RETROSEPCTIVE AND RETROACTIVE STATUTE

[Mr. M. GOVINDARAJAN]

Retrospective statute

It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation.   But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations.   Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only – ‘nova constitution futuris formam imponere debet non praeteritis’ – a new law ought to regulate what is to follow, not the past.

In ‘Nani Sha V. State of Arunachal Pradesh’ –2007 (5) TMI 593 - Supreme Court Of India the Supreme Court held that in order to make a provision applicable with retrospective effect, it has to specifically expressed in the provision.   Nothing had stopped the Government before amending the statute to word it specifically, making it retrospective.

In ‘K.S. Paripoornam V. State of Kerala’ 1994 (9) TMI 344 - SUPREME COURT OF INDIA the Supreme Court has observed that usually an amendment will take effect only from the date of its enactment and will have no retrospective effect in the absence of express intent or an intent clearly implied to the contrary.   Indeed there is a presumption served that a statute dealing with substantive rights differs from a statute which relates to procedures or evidence or is declaratory in nature inasmuch as while a statute dealing with substantive rights is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect, a statute that concerns mainly matters of procedure or evidence or which is declaratory in nature has to be construed as retrospective unless there is a clear indication that such was not the intention of the Legislature.

The Supreme Court further observed that a statute is regarded as retrospective if it operates on cases or facts coming into existence before its commencement in the sense that it affects, even if for the future only, the character or consequences of transactions previously entered into or of other past conduct.   By virtue of the presumption against retrospective applicability of laws dealing with substantive rights transactions are neither invalidated by reason of their failure to comply with formal requirements subsequently imposed, nor open to attack under powers of avoidance subsequently conferred.  They are also not rendered valid by subsequent relaxations of the law, whether relating to form or to substance.   Similarly, provisions in which a contrary intention does not appear neither impose new liabilities in respect of events taking place before their commencement, nor relief persons from liabilities then existing, and the view that existing obligations were not intended to be affected has been taken in varying degrees even of provisions expressly prohibiting proceedings.

The dictum of Lord Denman C.J. is that a statute which is in its direct operation prospective cannot properly be called a retrospective statute because a part of the requisites for its action is drawn from time antecedent to its passing, which has received the approval of the Court, does not mean that a statute which is otherwise retrospective in the sense that it takes away or impairs any vested right acquired under existing laws or creates a new obligation or imposes a new duty or attaches a new disability in respect to transactions or considerations already past, will not be treated as retrospective.

Lord Denim further observed that a statute would not be operating prospectively if it creates new rights and duties arising out of past transactions.   The question whether a particular statute operates prospectively only or has retrospective operation also will have to be determined on the basis of the effect it has on existing rights and obligations, whether it creates new obligations or imposes new duties or levies new liabilities in relation to past transactions.   For that purpose it is necessary to ascertain the intention of the legislature as indicated in the statute itself.

In ‘Zile Singh V. State of Haryana’ – 2004 (10) TMI 553 - SUPREME COURT the Supreme Court discussed about the retrospective effect in declaratory statutes.   The Supreme Court held that the presumption against retrospective operation is not applicable to the declaratory statutes.   In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form.  If a new Act is ‘to explain’ an earlier Act, it would be without object unless construed retrospectively.  An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act.   It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intends.  An amending act may be purely declaratory to clear a meaning of a provision of the Principal Act which was already implicit.  A clarificatory amendment of this nature will have retrospective effect.

The Supreme Court further held that though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, it is open for the legislature to enact laws having retrospective operation.   This can be achieved by express enactment or by necessary implication from the language employed.   If it is necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will give it such an operation.   In the operation of a retrospective operation having been expressly given, the courts may be called upon to construe the provisions and answer the question whether the legislature had sufficiently expressed that intention giving the statute retrospectivity.  Four factors are suggested as relevant-

• General scope and purview of the statute;
• The remedy sought to be applied;
• The former state of the law; and
• What it was the legislature contemplated.

The rule against retrospectivity does not extend to protect from the effect of a repeal, a privilege which did not amount to accrued right.

In ‘National Agricultural Co-op Marketing Federation of India Limited V. Union of India’ – 2003 (3) TMI 3 - SUPREME Court the Supreme Court held that there is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment.   Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before.  Sometimes this is done by re-enacting retrospectivity a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law.   Sometimes the legislature gives its own meaning and interpretation of the law under which tax was collected and by legislative fiat makes the new meaning binding upon courts.   The legislature may follow any one method or all of them.

Retroactive statute

The provisions of the legislation may be retroactive i.e., to cover the transactions which have taken place before the enactment it cannot have a retrospective effect, i.e., it cannot be deemed to have come into force from a back date.

Crawford in his ‘Crawford’s Statutory Construction’ observed that amendatory statutes are subject to the general principles relative to retroactive operation.  Like original statutes, they will not be given retroactive construction, unless the language clearly makes such construction necessary.   In other words, amendment will usually take effect only from the date of its enactment and will have no application to prior transactions, in the absence of an expressed intent or intent clearly implied to the contrary.   Indeed there is a presumption that an amendment shall operate prospectively.