 17 of the said Act have to be appreciated in the context of the law prevalent when the said Act was enacted. The ground reality has changed on account of Section 30 of the Advocates Act having come into force on 15-6-2011, while all the judgments taking contrary view are based on Section 30 not being notified and the consequence thereof. Section 30 was not law when the said enactment was enacted and brought into force.” (emphasis supplied)
In view of the conflicting views of the High Courts, a clear legal position is yet to emerge and awaits finality. However it is pertinent for our analysis that a clear non obstante clause can be considered as overridden in the wake of a subsequent legislation.
Before moving further, it is crucial to differentiate this aspect with the one covered in the next part. The point of inquiry here is whether an enactment with a non obstante clause can be overridden by a subsequently enacted law where the latter law does not carry a similar non obstante clause; whereas the analysis in the subsequent part would examine the concomitant issues where both the enactments carry a non obstante clause and thus the dispute in those cases is which of the non obstante clauses will govern.
IV. Limiting non obstante clauses in wake of competing clauses under other enactments
A crucial aspect on the scope of non obstante clause relates to reconciliation of multiple non obstante clauses under competing legislations and their inter se application in a given set of facts. In view of this author, precedents reveal two broad approaches to resolve such cases of conflict between the non obstante clauses per se.25 The first approach is more of a subjective determination inasmuch as it involves consideration of underlying legislative intent in the competing legislations and classification of laws into general and special legislations on such parameter. The second approach is more objective and relies exclusively upon the fact as to which of the two legislations was enacted later in point of time i.e. the lex posteriori rule. The following discussion will reveal that while the second approach has been validated in a few cases, on closer examination it appears that this approach seemingly coalesces into the first approach.
In A.P. State Financial Corpn. v. Official Liquidator26 a two-Judge Bench of the Supreme Court was concerned with State Financial Corporations Act, 1951 and Companies Act, 1956, both of which carried non obstante clauses, and the issue involved was which of the two legislations would apply. Without much ado the Supreme Court held that the relevant provisions of the Companies Act being a “subsequent enactment” would prevail over those under the 1951 Act. On the contrary, a three-Judge Bench of the Supreme Court earlier in R.S. Raghunath v. State of Karnataka27 by 2:1 majority gave effect to a prior enactment even in the wake of a non obstante clause in the subsequently enacted provisions holding that they were of “general” nature as contrasted to “special” nature of prior provisions. Even though Kuldip Singh J., who concurred to form the majority, observed that “even the general law later in time, prevails over the earlier special law if it clearly and directly supercedes the said special law – is an unexceptionable proposition of law”, yet concluded that the subsequently enacted general provision did not apply to the lis in the wake of the prior special provisions.28 While Reddy, J., the other Judge speaking for the majority, also agreed to this proposition, he extended the principle even for reconciliation of non obstante clauses inter alia in the following terms:
“13. As already noted, there should be a clear inconsistency between the two enactments before giving an overriding effect to the non obstante clause but when the scope of the provisions of an earlier enactment is clear the same cannot be cut down by resort to non obstante clause. In the instant case we have noticed that even the General Rules of which Rule 3(2) forms a part provide for promotion by selection. As a matter of fact Rules 1(3)(a), 3(1) and 4 also provide for the enforceability of the Special Rules. The very Rule 3 of the General Rules which provides for recruitment also provides for promotion by selection and further lays down that the methods of recruitment shall be as specified in the Special Rules, if any. In this background if we examine the General Rules it becomes clear that the object of these rules only is to provide broadly for recruitment to services of all the departments and they are framed generally to cover situations that are not covered by the special rules of any particular department. In such a situation both the rules including Rules 1(3)(a), 3(1) and 4 of the General Rules should be read together. If so read it becomes plain that there is no inconsistency and that amendment by inserting Rule 3(2) is only an amendment to the General Rules and it cannot be interpreted as to supersede the Special Rules. The amendment also must be read as being subject to Rules 1(3)(a), 3(1) and 4(2) of the General Rules themselves. The amendment cannot be read as abrogating all other Special Rules in respect of all departments. In a given case where there are no Special Rules then naturally the General Rules would be applicable. Just because there is a non obstante clause, in Rule 3(2) it cannot be interpreted that the said amendment to the General Rules though later in point of time would abrogate the special rule the scope of which is very clear and which co-exists particularly when no patent conflict or inconsistency can be spelt out. As already noted Rules 1(3)(a), 3(1) and 4 of the General Rules themselves provide for promotion by selection and for enforceability of the Special Rules in that regard. Therefore there is no patent conflict or inconsistency at all between the General and the Special Rules.”29 (emphasis supplied)
In minority, Dayal, J. however opined that the mandate of the non obstante clause “cannot be ignored”. On the point of conflict, he specifically observed that in “the present case the later general law prevails over the earlier special law because the non obstante clause specifically mentions its efficacy in spite of the special law. It was for the legislature to choose the method to indicate its intention. The courts should not defeat their intention by overlooking it”.30 Nonetheless, in the net outcome by majority, the non obstante clause was not given primacy by declaring the enactment carrying it as a general legislation.
The aforesaid conclusion appears to be an extension, if not restatement, of the principle that the object and purpose of the laws in consideration form the basis for according primacy to one of the non obstante clauses. Suffice is to recount the observations of the Supreme Court in Jain Ink Mfg. Co. v. LIC31 wherein this aspect was clarified as under:
“7. It is true that in both the Acts there is a non obstante clause but the question to be determined is whether the non obstante clauses operate in the same field or have two different spheres though there may be some amount of overlapping. The observations cited above clearly lay down that in such cases the conflict should be resolved by reference to the object and purpose of the laws in consideration.”
