GUJARAT NATIONAL LAW UNIVERSITY

SUBJECT: Legislative Drafting and Statutory Interpretation.

RESEARCH PROJECT ON:

Analysis of “Retrospective Operation of Statutes.”

SUBMITTED TO:

Mr. Sanjeev Chaudhary

SUBMITTED BY:

Gauravi Talwar (21BBL034)

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 TABLE OF CONTENTS:

INTRODUCTION.......................................................................................................................... 3

ANALYSIS....................................................................................................................................... 4

1. ARTICLE 20 AND PENAL STATUTES OF INDIA................................................. 4

2. STATUTES PROVIDING FOR SUBSTANTIVE RIGHTS......................................... 6
3. STATUTES PROCEDURAL IN NATURE................................................................... 8
4. SUCCESSION AND INHERITANCE STATUTES..................................................... 9
5. ACTS OF LIMITATION............................................................................................. 10
6. STATUTES WHICH REGULATE TRANSFERS AND CONTRACTS..................11
7. OPERATION OF FISCAL STATUTES....................................................................... 11

CONCLUSION.............................................................................................................................. 12

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 INTRODUCTION:

Every statute once enacted is either prospective or retrospective from the period of legal
applicability of the statutes. Generally, all the statutes have prospective effect i.e they are
applicable after the date of enactment for future transactions. On the other hand, there are
statutes which operate retrospectively which means they are applicable to past proceedings
also. Therefore, retrospective operation of law implies that law must be applied to situations
that existed before the enactment of the law. In a way, A retrospective statute replaces or
impairs an already existing right by forming or enforcing a new liability for an act performed
prior to the legislation being enacted.

With regards to retrospective operation of law, it is pertinent to mention Maxwell’s view 1

where he states that it is a firmly established rule of construction that retrospective operation
should not be given to a statute unless it is absolutely necessary in order to avoid damage to
the language of the enactment. When the language of the enactment allows room for
interpretation, it should be construed as prospective only. This rule includes another
secondary rule that a statute ought not to have more retrospective operation than its language
considers necessary. Even the view of Francis Bennion2 is that current law must govern
current activities. He states that retrospective laws are inappropriate because application of
law should not be in the nature of backward adjustment. He even cited the example of US
Constitution which disapproves ex-post facto laws.

The project will therefore analyse and discuss the retrospective operation of law from the
perspectives of different types of law such as procedural legislations, fiscal statutes etc
through legal provisions and judicial decisions.

1
Maxwell on the Interpretation of Statutes, 12th Edn.
2
Francis Bennion's Statutory Interpretation, 2nd Edn
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 ANALYSIS:

One of the most important principles of construction is that a statute is prospective in nature
unless it is expressly or impliedly said to have retrospective operation. This presumption is
contained in the maxim, “"nova constitutio futuris formam imponere debet non praeteritis"
which means that new law must regulate the future acts and not those of the past. In Young v.
Adams3, it was noted that retrospective operation should only be provided in a statute only if
there was an intention explicitly mentioned in clear language.

The Constitution of India does not allow for retrospective operation of an act or law. It
permits for such operation only when there is a necessary implication in law or express
provision stating that the law is to be applied retrospectively. A law which is said to be
retrospective but if it cannot be particularly implied from the Act, it would be regarded as
invalid or beyond the scope of constitutional limits. The Apex Court in respect of
retrospectivity of statutes has laid down many judgments to explain its nuances and aspects.

ARTICLE 20 AND PENAL STATUTES OF INDIA:

In India, the legislature is empowered to make prospective laws. In that regard, Article 20 of
the Constitution of India gives certain safeguards to persons accused of a crime. Therefore, a
restriction on the law making power of the constitution is enforced by Article 20(1) of the
Indian constitution. Even though it prohibits the legislature to effect criminal laws
retrospectively, it doesn’t prohibit a civil liability retrospectively. The applicability of ex post
facto rules to criminal liability is often frowned upon. The canon of interpretation of penal
provisions does not permit the retrospective effect of the law to be accomplished by penal
provisions. In addition to the negation of fair play and justice, a subsequent law that came
into effect after the commission of the act would per se be unconscionable in order to punish
a person for his act which was not an offence at the time of committing the act.4

The Supreme Court in Vijay v. State of Maharashtra5 laid down that penal statutes that create
new offences are always prospective in nature. However, when penal statutes create new
disabilities, one must deviate from ordinary prospective interpretation and apply retrospective
operation when there is a clear intention that they must be applied to previous events.

