Legal fiction [Meaning]

Indian Law Encyclopedia

To treat an imaginary state of affairs as real.

In Bhavnagar University v. Palitana Sugar Mill (P) Ltd. and Ors., (2003) 2 SCC 111, it was held that the purpose and object of creating a legal fiction in the statute is well known and when a legal fiction is created, it must be given its full effect.

It was held in East End Dwellings Co. Ltd. v. Finsbury Borough Council [(1951) 2 All ER 587]:

“If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.”

27. It must, however, be noticed that therein the court has also noticed a decision of this Court in Consolidated Coffee Ltd. v. Coffee Board [(1995) 1 SCC 312] wherein it has been held that mere use of the word “deemed” is itself not sufficient to set up a legal fiction.

28. Furthermore, it is not the law that the court, irrespective of the nature, purport and object of the statute, shall assign a meaning which was not intended to be given by the Legislature. legal fiction created in terms of sub-section (3) of Section 32 of the Act was only in regard to the receivability of instrument in evidence. The legal fiction for the aforementioned purpose is raised only to the extent that for the said purposes it shall be deemed to have been originally duly stamped, viz., the determination of chargeability of additional duty would be no significance if the additional duty determined by the Collector, if any, has been deposited.

29. In Maruti Udyog Ltd. v. Ram Lal and Others, [(2005) 2 SCC 638], this Court held:

“35. In construing a legal fiction the purpose for which it is created should be kept in mind and should not be extended beyond the scope thereof or beyond the language by which it is created. Furthermore, it is well-known that a deeming provision cannot be pushed too far so as to result in an anomalous or absurd position. The Court must remind itself that the expressions like “as if is adopted in law for a limited purpose and there cannot be any justification to extend the same beyond the purpose for which the legislature adopted it.”

[See also Ishikawajma-Harima Heavy Industries Ltd. v. Director of Income Tax, Mumbai, (2007) 1 SCALE 140]

A deeming provision is a legal fiction and an admission of the non-existence of the fact deemed. (See M/s. J.K. Cotton Spinning and Weaving Mills Ltd. and Anr. v. Union of India and Ors., AIR 1988 SC 191 at 202). Therefore, while interpreting a provision creating a legal fiction, the Court has to ascertain the purpose for which the fiction is created.

23. The law on this aspect has been very neatly summed-up by Lord Justice James in Ex Parte Walton, In re Levy (1881) 17 Ch. D. 746. At page 756 the learned Judge formulated as follows:

…When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to….

24. The aforesaid formulation has been approved by Constitution Bench of this Court in State of Travancore Cochin and Ors. v. Shanmugha Vilas Cashewnut Factory, Quilon reported in, AIR 1953 SC 333. At page 343 of the report the aforesaid principles have been referred to by this Court along with the various other decisions and which are set out:

When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to…

The above observations were quoted with approval by Lord Cairns and Lord Blackburn in Arthur Hill v. East and West India Dock Company (1884) 9 A.C. 448. Lord Blackburn went on to add at page 458:

I think the words here ‘shall be deemed to have surrendered’. mean, shall be surrendered so far as is necessary to effectuate the purposes of the Act and no further;…

                                                                                    (Emphasis added)

13. In Ittianam and Ors. v. Cherichi @ Padmini, (2010) 8 SCC 612, it was held that when the Legislature uses a deeming provision to create a legal fiction, it is always used to achieve a purpose.

