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CA Intermediate · Corporate and Other Laws · Interpretation of Statutes

A tribunal is interpreting a section of the Companies Act that, read literally, would produce a result contrary to the evident object of the provision. Two meanings are reasonably possible. Which approach is consistent with the settled rules of interpretation?

The tribunal should prefer the construction that promotes the object of the Act and avoids absurdity, reading the provision in the context of the whole statute. The literal meaning is followed only when the words are plain and produce no absurd result, so the other approaches are unsupported.

  1. APrefer the construction that promotes the object of the Act and avoids absurdity, reading the section in the context of the whole ActCorrect
  2. BAdopt the literal meaning regardless of the absurd result, as courts can never look at the object
  3. CDisregard the Act's preamble and apply foreign law instead
  4. DChoose the meaning favouring the company, as companies are always protected

Explanation

Courts read a statute as a whole and, where the literal meaning leads to absurdity or defeats the object, prefer the construction that advances the legislative purpose. Literal rule applies only where words are clear and unambiguous. Preamble can aid in understanding the object, and there is no rule that favours companies.

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