UNIVERSITY INSTITUTE OF LEGAL STUDIES,

PANJAB UNIVERSITY, CHANDIGARH

TOPIC – OPERATION OF STATUTES

A PROJECT REPORT SUBMITTED AS A PART OF INTERNAL ASSESSMENT OF THE

COURSE B.A.LL.B (HONS.) IN THE SUBJECT OF INTERPRETATION OF STATUTES
FOR THE SESSION 2023-24

SUBMITTED TO:
SUBMITTED BY:

PROF. AVNEET MINHAS

YUVRAJ GARG UILS
ROLL NO. 168/21, SEM 6

PU, CHANDIGARH
SEC C, B.A.LL.B
 ACKNOWLEDGMENT

I express my deep sense of gratitude to all those who have been instrumental in preparation of
this project. Primarily I would like to thank god for being able to complete this project with
success. Then I would like to pay my sincere gratitude to my teacher Avneet Minhas Ma’am,
University Institute of Legal Studies, Panjab University, Chandigarh, whose guidance has
been the one that helped me complete this project and make it successful. His suggestions and
instructions have served as the major contributor towards the completion of the project. Then
I would like to thank the entire faculty of University Institute of Legal Studies, Panjab
University, Chandigarh, for always motivating me to give the best. Lastly I would like to
thank all my classmates and my family who helped me a lot.

Yuvraj Garg

168/21
 TABLE OF CONTENTS
INTRODUCTION......................................................................................................4
DEFINING COMMENCEMENT..................................................................................4
1. GENERAL STATUTE..........................................................................................................5
2. AMENDING STATUTE........................................................................................................5
3. DECLARATORY STATUTE..................................................................................................5
4. GENERAL ACT AND SPECIAL ACT...................................................................................5
5. STATUTES REGULATING SUCCESSION..............................................................................6
DOCTRINE OF PROSPECTIVE OVERRULING...........................................................6
RESTRICTIONS ON THE APPLICATIONS OF THE DOCTRINE OF PROSPECTIVE
OVERRULING.........................................................................................................6
TAXATION STATUTES AND RETROSPECTIVE OPERATION......................................7
POWER TO MAKE RETROSPECTIVE LAWS.............................................................7
STATUTES DEALING WITH SUBSTANTIVE RIGHTS................................................8
STATUTES DEALING WITH PROCEDURE................................................................8
LEGAL POSITION WITH REGARD TO RETROSPECTIVE OPERATION OF A STATUTE
..............................................................................................................................9
CASE LAWS.........................................................................................................10
BIBLIOGRAPHY....................................................................................................12
 INTRODUCTION

Statutes are either prospective or both prospective and retrospective from the point of its
applicability i.e. the period of legal effect of statutes. All statutes in general have only
prospective effect. It means applicability to future transactions. But certain statutes have to be
sometimes both prospective and retrospective. Retrospective means the statute would apply
and affect past transaction also. Such statutes seek to govern past acts, events as to impair an
existing right or obligation. A retrospective statute contemplates the past and gives to a
previous transaction some different legal effect from that which it had under the law when it
occurred or transpired. There must be words in a statute sufficient to show that the intention
of the legislature is to give the rule or the law the Retrospective effect. Prospective with
reference to statutes shows that it is concerned with or applying the laws in future or at least
from the date of commencement of the statutes. All the provisions made in the purview of the
future are meant to be prospective statutes.

DEFINING COMMENCEMENT

The term ‘commencement’ is used with reference to an Act, the day on which the Act comes
into force. If not provided, a Central Act comes into force on the day it receives Presidential
assent. The commencement date is usually specified in the text of the statute itself or in a
separate commencement order issued by the relevant government authority. The date of
commencement may be different for different provisions of the statute. For example, some
provisions may come into effect immediately upon the commencement of the statute, while
others may have a delayed commencement date or may only come into effect when certain
conditions are met. It is important to determine the commencement date of a statute, as
failure to comply with the requirements of the statute from the date of commencement may
result in legal consequences, such as fines or other penalties. Under Section 5 of the General
Clauses Act, 1897 it is stated that when a Central Act is not expressed to come into operation
on a particular day, then it comes into effect on the day on which it receives the assent of the
President. Unless the contrary is expressed, a Central Act of Regulation shall be construed as
having come into operation immediately on the expiration of the day preceding its
commencement.

