Chapter 14: Interpretation of Statutes - Test 1: answer key

Question 1 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. Anekta Garments Ltd, an unlisted public company with 1,850 members, convened an extraordinary general meeting on 18 November 2026 to approve a related-party contract with Riya Design Studio LLP. The notice under Section 102 described director Rohan Mehta's concern or interest as 'he is a director in Riya Design Studio LLP'. Rohan's spouse held 60% of Riya; Rohan held no shares. Members objected that the notice omitted the spouse's shareholding and the financial effect of the contract. The company secretary replied that the phrase concern or interest must be read literally as a direct legal interest, and since Rohan held no shares, no further disclosure was needed. The chair overruled the objection. Later the ROC issued a notice alleging that the explanatory statement was inadequate. In a separate board meeting, the managing director borrowed ₹2 crore from a bank relying on the articles, which state that the director may borrow money with Board approval. No Board approval was obtained; the MD claimed that 'may' is only directory. The board also noted that the articles contain a clause saying that the borrowing power is subject to Section 180 of the Companies Act, 2013. A shareholder requisition asked for a poll on the contract; the chair rejected it citing a general article that all resolutions shall be decided on a show of hands unless the Board directs otherwise. The requisitionists relied on Section 109, which uses 'may' for a poll. The board seeks advice on how a court would construe the phrase, the word may, the subject-to clause, and the poll provision.

In construing the phrase 'concern or interest' in Section 102(2), which approach is most appropriate?

1. Literal construction, because the phrase must be confined to direct legal ownership of shares by the director.
2. Reasonable construction, because a narrow reading would defeat the object of enabling members to understand the scope and implications of the business. (correct answer)
3. Harmonious construction, because Section 102 must be read with the articles to exclude family interests.
4. Mischief rule, because the phrase has no ordinary meaning and the court must invent a meaning.

Answer: B — Reasonable construction, because a narrow reading would defeat the object of enabling members to understand the scope and implications of the business.

Explanation. Section 102(2) requires disclosure of the nature of concern or interest, financial or otherwise. A restricted literal reading confined to direct shareholding would defeat the object of enabling members to understand the meaning, scope and implications of the item of business. The reasonable construction rule, reflected in ut res magis valeat quam pereat, prefers an interpretation that advances the statute's purpose. The trap is to apply literal construction merely because the words are familiar, ignoring the statutory context and object.

Where it goes wrong. Choosing literal construction because the phrase appears plain, without considering the object of full and frank disclosure.

Authority. Section 102(2) of the Companies Act, 2013; Rule of Reasonable Construction

Question 2 · 2 marks · Chapter 14: Interpretation of Statutes · medium

The MD claims that 'may borrow with Board approval' is directory. Which statement is correct?

1. The word may is always mandatory in articles, so Board approval is unnecessary.
2. The word may is always directory, so the MD can borrow without approval.
3. May confers a power to borrow, but the words with Board approval are a mandatory condition; borrowing without approval is invalid. (correct answer)
4. May is a technical word and must be given its technical meaning, which excludes Board approval.

Answer: C — May confers a power to borrow, but the words with Board approval are a mandatory condition; borrowing without approval is invalid.

Explanation. The word may ordinarily confers discretion or power, but the phrase with Board approval qualifies the exercise of that power. The condition is mandatory because it safeguards the company's internal decision-making. Reading may as making Board approval optional would defeat the article's purpose and produce an unreasonable result. The primary trap is treating may as always permissive and ignoring the attached condition.

Where it goes wrong. Assuming 'may' is always directory and that the approval condition can be ignored.

Authority. Rule of Literal Construction; Rule of Reasonable Construction

Question 3 · 2 marks · Chapter 14: Interpretation of Statutes · hard

The articles state that the borrowing power is subject to Section 180. What is the effect of this clause?

1. The articles prevail because they are a contract between the company and its members.
2. Section 180 is merely directory, so the clause has no practical effect.
3. The clause applies only to private companies and not to Anekta Garments Ltd.
4. The subject-to clause makes the borrowing power subservient to Section 180, so Section 180 prevails in case of conflict. (correct answer)

Answer: D — The subject-to clause makes the borrowing power subservient to Section 180, so Section 180 prevails in case of conflict.