Contrasted from the analysis above, there is a long line of those cases where the factum of a legislation being subsequent enactment was considered relevant, if not conclusive, in determining which enactment is to be given overriding effect. In Maharashtra Tubes Ltd. v. State Industrial & Investment Corpn. of Maharashtra Ltd.32 the Supreme Court upheld overriding effect to subsequently enacted Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on account of its non obstante clause despite a similar clause in the earlier enacted State Financial Corporations Act, 1951, though only after ruling out that the 1951 Act was not a special enactment in the context of the dispute. The court opined in the following terms:
“9. Having reached the conclusion that both the 1951 Act and the 1985 Act are special statutes dealing with different situations — the former providing for the grant of financial assistance to industrial concerns with a view to boost up industrialisation and the latter providing for revival and rehabilitation of sick industrial undertakings, if necessary, by grant of financial assistance, we cannot uphold the contention urged on behalf of the respondent that the 1985 Act is a general statute covering a larger number of industrial concerns than the 1951 Act and, therefore, the latter would prevail over the former in the event of conflict. Both the statutes have competing non obstante provisions. Section 46-B of the 1951 Act provides that the provision of that statute and of any rule or order made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force whereas Section 32(1) of the 1985 Act also provides that the provisions of the said Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law. Section 22(1) also carries a non obstante clause and says that the said provision shall apply notwithstanding anything contained in Companies Act, 1956 or any other law. The 1985 Act being a subsequent enactment, the non obstante clause therein would ordinarily prevail over the non obstante clause found in Section 46-B of the 1951 Act unless it is found that the 1985 Act is a general statute and the 1951 Act is a special one. In that event the maxim generalia specialibus non derogant would apply. But in the present case on a consideration of the relevant provisions of the two statutes we have come to the conclusion that the 1951 Act deals with pre-sickness situation whereas the 1985 Act deals with the post-sickness situation. It is, therefore, not possible to agree that the 1951 Act is a special statute vis-à-vis the 1985 Act which is a general statute. Both are special statutes dealing with different situations notwithstanding a slight overlap here and there, for example, both of them provide for grant of financial assistance though in different situations. We must, therefore, hold that in cases of sick industrial undertakings the provisions contained in the 1985 Act would ordinarily prevail and govern.” (emphasis supplied)
Then there is the decision in W.B. Electricity Regulatory Commission v. CESC Ltd.33 where the Supreme Court, impliedly giving utmost priority to lex posteriori, made short thrift of the contention that the earlier enactment, even though with a non obstante clause, could override a subsequent enactment with a similar clause inter alia in the following terms:
“56. First of all the non obstante clause in Schedule VI to the 1948 Act refers only to the provisions of the Electricity Act, 1910. Schedule VI which is found in the Act of 1948, the legislature could not have contemplated a subsequent enactment containing a non obstante clause coming into force, nor does it say that this non obstante clause applies to or is in preference to all other enactments including future enactments. Therefore this ground itself is sufficient to reject the argument of the learned counsel for the respondents as to the prevailing effect of the non obstante clause in Schedule VI to the 1948 Act.…”
A recent decision of a three-Judge Bench of the Supreme Court in KSL & Industries Ltd. v. Arihant Threads Ltd.34 revisits these aspects and adds a different dimension for this analysis. More so, it also reveals the difficulty in applying the tie-breaker rules, if one may treat non obstante clauses as such, for the lis approached a three-Judge Bench of the Supreme Court out of reference of two Judges who had a difference of opinion amongst them.
In this case the dispute involved reconciliation of non obstante clauses under SICA and Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBA). The dispute arose in view of the default by the respondent in the payment of its debt and consequent initiation of proceedings against it under the RDDBA. The respondent initiated proceedings under the SICA and the matter was considered by the Board for Industrial and Financial Reconstruction (BIFR). The High Court held that proceedings under the RDDBA could not proceed in view of the non obstante clause under Section 22 of the SICA. One of the Judges of the Supreme Court agreed with this reasoning of the High Court. However, the other Judge was of the view that the RDDBA contained a similar non obstante clause and thus the reference to SICA was unwarranted. In view of this difference of opinion amongst the two Judges the matter was referred for reconsideration to a Bench of larger composition.35 At this stage it is expedient to examine the relevant provision of the RDDBA, which states as under:
“34. Act to have overriding effect.—
(1) Save as provided under sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984), the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989).” (emphasis supplied)
Attempting to reconcile the non obstante clauses under the two legislations, the three-Judge Bench of the Supreme Court specifically took note that both the legislations were “special laws” dealing with specific subject-matters and also declared that “Parliament must be deemed to have had knowledge of the earlier law” as the guiding principle for such reconciliation. The court thereafter held that the approach in such cases was to determine “as to which Act shall prevail” the response to which was dependent upon various factors such as: (i) the purpose of the two legislations; (ii) which of the two laws is general or special; and (iii) which law is later. Additionally, the issue as to whether these laws could be “harmoniously construed” was also held to be a relevant factor. In this background, the Supreme Court took note of the earlier precedents on the subject36 to conclude that both SICA and RDDBA were special laws in their own fields inter alia in the following terms:
