INTRODUCTION

Legal interpretation is a difficult task. Modern theorists have shown that language is unlimited and
that those texts are at risk of playing a game that is not compatible with debilitating power. In the
eyes of recent theorists, words have no ‘important’ meanings; instead, words are permanent
flexible with the ability to block communication and disrupt the translation process. This raises an
obvious question - the one that has been overlooked by the lion’s share of recent theorists. If the
language is weak and unstable, why does it work so well? Why language works effectively in
transmitting information? As Peter Hogg once asked, if language is not uncontrollably, how that
people are able to ‘keep appointments of dentists and stop these standing signs’? My view is that
the consistent flexibility and communication success we see in the real world it does not mean that
language is more determined than what postmodernists say. Instead, it suggests that there is
something other than language that prevents free play of completion translation; something that
blocks the late feeling of undermining the meaning of texts with a diminishing definition. The
powerful force in question is self-centeredness 1. At its most basic level, interpreting is the process
by which translators have to choose in the middle of the competition, some definitions. As with all
decisions, translated selection is restricted the self-consciousness of the decision-maker in question.
The same is true of decisions made by judges when interpreting the law. Everyone, including the
judges, translated the text in whatever way they could it will be very beneficial. This universal
pursuit of pleasure has the effect of preventing the types of translation options to be made by the
interpreter. The role of fun in restricting translation options can be shown on a daily basis
examples. Remember what Hogg said about dental appointments and stop signs. I mean a lot
theorists committed themselves over time to be able to do it at the dentist despite being able to
rebuild, stabilizing, re-interpreting, and deciphering any text they encounter (including their
appointment books). They also stand with stop signs. The reason is that the latest scholars (like all
of us) have it interest in dental hygiene and avoiding traffic tickets and car crashes 2. While they

1
Important General Rules of Interpretation: A Study, by Mukund Sarda, SSRN April ’14

2
William S. Blatt University of Miami School of Law, wblatt@law.miami.edu
could choose to perform a persuasive act of renewal through their letters of appointment or
submission postmodern tools for revealing layers of meaning embedded in the stop sign, usually
selective to do so: their commitment to re-creating the right text goes beyond their desire to profit
the result they appreciate (healthy teeth or safe driving in these examples). They do their best to
Translate the nomination letters and set up the symbols in the usual way because it costs money to
do so otherwise it is too high. Costs associated with conflicting interpretations of nomination letters
(i.e., additional risk of missed appointments) and costs associated with irregularities the definition
of stop signs (i.e., increased risk of traffic tickets and car accidents) is the same it is good for many
people to avoid rebuilding such texts.

KINDS OF INTERPRETATION

THE LITERAL OR GRAMMATICAL INTERPRETATION

According to this rule, the phrases are given their every day and herbal that means and if the means
of such phrases is apparent they ought to take delivery of impact to anything is their consequence.
So, the everyday, herbal famous or literal that means of the phrases must be taken into
consideration. It is the overall rule of interpretation that judges aren't at liberty to feature to or to
get rid of from the letters of regulation. They must restrained to the language of the regulation.
Courts can't examine whatever into a statutory provision which is apparent and unambiguous.
In the case of Lalita Kumari v. Government of Uttar Pradesh, the principle query became the
translation of Section 154 of the Code of Criminal Procedure. The courtroom docket held that use
of phrase “shall” leaves no discretion to police officer to keep initial enquiry earlier than recording
an FIR. Use of the expression “records” with none qualification additionally denotes that police has
to report records regardless of him being unhappy through its reasonableness. So here, the
courtroom docket interpreted the literal that means of the phrases used.

THE MISCHIEF RULE

This rule of interpretation became laid down within side the case of Heydon’s Case 3, wherein it
became held 4 matters are to be considered:-
 What became the not unusual place regulation earlier than the making of the Act?
 What became the mischief and disorder for which the not unusual regulation did now no
longer offer?
 What treatment the parliament had resolved and appointed to treatment the ailment of
commonwealth
 The proper cause of the treatment.

