Why cpc is not retrospective?
This article is written by Parth Verma, a law student at the School of Law, Christ University, Bengaluru. This article seeks to explain the concept of retrospective operation of statutes with the help of case laws. In addition, it aims to look into the issues existing in this concept and its relation with the rights of citizens.
It has been published by Rachit Garg.
Laws are made in any country to punish wrongdoers for the heinous crimes they might commit. These are generally formulated when there are increased instances of people being left scot-free despite committing an offence due to the lack of proper legal provisions. A prime example of this is the anti-defection law, introduced in 1985 owing to mass defections. As a result, these laws are applicable to similar crimes that might be committed in the future. However, there have been several instances in which the newly formulated or amended laws could be used to hold a person liable for offences committed before the introduction of that law as well. These types of laws or amendments are very rarely found in any country and are known as retrospective laws or statutes.
Retrospective laws can generally be made for both criminal as well as civil offences. In recent times, such legislation has become a topic of debate. While certain scholars are of the opinion that such legislation directly violates the rights of the people, others feel it is necessary that the wrongdoers get punished even though they committed a wrongful act that was unrecognized at that point in time owing to the lack of any statutory provisions. This article will delve deeper into all these aspects and resolve the existing ambiguities in such laws.
The term ‘retrospective’ essentially means speculating or looking into the events or incidents that have taken place in the past. When any law that was already existing is changed, altered, or some portion of it is removed, it doesn’t remain the same as it was previously. However, the new changes still have an influence on the events that occurred in the past. In other words, if a person commits an act that was not considered to be an offence at that point under any legislation, but becomes one after some changes in the existing laws or the introduction of a new law, the person could be held liable even for the acts committed by him in the past that are now an offence.
This operation of a statute acts contrary to the general perception that any law is introduced to consider the crimes that might be committed in the future. When a statute operates retrospectively, however, the new law can be applied to the facts or the actions that were carried out even before such a law had been proposed. When such a statutory provision is introduced which aims to consider past actions as well, it is clearly stated that the act was said to be in operation from the given date in the past. From that date forth, all the offences would be included within the purview of the statute and the people would be punished. These statutes are also known as ex-post facto laws. There can be four different scenarios that might arise when retrospective legislation is introduced.
In this scenario, if a person carries out an act that was not wrongful at that point of time but later on, due to the passing of legislation recognizing the same act as wrongful, he could be held liable. This would happen when the law has a retrospective operation, making the person liable for acts committed in the past that are wrongful or criminal in nature, due to the introduction of legislation or a statute.
In a very rare scenario, ‘if a person has been sentenced for around 7 years for committing any wrongful act, but 2 years later, the act committed by him is no longer unlawful with a retrospective impact, the person could be directly released.’ It is a very rare situation to actually happen that an act previously declared unlawful becomes a legal act.
An example of this is the decriminalization of Section 377 of the Indian Penal Code, 1860, which stated that it had declared homosexuality a criminal offence. It is applied retrospectively to all the citizens who were criminally charged because of their sexual orientation before the introduction of this Act.
Under this scenario, if the person has been punished for an act under any given statutory provision but later on, some changes are made, leading to a reduction in the period of punishment. This is a situation of a retrospective law dealing with amnesty to decriminalize certain acts and grant a pardon to the wrongdoer. A person serving a prison sentence for a specified period will have the punishment reduced owing to the same.
An example of this is the Amnesty Scheme. The government may introduce it to reduce the payment of the late fee for tax filing. This would reduce the punishment for the late payment of taxes.
When an existing law is amended with a retrospective impact to bring a wrongful act into a more severe category than it was while being committed, the sentence or the term of punishment might be increased for the wrongdoer. This might involve an increase in penalties, increasing the fines payable, increasing the sentence of imprisonment, or any other factor.
These are some of the general impacts that a statute with a retrospective operation might have on a person who committed a wrongful act recognized by the statutes later on.
Retrospective laws are generally applied in a country to either increase or decrease the punishment for any particular crime. They may be placed into a more serious category or reduce the punishment of the crime, thereby reducing their sentence. However, the treatment of retrospective laws also varies for the various laws. A retrospective operation can only be given to a statute affecting the substantive rights of the people and could be made applicable to the events that took place in the past. For example, if a person committed a crime 2 years ago, which was held to be a punishable offence, the act now is no longer a crime with a retrospective effect. It would be applicable to the person and he would be released. This is an example of a retrospective operation on substantive law.
