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Doctrine Of Contemporanea Expositio Cannot Be Applied When An Authority's Construction Is Found To Be Erroneous: SC [Read Judgment]

LIVELAW NEWS NETWORK
19 July 2020 8:19 AM GMT
Doctrine Of Contemporanea Expositio Cannot Be Applied When An Authority

"It cannot be laid down that understanding of a particular administrative or executing authority is always fait accompli and has to be applied even if erroneous."

The Supreme Court has observed that the doctrine of Contemporanea Expositio cannot be applied when the construction placed by the contemporary authority is found to be clearly wrong or erroneous.

The Court was considering an appeal filed by Ultratech Cement Limited against the dismissal of its writ petition by the Rajasthan High Court. The High Court had upheld the order of revision passed by the Additional Chief Secretary, Finance, Government of Rajasthan, Jaipur in revision proceedings under Clause 13 of the Rajasthan Investment Promotion Scheme-2003.

In this case, State Level Screening Committee, who was the prescribed authority for determining eligibility for subsidy under the Scheme in question, entitled to subsidy to the extent of 75%. In revision, the Government held that the company is eligible only to the extent of 50% of the payable and deposited Sales Tax/VAT and not to the extent of 75%.

In the appeal before the Supreme court, the company invoked the doctrine of Contemporanea Expositio to contend that SLSC, consisting mostly of the officers from the Finance Department of the State, was in the best position to construe the decision of BIDI. It was contended that it was plainly and clearly understood by the authorities concerned that the company was entitled to subsidy to the extent of 75% in the true interpretation of the provisions of the Scheme and on their correct application to the facts of the case; and, therefore, they are not entitled to alter their stand at the later stage.

While addressing this contention, the bench comprising of Justices AM Khanwilkar and Dinesh Maheshwari noted that the doctrine is embodied in the maxim 'Contemporanea exposition est optima et fortissimo in lege' which means that the best way to construe a document is to read it as it would have read when made.

The court observed that, as regards the contemporaneous construction placed by the administrative or executive officers charged with executing statute, the Courts lean in favour of attaching considerable weight to the same but, it cannot be laid down that understanding of a particular administrative or executing authority is always fait accompli and has to be applied even if erroneous. It observed thus in Paragraph 25.3 of the judgment

"Suffice it to observe for the present purpose that in essence, the doctrine of Contemporanea Expositio is applied as a guide to the interpretation of a statute or even document by referring to the exposition that the same had received from competent authority at the relevant point of time. This doctrine is also relatable to the doctrine of stare decisis whereunder, an exposition standing for a long length of time, is considered to be a law settled and is applied as such. As regards the contemporaneous construction placed by the administrative or executive officers charged with executing statute, the Courts lean in favour of attaching considerable weight to the same but, it cannot be laid down that understanding of a particular administrative or executing authority is always fait accompli and has to be applied even if erroneous. The true principle is just to the contrary: that is, if a construction placed by the contemporary authority is found to be clearly wrong or erroneous, the same deserves to be disregarded."

While rejecting the submission of the Appellant based on the doctrine, the court further observed:

"If at all this doctrine is applied, the consequence would be that howsoever erroneous a decision by the executive or administrative authority may be, once it emanates from the understanding of some of the officers or authorities, the same would acquire immunity from scrutiny for all time to come."

The court then affirmed the High Court order but with the modification that the authority shall be entitled to recover interest at the rate of 12% per annum from the date of availing of excessive subsidy (25%) by the company until payment/recovery.

Case name: M/S. ULTRATECH CEMENT LTD. vs. STATE OF RAJASTHAN & ORS.
Case no.: CIVIL APPEAL NO. 2773 OF 2020
Coram: Justices AM Khanwilkar and Dinesh Maheshwari

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