3
Young v. Adams, 693 F. Supp. 2d 635 (W.D. Tex. 2010).
4
“Retrospective Operation of law”, Niharika Khanna , Journal for Law and Public Policy, Vol 2 (2016)
http://www.jlapp.in/volume-2-issue-6/
5
Vijay v. State of Maharashtra, (2006) 6 SCC 289.
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 Starting from Penal Statutes, due to the constitutional restrictions imposed by Article 20, will
only be prospective in nature. When an Act creates a new offence, it would only include
offenders who commit all the essentials of an offence after the act comes into force. This
principle has been put into application for provisions that affect power to grant pardon or
remission. For instance, Section 433A of Code of Criminal Procedure states that when a
sentence of life imprisonment is given for convicting a person for an offence for which
capital punishments is one of the consequences, such person shall not be acquitted from
prison unless he has served a minimum of fourteen years of imprisonment. The courts have
held the section to be applicable to sentences imposed only after the section came into force
and not applicable to person convicted before it came into force. 6

Another principle emerging from interpretation of criminal statutes that its provisions are to
be strictly construed and retrospective operation is not to be applied unless there is clear
legislative intention on that regards. It has been observed by Supreme Court that amendments
in criminal law do not intend to create unnecessary delays for disposal of criminal cases or
possibilities of retrial because of the change in law.7

The restriction as contained in Article 20 for retrospective operation of penal codes cannot be
applied to a law that alleviates or mollifies the severity of an existing penal statute. In the
case of Rattan Lal v. State of Punjab8, the Probation of the Offenders Act 1958, was not
applicable to the region in which the crime was committed and was extended to the area
where his appeal was pending and the court held that the benefit of doubt can be given to the
accused.

Therefore, the Union Parliament and Legislature of States in India possess general powers of
legislation in the areas assigned to them subject to some restrictions. The legislature through
retrospective legislation can remove an amending act fully and reinstate the law as it was
before the Amending act. This power has been used to validate previous executive and
legislative acts in order to cure the defects that made them invalid in the first place.

The Constitutional Bench of the Apex Court in Commissioner of Income Tax vs. Vatika
Township Private Ltd9 reiterated that it cannot be presumed that an Act is intended to have a
retrospective operation. The premise behind the rule is that current transactions must be
regulated by contemporary enactments. The legislation passed today cannot be extended to
past

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 6
State of Haryana v. Ram Diya, AIR 1990 SC 1336.
7
G.P. Singh, Principles of Statutory Interpretation, 14th Edition (Lexis Nexis).
8
Rattan Lal v. State of Punjab, AIR 1965 SC 444.
9
Income Tax Commissioner v. Vatika Township Private Ltd., 2014 (9) TMI 576.

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 incidents. The judgement laid down the general principles governing retrospective operation
of statutes and observed that among the guiding principles of interpretation of statutes, the
foremost established principle is that a law is believed not to have a retrospective operation,
unless a contrary intention occurs. The Court held that by relying on the existing law, every
human being is entitled to organise his affairs and should not find that his arrangements have
been retrospectively disrupted.

The said principle of law find its meaning in the maxim of “lex prospicit non respicit” which
means that the law looks forward not backward. A retrospective law is contrary to the general
principle that when enacted for the first time to deal with future activities, legislation under
which the conduct of humanity is to be governed does not alter the nature of past transactions
carried out in accordance with the faith of the then established law. Thus, the second basis of
the rule against retrospectively lies in the principle of fairness‘, which must be the base of
every legal rule. Legislation that modifies accrued rights or imposes responsibilities or
imposes new duties or imposes a new impairment must also be regarded as prospective unless
the legislative aim is specifically to give retrospective effect to the enactment or the
legislation is intended to provide an apparent omission in an earlier legislation or to clarify an
earlier legislation.

The Supreme Court viewed the rule against a retrospective construction to be different. If a
law confers a gain on some individuals, but without imposing a corresponding drawback on
some other individual or on the general public, and where the lawmakers seem to have been
the target of conferring such a benefit, then the inference would be that such a law, giving it a
purposeful construction, would warrant that it would have a retrospective operation.

STATUTES PROVIDING FOR SUBSTANTIVE RIGHTS:

In a situation where the legislation takes away rights created in the interest of a person such
as property rights or statutory rights or rights created from a contractual transaction, the
legislative must protect their rights by stating that its provisions have a retrospective effect.
This principle is noticed in the Supreme Court case of Suhas H Pophale v. Oriental
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Insurance Co. Ltd. The issue before the court was whether that a “deemed tenant” under
Section 15A of the Bombay Rent, 1947 continue to be protected in the succeeding act i.e
Maharashtra Rent Control Act, 1999 under its definition of “tenant”. The court ruled in his
favour and stated that he cannot be evicted as an “unauthorised occupant” under the Public
Premises Act, 1971. As there was no
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Suhas H Pophale v. Oriental Insurance Co Ltd, (2014) 4 SCC 657,

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 retrospective operation was not expressly provided in the Public Premises Act, his deemed
tenancy could not be destroyed.