On the other hand, the above-mentioned is not applicable to procedural laws. The procedural laws generally have a retroactive operation and not a retrospective operation. The retroactive operation essentially means that the statute introduces a new obligation or transaction and, at the same time, impairs certain vested rights. Hence, the retrospective operation of laws applies only to the substantive laws and not to the procedural ones.
A declaratory statute refers to a statutory provision that aims to remove any ambiguities related to prior law, either by explaining the previous statute or by reconciling the conflicts in various judicial decisions. The declaratory laws, as a result, have a retroactive operation as they aim to improve the prior laws. It is only when the rights are vested or the litigation is settled that they are applied retrospectively, as stated in the case of Commissioner of Income Tax v Sriram Agarwal (1986).
Explanatory statutes are also very similar to declaratory statutes and have a retrospective application. These statutes aim to explain the law and rectify all the omissions that existed in the previous laws.
Retrospective laws can certainly be made for criminal acts. However, these are not encouraged in India. This is so because holding a person liable for an act committed by him in the past, which was not unlawful at that point but now is, would be clearly unjustified. Most of the interpreted legal provisions state that the punishment for the offences is prohibited from having a retrospective effect. Only if stated in an implied manner with the appropriate intention, the new punishments introduced under the laws are allowed to have a retrospective impact.
Though both the retrospective and ex-post facto laws might have the same effect most of the time, there are slight differences that exist between them. While all the ex-post facto laws are necessarily retrospective laws, all retrospective laws are not ex-post facto laws. While ex-post facto laws are prohibited in India, there is no such express prohibition on retrospective laws. There are several retrospective laws that aren’t ex-post facto laws that are allowed to be introduced for the purpose of amnesty in taxation, criminal punishment, etc. The retrospective laws only look backward at the events of the past, but the ex-post facto laws act on the things that are in the past. The retrospective laws aim to focus on acts committed in the past before the commencement of the statute. On the other hand, any ex-post facto law might impose various new obligations on the transactions or any act committed by an individual or impair the vested rights.
These are the major differences between ex-post facto laws and retrospective laws. In most situations, these terms can be used synonymously. Yet, there are several laws that can have a retrospective operation but can’t be ex-post facto laws, such as the amnesty schemes of taxation.
The retrospective and retroactive laws both aim to look into the past, but the method of dealing with the laws is different. While the retrospective laws just aim to look into the legal provisions of the past, the retroactive laws not only look into the past but also aim to act upon them.
In the case of Jay Mahakali Rolling Mills v. Union of India (2002), the Supreme Court provided the distinction. The Court stated that retrospective means the law which contemplates the past, referring to a given statute that was there previously. It is made applicable to all the events that occurred in the past before the new law came into force. On the other hand, a retroactive statute refers to any statute that aims to look into the previous legislation and create certain new obligations or transactions. At the same time, it might even impair or destroy certain vested rights.
The Court further went on to say that retroactive laws aim to cover two distinct concepts. One is true retroactivity, which involves the application of a new rule to an act that was carried out before the rule had been made. The other is quasi retroactivity which applies to an act that is still in the process of completion. On the other hand, the retrospective operation might become very ambiguous. Such statutes, however, generally operate in cases that affect, even if only for the future, the character of acts the person has previously indulged in.
These are some of the major differences between retrospective and retroactive laws, but the one thing common to both is that they both focus on past acts.
In India, the retrospective operation of any statute is prohibited for any civil offence. The Constitution of India doesn’t permit a retrospective operation of any given act unless there is any implication in law stating that the law that is there has to be retrospective in nature. Any Act that is introduced in India that is held to be retrospective but has not been specifically implied in the act, is said to be unconstitutional as well as void.
Making ex-post facto laws is completely prohibited under the fundamental rights stated in the constitution of India. Under Article 20(1) of the Constitution, 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.
There are various examples of retrospective legislation in India. Though these laws primarily deal in the field of taxation, there have been several other laws introduced in India.
One of the examples of such legislation is the Karnataka Scheduled Caste and Scheduled Tribe (Prohibition of Transfer of Certain Lands) Act, 1978, which was retrospective in nature. This Act aimed to prohibit the transfer of land granted by the government to people belonging to the Scheduled Castes and the Scheduled Tribes. This law was also applicable on the land under the ownership of the Scheduled Castes and the Scheduled Tribes before the enactment of this law. Nobody was even allowed to purchase the land owned by the people belonging to SC and ST communities.