Explanation. A subject-to clause indicates that the provision in which it appears is subservient to the provision referred to. Therefore, the articles' borrowing power must be read subject to Section 180. If there is a conflict, Section 180 prevails. The trap is to treat the articles as a contract that can override the statute; internal rules cannot prevail over mandatory statutory requirements.

Where it goes wrong. Treating the articles as supreme because they bind the company and members.

Authority. Rule of Harmonious Construction; Section 180 of the Companies Act, 2013

Question 4 · 2 marks · Chapter 14: Interpretation of Statutes · medium

A shareholder requisition for a poll under Section 109 conflicts with a general article saying resolutions are decided on a show of hands unless the Board directs otherwise. Which maxim or rule applies?

1. Generalia specialibus non derogant; the specific statutory right to demand a poll prevails over the general article. (correct answer)
2. Literal construction; the article must prevail because it is later in date.
3. Beneficial construction; the article must be read to protect the Board's discretion.
4. Ejusdem generis; the word poll takes colour from show of hands and is excluded.

Answer: A — Generalia specialibus non derogant; the specific statutory right to demand a poll prevails over the general article.

Explanation. Section 109 gives a specific statutory right to demand a poll in the prescribed circumstances. A general article about show of hands cannot derogate from that specific right. The maxim generalia specialibus non derogant means special provisions prevail over general provisions. The trap is to let the general article override the specific statutory right, which would render the statutory provision redundant.

Where it goes wrong. Allowing the general article to override a specific statutory right.

Authority. Rule of Harmonious Construction; Section 109 of the Companies Act, 2013

Question 5 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. Zenith Agro Tech Pvt Ltd, an Indian company with 2,100 members, filed Form MGT-7 within sixty days of its annual general meeting. The ROC notice alleged that the return was incomplete because the company did not attach the list of shareholders, although Rule 12 of the Companies (Management and Administration) Rules, 2014 says the company shall attach the list. The CFO argued that since no specific penalty is provided for the omission, 'shall' is directory and the return is valid. The company also has a subsidiary, Zenith Global Inc, incorporated in Singapore. Zenith Global maintains a liaison office in Pune but conducts no business activity in India. The ROC treated Zenith Global as a foreign company under Section 2(42); the company argued that the definition uses 'and' between place of business and business activity, so both must exist. The board meeting also considered a conflict between the articles and the Act. The articles say the Board may appoint additional directors, but Section 161(1) says such appointment shall not exceed the maximum strength fixed by the articles. The company appointed two additional directors when the maximum strength was already reached. The chair said that if two provisions clash, the general article must prevail. The company secretary noted that a proviso to Rule 12 allows the Registrar to condone delay on payment of additional fee. The company wants advice on the construction of 'shall', 'and', the conflict between the articles and Section 161, and the effect of the proviso.

How should 'shall attach' in Rule 12 be construed?

1. Directory because no specific penalty is prescribed for non-attachment.
2. Mandatory because it is a condition for a complete return; absence of a specific penalty does not make it directory. (correct answer)
3. Directory because the Registrar has power to condone delay.
4. Mandatory only if the company has more than 1,000 members.

Answer: B — Mandatory because it is a condition for a complete return; absence of a specific penalty does not make it directory.

Explanation. The word shall ordinarily imports a command. The requirement to attach the list is part of the completeness of the annual return, and the absence of a specific penalty for this omission does not convert a mandatory requirement into a directory one. The context and purpose of the rule show that attachment is not optional. The trap is equating absence of a specific penalty with a directory character.

Where it goes wrong. Inferring directory status merely because no separate penalty is mentioned.

Authority. Rule 12 of the Companies (Management and Administration) Rules, 2014; Rule of Literal Construction

Question 6 · 2 marks · Chapter 14: Interpretation of Statutes · medium

Section 2(42) uses 'and' between place of business and business activity. Which statement is correct?

1. And is always disjunctive; either place or activity is sufficient.
2. And must be read as or because the definition is beneficial.
3. And is ordinarily conjunctive; unless context indicates otherwise, both elements are required for a foreign company. (correct answer)
4. And has no meaning in a definition and may be ignored.

Answer: C — And is ordinarily conjunctive; unless context indicates otherwise, both elements are required for a foreign company.

Explanation. The word and is normally conjunctive and joins the two requirements in the definition. A court reads and as or only where the context and legislative intention clearly require it. Since Section 2(42) uses and between place of business and business activity, both elements are ordinarily required. The trap is to casually convert and into or without a clear contextual justification.

