RETROSPECTIVITY AND RETROACTIVITY OF LAWS

Before reading this article, it is vital to understand why you need to know whether a law is retrospective or retroactive in nature. I’ll answer in a layman’s language that whether a law applies practically to you or your client squared in a dispute is that, it aids in litigating the maintainability of a suit in its entirety or a particular accusation raised in the court of law, if the cause of the dispute has taken place before or after an act comes into force.

Under Article 20(1) of the Constitution of India, it has been clearly stated that there could be no retrospective impact of the formulated laws on offences committed before the introduction of the statute. The primary objective of this article is to ensure that the law and order are maintained properly and that there is absolutely no illegal detention taking place. The person who carried out an act at that point was completely aware that it was not unlawful, and later on, if it is declared to be unlawful, it is clearly violative of his rights. The person won’t have knowledge of any sort that the act he committed would be in the future declared unlawful or illegal and hence should not be punished.

COURT’S INTERPRETATION

On 15^th March 2012, the bench of the Supreme Court of India comprising A.K. Patnaik and Swatanter Kumar, JJ., was dealing with a critical question of whether Section 129(6) of the Customs Act, 1962 which stipulated that on demitting office as a member of the Customs, Excise and Service Tax Appellate Tribunal [CESTAT], a person shall not be entitled to appear before CESTAT, is ultra vires of the Indian Constitution?

While clarifying the above question the apex court stated that “one must clearly understand a distinction between a law being enforced retrospectively and a law that operates retroactively.” The restriction in the present case was a clear example where the right to practice before a limited forum was being taken away while leaving all other forums were open for practice. Though such a restriction may have the effect of relating back to a date prior to the present. In that sense, the law stricto sensu was held not to be retrospective but would be retroactive. Further, it was noted that is not for the Court to interfere with the implementation of a restriction, which is otherwise valid in law, only on the ground that it has the effect of restricting the rights of the people who attain that status prior to the introduction of the restriction.

The apex court in the case of Rafiquennessa v. Lal Bahadur Chetri (1964) 6 SCR 876 substantially differentiated between retrospective and retroactive laws:-

Retrospective Laws	Retroactive Laws
·       A retrospective law is defined as one which takes away or impairs vested or accrued rights acquired under existing laws.	·     A retroactive law takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past.
·   Retrospective operation of a statutory provision can be inferred even in cases where such retroactive operation appears to be clearly implicit in the provision construed in the context where it occurs.	·   A statutory provision is held to be retroactive either when it is so declared by express terms, or the intention to make it retroactive clearly follows from the relevant words and the context in which they occur.

It was in the case of State Bank's Staff Union (Madras Circle) v. Union of India [(2005) 7 SCC 584] that staff members of SBI approached the Supreme Court of India when the Madras High Court upheld the constitutionality of certain amendments in the State Bank of India Act, 1955, the Banking Act, 1970 and the Banking Companies Act, 1980, and stated that after these amendments, the customary bonus was not payable by the SBI to their staff. The apex court also upheld the retrospective nature of the acts and relied upon certain important parameters:-  

Judicial Dictionary (13th Edn.) by K.J. Aiyar, Butterworth, p. 857, states that the word "retrospective" when used with reference to an enactment may mean in the following manner:-

(i)              affecting an existing contract; or

(ii)            reopening up of past, closed, and completed transaction; or

(iii)          affecting accrued rights and remedies; or

(iv)          affecting the procedure.

IMPACT OF A RETROSPECTIVE LAW

Justice G.P. Singh, in his Principles of Statutory Interpretation 12th Ed., 2010) has stated that the classification of a statute, as either a substantive or procedural law, does not necessarily determine whether it may have retrospective operation. For example, a statute of limitation is generally regarded as procedural, but its application to a past cause of action has the effect of reviving or extinguishing a right to sue. Such an operation cannot be said to be procedural. It has also been noted that the rule of retrospective construction is not applicable merely because a part of the requisites for its action is drawn from a time antecedent to the passing of the relevant law. For these reasons, the rule against retrospectivity has also been stated, in recent years, to avoid the classification of statutes into substantive and procedural and the usage of words like "existing" or "vested".

IMPACT OF A RETROACTIVE LAW

In Harvard Law Review, Vol. 73, p. 692 it was observed that it is necessary that the legislature should be able to cure inadvertent defects in statutes or their administration by making what has been aptly called 'small repairs'. Moreover, the individual who claims that a vested right has arisen from the defect is seeking a windfall since had the legislature's or administrator's action had the effect it was intended to be and could have had, no such right would have arisen. Thus, the interest in the retroactive curing of such a defect in the administration of the Government outweighs the individual's interest in benefiting from the defect.

CONCLUSION

In judiciously examining the question of retrospectivity or retroactivity, the relevant considerations include the circumstances in which legislation was created and the test of fairness. The principles of statutory interpretation have expanded. With the development of law, it is desirable that the courts should apply the latest tools of interpretation to arrive at a more meaningful and definite conclusion.