“48. …As observed earlier, the purpose of one is to provide ameliorative measures for reconstruction of sick companies, and the purpose of the other is to provide for speedy recovery of debts of banks and financial institutions. Both the Acts are ‘special’ in this sense. However, with reference to the specific purpose of reconstruction of sick companies, SICA must be held to be a special law, though it may be considered to be a general law in relation to the recovery of debts. Whereas, the RDDB Act may be considered to be a special law in relation to the recovery of debts and SICA may be considered to be a general law in this regard.…”37
Having held so, the court considered the test to be applied for resolution of the conflict i.e. “[n]ormally the latter of the two would prevail on the principle that the legislature was aware that it had enacted the earlier Act and yet chose to enact the subsequent Act with a non obstante clause.”38 The Supreme Court, however, rejected the application of this test to the instant case in view of the non-derogation clause in Section 22 of the RDDBA. In view of the Supreme Court, the “term ‘not in derogation’ clearly expresses the intention of Parliament not to detract from or abrogate the provisions of SICA in any way. This, in effect must mean that Parliament intended the proceedings under SICA for reconstruction of a sick company to go on and for that purpose further intended that all the other proceedings against the company and its properties should be stayed pending the process of reconstruction.”39
The Supreme Court thus diluted the effect of the non obstante clause on account of the non-derogation clause in the RDDBA. In other words, the tussle of primacy amongst the two non obstante clauses under two specific legislations was resolved by aid of a non-derogation clause which in view of the court conveyed the legislative intent on the aspect as to which of the two enactments was to be given primacy. This aspect is explored in further detail in the subsequent part. However what is relevant for the purpose of inquiry in this part is that relative superiority amongst two non obstante clauses is not just a function of the date of respective enactments40 but also requires consideration of other variables such as the: (i) general versus special legislation; (ii) non-derogation clauses; etc. It also appears from the above that reconciliation of two non obstante clauses is an issue the solution to which is neither contingent upon identified variables nor is capable of is an easy answer as it requires appraisal of numerous legal and policy variables.41
V. Recent trends on construction of non obstante clauses
The above discussion reveals two mixed aspects on construction and effect of non obstante clause. Rather, the second aspect is a caveat to the former. These are; firstly, by design a non obstante clause is meant to override other provisions; secondly in certain cases such clauses are not given any primacy and instead relegated as a non sequitur owing to other reasons. Having said that, in this part we bring to fore the recent developments to populate the emerging jurisprudence on the subject. The decisions discussed in this part, all in the current decade, actually expand the caveat i.e. instead of giving the due share to the intent underlying enactment of non obstante clauses these decisions extend alternate rationale to confine the overriding effect of non obstante clauses.
Case Study – I: Indra Kumar – impliedly reading down non obstante clause
In Indra Kumar Patodia v. Reliance Industries Ltd.42 the Supreme Court was concerned with interpretation of the non obstante clause employed in Section 142 of the Negotiable Instruments Act (NI Act). The dispute arose out of a complaint filed by the respondent Company under Section 138 of the NI Act. This complaint was rejected by the trial court as signature of the complainant was not appended to the complaint. The High Court reversed the decision and the case travelled in appeal to the Supreme Court where the issue hinged upon the construction of the said Section 142, the relevant part of which states as under:
“142. Cognizance of offences.—Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974)
(a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
In this background, the Supreme Court was called upon to determine whether in view of the expression “complaint, in writing” read in conjunction with the non obstante clause overriding Code of Criminal Procedure (CrPC), the complaint under Section 142 was compulsorily required to be attested by the complainant. Affirming the view of the High Court, the Supreme Court held that the non obstante clause in Section 142 was a limited one and only overrode CrPC to the extent that the complaint was required to be in writing; it did not override CrPC to the extent that an unsigned complaint could be the basis of an inquiry under the provisions of CrPC.
Even though the non obstante clause in Section 142 is unqualified i.e. refers to CrPC generally and upon a plain reading does not override select provisions of CrPC alone, in view of the Supreme Court the non obstante clause was to be given a “restricted meaning” and confined only to select provisions and not generally.43 On this aspect the Supreme Court declared the legal position in the following terms:
“18. It is clear that the non obstante clause has to be given restricted meaning and when the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands all alone by itself. In other words, there requires to be a determination as to which provision answers the description and which does not. While interpreting the non obstante clause, the court is required to find out the extent to which the legislature intended to do so and the context in which the non obstante clause is used. We have already referred to the definition of complaint as stated in Section 2(d) of the Code which provides that the same needs to be in oral or in writing. The non obstante clause, when it refers to the Code only excludes the oral part in such definition.”44 (emphasis supplied)
In this view of the legal position, the Supreme Court concluded that the purpose of the non obstante clause in Section 142(a) was a limited one and only to exclude oral complaint; the said provision was not to be interpreted to exclude application of all other provisions of CrPC. Accordingly, the Court concluded in view of Section 200 CrPC an unsigned complaint was also valid and not hit by Section 142 of the NI Act. Therefore, despite presence of a non obstante clause which apparently provided overriding effect of the NI Act over entire CrPC, the Supreme Court preferred to limit the contours of the overriding effect to certain aspects of CrPC alone. The Supreme Court has not assigned any reason for giving such limited construction to non obstante clause in Section 142 of the NI Act. Nonetheless Section 142 of the NI Act appears to have been rewritten from being a non obstante clause overriding all other provisions of CrPC to be a non obstante clause overriding specified provisions of CrPC.