Where it goes wrong. Reading 'and' as 'or' without examining context and legislative intent.

Authority. Section 2(42) of the Companies Act, 2013; Rule of Literal Construction

Question 7 · 2 marks · Chapter 14: Interpretation of Statutes · hard

The articles say the Board may appoint additional directors, but Section 161(1) says such appointment shall not exceed the maximum strength fixed by the articles. Which is correct?

1. The articles prevail because they are the company's internal rules.
2. The Board may exceed the maximum if it passes a unanimous resolution.
3. The conflict is resolved by reading both provisions as directory.
4. The specific statutory ceiling in Section 161(1) prevails; the articles cannot permit exceeding the maximum strength. (correct answer)

Answer: D — The specific statutory ceiling in Section 161(1) prevails; the articles cannot permit exceeding the maximum strength.

Explanation. The articles are subordinate to the Act. Section 161(1) imposes a specific ceiling, and the articles cannot authorise what the statute prohibits. Reading both provisions harmoniously means the article's power to appoint additional directors is exercisable only within the statutory maximum. The trap is to treat the articles as an independent source of power that can override the statutory ceiling.

Where it goes wrong. Giving internal articles primacy over a mandatory statutory ceiling.

Authority. Section 161(1) of the Companies Act, 2013; Rule of Harmonious Construction

Question 8 · 2 marks · Chapter 14: Interpretation of Statutes · medium

If a proviso to Rule 12 allows the Registrar to condone delay on additional fee, what is the effect on the main rule?

1. The proviso carves out a limited exception; it does not make the main requirement directory for all cases. (correct answer)
2. The proviso repeals the main rule.
3. The proviso converts the main rule into a directory provision.
4. The proviso applies only to companies with foreign subsidiaries.

Answer: A — The proviso carves out a limited exception; it does not make the main requirement directory for all cases.

Explanation. A proviso normally carves out a limited exception or qualifies the main provision. A power to condone delay on payment of additional fee does not make the underlying requirement optional in every case. The main rule continues to operate, and the proviso applies only within its scope. The trap is to treat a condonation clause as a general licence to disregard the main requirement.

Where it goes wrong. Overreading a proviso as nullifying the main rule.

Authority. Rule 12 of the Companies (Management and Administration) Rules, 2014; Rule of Harmonious Construction

Question 9 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. Vayu Renewables Ltd, a listed company, computed net profit of ₹12 crore under Section 198 for FY 2025-26. Its CSR obligation was ₹24 lakh. The CSR Committee approved a budget of ₹20 lakh; the company spent ₹14 lakh. The unspent ₹6 lakh did not relate to any ongoing project. The CFO argued that Section 135(5) requires transfer of unspent amount to a Schedule VII fund within six months, while Section 135(6) requires transfer to an Unspent CSR Account within thirty days for ongoing projects. Because the project was not ongoing, he proposed to apply Section 135(6) by analogy and deposit the amount in the Unspent CSR Account. A director objected that the two provisions must be read harmoniously: the specific ongoing-project rule carves out an exception to the general non-ongoing rule. The board also considered the articles, which say that dividend may be declared subject to Section 123. The board declared a dividend despite a pending default in transferring the CSR amount. The chair relied on a general clause in the articles permitting dividend out of free reserves. The company also received a notice under Section 135(5) proposing penalty. The board seeks advice on which provision applies, the effect of the subject-to clause, and whether 'shall transfer' can be read as directory.

Which provision applies to the unspent CSR amount that did not relate to an ongoing project?

1. Section 135(6), because it is the later provision.
2. Section 135(6) by analogy, because the amount was unspent.
3. Section 135(5), because the specific ongoing-project rule in Section 135(6) does not apply; the general rule governs. (correct answer)
4. Neither; the amount may be retained in the general bank account.

Answer: C — Section 135(5), because the specific ongoing-project rule in Section 135(6) does not apply; the general rule governs.

Explanation. Section 135(6) is a specific rule for unspent amounts relating to ongoing projects. Where the unspent amount does not relate to an ongoing project, the specific rule does not apply and the general rule in Section 135(5) governs. The two provisions are read harmoniously so that each has its own field. The trap is to apply the ongoing-project provision by analogy when its conditions are not satisfied.

Where it goes wrong. Applying the ongoing-project rule by analogy to a non-ongoing project.