In Hitendra Vishnu Thakur vs. State of Maharashtra 11 , the Court while stating the ambit and
scope of an amending Act and its respective retrospective operation held that it is presumed
for a statue affecting substantive right s prospective in operation unless it is made
retrospective by an express provision. Retrospective operation must not be allowed for
procedural law. A statutory provision which along with changing the procedure, creates new
rights and liabilities shall be understood to be of prospective operation unless it is provided
otherwise through implicit or express words.

Therefore, while determining the scope and degree of retrospective operation of a particular
statute, there must a close and careful examination of the language of the statutory provision.
When the literal reading of the section providing for retrospectivity creates inconsistencies
and absurdities, a situation not prima facie within the words can be covered if the intent of the
provision shows its purpose was to cover it.12 There is no rigid rule with regards to
retrospective construction and thus, it varies from situation to situation and should be looked
at from a fairness perspective. Court have been known to apply the device of legal fiction to
bring about implied retrospective operation.

It is definitely true that the language is the most important factor to be considered while
deciding the application of a specific statute to past occurrences but it is not a rigid rule that
by stating present or present perfect tense can decide if the statute includes past events. For
instance, “debtor commits an act of bankruptcy” was held to include actions of bankruptcy
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before the commencement of the act. Thus, even though the word “is” generally refers to
the present, it may have a future meaning as well as past importance in the sense of “has
been.” This was understood in the judgement of Anand Gajpati Raju v. PVG Raju14 where
section 8(1) of the Arbitration Act which stated “"judicial authority before which an action is
brought in a matter which is the subject of an arbitration agreement" was brought before the
court. It was observed that when the action is instituted, the arbitration agreement need not
exist and cases where the arbitration agreement exist after the action is brought are also
covered.

11
Hitendra Vishnu Thakur v. State of Maharashtra, 1994 AIR 2623.
12
UOI v. Filip Tiago De Gama of Vedem Vasco De Gama, AIR 1990 SC 981.
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Ex parte, Pratt, (1884) 12 QBD 334; referred in State of Bombay v. Vishnu Ram Chandra, AIR 1961 SC 307.
14
Anand Gajpati Raju v. PVG Raju, AIR 2000 SC 1886.

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 STATUTES PROCEDURAL IN NATURE:

Unlike laws dealing with substantive rights, statutes dealing solely with procedural matters
are considered to be retrospective unless such a construction is textually inadmissible. In this
regard, the quote by Lord Denning must be stated that retrospective operation to statutes does
not apply to only statutes which affect vested rights. It doesn’t apply to enactments that only
change the form of procedure or admissibility of evidence. 15 Thus, when the new Act has an
effect only on issues of procedure then it prima facie applies to past, pending and future
actions. The underlying idea behind this principle is that a person does not have a vested right
in any ways of procedure and so, when the course of the procedure is changed or altered by
an act of parliament, he has to proceed as per the altered mode.

Application of this principle can be noted in Sudhir G Angur v. M Sanjeev16 where the Apex
Court held that when a suit reached for disposal in any court, the court cannot deny
jurisdiction on the reason that it did not have jurisdiction to entertain the suit on the time it
was instituted. In order to create a distinction between matters of procedural and substantive
nature, the laws related to forum and limitation are considered to be procedural while right of
action and appeal are substantive in nature. Normally, the statute would not be applied
retrospectively if its application would generate new obligations or new disabilities or duties.
And if there are creation of new rights and duties, the statute will operate prospectively

New India Insurance Co. Ltd v. Shanti Misra17 laid down that where a new Act necessitates
certain types of original proceedings to be initiated before a special tribunal established under
the statute and thereby excludes civil courts, all proceedings of the type (old or new cases)
would have to be before the tribunal. And thus, a change of forum is an issue of procedure.

