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Published : January 23, 2011 | Author : rubyplp
Category : Constitutional Law | Total Views : 23907 | Rating :

  
rubyplp
Laasya Priya Ponnada LL.M. First Year Student
 

“Prospective Vs. Retrospective” Statutes

Coke Maxim: “A new law ought to be prospective, not retrospective in its operation.”

Ordinarily, a legislature has power to make prospective laws, but Art.20 of the Indian Constitution, 1950 provides certain safeguards to the persons accused of crime and so Art. 20(1) of the Indian constitution imposes a limitation on the law making power of the constitution. It prohibits the legislature to make retrospective criminal laws however it does not prohibit a civil liability retrospectively i.e. with effect from a past date. So a tax can be imposed retrospectively. Clause (1) of the Article 20 of the Indian Constitution guarantees rights against ex-post facto laws. It provides that “ no person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.” The American Constitution also constitutes a similar provision prohibiting ex-post facto laws both by the Central and State legislatures.

Meaning:
The dictionary meaning of the word prospective with reference to statutes shows that it is concerned with or applying the laws in future or atleast from the date of commencement of the statute. Whereas the word retrospective when used with reference to an enactment may mean:

1. Effecting an existing contract or
2. Reopening of the past , closed and completed transactions, or
3. Affecting accrued rights and remedies, or
4. Affecting procedure.

The retrospective operation of an enactment may mean one thing and its affecting the rights of parties another. Normally, an enactment is prospective in nature. It does not affect that which has gone, or completed and closed up already. Ordinarily, the presumption with respect to an enactment is that, unless there is something in it to show that it means otherwise, it deals with future contingencies, and does not annul or affect existing rights and liabilities or vested rights, or obligations already acquired under some provisions of law although its effect is that it does not affect an existing right as well. If an enactment expressly provides that it should be deemed to have come into effect from a past date, it is retrospective in nature. It then operates to affect existing rights and obligations, and is construed to take away, impair or curtail, a vested right which had been acquired under some existing law. If an enactment is intended to be retrospective in operation, and also in effect, the legislature must expressly, and in clear and unequivocal language, say so, in the enactment itself. A retrospective operation is not given to a statute, so as to impair an existing right or obligation, otherwise than as regards matters of procedure unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in a language which is capable of either interpretation, it ought to be construed prospectively.

In Young v. Adams, it was observed that retrospective operation ought not to be given to a statute, unless an intention to that effect is expressed in plain and unambiguous language. However, it does not seem probable that the legislature should intent to extinguish by means of a retrospective enactment, rights and interests which might already have vested. The retrospective operation should not be favoured, unless the legislature clearly and distinctly authorizes the doing of something which is physically inconsistent with the existence of an existing right and a statute is not construed to have a greater retrospective operation than what its language renders it necessary, because it may be that the retrospective operation may be partial and not full at some places in the enactment.

In Smt. Dayawati v. Inderjit , It was held that "Now as a general proposition, it, may be admitted that ordinarily a Court of appeal cannot take into account a new law, brought into existence after the judgment appealed from has been rendered, because the rights of the litigants in an appeal are determined under the law in force at the date of the suit. Even before the days of Coke whose maxim - a new law ought to be prospective, not retrospective in its operation - is off-quoted, Courts have looked with dis-favour upon laws which take away vested rights or affect pending cases. Matters of procedure are, however, different and the law affecting procedure is always retrospective. But it does not mean that there is an absolute rule of inviolability of substantive rights. If the new law speaks in language, which, expressly or by clear intendment, takes in even pending matters, the Court of trial as well as the Court of appeal must have regard to an intention so expressed, and the Court of appeal may give effect to such a law even after the judgment of the Court of first instance."