Authority. Section 135(5) of the Companies Act, 2013; Section 135(6) of the Companies Act, 2013; Rule of Harmonious Construction

Question 10 · 2 marks · Chapter 14: Interpretation of Statutes · hard

The maxim generalia specialibus non derogant means:

1. General words prevail over special words.
2. Special provisions prevail over general provisions; general provisions do not derogate from special ones. (correct answer)
3. Later statutes always repeal earlier statutes.
4. Penal provisions are construed strictly against the State.

Answer: B — Special provisions prevail over general provisions; general provisions do not derogate from special ones.

Explanation. The maxim means that general provisions do not derogate from special provisions. When a general rule and a specific rule cover the same subject, the specific rule prevails to the extent of its scope. This avoids conflict and gives effect to both provisions. The trap is to reverse the maxim and allow general provisions to override specific ones.

Where it goes wrong. Reversing the maxim and giving primacy to general provisions.

Authority. Rule of Harmonious Construction; Maxim generalia specialibus non derogant

Question 11 · 2 marks · Chapter 14: Interpretation of Statutes · medium

Can 'shall transfer' in Section 135(5) be read as directory because no penalty is specifically attached to that sub-section?

1. Yes, because shall is always directory when no penalty is prescribed.
2. Yes, because the company has free reserves.
3. No, because only the Board can decide whether to transfer.
4. No, shall is mandatory; absence of a specific penalty does not make it directory when the context imposes a statutory duty. (correct answer)

Answer: D — No, shall is mandatory; absence of a specific penalty does not make it directory when the context imposes a statutory duty.

Explanation. The word shall ordinarily indicates a mandatory requirement. The absence of a penalty in the same sub-section does not by itself make the duty directory. The context, object and scheme of CSR provisions show that transfer of the unspent amount is a statutory obligation. The trap is to assume that every mandatory duty must have a separate penalty attached to it.

Where it goes wrong. Equating absence of a specific penalty with a directory obligation.

Authority. Section 135(5) of the Companies Act, 2013; Rule of Literal Construction

Question 12 · 2 marks · Chapter 14: Interpretation of Statutes · hard

The articles say dividend may be declared subject to Section 123. What is the effect of this clause?

1. The subject-to clause makes the dividend power subservient to Section 123; compliance with Section 123 is a precondition. (correct answer)
2. The articles override Section 123 because dividend is a domestic matter.
3. The clause is meaningless because may is always permissive.
4. The clause applies only to preference dividend.

Answer: A — The subject-to clause makes the dividend power subservient to Section 123; compliance with Section 123 is a precondition.

Explanation. A subject-to clause makes the provision in which it appears subordinate to the provision referred to. Therefore, the article's dividend power must be exercised only in compliance with Section 123. The articles cannot authorise a dividend that contravenes the statutory conditions. The trap is to treat the articles as an independent source of dividend power overriding the Act.

Where it goes wrong. Ignoring the subordinating effect of the subject-to clause.

Authority. Section 123 of the Companies Act, 2013; Rule of Harmonious Construction

Question 13 · 2 marks · Chapter 14: Interpretation of Statutes · medium

Scenario. Nirvaan Foods Ltd's articles state: 'The Board may appoint a whole-time director for a period not exceeding five years.' The Board appoints Mr Dev for six years. The company secretary says the five-year limit is directory because 'may' is used. Which statement is correct?

Nirvaan Foods Ltd's articles state: 'The Board may appoint a whole-time director for a period not exceeding five years.' The Board appoints Mr Dev for six years. The company secretary says the five-year limit is directory because 'may' is used. Which statement is correct?

1. May is mandatory, so the appointment is valid for six years.
2. Not exceeding five years is directory; six years is valid if approved by members.
3. May confers power, but not exceeding five years is a mandatory condition; the six-year appointment is invalid to that extent. (correct answer)
4. The appointment is valid because whole-time director is a technical word.

Answer: C — May confers power, but not exceeding five years is a mandatory condition; the six-year appointment is invalid to that extent.

Explanation. May confers a power to appoint, but the phrase not exceeding five years is a condition attached to its exercise. The condition is mandatory because it limits tenure and protects governance. Reading the limit as directory would defeat the article's purpose. The trap is to focus only on may and ignore the mandatory words not exceeding five years.

Where it goes wrong. Treating the tenure limit as directory because the enabling word is may.

