It is well known that 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.
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….
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)