1. GENERAL STATUTE
Every statute is prima facie prospective, unless it is expressed or implied. If the object of the
statute is to affect vested rights or to impose new burdens or to impair existing obligations,
then there must be words in the statute sufficient to show the intention of the legislature. A
statute can be given retrospective effect, only if the statute so directs either expressly or by
necessary implications. It is a fundamental rule of the law that no statute shall be construed
to have retrospective operation unless such construction appears very clearly in terms of
the Act, or arises by necessary or distinct implication. Minute attention must be given to the
language of the statutory provision for determining the scope of the retrospection as intended
by the Parliament. For that, the language used in a statute is the most important factor to be
considered. Statutes dealing with merely matters of procedure are presumed to be
retrospective unless otherwise interrupted.

2. AMENDING STATUTE
An amendment of a substantive law is not retrospective unless laid down or necessarily
implied. A vested right cannot be taken away by amending Act except by express language or
by necessary intendment.

3. DECLARATORY STATUTE
A declaratory Act is defined as an Act to remove doubts existing as to the common law, or the
meaning or the effect of any statute. The usual reason for the passing a declaratory act is to
set aside what Parliament has considered a judicial error, whether in the statement of the
common law or the interpretation of the statute. The presumption against retrospective
operation is not applicable to the declaratory statutes. A declaratory act is an act to remove
doubts existing to common law and thus declaratory acts are usually held retrospective.

4. GENERAL ACT AND SPECIAL ACT

The general rule is that special Acts prevails over the general act in the case of inconsistency.
A general act cannot repeal a special act. A Special Act, though earlier in time, deals with
special objects and general law even if enacted later cannot repeal it. Generalibus specialia
derogant is a legal maxim used in connection with the harmonious construction rule in India.
It basically means that special things detract from general things. In other words, if a special
provision is made on a certain matter, then that matter is excluded from the general
provisions. Applying this rule, the Patna High Court held in Vinay Kumar Singh v. Bihar
State Electricity Board (2003) that Article 351 of the Constitution of India is a general
provision regarding the development of Hindi in India. Article 348 on the other hand, is a
specific provision with respect to the language to be used in the Supreme Court and the high
courts. Therefore, the applicability of Article 351 of the Constitution is entirely
precluded. The Supreme Court in Food inspector v. Suivert and Dholakia Pvt ltd. Held that
if there is a general law and a special law relating to a particular subject, the general law must
be so applied as to not to affect the special provision. Only if the intention to abrogate the
special law can be spelled out, the general law shall prevail.

5. STATUTES REGULATING SUCCESSION

Statutes enacted for regulating succession are not applicable to already open succession.
Such laws have only prospective effect. It is the same regarding statutes regulating transfers
and contracts. Fiscal and Penal Statutes are prospective Statutes regulating appeals and
finality of orders are also prospective.

DOCTRINE OF PROSPECTIVE OVERRULING

The Rule in I.C Golaknath v. State of Punjab- The doctrine of prospective overruling is a
modern doctrine suitable for a fast-moving society. It does not affect the past but restricts its
scope for the future. Under this doctrine, the court declares what the law is but does not give
retrospectivity. It reconciles the two conflicting doctrines, namely, the Court finds law and
that it makes a law for the future by bringing about a smooth transition by correcting the
errors in the law without disturbing the impact of errors on the past transactions. In other
words, the law for the future corrected and the past transaction as per the law, though invalid,
are held valid. The doctrine of prospective overruling can be invoked only regarding
constitutional matters. It can be applied only by the Supreme Court.

RESTRICTIONS ON THE APPLICATIONS OF THE DOCTRINE OF PROSPECTIVE

OVERRULING
The learned judges imposed following three restrictions on the application of this principle:
 1. That the principle of prospective overruling would for the time being used in
constitutional matters only;
2. That the Supreme Court alone, and no other court, would have the authority to apply
the principle; and
3. The scope of the prospectively to be imposed is a matter of discretion for the Supreme
Court which is to be moulded in accordance with the justice of the cause or matter
before it.

TAXATION STATUTES AND RETROSPECTIVE OPERATION

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,
19611 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.