This precept is utilized by the courts to interpret the goal of the legislators. This targets at locating
the mischief and disorder within side the statute after which supplying for treatment for the equal.
The principal benefit of this rule is that it closes the loopholes within side the regulation and allows
to expand the regulation. This rule permits the judges to trade the means of the regulation with the
view to make certain management of justice. This rule offers maximum discretion to the judges and
is suitable to the ambiguous instances.

In the case of Bengal Immunity Company v. the State of Bihar 4, the mischief rule became
implemented to the development of Article 286 of the Constitution of India, watching that it
became to treatment the mischief of a couple of taxation and to maintain the loose glide of the
inter-nation alternate or trade withinside the Union of India seemed as one monetary unit with none
provincial barrier that the Constitution makers followed Article 286 withinside the Constitution.

THE GOLDEN RULE

This rule is the change of the precept of grammatical interpretation. According to this rule, in
general the phrases used withinside the statute ought to take delivery of their herbal that means
however if it results in inconvenience, problem or injustice, the courts ought to adjust the that
means to such an volume so one can take away such inconvenience or injustice. So as this rule

3
(1584) 76 ER 637
4
1955 ( 2 ) SCR 603
solves all issues that is referred to as Golden Rule. This rule is primarily based totally on the idea
that the legislature does now no longer intend sure gadgets and any creation main to any of such
gadgets merits to be rejected.

In the case of Uttar Pradesh Bhoodan Yagna Samiti v. Brij Kishore 5, the preferrred courtroom
docket held that the expression “landless person’’ utilized in phase 14 of U.P. Bhoodan Brij
Kishore, the preferrred courtroom docket held that the expression “landless person’’ utilized in
Section 14 of U.P. Bhoodan Yagna Act, 1953 which made provision for furnish of land to humans,
became restrained to “landless laborers’’. A landless labour is he who's engaged in agriculture
however having no agricultural land. The Court similarly stated that “any landless person” did now
no longer consist of a landless businessman dwelling in a city. The item of the Act became to put in
force the Bhoodan movement, which aimed toward distribution of land to landless labors who had
been verged in agriculture. A businessman aleven though landless can't declare the advantage of
the Act.

HARMONIOUS CONSTRUCTION

This rule of interpretation is followed in the ones instances wherein arises a warfare among or
greater statutes or among the 2 provisions of the equal statute. The rule follows the precept that
each statute has a few cause for which its miles enacted, so it ought to be examine as an entire. So
the enactment which makes the enactment a steady entire ought to be the intention of the courts and
a creation which avoids inconsistency ought to be followed.

In T.M.A. Pai Foundation v. State of Karnataka6 , whilst decoding Articles 29 and 30 of the
Constitution the Supreme courtroom docket determined that after constitutional provisions are
interpreted, it must be borne in thoughts that the translation ought to be which includes to similarly
in corporation. They can't be examine in isolation and must be examine harmoniously to offer that
means and cause. They can't be interpreted in a way that renders any other provision redundant. If
essential, a purposive and harmonious interpretation ought to take delivery of.
5
1988 AIR 2239, 1988 SCR Supl. (2) 859
6
 [1971 (Supp.) SCR 677]
BENEFICAL CONSTRUCTION

A useful statute confers advantage on people if any provision is ambiguous so this is able to
meanings, certainly considered one among which could maintain the advantage and any other
which could take it away, the means which preserves it ought to be followed. The foundation of
this rule is that the courts ought to be beneficent closer to the humans on whom blessings has been
conferred through the statute. It entails giving widest that means to statute. The distinct form of
legislation which acquire useful creation are The Factories Act, Industrial Disputes Act, Consumer
Protection Act, Juvenile Justice Act and diverse socio monetary legislation.
The following instances illustrate using useful creation:-

In case of Hindustan Lever Ltd v Ashok Vishnu Kate7, the courtroom docket held that during a
case associated with prevention of unfair exertions practice, at some stage in decoding social
welfare regulation, a creation ought to be positioned at the applicable provisions which similarly
the cause for which such regulation became enacted.
The Supreme Court held within side the case of Spring Meadows Hospital v. H. Ahluwalia 8, that if
the dad and mom have employed the offerings of a health center for the advantage in their infant
they and the kid can preserve unbiased movements in opposition to the health center for poor
offerings.