It is also pertinent to point out that the Supreme Court held that if the intention of the Parliament underlying the non obstante clauses in Section 142 was actually to exclude an unsigned complaint, it should not have just generally overridden CrPC but should have enacted Section 142 otherwise. On this point it was observed as under:
“21. In the case on hand, the complaint was presented in person on 3-6-1998 and on the direction by the Magistrate, the complaint was verified on 30-7-1998 and duly signed by the authorised officer of the company, the complainant. As rightly pointed out by the Division Bench, no prejudice has been caused to the accused for non-signing the complaint. The statement made on oath and signed by the complainant safeguards the interest of the accused. In view of the same, we hold that the requirements of Section 142(a) of the Act are that the complaint must necessarily be in writing and the complaint can be presented by the payee or holder in due course of the cheque and it need not be signed by the complainant. In other words, if the legislature intended that the complaint under the Act, apart from being in writing, is also required to be signed by the complainant, the legislature would have used different language and inserted the same at the appropriate place. In our opinion, the correct interpretation would be that the complaint under Section 142(a) of the Act requires to be in writing as at the time of taking cognizance, the Magistrate will examine the complainant on oath and the verification statement will be signed by the complainant.”45 (emphasis supplied)
This observation of the Supreme Court implies that a general non obstante clause is not sui generis sufficient to override all non-descript provisions and the override will be permitted only to the extent the provisions or aspects of other law sought to be overridden are specially mentioned in the non obstante clause. With respect, this entirely frustrates the purpose of having a general non obstante clause where the legislative intent is to override all provisions of the specified enactment. On this count it is pertinent to note the diametrically observations of the Supreme Court in its earlier decision in Maktool Singh v. State of Punjab46 in a similar context as under:
“8. If the intention of Parliament in enacting Section 32-A of the Act is only to curb the Government’s powers under Sections 432 and 433 of the Code, Parliament would, instead of using the present all-covering words in the non obstante clause (‘notwithstanding anything contained in the Code or in any other law’) have employed the words ‘notwithstanding anything contained in Chapter XXXII of the Code’. Precision and brevity are generally the hallmarks of legislative draftsmanship. Hence, lesser words for achieving the purpose would have been employed by the legislature while framing a provision in the statute.”
Clearly, therefore, the reasoning in the latter decision i.e. Indra Kumar Patodia47 reveals a change in judicial trend. It is also interesting to note the academic appreciation of this decision. Immediately after discussing this judgment, the next para in a noted Indian Treatise on Statutory Interpretation, the commentary notes “but the wide meaning of the non obstante clause and the enacting words following it cannot be curtailed when the use of the wide language accords with the object of the Act.”48 Contrasted on the touchstone of the legal principle emanating from the decision in Indra Kumar Patodia49, these observations imply that the purpose of the non obstante clause and the object of the enactment carrying it are significant variables which determine the extent of override effect attributable to the clause. It therefore appears that the decision in Indra Kumar Patodia50 should not be read as laying down the proposition that in any circumstance the broad contours of the non obstante clause can be discarded and the conclusion to this effect must be a conscious outcome having regard to the legislative policy and statutory scheme.
Case Study – II: Vishal – pitting non obstante clause against objective of the competing enactments
A more recent decision of the Supreme Court in Vishal N. Kalsaria v. Bank of India51 extends this principle further. Unlike Indra Kumar Patodia52 which dealt with a non obstante clause overriding a specified statute, the Supreme Court in Vishal N. Kalsaria53 dealt with a non obstante clause which stipulated overriding effect over any other legislation. Nonetheless Vishal N. Kalsaria54 ended up in similar outcome as in Indra Kumar Patodia55.
In Vishal N. Kalsaria56 the Supreme Court was called upon to determine the superior right amongst: (a) the rights of a “protected tenant” under the State rent control legislation as against; (b) the rights of the lender under “Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002” (SARFAESI Act). Here, the borrower/landlord had created a tenancy in the property and subsequently took loan against the strength of the property. Upon his default, recovery proceedings were initiated under the SARFAESI Act. The tenants resisted their eviction invoking the Maharashtra Rent Control Act, 1999. The claim of the tenants did not find favour up to the High Court in view of Section 35 of the SARFAESI Act which states as under:
“35. The provisions of this Act to override other laws.—The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.”
A plain reading of the aforesaid clause appears to convey that the provisions of SARFAESI Act will override any other inconsistent provision in any other law. The Supreme Court, however, held otherwise. Taking note of the philosophy behind the rent control legislations, the Supreme Court concluded that their purpose was to protect the tenants and accordingly a situation of “unjust eviction” was to be avoided; thus the claims under SARFAESI Act were to fail notwithstanding its wide non obstante clause. In this background, the Supreme Court enumerated the competing considerations and also its conclusion thereon in the following terms:
“29. When we understand the factual matrix in the backdrop of the objectives of the above two legislations, the controversy in the instant case assumes immense significance. There is an interest of the bank in recovering the non-performing asset on the one hand, and protecting the right of the blameless tenant on the other. The Rent Control Act being a social welfare legislation, must be construed as such. A landlord cannot be permitted to do indirectly what he has been barred from doing under the Rent Control Act, more so when the two legislations, that is, the SARFAESI Act and the Rent Control Act operate in completely different fields. While the SARFAESI Act is concerned with non-performing assets of the banks, the Rent Control Act governs the relationship between a tenant and the landlord and specifies the rights and liabilities of each as well as the rules of ejectment with respect to such tenants. The provisions of the SARFAESI Act cannot be used to override the provisions of the Rent Control Act. If the contentions of the learned counsel for the respondent Banks are to be accepted, it would render the entire scheme of all Rent Control Acts operating in the country as useless and nugatory. Tenants would be left wholly to the mercy of their landlords and in the fear that the landlord may use the tenanted premises as a security interest while taking a loan from a bank and subsequently default on it. Conversely, a landlord would simply have to give up the tenanted premises as a security interest to the creditor banks while he is still getting rent for the same. In case of default of the loan, the maximum brunt will be borne by the unsuspecting tenant, who would be evicted from the possession of the tenanted property by the bank under the provisions of the SARFAESI Act. Under no circumstances can this be permitted, more so in view of the statutory protections to the tenants under the Rent Control Act and also in respect of contractual tenants along with the possession of their properties which shall be obtained with due process of law.”57 (emphasis supplied)
Thus, essentially the Supreme Court laid stress upon the purpose of a law sought to be overridden (here the rent control legislation) before giving effect to the non obstante provisions of another law notwithstanding the wide and explicit language of the statutory provision. While the underlying objective of a non obstante clause is only to ensure that an inconsistent law gives way, the Supreme Court in Vishal N. Kalsaria58 has concluded that even a non obstante clause cannot override an inconsistency if such inconsistency is on account of a social policy.
