'Law Should Never Be A Puzzle': Karnataka High Court Urges Legislature To Revive Practice Of Using Illustrations In Statutes

The Karnataka High Court has recently remarked that law which is 'meant for common man' must be drafted in 'the simplest possible way', while suggesting that the legislature should bring back the practise of using illustrations in the statute to reduce conflicts about its interpretation and ensuing litigation. [2026 Livelaw (Kar) 231]

The single judge bench of Justice Anant Ramanath Hegde emphasised that the drafting of statutes, if it follows the practise of incorporating illustrations, would reduce potential litigation. The single judge bench was presiding over a matter of a dispute between a company and the Telangana commercial tax department over the assets of BPL Engineering Pvt Ltd.

“…The importance of illustrations found in several enactments, such as the Indian Penal Code, 1860, the Indian Contract Act, 1872, the Transfer of Property Act, 1882, the Specific Relief Act, 1963, the Bharatiya Nyaya Sanhita, 2023 and the Bharatiya Sakshya Adhiniyam, 2023, in capturing the true import of a provision is well known. However, perhaps unknowingly or unintentionally, such a worthy practice has been forgotten. It is high time it should be revived,”, the court observed.

The court went on to cite the conflicting opinions of various High Courts regarding the prospective/ retrospective and retroactive operation of statutes and its subsequent amendments. For example, Chapter IV A [registration of security interests with the Central Registry (CERSAI)] of the SARFAESI Act has also given rise to divergent opinions about its application, the court further stated.

“Wherever needed and appropriate, the incorporation of illustrations while enacting or amending a legislation may greatly assist all stakeholders in the justice delivery system…It would always be desirable for the Legislature, while introducing an amendment, to indicate in clear terms whether the law or the amended provision is prospective, retrospective, retroactive and more important, with additional prescription as to how the amended provision is intended to apply to transactions and events that occurred prior to the amendment, to pending proceedings, and to future transactions…”, the Court noted along the same lines.

However, the court clarified that it wasn't issuing blanket directions to the lawmakers or any other entities:

“…These observations should not be understood as an attempt by this Court either to legislate or to issue directions regarding legislative policy. This Court is conscious that such power does not vest in it. The endeavour is only to draw attention on the issue which may result in different legislative practices which, if adopted, may reduce uncertainty and avoid unnecessary litigation…”, the court further clarified.

The observations were made in a matter concerning fiscal legislations enacted by the respective states. In its 60-page judgment, the court has interpreted that a statutory first charge created under State tax enactments takes precedence over the priority in payment conferred upon secured creditors under Section 26E of the SARFAESI Act.

The dispute was over the attachment of properties by the Department versus the attempt to sell the properties mortgaged to it by the creditor, and later its substitute, outside the winding up proceedings of BPL Company. The Non-Performing Asset of BPL was initially entrusted to Stressed Assets Stabilisation Fund ("SASF"), which was later substituted by OMKARA Assets.

The court, hence, held that the application filed by Omkara Assets Reconstruction Private Limited to recall the attachment orders in Tax Department's favour must be dismissed, ruling that the Telangana Commercial Tax Department's statutory first charge over the property of the defunct M/s BPL Engineering Limited would prevail over the claims of the secured creditor under SARFAESI.

Case Title: Omkara Assets Reconstruction Private Limited v. The Official Liquidator of M/s BPL Engineering Limited (In Liquidation) & Ors.

Case No: Company Application No. 49/2025, Company Application No. 86/2025, Company Application No. 89/2025 in Company Petition No. 160/2005

Citation: 2026 Livelaw (Kar) 231