"PROVISO" - Scope and purpose

[Mr. M. GOVINDARAJAN]

Proviso

In some sections of a statute, after the main provision is spelled out, a clause is added, with the opening words “provided that…”. The part of the section commencing with the words “Provided that…” is called Proviso. 

Sometimes more than one proviso is attached with the section. If there is any repugnancy between the two provisos, the latter shall prevail.

For example we may take section 3(1) of Companies Act, 2013.  Section 3(1) of the Companies Act, 2013 reads as-

Formation of company

 3. (1) A company may be formed for any lawful purpose by-

1. seven or more persons, where the company to be formed is to be a public company;
2. two or more persons, where the company to be formed is to be a private company;
3. one person, where the company to be formed is to be One Person Company that is to say, a private company,

by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration:

      Provided that the memorandum of One Person Company shall indicate the name of the other person, with his prior written consent in the prescribed form, who shall, in the event of the subscriber's death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles:

      Provided further that such other person may withdraw his consent in such manner as may be prescribed:

      Provided also that the member of One Person Company may at any time change the name of such other person by giving notice in such manner as may be prescribed:

      Provided also that it shall be the duty of the member of One Person Company to intimate the company the change, if any, in the name of the other person nominated by him by indicating in the memorandum or otherwise within such time and in such manner as may be prescribed, and the company shall intimate the Registrar any such change within such time and in such manner as may be prescribed:

Provided also that any such change in the name of the person shall not be deemed to be an alteration of the memorandum.

There are five provisos to section 3(1) of the Companies Act.  Section 3(1) provides for the requirement of formation of public limited company, private limited company and one person company.  The five provisos provide further procedures for one Person Company. 

• The first proviso provides that the name of the member should be indicated in the memorandum and the prior consent of that member should be obtained and filed with the Registrar at the time of incorporation. 
• The second proviso provides that such person may withdraw his consent. 
• The third proviso provides for change of another member by the member of One Person Company.
• The fourth proviso provides that the member shall intimate the change, if any, in the name of member nominated by him to the company which shall intimate the same to the Registrar. 
• The fifth provides that such change of name shall not be deemed to be an alteration of memorandum.

Therefore a proviso is a clause in a statute, contract, or the like, by which a condition is introduced or a stipulation or condition.  The function of a proviso is to carve out an exception or exclusion to the main provision which otherwise would have been in the main section. A proviso is a clause which is added to the statute to accept something from enacting clause or to limit its applicability. As such, the function of a proviso is to qualify something or to exclude, something from what is provided in the enactment which, but for proviso, would be within the purview of enactment.

Experts’ opinion

According to Lord Macmillan the proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment and its effect is confined to that case.

The proviso may, as LORD MACNAGHTEN laid down, be ‘a qualification of the preceding enactment which is expressed in terms too general to be quite accurate.’

HIDAYATULLAH, J laid: ‘As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not interpreted as stating a general rule.’

In the words of KAPUR, J.: ‘The proper function of a proviso is that it qualifies the generality of the main enactment by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso would fall within the main enactment.’

Purposes

As such using the proviso in a section may serve the following purposes-

• qualifying or excepting certain provisions from the main enactment; 
• it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; 
• it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and color of the substantive enactment itself; and
• it may be used merely to act as an option addenda to the enactment with the sole object of explaining the real intentions of the statutory provision.

Justice GP Singh summarized as follows-

• A proviso is not construed as excluding or adding something by implication;
• A proviso is construed in relation to the subject matter of the statutory provision to which it is appended
• Where the substantive provision of a statute lacks clarity, a proviso may shed light on its true meaning
• An effort should be made while construing a statute to give meaning both to the main enactment and its proviso bearing in mind that sometimes a proviso is inserted as a matter of abundant caution:
•  While ordinarily, it would be unusual to interpret the proviso as an independent enacting clause, as distinct from its main enactment, this is true only of a real proviso and the draftsperson of the statute may have intended for the proviso to be, in substance, a fresh enactment.

Harmonious construction

It is important that a proviso must be construed harmoniously with the main statute so as to give effect to the legislative objective. The proviso is not to be taken absolutely in its strict literal sense but is of necessity limited to the ambition of the section which it qualifies. A proviso cannot be permitted by construction to defeat the basic intent expressed in the substantive provision. A proviso does not travel beyond the provision to which it is appended, golden rule is to read the whole Section, inclusive of the proviso in such manner that they mutually throw light on each other and result in a harmonious construction. The main part of an enactment cannot be so interpreted as to render its proviso unnecessary and ineffective.

While ordinarily, it would be unusual to interpret the proviso as an independent enacting clause, as distinct from its main enactment, this is true only of a real proviso and the draftsperson of the statute may have intended for the proviso to be, in substance, a fresh enactment

Conclusion

Provisos in a statute have multi-faceted personalities. As interpretational principles governing statutes have evolved, certain basic ideas have been recognized, while heeding to the text and context.  A proviso is construed in relation to the subject matter of the statutory provision to which it is appended. Where the substantive provision of a statute lacks clarity, a proviso may shed light on its true meaning.