CASE ANALYSIS

Case name: M A Hakeem vs. Tsrtc, Bus Bhavan, Mushirabad

Petitioner: M.A. Hakeem
Respondent: Telangana State Road Transportation Corporation (TSRTC).
Citation: Writ Petition No.25147 of 2015
Hon'ble Judges/Coram: The Honble Sri Justice R.Kantha Rao presided over this case.
7
1996 AIR 285, 1995 SCC (6) 326
8
[(1998) 4 SCC 39]
FACTS
The petitioner was the bus driver for TSRTC. He was also the surety along with Mohammed
Kareem Pasha (driver) to help Shaik Hussain (conductor) obtain a House Building Advance Loan.
As per the regulations of the corporation, if an employee is removed from service, the balance
loan amount and interest has to be recovered from the settlement of salary, gratuity and by
disposing of the property offered as security to the HBA.
HBA recovered the amount after the principal debtor was removed from service and petitioner
retired. The petitioner contended that the mortgaged property must be disposed first before
coming after the sureties’ retirement benefits. The respondents contended that the petitioner is
liable to pay and cannot go back and deny liability as it is co-extensive.

ISSUES
1. Whether there is a contractual obligation on the part of the surety if the principal debtor
defaults?
2. Whether the creditor has to exhaust all his remedies against the principal debtor before
going after the surety?

JUDGEMENT
The writ petition was allowed subsequently. In the judgment, the judge acknowledged that the
creditor can proceed either against the principal borrower or the sureties according to his choice
cannot be made applicable to the facts of the present case. The regulations of the corporation
clearly indicate that the corporation has a right to proceed to recover the debt from the amounts
payable to the principal borrower and also by bringing the property mortgaged as security for the
loan to sale. The corporation must follow the regulations.

Further in the judgment, it was mentioned that since the corporation is an organization of the
state, it is under an obligation to follow its regulations and circular instructions. In this instant
case, the corporation acted in clear disregard of its own regulations and circular instructions.
 The court further relied on the judgment given in the State Bank of Saurashtra v. Chitranjan
Ranganath Raja9, the supreme court has emphatically laid down “when the creditor acts in
utterdisregard of its responsibility and is grossly negligent in exercising all the care of a prudent
man which one would expect in management of one’s own affairs cannot act to the detriment of
the surety”. The court stated by the corporation not following its own rules, it acted in gross
negligence. Therefore, the corporation cannot act detriment to the surety and must follow the rules
of the corporation. The money should be recovered by selling the mortgaged property first.

METHODS OF DECIDING THE CASE

There are two methods of deciding a case:

● Inductive Method: there is a great reliance placed upon the decisions of the judges.
Before deciding a case, the judges look into previously decided cases of the similar nature
by their own court or by superior court. From particular cases they deduce general rules,
and apply them on the cases before them and decide accordingly.
● Deductive Method: there is a great reliance placed legislatures and enacted statues. In
such a system, the cases are decided on the basis the enacted legislature and statue that
are codified and the judges decide cases on the basis of these codes and not on the basis
of previously decided cases.
In the present case the court has utilized both the method mentioned above, for instance for
inductive method the court has relied upon many cases (mentioned below) which have ruled a
similar judgment having similar facts. Section 128 of the ICA, has also been given literal
interpretation, thus attracting the deductive method as well. However in deciding the second
issue raised in the present case at hand the court has used inductive method as an exception. The
court has gone beyond the general cases and held this case to fall in an exception category.

9
State Bank of Saurashtra v. Chitranjan Ranganath Raja 1980 AIR 1528
 PROVISIONS AND INTENTIONS OF LEGISLATURE

S ection 128 of Indian Contract Act – Surety’s liability – The liability of the surety is co-
extensive with that of the principal debtor, unless it is otherwise provided in the contract. In

Balakrishnan v. H.Chunnilal Bagma10 held that it is clear that the liability of the principal
debtor and the liability of a surety which is co-extensive with that of the former are really
separate liabilities although arising out of the same transaction. The purpose of contract of
guarantee is defeated if the creditor is asked to postpone his remedies against the surety. The
liability of surety is immediate. Thus the intention of the legislature is to provide speedy and
assured remedy to the creditor. It is important to note that the purpose of a surety is to protect the
creditor.

