Legal disputes generally become entrenched in cases of clash
of provisions in different statutes, or in the same statute when all such
provisions have application to the issues involved. In such situation the
controversy created is resolved by application of the legal maxim ‘generalia
specialibus non derogant’ which means that general things do not derogate
from special things. Conversely, special things derogate from general things. In
law it means that where there are more than one dispensations, the special
dispensation overrules the general one and it is the special one that has
application in resolving the issue.
2. The principle helps in resolving the conflict arising
between two different Acts. In a recent landmark decision relating to the
Arbitration and Conciliation Act, 1996 where there were conflicting provisions
in the A & C Act and in the Limitation Act, 1963 as to the bar of limitation for
commencement of proceedings in a Court, the Supreme Court in Consolidated
Engineering Enterprises v. The Principal Secretary (Irrigation Department) &
Ors., (2008) INSC 574 held the Arbitration and Conciliation Act, 1996 to be
a special law, consolidating and amending the law relating to arbitration and
matters connected therewith overriding the provisions of the Limitation Act. The
A&C Act does not prescribe the period of limitation for starting various
proceedings under the Act, except where it intends to prescribe a period
different from what is prescribed in the Limitation Act. There is no express
provision excluding the application of the provisions of the Limitation Act to
proceedings under the A&C Act. On the other hand, S. 43 makes the provisions of
the Limitation Act applicable to proceedings under the A&C Act, except in
certain specified areas and insofar as they are not inconsistent with the
provisions of the A&C Act. When the question arose as to whether the Limitation
Act will apply to proceedings in arbitration which are proceedings before a
Tribunal, an argument was advanced that the Limitation Act has application to
proceedings in Courts only and, therefore, will have no application to
proceedings in arbitration. However, considering the provisions of S. 43 of the
A&C Act, Ss.(1) of which specifically extended application of the Limitation Act
to arbitration as it applies to proceedings in Court, it was held by the Supreme
Court, having regard to the legislative intent and the principle of generalia
specialibus non derogant, that the Limitation Act will apply with its
extended scope in relation to arbitration proceedings and will have application
to such proceedings whether before the Tribunal or the Courts.
3. The determination as to which of the various statutes is a
special Act is based on the relative evaluation of the two Acts in the context
of the subject-matter in dispute. In relation to the same Act i.e., the
Arbitration and Conciliation Act, 1996, when there was a clash between the
provisions of the A&C Act and the Electricity Act, the Supreme Court in
Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd., (2008) 4 SCC 755, where
the issue was whether the provisions of dispute resolution between the licensees
and generating companies contained in the Electricity Act, 2003 will prevail
over the provision of the A&C Act dealing with appointment of arbitrators,
applied the very same principle of generalia specialibus non derogant and
held that the provisions in the Electricity Act are special and hence will
override the general provisions of the A&C Act, 1996.
4. The maxim applies when there are overlapping provisions in
the same statute not consistent with each other. Issues have arisen in the
interpretation of S. 37 vis-à-vis the provisions of S. 30 to S. 36 of the
Income-tax Act. All these provisions govern admissibility of business expenses.
Whereas S. 37(1) is a general provision laying down the broad yardsticks
applicable to admissibility of expenses, S. 30 to S. 36 are special provisions
providing for the admissibility of specified expenses subject to conditions and
limitations prescribed therein. The issue arose as to whether total amount of
bonus paid to employees governed by the Payment of Bonus Act in excess of the
monetary limit prescribed therein can be allowed deduction in computation of
business income. The argument was that to the extent of amount payable under
that Act, the same should be allowed under the proviso to S. 36(1)(ii) and the
excess amount under the general provision of S. 37(1) being the expenditure laid
out or expended wholly and exclusively for the purpose of business. The view was
taken that there being a specific provision for such bonus contained in proviso
to S. 36(1) (ii), the general provisions of S. 37(1) had no application and,
therefore, the CBDT vide Circular No. 414, dated 14-3-1985 clarified that the
allowance for bonus to employees governed by the Payment of Bonus Act has to be
restricted to the amount payable under that Act. This view was upheld by the
Bombay High Court in Sabodhchandra Popatlal v. CIT, (1953) 24 ITR 566 and
Madras High Court in N. M. Rayaloo Iyer and Sons v. CIT, 26 ITR 265. The
proviso having been deleted, the overlapping now stands removed.
5. A similar situation arose in relation to the allowability
of expenses on the maintenance of any residential accommodation in the nature of
a guest-house. Whereas S. 30 allows deduction in respect of rent, rates, taxes,
repairs and insurance for premises used for the purposes of business, Ss.(4) of
S. 37 (now stands deleted )denied such guesthouse maintenance expenses. Treating
Section 30 as the special provision not to be overridden by the general
provision of S. 37, the Bombay High Court in CIT v. Chase Bright Steel Ltd.,
177 ITR 124 and in Century Spinning and Manufacturing Co. Ltd., 189 ITR 660 held
these guesthouse expenses allowable u/s.30 regardless of the provision contained
in S. 37(4). The Supreme Court in Britannia Industries Ltd. v. CIT, 278
ITR 546, however, agreed with the contention of the Revenue that ‘premises used
for purpose of business’ is a broad expression, whereas guesthouse in S. 37(4)
refers to a special category within that broad expression. By the specific
provision in Ss.(4) of S. 37, guesthouse is to be treated differently from the
general category of premises and S. 37(4) brings out clear and unambiguous
intention of the Legislature to make such expenses disallowable.