It is crucial to note that the Supreme Court in Vishal N. Kalsaria59 was alive to the fact that Section 35 of the SARFAESI Act employed the widest of all possible non obstante clauses inasmuch as it sought to override all other inconsistent laws and yet the Supreme Court chose to limit its application extending the following reasoning:
“37. It is a settled position of law that once tenancy is created, a tenant can be evicted only after following the due process of law, as prescribed under the provisions of the Rent Control Act. A tenant cannot be arbitrarily evicted by using the provisions of the SARFAESI Act as that would amount to stultifying the statutory rights of protection given to the tenant. A non obstante clause (Section 35 of the SARFAESI Act) cannot be used to bulldoze the statutory rights vested in the tenants under the Rent Control Act. The expression ‘any other law for the time being in force’ as appearing in Section 35 of the SARFAESI Act cannot mean to extend to each and every law enacted by the Central and State Legislatures. It can only extend to the laws operating in the same field.
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40. In view of the above legal position, if we accept the legal submissions made on behalf of the banks to hold that the provisions of the SARFAESI Act override the provisions of the various Rent Control Acts to allow a bank to evict a tenant from the tenanted premises, which has become a secured asset of the bank after the default on loan by the landlord and dispense with the procedure laid down under the provisions of the various Rent Control Acts and the law laid down by this Court in a catena of cases, then the legislative powers of the State Legislatures are denuded which would amount to subverting the law enacted by the State Legislature. Surely, such a situation was not contemplated by Parliament while enacting the SARFAESI Act and therefore, the interpretation sought to be made by the learned counsel appearing on behalf of the banks cannot be accepted by this Court as the same is wholly untenable in law.” (emphasis supplied)
As it is evident from the aforesaid reasoning, even though it noted that the SARFAESI Act was a special enactment to prescribe a remedy for the banking and financial sector which did not have a level playing field, and thus alleviate their position by giving overriding effect to its provisions over any other enactment, the Supreme Court nonetheless chose to limit the effect of the non obstante clause. Various questions arise from the outcome of this interpretative exercise. If the Parliament indeed intended that SARFAESI Act was to have overriding effect over the rent control laws, how else should it have legislated Section 35? Further, how does one decide when two laws “operate in the same field” so as to give effect to the non obstante clause? Stretched to a larger level, is it possible to read Vishal N. Kalsaria60 as laying down the proposition that an enactment will not be subjected to the non obstante clause of another enactment unless the former specially gives way to the latter? In other words, is the legislature obliged not just to employ a general non obstante clause but must also simultaneously amend the specific laws sought to be overridden by inserting “subject-to” clauses therein to give overriding effect to the enactment carrying the non obstante clause? These issues arise because in almost every dispute relating to inter se priority of two enactments the possibility of distinct legislative fields, on which such enactments are legislated, always exists. Therefore on a pragmatic plane the above enunciation of legal position in Vishal N. Kalsaria61 may amount to giving subjective discretion to the Judge to determine priority to a legislation vis-à-vis the other.
Additionally, the reasoning in Vishal N. Kalsaria62 does not address the doctrine of implied repeal. Let us assume for this discussion that Section 35 of the SARFAESI Act did not exist in the statute books. Even in such a scenario, would the legal position not have been that SARFAESI Act, being a later enactment, would prevail? Applying the doctrine of implied repeal, the answer appears to be in the affirmative. A five-Judge Bench of the Supreme Court in State of Orissa v. M.A. Tulloch & Co .63 explained the legal position on this aspect inter alia in the following terms:
“20. …There is, however, no express decision either in England or, so far as we have been able to ascertain, in the United States on this point. Untrammelled, as we are, by authority, we have to inquire the principle on which the saving clause in Section 6 is based. It is manifest that the principle underlying it is that every later enactment which supersedes an earlier one or puts an end to an earlier state of the law is presumed to intend the continuance of rights accrued and liabilities incurred under the superseded enactment unless there were sufficient indications — express or implied — in the later enactment designed to completely obliterate the earlier state of the law. The next question is whether the application of that principle could or ought to be limited to cases where a particular form of words is used to indicate that the earlier law has been repealed. The entire theory underlying implied repeals is that there is no need for the later enactment to state in express terms that an earlier enactment has been repealed by using any particular set of words or form of drafting but that if the legislative intent to supersede the earlier law is manifested by the enactment of provisions as to effect such supersession, then there is in law a repeal notwithstanding the absence of the word ‘repeal’ in the later statute. Now, if the legislative intent to supersede the earlier law is the basis upon which the doctrine of implied repeal is founded could there be any incongruity in attributing to the later legislation the same intent which Section 6 presumes where the word ‘repeal’ is expressly used. So far as statutory construction is concerned, it is one of the cardinal principles of the law that there is no distinction or difference between an express provision and a provision which is necessarily implied, for it is only the form that differs in the two cases and there is no difference in intention or in substance. A repeal may be brought about by repugnant legislation, without even any reference to the Act intended to be repealed, for once legislative competence to effect a repeal is posited, it matters little whether this is done expressly or inferentially or by the enactment of repugnant legislation. If such is the basis upon which repeals and implied repeals are brought about it appears to us to be both logical as well as in accordance with the principles upon which the rule as to implied repeal rests to attribute to that legislature which effects a repeal by necessary implication the same intention as that which would attend the case of an express repeal. … (emphasis supplied)
Thus the facts that SARFAESI Act: (i) is a legislation enacted later in point out time, (ii) is also a special law; and (iii) it stipulates specific provisions which are inconsistent with the provisions earlier enacted, clearly indicates that the Parliament intended to abrogate or impliedly repeal the earlier inconsistent provisions. This intent was furthered by a clear non obstante clause in Section 35. In fact, as seen in earlier part, subsequently enacted non obstante clauses generally prevail over earlier enacted non obstante clause. Adding another dimension to it, therefore, even if the rent control legislations carried a non obstante clause, the fact that SARFAESI Act is a subsequent enactment was a potent test seemingly overriding the rent control legislations. Thus relegating the application of SARFAESI Act, despite an unambiguous and wide non obstante clause, subject to other laws such as the rent control laws is clearly a marked shift in the jurisprudential outlook on construction and effect of non obstante clauses.