Similarly, in Kuwait Minister of Public v Sir Frederick Snow & Partners 18 the Court held that
an arbitration award made in a foreign State is enforceable in the United Kingdom as a
convention award under section 3 of the Arbitration Act, 1975 if the foreign State is a party to
the New York Convention when proceedings for enforcing the award are taken even though it
was not such a party at the time of making of the award. It was observed by the court that in
so construing the section it must not be given a retrospective operation because it solely
affected the form of procedure of enforcement in that an award which, at the time it was
made, was

15
Blyth v. Blyth, 1966 AC 643 (HL).
16
Sudhir G Angur v. M Sanjeev, AIR 2006 SC 351.
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New India Insurance Co Ltd v. Shanti Misra (Smt), AIR 1976 SC 237.
18
Kuwait Minister of Public v. Sir Frederick Snow & Partners, (1984) 1 All ER 733.

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 enforceable by action at common law became enforceable under the Act on the foreign State
becoming a party to the convention subsequent to the date of the award.

SUCCESSION AND INHERITANCE STATUTES:

When the Acts of Parliament are for the purpose of regulating succession, they are not
applicable to successions that have already started. The statutes are not applicable because the
effect would deprive the property from persons who were conferred the rights over the
property before the statute came into force. When the law applicable alters the order of
succession, the material time is the date when succession opens afterwards. 19

Therefore, in Lala Dunichand v Anarkali20, the Hindu Law of Inheritance (Amendment) Act,
1929 was applied to a situation where a woman heir died after the Act came into force and
the male heir had died before the commencement of the Act. The application of the act was
not given retrospective operation because doing so would divest the persons who have rights
already vested in them under the Hindu Law. The court was of the view that the even though
female heir under the Hindu Law is a limited owner, she fully represented the estate and thus,
other reversioners have no interest in it.

Another example could be section 14 of the Hindu Succession Act, 1956 which stated that a
Hindu female shall be the full owner and not limited owner of a property possessed by her
irrespective of whether it was acquired before and after the commencement of the Act. A
reading of this section indicates that it is retrospective in nature but it has not been provided
retrospective operation larger than its language permits. Thus, in numerous cases 21, the courts
have held that when a female heir alienates from her property before the Act is enforced, she
won’t get the right to full ownership under the section.

An interesting judgement in this regard is Cherotte Sugathan v Cherotte Bharathi22. In the

case, a Hindu widow after the enforcement of Hindu Succession Ac got the ownership of her
estate absolutely as per her right under the Hindu Widows Remarriage Act before its repeal in
1983. Her remarriage would not deprive her of the property vested in her. Therefore, it held
that a widow had a right to inherit the property of her dead husband.

19
Muhammad Abdus Samad v. Qurban Hussain, ILR 26 All 119.
20
Lala Dunichand v. Anarkali (Mt), AIR 1946 PC 173.
21
Munshi Singh v. Sohanbai (Smt), AIR 1989 SC 1179, Naresh Kumari v. Sakshi Lal, AIR 1999 SC 928.
22
Cherotte Sugathan v. Cherotte Bharathi, AIR 2008 SC 1467
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 ACTS OF LIMITATION:

The purpose of a statutes of limitation is to lay down time frame or duration within which
legal actions can be initiated for administering substantive legal rights under the applicable
law and thus, it doesn’t create any right. The statutes of limitation are considered to be
procedural in nature and the rule of limitation applicable to the action shall be the law in
effect on the date of the institution of the action, regardless of the date of accrual of the cause
of action. The principle of operation arising from statutes prescribing limitation is therefore,
that when a particular cause of action has been barred by a previous Limitation statute, the
right cannot be brought back by a latter Limitation statute even if the second one gives a
greater time of limitation compared to the previous one. 23 Another principle, as a natural
corollary, is that when the subsequent act gives a shorter limitation period compared to the
earlier Act the rights existing as per the earlier Act would prevail. However, in order to
prevent certain complications when the subsequent statute prescribes shorter periods, the
Limitation Act postpone their effect for some reasonable time or to provide for a time gap for
which benefits of the either of acts can be taken. 24

Therefore, the statutes of Limitation are both retrospective and prospective in nature because
on one hand, they are applicable to all the legal proceedings initiated post their operation for
implementing causes of action accrued previously. While on the other hand, they can be
considered to be prospective because they do not have any effect of bringing back a right of
action already barred on the date of their coming into effect and that they don’t have an effect
of removing the rights of action existing on that date. 25

The application of these principles can be seen to be applied in the Section 107 of the Wakf
Act, 1995 which stated that the provisions of Limitation Act, 1963 would not apply to action
for possession of immovable property contained in a wakf property. The judgement of T
Kaliamurthi v Gori Thaikkal Wakf held that the abovementioned section shall not be applied
when the right of suit for possession with regards to wakf property has become barred prior to
section 107 coming into force and property rights being destroyed by the application of
section 27 of the Limitation Act.