Authority. Rule of Literal Construction; Rule of Reasonable Construction

Question 14 · 2 marks · Chapter 14: Interpretation of Statutes · medium

Scenario. Surya Logistics Ltd's legal team argues that the definition of document in Section 3(18) of the General Clauses Act uses 'shall include', so the definition is exhaustive and a photograph cannot be a document. Which is correct?

Surya Logistics Ltd's legal team argues that the definition of document in Section 3(18) of the General Clauses Act uses 'shall include', so the definition is exhaustive and a photograph cannot be a document. Which is correct?

1. Includes is restrictive; a photograph is excluded.
2. Includes is prima facie extensive; a photograph may fall within document if it records matter. (correct answer)
3. Means and includes is the only exhaustive form, so includes has no effect.
4. A photograph can never be a document under any statute.

Answer: B — Includes is prima facie extensive; a photograph may fall within document if it records matter.

Explanation. When a word is defined to include something, the definition is prima facie extensive. The word defined is not restricted to the listed meaning but extends to other things of the same nature. A photograph that records matter may therefore fall within document. The trap is to read includes as if it were means, which would make the definition restrictive and exhaustive.

Where it goes wrong. Confusing 'includes' with 'means' and treating an inclusive definition as exhaustive.

Authority. Section 3(18) of the General Clauses Act, 1897; Definitional Sections

Question 15 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. A Central Act uses the word practice in a provision about advocates. A company argues for the popular meaning habitual action. Which rule applies?

A Central Act uses the word practice in a provision about advocates. A company argues for the popular meaning habitual action. Which rule applies?

1. Ejusdem generis; practice takes colour from surrounding words.
2. Harmonious construction; practice must be read with company law.
3. Mischief rule; practice means any business.
4. Literal construction; technical words are given technical meaning, so practice means acting and pleading on behalf of a litigant. (correct answer)

Answer: D — Literal construction; technical words are given technical meaning, so practice means acting and pleading on behalf of a litigant.

Explanation. Under literal construction, technical words are understood in their technical sense. In the context of the legal profession, practice includes acting and pleading on behalf of a litigant. The popular meaning of habitual action is not the statutory sense. The trap is to choose a dictionary or popular meaning for a technical legal expression.

Where it goes wrong. Giving a technical legal word its popular meaning.

Authority. Rule of Literal Construction; Ashwini Kumar Ghose v. Arabinda Bose

Question 16 · 2 marks · Chapter 14: Interpretation of Statutes · medium

Scenario. A Central Act provides: 'Notwithstanding anything contained in Section 10, Section 11 shall apply to all filings.' A company argues Section 10 should prevail because it is the general provision. Which is correct?

A Central Act provides: 'Notwithstanding anything contained in Section 10, Section 11 shall apply to all filings.' A company argues Section 10 should prevail because it is the general provision. Which is correct?

1. Section 11 prevails because the non-obstante clause overrides Section 10. (correct answer)
2. Section 10 prevails because general provisions always prevail.
3. Both are void for conflict.
4. The Act is unconstitutional because it uses notwithstanding.

Answer: A — Section 11 prevails because the non-obstante clause overrides Section 10.

Explanation. A clause beginning with notwithstanding anything contained is a non-obstante clause. It makes the provision prevail over the provision mentioned in the clause. Therefore, Section 11 overrides Section 10 to the extent stated. The trap is to assume that general provisions always prevail, ignoring the overriding effect of the non-obstante clause.

Where it goes wrong. Giving primacy to the general provision despite a non-obstante clause.

Authority. Rule of Harmonious Construction; Non-obstante clause

Question 17 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. A rule states: 'Without prejudice to Section 20, the licensing officer may suspend a licence.' The licensee argues that once a penalty is imposed under Section 20, suspension is barred. Which is correct?

A rule states: 'Without prejudice to Section 20, the licensing officer may suspend a licence.' The licensee argues that once a penalty is imposed under Section 20, suspension is barred. Which is correct?

1. Suspension is barred because without prejudice means Section 20 is the only remedy.
2. Suspension is valid only if the Section 20 penalty is refunded.
3. Without prejudice makes suspension operate in addition to, not in derogation of, Section 20; suspension is not barred. (correct answer)
4. Without prejudice makes the rule void.

Answer: C — Without prejudice makes suspension operate in addition to, not in derogation of, Section 20; suspension is not barred.

