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CA Intermediate · Corporate and Other Laws · Interpretation of Statutes

An Act, in a provision, says 'the Collector may, by notice, require any person to furnish information'. A different clause in the same Act, dealing with penalties, uses the word 'shall' for the Collector's duty to give a hearing before imposing a penalty. The Collector imposes a penalty without giving a hearing, arguing that the provision is only directory. Which position is most consistent with accepted interpretation principles?

The hearing requirement is mandatory. The word 'shall', combined with the fact that a penalty affects a person's rights and natural justice requires a hearing, shows the legislature intended compliance. A penalty imposed without a hearing can therefore be challenged.

  1. AThe provision is always directory when the Act is silent on consequences
  2. BThe use of 'shall' together with the principle of natural justice indicates the hearing requirement is mandatory, so the penalty without hearing is open to challengeCorrect
  3. CThe word 'shall' is meaningless and must be read as 'may'
  4. DOnly the High Court can decide whether a word is mandatory, so the Collector is not bound

Explanation

Whether a provision is mandatory or directory depends on its language, object and consequences. A hearing before a penalty affects a person's rights and is tied to natural justice, and 'shall' supports a mandatory reading. Silence on consequences does not by itself make it directory.

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