Criminal Law:
Article 20 of the Indian Constitution is divided into two parts. Under the first part, no person shall be convicted of any offence except for violation of ‘law in force’ at the time of the commission of the act charged as an offence. A person is to be convicted for violating a law in force when the act charged is committed. A law enacted later making an act done earlier as an offence, will not make person liable for convicted for violating a law in force when the act charged is committed. A law enacted later, making an act done earlier as an offence, will not make person liable for convicted under it. This means that if an act is not an offence at the date of its commission it cannot be an offence at the date subsequent to its commission. In Prahlad Krishna vs. State of Bombay, it has been held that an immunity is thus provided to a person from being tried for an act under a law enacted subsequently, which makes the law unlawful.

In Pareed Lubha Vs. Nilambaram, it has been held that if the non-payment of the Panchayat Tax was not an offence on the day it fell due, the defaulter could not be convicted for the omission to pay under a law passed subsequently even if it covered older dues. The protection afforded by Clause (1) is available only against conviction or sentence for a criminal offence under ex-post fact law and not against the trial. Under the American law the prohibition applies even in respect of trial. So the guarantee provided the American constitution is wider than that under the Indian constitution. A trial under a procedure different from what it was at the time of the commission of the offence or by a special court constituted after the commission of the offence cannot ipso facto be held unconstitutional.

The protection of clause (1) of the Article 20 cannot be claimed in case of preventive detention or demanding security from a person. This immunity extends only against punishment by courts for a criminal offence under an ex-post facto law and cannot be claimed for acts done before the relevant law has been passed or demanding a security from a press under the press law. The prohibition is just for conviction and sentence only and not for prosecution and trial under a retrospective law. An ex-post facto law which imposes penalty retroactively i.e. upon acts already done or which increases the penalty for such acts but not retrospective law.

Strictly speaking a retrospective law only looks backward on things that are past and ex-post facto law is a retroactive law that acts on things that are past, but the terms retroactive and retrospective are used synonymously. Retrospective law is made to affect acts or facts occurring, or rights occurring before it came into force. Every statute which 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. Retroactive statute means a statute which creates a new obligation on transactions or considerations already part or destroys or impairs vested rights.

The second part of Article 20(1) protects a person from ‘a penalty greater than that which he might have been subjected to at the time of the commission of the offence. Thus a person cannot be made to suffer more by an ex-post facto law than he would be subjected to at the time he committed the offence. This clause applies to punishment for criminal offences only. In Kedarnath vs. State of West Bengal, the accused committed an offence under the Prevention of Corruption Act then in force was punishable by imprisonment or fine or both. The Act was amended in 1949 which enhanced the punishment for the same offence for an additional fine equivalent to the amount of money procured by the accused through the offence. The Supreme Court held that the enhanced punishment prescribed in 1949 could not be applicable to the act committed by the accused in 1947 and hence set aside the additional fine imposed by the amended Act.

Taxation:
While tax laws by themselves are complicated, even more so are the provisions of the Income-Tax Act, 1961. Even after five decades there is uncertainty with regard to interpreting both the substantive and procedural provisions of the law. The focus and battle lines have shifted from domestic tax to international tax. Retrospective amendments to the tax law completely upset the applecart and make a mockery of business models which take into account certain concessions and incentives. Despite repeated representations not to make retrospective amendments, the usual quota of amendments are made every year.

Recently, the Special Bench of the Delhi Tribunal, in the ITO New Delhi vs Ekta Promoters Private Ltd case, had to consider whether the levy of interest under Section 234D of the Act from June 1, 2003, will have retrospective application to case.

Facts and decision:
The only set of facts in this important case is that the I-T department sought to levy interest under Section 234D for assessment years (AYs) 1998-99 to 2000-2001 by issuing notices under Section 148 of the Act. The company contested the levy and the CIT (Appeals) held that interest under Section 234D could not be charged for AYs before June 1, 2003. The department took the matter to the Tribunal. The Special Bench of the Tribunal held that levy of interest under Section 234 can be applied only from AYs 2004-2005 onwards and not for the earlier years.

