Prospective Application and Retrospective Effect

In one line

A statute is presumed to speak to the future, so it does not reach back over things already done or rights already accrued unless the legislature has said so.

In the wording a student can write in an exam: the rule is expressed in the maxim nova constitutio futuris formam imponere debet, non praeteritis, a new law ought to impose form upon what is to come and not upon what is past; a statute is therefore construed as prospective unless a contrary intention appears expressly or by necessary implication; article 20(1) of the Constitution makes the rule absolute in the criminal law by providing 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.

Why the presumption exists

Because people order their affairs by the law as it is.

A person who buys land, signs a contract, files a suit or does anything else does it on the footing of the rules then in force. A statute that changed the consequences of what has already been done would defeat that expectation and would punish a person for failing to predict a law that did not exist.

That is the reason the Supreme Court gave in Commissioner of Income Tax v. Vatika Township Private Limited, decided on 15 September 2014: the obvious basis of the principle against retrospectivity is fairness. Facts. A proviso added to section 113 of the Income Tax Act 1961 by the Finance Act 2002 imposed a surcharge on block assessments, and the Revenue applied it to periods before it came into force; a Constitution Bench was constituted because earlier decisions had gone both ways. Held. Legislation which modifies accrued rights, or imposes obligations, new duties or a new disability, is to be treated as prospective unless the legislative intent is clearly to the contrary; the rule works differently where a benefit is conferred without a corresponding detriment, in which case a purposive construction may give retrospective effect, and that is the justification for treating procedural provisions as retrospective; and the presumption does not apply to declaratory statutes. On the facts the proviso was onerous rather than beneficial, so the normal presumption applied and it operated prospectively. Why it matters. It is a Constitution Bench statement of the rule, the reason for it and the exceptions to it, in one judgment.

The vocabulary

Three words, and using them precisely is half the answer.

Prospective means operating on events occurring after the Act comes into force.