23
Mahesh Narain Munshi v. Taruck Nath Moitra, ILR 20 Cal 487.
24
Section 30, Limitation Act, 1963 (Act 36 of 1963).
25
Thirumalai Chemicals Ltd v. UOI, (2011) 6 SCC 739.
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 It is pertinent to mention Section 166 (3) of the Motor Vehicles Act, 1988 which had
provided for a limitation period of 6 months for filing a petition before a tribunal established
under the Act with the power to extend it by maximum twelve month from the happening of
the accident. With the MV (Amendment) Act, 1994, the section was deleted as a result of
which the there was no period of limitation for a claim petition. Even though the deletion was
impliedly retrospective, it meant to include all the pending claims and the claims for
accidents occurring before the amendment date but not filed before the date. But retrospective
operation for a decision already holding a claim barred would remain the same. 26

STATUTES WHICH REGULATE TRANSFERS AND CONTRACTS:

The statutes that impose formalities for carrying out transfers are not applicable to transfers
made before the implementation of the statute. Similarly, laws that dispense with formalities
previously needed to make transfers do not have the effect of validating transfers that were
lacking in those formalities and that were made prior to those statutes. Another principle
arising in such statutes is that a transfer made in violation of statute is not valid and won’t be
considered to be valid when the statute is repealed too.27

An instance of such a statute would be the Transfer of Property Act, 1882 since the Act
cannot be considered to be retrospective in nature because it does not impact any rights or
liability which is the result of a legal relation made prior to the passing of the Act or any
relief in relation to such a right or liability. Therefore, in Ahmad Raza v. Abid Husain28, the
court upheld the validity of an oral mortgage that was created before the Act came into force.

OPERATION FOR FISCAL LEGISLATIONS:

When it comes to fiscal statutes, there is a general assumption that they are not retrospective
in nature. One of the most fundamental principles of tax law is that law must always be
applied for the current assessment year unless it is expressly or impliedly provided otherwise.
This principle is obviously applicable to the substantive sections that prescribe charges and
penalty and not to procedural provisions that apply to pending proceedings and are normally
retrospective in operation. An assesse has a vested right and therefore, cannot be reassessed
unless an amendment provides for restrospectivity. In case a provision is retrospective in
nature and has the effect of creating new liabilities which were barred by limitation, the
principle of

26
Dhannalal v. DP Vijayvargiya, 1996 (4) Scale 458.
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 27
Ram Kristo v. Dhankisto, AIR 1969 SC 204.
28
Ahmad Raza v. Abid Husain, ILR 48 All 494.

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 strict construction should be applied. Additionally, if the event is continuing and not finished
when the Act was initiated, the taxing statute would be called retrospective. Therefore, there
is no rigid formula been given for the describing the intention of the Legislature to give
retrospective operation to a taxing statute. The Courts have declared such retrospective laws
to be in contravention with Article 14 and 19 on account of arbitrariness, unreasonableness
and irrationality. 29

In Govinddas v. Income tax officer30, the construction of Section 171 (6) of the Income Tax
Act, 1961 was analysed. It was held that the section was not applicable to assessment made
for the Hindu Undivided Family for any period before the statute was enacted. It was based
on the general principle that a new act is prospective because it affects existing rights and
creates new obligations. The court observed that the said section created joint and several
liabilities for the HUF for the payment of tax after the assessment found that the family has
total or partial properties. Section 171 (6) created new liabilities because it wasn’t limited to
joint family properties but also made a member personally liable and thus, the section would
not be understood to be applicable to assessments finished under the old Act.

CONCLUSION:

From the above analysis, it is quite clear that statutes which deal with substantive rights in
will, in most situations, have prospective operation of law unless the statute intends to create
new liabilities or rights and statutes dealing with procedure are retrospective. The real
question in all the cases with respect to the primary intention of the Legislature. Its purpose
can be understood from the language and terminologies used in the statute, the object
indicated, the nature of rights which are affected, and the surrounding situations in which the
legislation is passed. The principle of fairness come into play while interpreting a statute that
provides an advantage, with regards to it being given a retrospective operation. For instance,
the presumption of retrospective action shall not apply to declaratory statutes which eliminate
doubts as to common law or the intent or effect of any statute. Generally, such actions are
held to be retrospective. It is well known that whether a statute is curative or merely
declaratory, retrospective application of the previous law is usually expected.

29
RC Tobacco Pvt Ltd v. UOI, (2005) 7 SCC 725.
30
Govinddas v. Income-tax Officer, AIR 1977 SC 552.
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