D octrine of Pari Materia is applied in interpreting such statutes 11. It states that the statute has to
be interpreted in its literal sense and no wide ambit should be applied. For interpreting the
concerned statute help of other statutes can be taken which are dealing with the same subject matter
or forming part of the same system.

The Principles of Interpretation assume importance as the Courts and lawyers are often called upon
to unfold the meaning of ambiguous words and expressions and resolving inconsistencies. The
process of application of the enacted law on facts and circumstances before the courts has led to
formulation of certain rules of interpretation or construction, so that some consistency in the
decisions maybe achieved. Legal experts draft enacted laws, Acts and Rules and it could be
expected that the language used will leave no room for interpretation or construction.
As per our opinion, while both Literal and Golden Rules of Interpretation were brought forward, it
was the Literal rule that was applied.
The bench in this case, concluded that there may be cases where even though literal interpretation
may include certain consequences not intended by the legislature, the court shall \ interpret the
same based on the facts and circumstances Also, a statute may be given a literal interpretation on

10
Balakrishnan v. H.Chunnilal Bagmar (1998) 1 MLJ 307
11
Principles of Statutory Interpretation by Justice G.P. Singh (8th E.d.), Syn. 8.
the basis of the object of it although the grammatical construction would carry its operation far
beyond. In the present case Sec 128 of Indian Contract Act, is putting the creditor in sphere and
protecting his rights. One of the important general principle is Statute must be read as a whole and
all parts taken together when construing a provision.

AANALYSIS

W HETHER THERE IS A CONTRACTUAL OBLIGATION ON THE PART OF THE

SURETY IF THE PRINCIPAL DEBTOR DEFAULTS?

Section 128 of Indian Contract Act speaks about surety’s liability. It states that the liability of the
surety is co-extensive with that of the principal debtor, unless it is otherwise provided in the
contract. Therefore, a surety cannot escape liable when the principal debtor defaults. The surety
and principal debtor become co-debtors when the default occurs.

In Jagannath Ganeshram Agarwala v. Shivnarayan Bhagirath and others 12 held that the liability of
the surety is co-extensive, but is not in the alternative. Both the principal debtor and the surety are
liable at the same time to the creditors.

In the Gopilal J. Nichani’s13 case, Section 128 of the Indian Contract Act talks of only one thing
and that is about the liability of the guarantor as being co-extensive with that of the principal
debtor. In A. Ramadas Rao vs. J.P.Builders14, the court held that the liability of a surety is co-
extensive with that of the Principal debtor, unless the contrary is provided in the contract.

After establishing that the liability of a surety is co-extensive. It is important to understand

whether the creditor needs to exhaust all his remedies against the principal debtor before going

12
Jagannath Ganeshram Agarwala v. Shivnarayan Bhagirath and others (1940) 42 BOMLR 451
13
Gopilal J. Nichani vs Trac Industries And Components AIR 1978 Mad 134
14
A. Ramadas Rao vs. J.P.Builders (2011) 1 SCC 429
after the surety. It is important to note that a surety becomes a co-debtor when there is a default.

WHETHER THE CREDITOR HAS TO EXHAUST ALL HIS REMEDIES AGAINST THE
PRINCIPAL DEBTOR BEFORE GOING AFTER THE SURETY?