POWER TO MAKE RETROSPECTIVE LAWS

The Union Parliament and State Legislatures have plenary powers of legislation within the
fields assigned to them and subject to certain constitutional and judicially recognized
restrictions and can legislate prospectively as well as retrospectively. Competence to make a

1
The Income Tax Act, 1961, Act No. 43, Acts of Parliament.
law for a past period on a subject depends upon present competence to legislate on that
subject. By retrospective legislation, the Legislature may make a law which is operative for a
limited period prior to the date of its coming into force and is not operative either on that date
or in future. The power to make retrospective legislation enables the Legislature to obliterate
an amending Act completely and restore the law as it existed before the amending Act. This
power has also been often used for validating prior executive and legislative acts by
retrospectively curing the defect which led to their invalidity and thus even making
ineffective judgments of competent courts declaring the invalidity. It is not necessary that the
invalidity must be cured by the same Legislature which had passed the earlier invalid Act.
Thus, if a state Legislature passes an Act subject which fails outside its competence and
within the competence of Parliament and is for that reason held invalid, Parliament can by
passing retrospective Act which incorporates the State Act cure the invalidity.

STATUTES DEALING WITH SUBSTANTIVE RIGHTS

It is a cardinal principle construction that every statute is prima facie prospective unless it is
expressly or by necessary implication made to have 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. Every statute which takes away or impairs vested
rights acquired under existing laws, or creates a new obligation or imposes a new duty, or
attaches a new disability in respect of transactions already past, must be presumed to be
intended not to have a retrospective effect. The basis of the rule is no more than simple
fairness which ought to be the basis of every legal rule.

The rule against retrospective construction is not applicable to a statute merely "because
a part of the requisites for its action is drawn from a time antecedent to its passing". If that
were not so, every statute will be presumed to apply only to persons born and things come
into existence after its operation and the rule may well result in virtual nullification of most of
the statutes. An amending Act is, therefore, not retrospective merely because it applies also to
those to whom pre-amended Act was applicable if the amended Act has operation from the
date of its amendment and not an anterior date.

STATUTES DEALING WITH PROCEDURE

In contrast to statutes dealing with substantive rights, statutes dealing with merely matters of
procedure are presumed to be retrospective unless such a construction is textually
inadmissible. The rule that an Act of parliament is not to be given retrospective effect applies
only to statute' which affect vested rights. It does not apply to statutes which only alter the
form of procedure or the admissibility of evidence, or the effect which the courts give to
evidence. If the new Act affects matters of procedure only, then, prima facie it applies to all
actions pending as well as future. No person has a vested right in any course of procedure. He
has only the right of prosecution or defense in the manner prescribed for the time being by or
for the court in which the case is pending and if by an Act of Parliament the mode of
procedure is altered he has no other right than to proceed according to the altered mode.

For instance, Section 45B the Employees' State Insurance Act, 1948, which enables the
Employees' State Insurance Corporation to recover arrears of contribution from the
employers as arrears of land revenue, has been held to be procedural and applicable to arrears
falling due before coming into force of the Section on January 28, I968. The reason is that
statutes providing for new remedies for enforcement of an existing right are treated as
procedural and apply to future as well past causes of action.

LEGAL POSITION WITH REGARD TO RETROSPECTIVE OPERATION OF A

STATUTE

A. 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.

B. 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.

C. Every litigant has a vested right in substantive law but no such right exists in procedural
law.
D. A procedural statute should not generally 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.

E. 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.

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. 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.
 CASE LAWS

1. State of M.P. and another, v. G.S. Dall & Flour Mills

The Apex Court had observed that the notification of 3/71187 (given in 1987) amending the
1981 notification with retrospective effect so as to exclude what may be described in brief as
'traditional industries', cannot be given a retrospective effect. That the 1981 notification
clearly envisages no exclusion of any industry provided it 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 can
be prospective or retrospective, only prospective operation can be given to a notification
rescinding an exemption granted earlier. That the 3/71187 notification cannot be treated as
one merely clarifying an ambiguity in the earlier one and hence capable of being
retrospective; it enacts the rescission of the earlier exemption and, hence, can operate only
prospectively. It cannot take away the exemption conferred by the earlier notification".

2. Hitendra Vishnu Thakur v. State of Maharashtra

In this case Court laid down the ambit and scope of an amending Act and its retrospective
operation as follows: 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. 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. Every litigant has a vested right in substantive law
but no such right exists in procedural law. 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. 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.
 BIBLIOGRAPHY

1. https://www.legalservicesindia.com/article/517/Prospective-Vs.
Retrospective.html#google_vignette
2. Operation of Statutes | Explained (legalbites.in)
3. Retrospective operation of statutes - iPleaders