Another major legislation was the Tamil Nadu Land Acquisition (Revival of Operation, Amendment, and Validation) Act, 2019, whose constitutional validity was recently upheld by the Supreme Court, which was going to be applied retrospectively till the year 2013. The reasoning behind this decision of the Supreme Court was that the basic principle of the legislature is to protect the public interest at large. The legislature is at the helm of protecting the rights of the people and ensuring a democratic polity among the people. Hence, any step taken towards achieving this purpose is considered to be lawful, and the contention raised by the petitioner that it violated the principle of the separation of powers is completely invalid. For the public good, any law can be operated retrospectively without any stoppage since the law doesn’t completely prohibit the same.
However, if any retrospective law is to be introduced, it is only allowed for criminal matters and not in the case of civil matters.
The retrospective laws are generally utilized for tax-related matters, such as the Amnesty scheme. Those who fail to file their taxes on time are provided with some rebate, especially in the times of Covid-19. There were crores of people who lost their jobs and many even went bankrupt. Even small industrialists suffered a lot during this period. Many of them become incapable of paying their taxes on time.
It is at this point in time that the government can make good use of retrospective statutes. People would need to pay fewer taxes if the government amended the Income Tax Act, 1961 to state fewer taxes to be paid with a retrospective effect. At the same time, this operation can be used to impose some justified charges on transactions that have been carried out in the past. Such retrospective taxes help in rectifying any deviations in the taxation policies that previously allowed businesses to benefit from any kind of loophole.
There were several amendments that took place in this Act that were retrospective in nature. An example of the same is explanation 7 to Section 9(1)(i) of the Income Tax Act, 1995, which had to be applied retrospectively. It was declared by the Court in the case of Augustus Capital PTE Ltd v DCIT (2020) that explanation 5 of the Income Tax Act was applied retrospectively for the removal of any doubt with respect to the payment of the interest amount. Later explanations 6 and 7 were introduced that had to be read along with explanation 5 for providing further clarity regarding the accrued income. Since explanation 5 was applied retrospectively, the same should be the treatment of explanations 6 and 7. Hence the assessing officer, in this case, was ordered by the Court to read the concerned explanation 7 of Section 9(1)(i) as applicable from the year under consideration and that there shall be no further additions or questions regarding the same.
Another landmark case with regard to Section 9 of the Act is Ishikawajima Harima Heavy Industries Ltd v. Director of Income Tax (2007). Section 9 of the Act gave a whole new dimension to the concept of ‘income deemed to have accrued in India’. The company concerned in this case was involved in selling its products in the Indian market but was incorporated in Japan. There was a question in this case regarding the tax treatment of the fees for technical services that were to be paid by the non-resident companies in India. The Apex Court in this particular case held that two conditions are to be fulfilled for explanation 7 of Section 9 of this Act to be made applicable. The services from which the company is earning money on which the taxes are to be imposed must be rendered as well as utilized in India. If both these conditions are satisfied, the income is said to be accrued in India.
This judgement completely reversed the general perception that if the technical or consultancy services were provided in India, the company would be liable to pay the taxes regardless of whether these services were rendered outside India or not.
Further, the retrospective operation can also be used when the policies in the present and the past were very different owing to the fact that firms were required to pay a lesser amount of tax. In order to create a level playing field and to ensure justice and fairness in the payment of taxes. The most recent example of a retrospective taxation law is the policy under the Union Budget 2022-23. It brought about certain amendments to the Income Tax Act, 1961, which carried a retrospective impact. The examples of various amendments brought about under the Income Tax Act, 1961 are as follows.
Hence, the retrospective operation of the various amendments in the Income Tax Act, 1961 has played a vital role in ensuring the fair payment of taxes by every individual on time. Secondly, it has facilitated the introduction of amnesty schemes to provide some relief to small businessmen and industrialists.
In this particular case, the assessee was a public limited company, which had filed the income tax. Apart from that, there was an additional amount representing the cash compensatory support that wasn’t offered to the tax as an adjustment. It was not required under the Act prevailing in 1989. However, there was the introduction of the Finance Act of 1990 with a retrospective effect, stating that the tax is also required to be paid on cash assistance.