The Bench reasoned that “there is no dispute to the proposition that a court cannot read anything into a statutory provision which is plain and unambiguous. A statute is the edict of the legislature. The language employed in a statute is determinative of the legislative intent and according to the first and primary rule of construction, the intention of the legislation must be found in the words used by the legislature itself and the function of the court is only to interpret the law and the court cannot legislate. If a provision of law is misused and subjected to the abuse of the process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary.

“Legislative causus omissus cannot be supplied by judicial interpretative course. Thus, on the basis of argument that legislature has brought this provision just to fill the lacuna in the law and therefore these provisions should be construed retrospective cannot be accepted more particularly when these provisions have been inserted on the statute with effect from June 1, 2003, and not with retrospective effect. The legislature has specifically mentioned the date of applicability, that is, June 1, 2003, and the legislator was not incompetent to make retrospective provision, if it was so intended. Therefore, merely on the basis of interpretation, retrospective effect cannot be given to the provisions of Section 234D.”

Accordingly, the Special Bench held that the levy on interest under Section 234D of the Act would apply prospectively from AY 2004-05 onwards.

Provisions and analysis
Section 234D of the Act was introduced by the Finance Act, 2003 with effect from June 1, 2003, wherein an assessee getting a refund under the provisional assessment and liable to pay up the same on the regular assessment is liable to return the same with interest at 18 per cent per annum from the date of the refund to the date of the regular assessment.

The objective of this levy is to prevent assessees from enjoying free money in their hands without interest. There is no major concern on the levy per se. The issue became controversial when the department sought to apply the provision for past assessment years. The general principle is that provisions in a statute would operate prospectively unless retrospective operation is expressly provided for. This principle is laid down in Govind Das vs ITO and Sharma vs. ITO.

Courts have on several occasions held that retrospective legislation can be held invalid on the ground that it is unreasonable or beyond the legislative competence. A new levy of interest is clearly a substantive provision. It is introduced to achieve a particular objective and take care of situations where refunds are held by assesses for a period and in the case of a demand returned without interest, for the period in their custody.

The Finance Act of 2003 made it abundantly clear that it comes into effect from June 1, 2003. It is also settled law that penal laws cannot generally have retrospective operation. This is confirmed by CIT vs Hindustan Electro and DCIT vs Ashok Paper. The debate on retrospective and prospective application of amendment is endless and in a taxing statute the demand for the earlier years on account of the retrospective application of law can wipe out the net worth of companies. Assessees typically want the best of both worlds — any new incentive to be retrospective and a fresh levy, prospective. The solution possibly lies in balancing the two and making it clear that any new levy or change has to be only prospective.

Rule Of Beneficial Construction
In the Maxwell’s Interpretation of Statutes, 12th Edn. the statement of law relating to its operation is stated as: "Perhaps no rule of construction is more firmly established than thus - that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matters of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only. The rule has, in fact, two aspects, for it, "involves another and subordinate rule, to the effect that a statute is not to be construed so as to have a greater retrospective operation than its language renders necessary”.

The rule of beneficial construction requires that ex-post facto law should be applied to reduce the rigorous sentence of the previous law on the same subject. Such a law is not affected by Article 20(1). The principle is based upon the legal maxim “Salus Populi Est Suprema Lex” which means the welfare of the people is the supreme for the law. It is inspired by principles of justice, equity and good conscience.

In Francis Bennion's Statutory Interpretation, 2nd Edn, the statement of law is stated as follows: "The essential idea of legal system is that current law should govern current activities. Elsewhere in this work a particular Act is likened to a floodlight switched on or off, and the general body of law to the circumambient air. Clumsy though these images are, they show the inappropriateness of retrospective laws. If we do something today, we feel that the law applying to it should be the law in force today, not tomorrow's backward adjustment of it. Such, we believe, is the nature of law. Dislike of ex-post facto law is enshrined in the United States Constitution and in the Constitution of many American States, which forbid it. The true principle is that lex prospicit non respicit (law looks forward not back). As Willes, J. said retrospective legislation is 'contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought, when introduced for the first time, to deal with future acts, and ought not to change the character of past transaction carried on upon the faith of the then existing law."