What appears from a conjoint reading of the decisions in Indra Kumar Patodia64 and Vishal N. Kalsaria65 is that the recent trend purportedly confines the overriding effect of a non obstante clause by applying the perceived legislative intent underlying the provisions sought to be overridden by such clauses. Viewed differently, the decisions in Indra Kumar Patodia66 and Vishal N. Kalsaria67 reveal the new trend and a possible change in the jurisprudence itself.
There is another dimension to the analysis. Section 37 of the SARFAESI Act, which is in a sense a non-derogation clause, provides that “[t]he provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force”. Is the expression “or any other law for the time being in force” omnibus and covers all laws in force at the time of enactment of the SARFAESI Act? Or, is the scope of this expression to be restricted by applying the principle of ejusdem generis?68 These issues are currently res integra as there is no authoritative pronouncement on this aspect. However what is noteworthy for our discussion is that the decision in Vishal N. Kalsaria69 does not even refer to this Section 37. It could possibly have been a formidable contention that the existing rent control legislations were protected from the application of the SARFAESI Act in the wake of its Section 37. Such contention, if accepted by the Supreme Court, would most likely have: (i) saved ignominy to the non obstante clause in Section 35; and (ii) given some meaning to the non-derogation clause in Section 37 and in particular the expression “or any other law for the time being in force” therein. However the fact of the matter remains that the decision in Vishal N. Kalsaria70 does not rest its conclusion upon Section 37 which could possibly be extended to institute the proposition that the effect of non obstante clauses can be diluted irrespective of the presence of a non-derogation clause.
Case Study – III: Ericsson – Restraining operation of non obstante clause in wake of non-derogation clause
Contrasted from a non obstante clause which seeks to override effect of a conflicting enactment, non-derogation clauses are an instance of legislative technique where a subsequent legislation itself provides that it would not affect the operation of existing statutes. In view of their inter se conflicting effects, reconciling legislations carrying both non obstante and non-derogation clauses is an interpretative challenge. Often the conflict is resolved by the legislature itself when it specifies a limited number of enactments in the non-derogation clause. In such cases only the enumerated enactments are saved and all other enactments are to be considered as overridden by the non obstante clause.71 A crucial issue arises, however, when an enactment carries both non obstante and non-derogation clauses in their untrammelled forms. A recent decision of the Delhi High Court in Ericsson72 reveals the difficulties one is fraught with while reconciling such clauses in the same enactment.
In this case an Indian company, M approached the Competition Commission of India (CCI) alleging “abuse of dominant position” by a foreign company referred here as “Ericsson”. The CCI on preliminary inquiry decided to initiate proceedings under the Competition Act, 2002. This order of the CCI was challenged by Ericsson before the High Court inter alia contending that CCI lacked jurisdiction to initiate such action. Of several grounds, the key basis for the contention was that: (i) the alleged violation was in reference to certain patents held by Ericsson; (ii) the allegation of M essentially was that Ericsson is imposing arbitrary terms for issuing compulsory licence towards use of these patents; (iii) in view of Ericsson, this dispute was purely within the realm of the Patents Act, 1970; and (iv) thus the jurisdiction of the CCI was ousted.
Section 60 of the Competition Act stipulates that it “shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force”. However Section 62 of the same enactment also states that “[t]he provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force”. Inter alia, in this background, it was the contention of Ericsson73 before the High Court that “the Patents Act is a special Act vis-à-vis the Competition Act and therefore it shall prevail over the provisions of the Competition Act; consequently, insofar as exercise of patent rights are concerned, proceedings under the Competition Act would not be competent and outside the scope of that Act.”74 Thus, it was essential for the High Court to determine whether the CCI was justified in proceeding with the inquiry or whether its jurisdiction was constrained by the provisions of the Patents Act.
The reasoning of the High Court is curious, to say the least. Firstly the High Court ruled, in view of the non-derogation clause in Section 62, against the overriding effect of Section 60 of the Competition Act.75 Thereafter, applying the general versus special principle, the High Court declared that the Patents Act being a special legislation is not overridden by the provisions of the Competition Act and Section 60 in particular.76 One would expect that with these two key findings the challenge of Telefonaktiebolaget LM Ericsson (PUBL)77 is likely to succeed, but only to be disappointed. The High Court thereafter examined the scheme of the Competition Act to declare that there was no irreconcilable repugnancy between it and the Patents Act and therefore the remedies under the former could be availed despite the latter.78 Thus the CCI’s jurisdiction was declared to include examining even violations of patent terms in the context of the Competition Act.79 The conclusion of the High Court, in effect, is that the provisions of the Competition Act are applicable not on account of the non obstante clause but on account of the fact that there is no inconsistency in its simultaneous operation alongside the Patents Act. The relevant observations of the High Court are as under:
“154. Thus, in my view Section 60 of the Competition Act, which provides for the provisions of the said Act to have an effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, must be read harmoniously with Section 62 of the Competition Act and in the context of the subject-matter of the Competition Act. As discussed earlier, the Competition Act is directed to prohibit certain anti-competitive agreements, abuse of dominant position and formation of combinations which cause or are likely to cause appreciable adverse effect on competition. Plainly, agreements which may otherwise be lawful and enforceable under the general law – such as the Contract Act, 1872 – may still be anti-competitive and fall foul of Section 3 of the Competition Act. Similarly, a practice or conduct which may be considered as an abuse under Section 4 of the Competition Act may otherwise but for the said provision be legitimate under the general law. Equally, mergers and amalgamations that are permissible under the general law may result in aggregation of market power that may not be permitted under the Competition Act. Section 60 of the Competition Act must be read in the aforesaid context.