  • Section 141 of the Negotiable Instrument Act provides for a constructive liability. A legal fiction has been created thereby. The statute being a penal one, should receive strict construction. It requires strict compliance of the provision. Specific averments in the complaint petition so as to satisfy the requirements of Section 141 of the Act are imperative.
  • Power under Section 319 of the Code of Criminal procedure can be exercised by the Court suo motu or on an application by someone including accused already before it. If it is satisfied that any person other than accused had committed an offence he is to be tried together with the accused. The power is discretionary and such discretion must be exercised judicially having regard to the facts and circumstances of the case. Undisputedly, it is an extraordinary power which is conferred on the Court and should be used very sparingly and only if compelling reasons exist for taking action against a person against whom action had not been taken earlier. The word ‘evidence’ in Section 319 contemplates that evidence of witnesses given in Court. Under sub-section (4)(1)(b) of the aforesaid provision, it is specifically made clear that it will be presumed that newly added person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced. That would show that by virtue of sub-section (4)(1)(b) a legal fiction is created that cognizance would be presumed to have been taken so far as newly added accused is concerned [Lok Ram Versus Nihal Singh and ANOTHER AIR 2006 SC 1892 ]
  • Section 31 of the State Financial Corporations Act are treated in the nature of execution proceedings. In support of this submission the learned counsel referred to Gujarat State Financial Corporation vs. M/s. Natson Manufacturing Co. (P) Ltd. and Ors. (1979) 1 SCR 372. It was observed by this Court in this case that “the substantive relief in an application under Section 31 (1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree.”

    Section 31 of the Act contains special provisions for enforcement of claims by State Financial Corporations. It is by way of a legal fiction that the procedure akin to execution of decrees under the Code of Civil Procedure has been permitted to be invoked. But one cannot lose sight of the fact that there is no decree or order of a civil court when we are dealing with applications under Section 31 of the Act. The legal fiction at best refers to a procedure to be followed. It does not mean that a decree or order of a civil court is being executed, which is a sine qua non for invoking Article 136. The proposition set out in the case of Gujarat State Financial Corporation (supra) found support in M/s. Everest Industrial Corporation and others vs. Gujarat State Financial Corporation, (1987) 3 SCC 597. Again in Maganlal etc. vs. Jaiswal Industries, Neemach and Ors. (1989) 3 SCR 696, this court noticed that an order under Section 32 is not a decree stricto sensu as defined in Section 2(2) of the Code of Civil Procedure, the Financial Corporation could not be said to be a decree-holder. This makes it clear that while dealing with an application under Sections 31 and 32 of the Act there is no decree or order of a civil court being executed. It was only on the basis of a legal fiction that the proceedings under Section 31 are treated as akin to execution proceedings. In fact this Court has observed that there is no decree to be executed nor there is any decree-holder or judgment-debtor and, therefore, in a strict sense it cannot be said to be a case of execution of a decree. Article 136 of the Limitation Act has no application in the facts of the present case. Article 136 specifically uses the words “decree or order of any civil court”. The application under Sections 31 and 32 of the State Financial Corporations Act is not by way of execution of a decree or order of any civil court.

  •  In interpreting a provision creating a legal fiction, the Court has to ascertain for what purpose the fiction is created. (See Ex Parte, Walton, In re, Levy (1881) 17 Ch D 746). After ascertaining the purpose the Court has to assume all those facts and consequences which are incidental or inevitable corollaries for giving effect to the fiction. (See East End Dwelling Co. Ltd. vs. Finsbury Borough Council (1951) 2 All ER 587, Chief Inspector of Mines vs. Karam Chand Thapar (AIR 1961 SC 838). But in so construing the fiction it is not to be extended beyond the purpose for which it is created, or beyond the language of the provision by which it is created. (See State of Maharashtra vs. Laljit Rajshi Shah and others (2000) 2 SCC 699); In re, Coal Economising Gas Company (1875 1 Ch D 182) and Hill vs. East and West Dock Co. (1884) 9 AC 448 (HL)).

    Thus, by reason of legal fiction, a person, although not a juvenile, has to be treated to be one by the Board for the purpose of sentencing which takes care of a situation that the person although not a juvenile in terms of the 1986 Act but still would be treated as such under the 2000 Act for the said limited purpose.

  •  Let us examine the provisions of Chapter XIII of the Code of Criminal Procedure which deals with the jurisdiction of the criminal courts in inquiries and trials.

