A shocking decision by the Supreme Court in which it has termed a provision of law as legal fiction and disregarded it has been reported recently (III (2009) CPJ 2 (SC)).
Abhilash Jewellery is a jewelry shop in Thrisur district of Kerala. It had bought insurance from New India Assurance Company for Rs. 1.15 crores. When the policy was in effect, 588 gms. of gold was stolen from the shop. When the shop filed the insurance claim, it was rejected for the reason that the stolen gold was in the custody of an apprentice. One of the conditions of the policy was that insurance would be paid if the gold was in custody of an employee. The insurance company said that an apprentice is not an employee and so refused to pay the insured amount.
The jewelry shop filed a complaint before the National Consumer Commission arguing that under Sec. 2(6) of the Kerala Shops and Commercial Establishments Act, an apprentice is also an employee. The same interpretation appears in many other statutes also. The National Commission agreed with this argument and ordered the insurance company to pay up.
The insurance company appealed to the Supreme Court against this decision. The Supreme Court reversed the order of the National Commission saying: "The contract of insurance no doubt uses the word 'employee', but it does not say that the word 'employee' in the contract of insurance will have the same meaning as in the Kerala Shops and Commercial Establishments Act or the Employees State Insurance Act or any other enactment. In various enactments, the word 'employee' has no doubt, been defined to include an apprentice, but that is only a deeming provision and a legal fiction by which the word 'employee' has been extended. Legal fictions are well-known in law. For example, Section 43(3) of the Income Tax Act defines "plant' to include a book. Ordinarily, a plant means a factory, and by no stretch of the imagination can we call a factory a book. However, the Income Tax Act deems a book to be a plant for the purpose of depreciation. Many such illustrations of deeming clauses or legal fictions can be given. The definition of an employee in various enactments which include an apprentice within the ambit of the definition is such a piece of legal fiction. That however does not mean that an apprentice is an employee. In the present case, since the word 'employee' has not been defined in the contract of insurance, we have to give it the meaning which it has in common parlance. In common parlance, an apprentice is a trainee and not an employee."
There are some serious problems with the decision of the Supreme Court:
1. The Court has said that in common parlance, an apprentice is a trainee and not an employee. What is "common parlance"? Do people commonly know that an apprentice is a trainee and not an employee? The answer must be no. Then how do we find out the common usage of the word? The Oxford Dictionary, reputedly the most authoritative of all dictionaries, merely says that an apprentice is a person learning a skilled practical trade from an employer. But it does not definitely say that he is not an employee. What are we to do now? Shall we look the word up in the internet? According to the internet, an apprentice is considered an employee in America, England, Australia, etc. Then, is this not the meaning of "apprentice' in common usage?
2. Plain Meaning Rule is a principle used by courts. According to it, if a word used in a document is not defined in that document or in a related law, it should be given its plain meaning. In the present case, the word 'employee' may not be defined in the insurance contract, but according to the relevant laws, it is clear that an apprentice is also an employee. So there is no need to invoke the plain meaning rule for the word 'employee'.
3. It appears that the Court is not interpreting the phrase 'Legal Fiction' correctly. The procedural device used by courts when justice is not being done due to a defect in the law is called legal fiction. One example. In olden days one could only sue persons. In those days, when a company cheated a person, he could not, under the laws extant, file a case against the company. Realizing that this was unjust, courts delivered justice by creating a legal fiction that a company was a person for the purpose of law. (Nowadays, laws include companies in the definition of the word 'person'. So there is no need for the courts to resort to legal fiction in the matter of companies.) But when the law clearly says that an apprentice is an employee, the courts can not go against it.
4. If all courts disregard what is clearly spelt out in a law calling it legal fiction, then all laws become meaningless. Our Constitution reserves the power to make laws to the legislature. Judiciary can not exercise that power. The Supreme Court itself has repeatedly held that, in interpreting a law, no violence must be done to the language and the intention of the law. The order of the Court in dismissing Sec. 2(6) of the Kerala Shops and Commercial Establishments Act defining an apprentice to be an employee as a legal fiction violates these earlier orders.
Prof. S.K. Ananda Thirtha, Member, Mysore Grahakara Parishat