The question in this case revolves around whether the corporation has a legal obligation to dispose
of the mortgaged property before withholding their retirement benefits. The court was expected to
decide whether the creditor has the option of suing the principal debtor or surety. Or is it
necessary that all remedies against the principal debtor must be exhausted. Just like mentioned, in
the judgment of this case, precedents state that it is to the creditors’ discretion to who they recover
the money from.
In the case, U.P. Financial Corp v Garlon Polyfeb Industries 15 stated that the corporation could
straight away proceed against the surety without first proceeding against the company (principal
debtor). In the case, Nikunja Kishore Pradhan v SBI16, the decree-holder may at his choice
enforce the decree either against the principal debtor and surety. The Madras High Court in
Swaminath v. S.L. Lakshmana17, while referring to section 128 held that a suit against the surety
without first exhausting the remedies against a principal debtor could be maintained.
The Lahore High Court in Kuckreja Ltd. v. Said Alam 18 established the same. The Andhra Pradesh
High Court also in Nagpur Nagarik Sahakari Bank Ltd. v. Union of India 19, stated that it is not
necessary that the creditor must first seek remedy against the principal debtor before proceeding
against the surety. A bench of justices BS Chauhan and Dipak Misra also said the guarantor cannot
insist that the creditor must first exhaust all remedies against the principal debtor before recovering
the debts from the surety holders. However, there have been exceptions to the general established
rule that the creditor may chose who sue. It is not necessary that one must exhaust all remedies
against the principal debtor before going after the surety. The current M.A Hakeem case is such an

15
U.P. Financial Corp v Garlon Polyfeb Industries III (2003) BC 626, (2003) 2 UPLBEC 1785
16
Nikunja Kishore Pradhan v SBI 70(1990)CLT416
17
Swaminath v. S.L. Lakshmana 157 Ind Cas 979
18
Kuckreja Ltd. v. Said Alam AIR 1941 Lah 16
19
Nagpur Nagarik Sahakari Bank Ltd. v. Union of India AIR 1981 AP 153
exception.

The following cases were exceptions.

In the case, Bank of Bihar Ltd v Damodar Prasad20, the Supreme Court overruled the decision of
the Patna High Court and Trial court. The overruling reconfirmed that the bank shall not enforce
the guarantee in question only after having exhausted its remedies against the principal debtor.

In the case, Panpori v Central Bank of India, if the principal debtor is financially well off and can
discharge his liability under the decree, the creditor should in the first instance require him to pay
and only then may he proceed against the surety. However, in a decision in the case, Union of
India v Manku Narayana21, the Supreme Court said that the creditor must proceed against the
mortgaged property first and then only against the principal debtor and then only against the
surety for the remaining amount It is important to note that the purpose of a surety is to protect the
creditor. If a creditor, has to exhaust all the remedies against the principal debtor, the process will
be time consuming and legally exhausting. If the creditor cannot approach the surety without
exhausting all the remedies, the idea of a surety is nullified.

Finally, it is important to realize that the terms in the contract are superior to the general rules in
the Indian Contract Act. In this case, the regulations of the corporation and the circular
instructions placed on record clearly indicate that the corporation has a right to proceed to recover
the debt from the amounts payable to the principal borrow and also by bringing the property
mortgaged as security for the loan to sale first.

CRITICAL ANALYSIS

After reviewing precedents and the judgment of the present case. I strongly believe that in this
case the judgment was made in the interest of equity, justice and good conscious. I agree with the

20
Bank of Bihar Ltd v Damodar Prasad 1969 AIR 297
21
Union of India v Manku Narayan AIR 1987 SC 1078
judgment and ratio decidendi given in the said case. Firstly, the surety is liable to pay if the
principal debtor defaults. There is no question in the matter that the liability of a surety is co-
extensive. The petitioner cannot avoid his liability. The purpose of a surety gets defeated if the
surety cannot be held liable. However, it is true that in accordance to precedent, the creditor can
avail the option of either recovering the money from the principal debtor or surety. But this case is
an exception. As the rules of corporation dictate otherwise, those regulations must be adhered to.
The circulars of the corporation state, if an employee is removed from service, the balance loan
amount and interest has to be recovered from the settlement salary of the principal debtor,
gratuity, and be disposing of the property offered as security to the House Building Advance
(HBA). If the corporation has certain rules, then those rules are implied to be followed in the
contract. The creditor can either chose to proceed against the principal debtor, surety or
mortgaged property unless otherwise stated.