Explanation. A without prejudice clause means the particular provision operates in addition to the general provision and does not restrict it. Therefore, suspension is an additional measure and is not barred merely because a penalty under Section 20 is imposed. The trap is to read without prejudice as if it made the general provision exclusive.

Where it goes wrong. Misreading 'without prejudice' as an exclusivity or bar clause.

Authority. Rule of Harmonious Construction; Without prejudice clause

Question 18 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. A statute says: 'The Registrar may allow extension of time on payment of additional fee if sufficient cause is shown.' A company shows sufficient cause and pays the fee, but the Registrar refuses arbitrarily. Which is correct?

A statute says: 'The Registrar may allow extension of time on payment of additional fee if sufficient cause is shown.' A company shows sufficient cause and pays the fee, but the Registrar refuses arbitrarily. Which is correct?

1. May is always directory; the refusal is valid.
2. May is coupled with a duty; once conditions are satisfied, the Registrar must consider and ordinarily allow extension, and arbitrary refusal is subject to judicial review. (correct answer)
3. May is mandatory and the Registrar has no discretion at all.
4. The company has no remedy because extension is a privilege.

Answer: B — May is coupled with a duty; once conditions are satisfied, the Registrar must consider and ordinarily allow extension, and arbitrary refusal is subject to judicial review.

Explanation. Although may is ordinarily permissive, it can carry compulsory force where a power is coupled with a duty. Once the statutory conditions are satisfied, the Registrar must exercise the power reasonably and cannot refuse arbitrarily. The trap is to treat may as always optional, ignoring the duty element and judicial review.

Where it goes wrong. Reading 'may' as an unfettered discretion even after statutory conditions are met.

Authority. Rule of Literal Construction; May coupled with duty

Question 19 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. Section 139(2) says an audit firm shall not be appointed for more than two terms of five consecutive years. A company appoints a firm for two terms of five years and then for one more year. The firm claims the bar is directory. Which is correct?

Section 139(2) says an audit firm shall not be appointed for more than two terms of five consecutive years. A company appoints a firm for two terms of five years and then for one more year. The firm claims the bar is directory. Which is correct?

1. The appointment is valid because two terms are complete.
2. The appointment is valid because one more year is de minimis.
3. The bar applies only to listed companies, so the appointment is valid.
4. The bar is mandatory; the firm cannot be appointed for a third term, even for one year, without the cooling period. (correct answer)

Answer: D — The bar is mandatory; the firm cannot be appointed for a third term, even for one year, without the cooling period.

Explanation. The words shall not be appointed for more than two terms of five consecutive years impose a mandatory ceiling. A third appointment, even for one year, breaches the ceiling and defeats the rotation objective. The bar is not directory merely because the additional period is short. The trap is to treat a small excess as immaterial despite clear statutory language.

Where it goes wrong. Applying a de minimis approach to a mandatory statutory ceiling.

Authority. Section 139(2) of the Companies Act, 2013; Rule of Literal Construction

Question 20 · 2 marks · Chapter 14: Interpretation of Statutes · hard

Scenario. A consumer protection statute is ambiguous. Its preamble says it is to protect consumers against unfair trade practices. A court reads an ambiguous definition broadly to include e-commerce platforms. Which rule most suitable justifies this?

A consumer protection statute is ambiguous. Its preamble says it is to protect consumers against unfair trade practices. A court reads an ambiguous definition broadly to include e-commerce platforms. Which rule most suitable justifies this?

1. Reasonable construction, because the interpretation advances the object and avoids defeating the statute. (correct answer)
2. Literal construction, because the dictionary meaning is decisive.
3. Ejusdem generis, because e-commerce is of the same kind as shops.
4. Strict construction of penal provisions, because the statute imposes penalties.

Answer: A — Reasonable construction, because the interpretation advances the object and avoids defeating the statute.

Explanation. Where statutory language is ambiguous, the preamble may be used to ascertain the object and purpose. The reasonable construction rule prefers an interpretation that advances the remedy and suppresses the mischief. Reading the definition broadly to include e-commerce platforms furthers consumer protection. The trap is to cling to a narrow dictionary meaning despite ambiguity and a clear legislative object.

Where it goes wrong. Using literal dictionary meaning even when the statute is ambiguous and the preamble indicates a broader purpose.

Authority. Rule of Reasonable Construction; Preamble as an internal aid