In T. Baral Vs. Henry An Hoe a complaint was lodged against the respondent under Sec.16(1)(a) on August 16, 1975 for having committed an offence punishable under sec.16(1)(a) read with sec.7 of the Prevention of Food Adulteration Act as amended by the amending Actof 1973. On the date of the commission of the alleged offence i.e. on 16th August 1975, the law in force in the State of West Bengal was the Amendment Act which provided that such an offence would be punishable with imprisonment for life. On 1st April, 1976 enacted the Prevention of Food Adulteration (Amendment) Act,1976 which reduced the maximum punishment of life imprisonment as provided by the West Bengal Amendment Act to 3 years imprisonment. The question for determination was whether the pending proceedings would be governed by the procedure under sec.16-A as inserted by Central Amendment Act 34 of 1976. The High Court held that the West Bengal Amendment would be deemed to have been obliterated because of the central amendment. Confirming the decision of the Supreme Court held:

“Nothing really turns on the language of Section 16(1)(a) because the Central Amendment Act has not created a new offence thereby but dealt with the same offence. It is only retroactive criminal legislation that is prohibited under Article 20(1). It is quite clear that in so far as the central amendment Act creates new offences of enhances punishment for a particular type of offence no person shall be convicted by such ex-post facto law nor can the enhanced punishment prescribed by the amendment be applicable. But in so far as the Central amendment Act reduces the punishment for an offence punishable under section 16(1) (a) of the Act, there is no reasons why the accused should not have the benefit of such reduced punishment.

The rule of beneficial construction requires that even ex-post facto law of such a type should be applied to mitigate the rigour of the law. This principle is based both on sound reason and common sense. This finds support in a passage that “A retrospective Statute is different from an ex-post facto statute”.

In Garikapati Veeraya v. N. Subbiah Choudhry, the SC stated that "The golden rule of construction is that, in the absence of anything in the enactment to show that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the Act was passed."

In the American case Calder Vs. Bull , Chase,J., said “Every Ex-post facto law must necessarily be retrospective, but every retrospective law is not an ex-post facto law”.

In R. Vs. Youle, Matin,B. said in the oft quoted passage: “ If a statute deals with a particular clause of offences, and a subsequent Act is passed which deals with precisely the same offences, and a different punishment is imposed by the later Act, I think that, in effect, the legislature had declared that the new Act shall be substituted for the earlier Act.

This rule is however subject to the limitation contained in Article 20(1) against ex-post facto law providing for a greater punishment and has also no application where the offence described in the later Act is not the same as in the earlier Act i.e. when the essential ingredients of the two offences are different”.

In Ratan Lal Vs.State of Punjab, a boy of 16 years was convicted for committing an offence of house-trespass and outraging the modesty of a girl aged 7 years. The magistrate sentenced him for six months rigorous imprisonment and also imposed fine. After the judgment of magistrate, the Probation of Offenders Act, 1958 came into force. It provided that a person below 21 years of age should not ordinarily be sentenced to imprisonment. The Supreme Court by a majority of 2 to 1 held that the rule of beneficial interpretation required that ex-post facto could be applied to reduce the punishment. So an ex-post facto law which beneficial to the accused is not prohibited by clause (1) of Article 20.

Important Judicial Decisions:
In K. S. Paripoornan v. State of Kerala, this Court while considering the effect of amendment in the Land Acquisition Act in pending proceedings held thus in Para 47 thereof as: ''...In the instant case we are concerned with the application of the provisions of Sub-sec. (1-A) of S.23 as introduced by the Amending Act to acquisition proceedings which were pending on the date of commencement of the Amending Act. In relation pending proceedings, the approach of the Courts in England is that the same are unaffected by the changes in the law so far as they relate to the determination of the substantive rights and in the absence of a clear indication of a contrary intention in an amending enactment, the substantive rights of the parties to an action fall to be determined by the law as it existed when the fiction was commenced and this is so whether the law is change before the hearing of the case at the first instance or while an appeal is pending"