    9. Section 177 postulates that ordinarily offence shall be inquired into and tried by a court within whose local jurisdiction it was committed. Section 178, inter alia, deals with situations when it is uncertain in which of several local areas, an offence is committed or partly committed in one area and partly in another. The section provides that the offence can be inquired into or tried by a court having jurisdiction over any of the local areas mentioned therein. Under Section 179, offence is triable where act is done or consequences thereof ensued. Section 180 deals with the place of trial where act is an offence by reason of its relation to other offence. It provides that the first mentioned offence may be inquired into or tried by a court within whose local jurisdiction either act was done. In all these sections, for jurisdiction the emphasis is on the place where the offence has been committed. There is, however, a departure under Section 181(1) where additionally place of trial can also be the place where the accused is found, besides the court within whose jurisdiction the offence was committed. But the said section deals with offences committed by those who are likely to be on move which is evident from nature of offences mentioned in the section. Section 181(1) is in respect of the offences where the offenders are not normally located at a fixed place and that explains the departure. Section 183 deals with offences committed during journey or voyage. Section 186 deals with situation where two or more courts take cognizance of the same offence and in case of doubt as to which one of the courts has jurisdiction to proceed further, the High Court decides the matter. Section 187 deals with a situation where a person within local jurisdiction of a Magistrate has committed an offence outside such jurisdiction. The Magistrate can compel such a person to appear before him and then send him to the Magistrate which has jurisdiction to inquire into or try such offence.

    10. Under the aforesaid circumstances, the expression abovenoted in Section 188 is to be construed. The same expression was also there in the old Code. From the scheme of Chapter XIII of the Code, it is clear that neither the place of business or place of residence of the petitioner and for that matter of even the complainant is of any relevance. The relevant factor is the place of commission of offence. By legal fiction, Section 188 which deals with offence committed outside India, makes the place at which the offender may be found, to be a place of commission of offence. Section 188 proceeds on the basis that a fugitive from justice may be found anywhere in India. The finding of the accused has to be by the Court where accused appears. From the plain and clear language of the section, it is evident that the finding of the accused cannot be by the complainant or the Police. Further, it is not expected that a victim of an offence which was committed outside India should come to India and first try to ascertain where the accused is or may be and then approach that court. The convenience of such a victim is of importance. That has been kept in view by Section 188 of the Code. A victim may come to India and approach any court convenient to him and file complaint in respect of offence committed abroad by the Indian. The convenience of a person who is hiding after committing offence abroad and is fugitive from justice is not relevant. It is in this context, the expression in question has to be interpreted. Section 188 has been subject matter of interpretation for about 150 years.

    11. In Reg vs. Benito Lopez 1858 Cr LC 431, dealing with the question of jurisdiction of English courts in respect of offences committed on the high seas by foreigners on board English ships, decision was rendered by 14 Judges, i.e., all the Judges of the Court except Bramwell, B. The accused was held to have been found within jurisdiction of the county where he was tried. The decision refers to principles of International Law that a person is liable to be punished of all such offences wheresoever committed. Interpreting the word ‘found’ in provision under consideration in that case, which was to the following effect :

    “If any person being a British subject charged with having committed any crime or offence on board any British ship on the high seas, or in any foreign port or harbour; or if any person, not being a British subject, charged with having committed any crime or offence on board any British ship on the high seas, is found within the jurisdiction of any court of justice in Her Majesty’s dominions, which would have cognizance of such crime or offence if committed within the limits of its ordinary jurisdiction, such court shall have jurisdiction to hear and try the case as if such crime or offence had been committed within such limits: provided that nothing contained in this section shall be construed to alter or interfere with the Act 12 and 13 Vict. C. 96.”

    12. It was held that the word ‘found’ is used in its most extensive sense, and was intended to include all cases by giving jurisdiction to try at any place where the prisoner might happen to be at the time of trial. The object of the provision was to get rid of all questions about local jurisdiction. Lord Campbell, Chief Justice, in his opinion, dealing with the contention that if the prisoner was brought within the jurisdiction of the court against his will, he cannot be said to have been found there within the meaning of the Act, held that a man is ‘found’, within the meaning of that Act in any place where he is actually present.[Om Hemrajani Versus State of U.P. and another AIR 2005 SC 392 ]