155. It is well settled that the provision of any statute must be read in the context of the statute as a whole. A non obstante clause is a well-known legislative device used to give an overriding effect to certain provisions over the others which are inconsistent with those provisions; in the present case, Section 60 of the Competition Act expressly provides that the provisions of the Competition Act shall have effect notwithstanding anything inconsistent in any other law. However, the said provision must be read in the context of the Competition Act as a whole and the mischief that is sought to be addressed by the Competition Act. Thus, in my view, Section 60 is enacted only to restate and emphasise that notwithstanding agreements, arrangements, practices and conduct which may otherwise be legitimate under the general laws would nonetheless be subject to the rigors of the Competition Act. Section 60 cannot be read to curtail or whittle down the provisions of other statutes; this interpretation would also be in sync with provisions of Section 62 of the Competition Act as indicated above.
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175. The provisions of Sections 21 and 21-A of the Competition Act, read in the aforesaid context, indicate that the intention of the Parliament was not to abrogate any other law but to ensure that even in cases where CCI or other statutory authorities contemplate passing orders, which may be inconsistent with other statutes, the opinion of the concerned authority is taken into account while passing the such orders. The plain intention being that none of the statutory provisions are abrogated but only bypassed in certain cases. These provisions –Sections 21 and 21-A of the Competition Act – clearly indicates that the intention of the Parliament was that the Competition Act co-exist with other regulatory statutes and be harmoniously worked in tandem with those statutes and as far as possible, statutory orders be passed which are consistent with the statutory enactments concerned including the Competition Act.
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180. Facially, it may appear that the gravamen of the two enactments are intrinsically conflicting; however, when one views the same in the perspective that patent laws define the contours of certain rights, and the antitrust laws are essentially to prevent abuse of rights, the prospect of an irreconcilable conflict seems to reduce considerably.
181. In my view, there is no irreconcilable repugnancy or conflict between the Competition Act and the Patents Act. And, in absence of any irreconcilable conflict between the two legislations, the jurisdiction of CCI to entertain complaints for abuse of dominance in respect of patent rights cannot be ousted.”80 (emphasis supplied)
Even though the correctness of this decision is pending in intra-court appeals81, the lis involved in this case is a quintessential illustration of the complexities accompanying the task of determining the contours of non obstante clauses in contemporary legislations. In our inquiry it, however, appears that the non obstante clause under the Competition Act has been reduced to a non sequitur in the wake of the non-derogation clause in the same legislation. To generalise the proposition, does this decision imply that the presence of both non obstante and non-derogation clauses in the same legislation cancel each other out? If the answer is in the negative, then how does one construe the actual effect of non obstante clause of the Competition Act? On the contrary an answer in the affirmative may by diametrically opposite the settled interpretative principle that legislature does not act in futility.82 It will thus be interesting to note how the appellate forums resolve this conundrum.
In addition to the above issues, which are still open, there is an additional dimension which flows from this decision of the High Court. The High Court has held that the non obstante clause has to be construed in harmony with non-derogation clause in the Competition Act and it is only on account of there being no inconsistency between the Competition Act and the Patents Act that the provisions of Competition Act continue to apply. To extend this reasoning in instances of a similar lis involving another enactment other than Patents Act would imply that irrespective of its non obstante clause, the provisions of Competition Act shall not apply to a similar controversy unless the other enactment is not inconsistent with the Competition Act. This conclusion seems to render the clause obsolete and thus does not appear correct on the touchstone that such interpretation is to be avoided.83
Without adverting to the aforesaid two aspects, however, the Supreme Court in Mathew Varghese v. M. Amritha Kumar84 has come to a conclusion similar to the High Court in Telefonaktiebolaget LM Ericsson (PUBL)85. Taking note of the non-derogation clause in Section 37 of the SARFAESI Act, the Supreme Court chose to dilute the ambit of its non obstante clause in the following terms:
“46. A reading of Section 37 discloses that the application of the SARFAESI Act will be in addition to and not in derogation of the provisions of the RDDB Act. In other words, it will not in any way nullify or annul or impair the effect of the provisions of the RDDB Act. We are also fortified by our above statement of law as the heading of the said section also makes the position clear that application of other laws are not barred. The effect of Section 37 would, therefore, be that in addition to the provisions contained under the SARFAESI Act, in respect of proceedings initiated under the said Act, it will be in order for a party to fall back upon the provisions of the other Acts mentioned in Section 37, namely, the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or any other law for the time being in force.” (emphasis supplied)
Even if it could be contended that the aforesaid is not the final word on the subject, indeed the preponderance of judicial opinion is tilted towards confining the operation of a non obstante clause in the wake of a non-derogation clause, especially when the two are in the same enactment.
The above enunciation of legal position on the construction of non obstante clauses is by no means conclusive. The analysis only seeks to cull out certain critical dimensions which restrict the overriding effect of such clauses. Nonetheless, from the above discussion it appears that the nature of these clauses notwithstanding, a complex web of the underlying objectives of relevant enactments are both: (i) pertinent points of inquiry; and (ii) limitations in giving effect to non obstante clauses. The discussion also reveals the effect of other specific principles of statutory interpretation, such as: (a) abundant caution; (b) literal construction rule; (c) doctrine of reading down; and (d) non-derogation clauses; etc. to circumscribe the application and contours of non obstante clauses.