In State of M.P. and another, vs.. G.S. Dall & Flour Mills, The Apex Court in Para 21 of the judgment the Apex Court has observed that "the notification of 3/71187 amending the 1981 notification with retrospective effect so as to exclude what may be described in brief as 'traditional industries' though, like Rule 14 of the deferment rules, the exclusion extends' even to certain other non-traditional units operating in certain situations. Though this notification purports to be retrospective, it cannot be given such effect for a simple reason. We have held that the 1981 notification clearly envisages no exclusion of any industry which fulfils the terms of the notification from availing of the exemption granted under it. In view of this interpretation, the 1987 amendment has the effect of rescinding the exemption granted by the 1981 notification in respect of the industries mentioned by it. S. 12 is clear that, while a notification under it.”

In Hitendra Vishnu Thakur v. State of Maharashtra,it was stated that the ambit and scope of an amending Act and its retrospective operation as follows :

"(i) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits.

(ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature.

(iii) Every litigant has a vested right in substantive law but no such right exists in procedural law.

(iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished.

(v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in Operation unless otherwise provided, either expressly or by necessary implication."

Conclusion:
The Cardinal Principle of construction of a statute is that every statute was prima facie a prospective “unless it is expressly or by necessary implication made to have retrospective operation”. When a procedural law is considered it is always retroactive i.e. came into effect from past date so the question of retrospective operation shall arise in substantive laws only. Also a criminal law shall always have retroactive operation whereas the civil law may have retrospective or retroactive operation. So by observing the different opinions of jurists and experts in India on retrospective and retroactive laws, a conclusion may be drawn in such a way that only substantive civil laws can be operated retrospectively if the statute specifically prescribes it or there exists large interest of the public as whole otherwise all statutes shall be operated retroactively.

Hathi Singh Manufacturing Co. Vs.Union of India, A.I.R. 1960 SC 923
Sundaramier and Co. Vs. State of A.P., AIR 1958 SC 468.
AIR 1966 SC 1423 PARA 10
Chief Inspector of mines Vs.K.C.Thapper AIR 1961 SC 883
AIR 1952 Bom. 1.
AIR 1967 Ker. 155.
Shiv Bahadur Singh Vs. State of Vindhya Pradesh, AIR 1963 SC 394; Venkataraman Vs. Union of India, AIR 1954 SC 375; Union Of India Vs. Sukumar Pyne, AIR 1966 SC 1206.
Prahalad Krishna Vs. State of Bombay, AIR 1955 Bom. 1.
State of Bihar Vs. Shailbala, AIR 1952 SC 329.
Darshan Singh Vs. Ram Pal Singh 1992 Supp (1) SCC 191
AIR 1953 sc 404
ITA No.s 2551, 2552 and 2553/Del/2006 dated July 11, 2008.
103 ITR 123 SC
254 ITR 772 SC
243 ITR 48 SC
256 ITR 673
1983 1 scc 177
The Craies on Statute Law, 7th Edition, at pp.388-89.
AIR 1957 SC 540 (PARA 25)
1 L .Ed. 648.
(1861) 158 ER 311.
AIR 1965 SC 444.
AIR 1994 5 SCC 593 at P.636
Halsbury’s Laws of England Vol.44 para 922
AIR 1991 SC 772
(1994) 4 SCC 602; 1994 AIR SCW 3699; AIR 1994 SC 2623; 1995 Cr.L.J.

BIBILOGRAPHY:
1. Constitution of India by J.N.Pandey.
2. Maxwell Interpretation of Statutes, 12th Edition.
3. Francis Bennion’s Statutory Interpretation, 2nd Edition.
4. Interpretation of Statutes by Vepa P. Sarathi.
5. www.legalservicesindia.com

Authors contact info - articles The  author can be reached at: rubyplp@legalserviceindia.com

 




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