The suit was henceforth filed in the Court, stating that these provisions are penal in nature. However, the Court in this case declared that the provisions of this Act were not penal and, hence, this legislation can certainly be retrospective in nature. It is only a penal law on which the retrospective operation can’t take place.
In this case, there was an issue in the appeal from the trial court to the Supreme Court. Since the amount of the suit was Rs 11,000 but the amount required for an appeal before the High Court was required to be Rs 20,000, the appeal was not allowed. In this case, the Court stated that if there is an absence of any statement to show that the law has a retrospective operation, it can’t be determined to be the same. Hence such laws also cannot change the existing laws that are to be applicable for determining the validity of any claim in the Litigation.
In this particular case, a boy who was 16 years old was held liable for committing trespass and for outraging the modesty of a 7-year-old girl. He was ordered to rigorous imprisonment by the magistrate and a certain amount of fine was also imposed upon him. However, later on, the legislation known as the Probation of Offenders Act, 1958, came into force, in which it was stated that any person below the age of 21 should not be imprisoned. The Court in this case held that any legislation could be operated in a retrospective manner for the benefit of that person to reduce the punishment. Hence, any form of ex-post facto law which is required for the benefit of the accused is not prohibited from being introduced retrospectively under Article 20(1) of the Indian Constitution.
In this case, a writ petition had been filed wherein it was demanded that the amendment to Rule 13 terminating the liquor license should be quashed. As a result, a certain amount that was sought to be recovered by him for giving the liquor license in the past had been stuck.
The decision in the High Court of Kerala was passed in favour of the licensee. However, an appeal was made before the Supreme Court. The Supreme Court overruled the High Court’s decision and stated that any rule or law that is passed cannot be interpreted to be retrospective unless it explicitly mentions the opposite. Hence, the state was allowed to claim only 50% of the departmental management fees that were due for the period after the contract of sale for the liquor was terminated from the licensee.
This case defined the scope of the amendment brought in an Act and whether it should be allowed to operate retrospectively. The Court laid down that if any given law affects the substantive rights of any individual, then it should not be allowed to operate retrospectively. Apart from this, several other general principles were also laid down in this case, which are as follows.
The retrospective statutes are still used in several countries, however, within certain restrictions. Some of the countries have been mentioned below.
Under English law, there is a presumption that, unless stated specifically, the statutes are not assumed to have a retrospective effect. However, if a clear intention of any law being applied retrospectively has been specified, there is no need to stop the same from being implemented. An example of it was the Wireless Telegraph (Validation of charges) Act 1954, which provided the basis of a statutory provision for the wireless license fees that have been collected for the last 50 years. In the Supreme Court judgement of Walker v Innospec Ltd and Ors, 2017 it had been clearly stated by the Court that any enactment unless a contrary intention has been expressly stated, is going to be prospective in nature. Hence similar to the rule in India, every statute shall, by default have a prospective application.
In Australia, both the state and the Central Government have the power to make retrospective laws that would also apply to past events. However, this has been criticized time and again in Australia for being violative of the rule of law. This is so because, under the Australian principle of the rule of law, the law must be known to all so that they can comply with it. In the case of R v Kidman (1915), the retrospective operation was challenged for the first time. However, the High Court, in this case, stated that though the power of the Australian Parliament is limited by the Constitution, there is no limit on either the State Legislature or Parliament to formulate any retrospective law.
In France, the formulation of ex-post facto laws was completely prohibited, as per Article 2 of Code Civil or the Napoleonic Code. The basic reasoning given in this Article is that the law should only look into the future and shouldn’t be retrospective in nature. However, it was later determined by the Constitutional Council, one of the highest authorities in France, that retrospective laws could be introduced within certain limits. Similar to India, the council generally also introduces retrospective laws relating to taxation. In criminal law, the punishments as per the ex-post facto laws are still prohibited except in those cases where this legislation might benefit the wrongdoer.
Congress in America is prohibited from making any ex-post facto laws. This is one of the very few restrictions imposed by the Constitution of the United States of America on both the state and federal governments. When deciding upon the ex-post facto cases, the Court has relied upon the judgement given in the case of Calder v Bull (1798), in which it proposed the four forms of unconstitutional ex-post facto laws. However, it has not always been the case that ex-post facto laws aren’t allowed. There was an Act introduced in 2006 known as the Adam Walsh Child Protection and Safety Act that imposed certain new rules for registration for convicted sex offenders, also applying to those who had committed these offences in the past. Hence, for the common good of society, retrospective operation of statutes is prohibited in most situations.