On a larger level, given the background that Indian courts follow the interpretative techniques standard in the commonwealth fraternity, it is clear that the decisions of the Indian courts as a case study reveal a subtler shade of non obstante clauses. The above jurisprudential survey reveals trend, as if a comment on the contemporary legislative drafting, has serious lessons. Firstly, routine or excessive employment of non obstante clauses is bound to create more conflicts than solutions thereby also diluting their purpose of serving as tie-breaker rules. Secondly, presence of non obstante clauses in competing legislations robs such clauses of their overriding effect as it compels the judiciary to engage with other principles of statutory interpretation in order to determine the legislative intent, thereby relegating the non obstante clause as just another statutory provision. Thirdly, the legislative intent is seriously undermined when non obstante clauses are used in conjunction with non-derogation clauses. In fact such instances are a clear indication of incoherent and blunt legislative intent. These reflections require critical evaluation as the common reflection in each of these instance is ebbing away of legislative authority contrasted from the earlier legal position where one could consider a categorical iteration of the legislative intent by a mere employment of a non obstante clause. Legislative intent behind employing non obstante clauses notwithstanding, the exceptions to the rule are now in such numbers that the process of concluding upon the outcome in each case, therefore, requires a specific judicial precedent invariably of the Supreme Court.
†Advocate, Supreme Court of India; LLM, London School of Economics; BBA, LLB (Hons.) (Double Gold Medalist), National Law University, Jodhpur. The author can be reached at firstname.lastname@example.org.
3. A.K. Patnaik (ed.), G.P. Singh’s, Principles of Statutory Interpretation (14th edn., LexisNexis Butterworths, New Delhi, 2016) p. 401.
4. Orient Paper and Industries Ltd. v. State of Orissa, 1991 Supp (1) SCC 81, 92. See also Sharat Babu Digumarti v. State (NCT of Delhi), (2017) 2 SCC 18, paras 31-37; State of Bihar v. Anil Kumar, (2017) 14 SCC 304, para 22.
6. See generally Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi, (1996) 4 SCC 76, paras 76-77; Union of India v. Ajeet Singh, (2013) 4 SCC 186, para 18.1; Narcotics Control Bureau v. Kishan Lal, (1991) 1 SCC 705.
10. As explained by the Supreme Court in P.S. Sathappan v. Andhra Bank Ltd., (2004) 11 SCC 672 “a Letters Patent is the charter of the High Court. … [it] is the specific law under which a High Court derives its powers”.
11. Ex abundanti cautela – “It is not uncommon to find that the legislature sometimes, with a view to making its intention clear beyond doubt, uses language ex abundanti cautela though it may not be strictly necessary and even without it the same intention can be spelt out as a matter of judicial construction and this would be more so in case of subordinate legislation by the executive. The officer drafting a particular piece of subordinate legislation in the Executive Department may employ words with a view to leaving no scope for possible doubt as to its intention or sometimes even for greater completeness, though these words may not add anything to the meaning and scope of the subordinate legislation.” Union of India v. Modi Rubber Ltd., (1986) 4 SCC 66, para 7.
25. See generally A.K. Patnaik (ed.), G.P. Singh’s, Principles of Statutory Interpretation (14th edn., LexisNexis Butterworths, New Delhi, 2016) p. 410. .
32. (1993) 2 SCC 144, 157. Followed with approval in Solidaire India Ltd. v. Fairgrowth Financial Services Ltd., (2001) 3 SCC 71 where SICA, on account of non obstante clause therein, was given overriding effect over provisions of Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992 despite a non obstante clause therein as well.
36. Ram Narain v. Simla Banking & Industrial Co. Ltd., AIR 1956 SC 614; Sarwan Singh v. Kasturi Lal, (1977) 1 SCC 750; LIC v. D.J. Bahadur, (1981) 1 SCC 315; Maharashtra Tubes Ltd. v. State Industrial & Investment Corpn. of Maharashtra Ltd., (1993) 2 SCC 144; Allahabad Bank v. Canara Bank, (2000) 4 SCC 406; Solidaire India Ltd. v. Fairgrowth Financial Services Ltd., (2001) 3 SCC 71.
40. It must be pointed out that the principle of subsequent non obstante clause prevails has been endorsed in two recent Supreme Court decisions; Pegasus Assets Reconstruction (P) Ltd. v. Haryana Concast Ltd., (2016) 4 SCC 47 and Madras Petrochem Ltd. v. Board for Industrial and Financial Reconstruction, (2016) 4 SCC 1.
43. See also A.G. Varadarajulu v. State of T.N., (1998) 4 SCC 231 observing that “when the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands all alone by itself”.
48. A.K. Patnaik (ed.), G.P. Singh’s, Principles of Statutory Interpretation (14th edn., LexisNexis Butterworths, New Delhi, 2016) p. 407) quoting Rural Litigation and Entitlement Kendra v. State of U.P., 1989 Supp (1) SCC 504; T.N. Godavarman Thirumalpad v. Union of India, (2002) 10 SCC 606; and Union of India v. Ajeet Singh, (2013) 4 SCC 186.
68. “… the true scope of the rule of ejusdem generis is that words of a general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified and not its reverse, that specific words which precede are controlled by the general words which follow”. Amar Singhji v. State of Rajasthan, AIR 1955 SC 504 (Constitution Bench) per Venkatarama Ayyar, J.
81. LPA No. 246-247/2016 (Delhi High Court).