These are some of the major differences between the retrospective and prospective operation of the statutes.
The primary intention behind introducing retrospective laws is to ensure that the people who escaped liability in the past are held responsible or to reduce their punishment. However, its enforcement poses many challenges to democracy and also brings the government under scrutiny. Some of its ill effects are as follows:
These are some of the major limitations of retrospective legislation. There are problems not only with the procedural aspects of it with the various formalities but also with respect to the democratic values, including the people’s rights.
The retrospective operation of statutes is highly beneficial in certain areas but, at the same time, could be violative of people’s rights. The procedural aspects could also be very complicated if seen along with the Constitution of India. As a result, there is a need to balance the interests of both the government and the citizens by some measures. After observing all the aspects relating to it, it is fair to conclude that such laws have more negative as compared to positive impacts on society. Hence, except for certain circumstances in which there is no other alternative, these laws or amendments should not be allowed. Even with the recent Supreme Court judgements, legislators have the power to make retrospective legislation. They should still be used within reasonable limits so that there is fair justice for all. The purpose of law-making would be fulfilled only by ensuring fair justice. Any law, regardless of its retrospective or prospective application, should always uphold the democratic principle; if it is otherwise, as could be possible in the case of retrospective legislation, appropriate action must be taken.
According to Article 20(1) of the Indian Constitution, only retrospective criminal laws are prohibited. There is no prohibition on imposing civil liability retrospectively.
Any new law introduced is presumed to be prospective in nature unless expressly stated to be retrospective with the date in the past from which the statute shall apply.
The various examples of retrospective legislation in India are the Income Tax (Amendment) Act, 2021, Finance Act, 1990, and also the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition on transfer of certain lands) Act, 1978.
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These issues that we will deal with are:
It is important to rethink the theological foundations of the code of civil procedure because the procedural law as we know it by nature cannot be laid down extensively and exclusively. However carefully drafted, there will be situations when the code does not envisage a clear path forward. It is then the interpreters of law will be inclined to rethink the foundations of the CPC, take up a much more liberalized view and extend its provisions keeping in mind the legislator’s intent and to do justice at any cost as duty bound.
Procedural Law or Adjective Law deals with the enforcement of Law that is guided and regulated by the practice, procedure and machinery. In other words, procedural law is the collection or aggregate of the rules of procedure. To provide some context, Substantive laws are laws that creates or governs the rights and obligations of Individuals and entities and on the other hand, procedural law lays down the procedure of enforcement of those rights and obligations. It is thus said that procedural law is subordinate to substantive law.
The objects of the code of Civil procedure clearly states, “An Act to consolidate and amend the laws relating to the procedure of the Courts of Civil Judicature” thereby it inherits the core functionality of a procedural law.
The preamble to the CPC provides that it is an Act to consolidate and amend the laws relating to the procedure of the courts of civil judicature. Since the object of the Act, as stated in the preamble, is both to consolidate and amend, the Act has to be construed as forming a code, exhaustive of the matters dealt with therein. However, such a vast subject if interpreted in its strictest sense may lead to injustice or absurdity. Therefore, the provisions of the CPC, should be construed liberally and technical objections should not be allowed to defeat substantial justice.
The code of civil procedure applies to whole of India except the State of Nagaland and the tribal areas unless the State Government concerned may, by notification in the Official Gazette, extend the provisions of this Code to such territory.
Since, the code of civil procedure is procedural in nature and all procedural laws are usually retrospective the code of civil procedure too should apply retrospectively. Whereas, when a substantive law is passed it should always be deemed to apply prospectively unless exclusively mentioned otherwise.
But there’s no definite rule as to if CPC should be applied retrospectively or prospectively. As stated in State of A.P. v. Pioneer Builders A.P., AIR 2007 “The law of civil procedure is based on the principle that, as far as possible, no proceeding in a court of law should be allowed to be defeated on grounds of mere technicalities. The provisions of the CPC, therefore, must be interpreted in a manner so as to subserve and advance the cause of justice rather than to defeat it”
Therefore, CPC, like other procedural laws, is retrospective in operation and its provisions apply even to proceedings already initiated at the time of its enactment, unless there are good reasons to the contrary. Thus, all procedural laws are retrospective unless the legislature expressly states to the contrary.