[Rahul Sibal is an advocate who graduated from NALSAR Hyderabad. The author thanks Purvi Khanna, Nishtha Gupta and Anirudh Ramakrishnan for their comments on the draft version. However, the views expressed are the author’s alone. The author can be contacted at [email protected].]
[The first post in the series can
be accessed here.]
As discussed in the previous post, some practitioners have adopted the view that the Specific Relief (Amendment) Act, 2018 need not be construed prospectively and should apply to pending proceedings. To recount, their view draws support from the following propositions: (a) that the Specific Relief Act, 1963 is a procedural enactment, (b) that the rule against retrospectivity is inapplicable where the entire provision is repealed and substituted, (c) that holding the enactment to be retrospective would be in consonance with the intent of the enactment, and (d) that the duty of the defendant to perform his contractual obligations is created at the time of the contract itself, and therefore the removal of defenses to specific performance that were previously available to the defendant under sections 10 and 14 does not result in the imposition of new duties.
Below, the author has restated and analysed arguments (a) and (b) and the relevant precedents relied in favour of the stance that the amendment to the Specific Relief Act, 1963 should be applicable to pending proceedings. Then, the author attempts to respond each argument.
Argument (a): That the Specific Relief Act, 1963 is procedural in nature.
Some practitioners have argued (here) that the Specific Relief Act is a law of procedure, and that enactments which alter procedural provisions should be construed to apply to pending proceedings. The underlying principle behind this view is that “no person has a vested right in any course of procedure”. Support for the proposition that the Specific Relief Act, 1963 is an enactment in procedural law is purported to be drawn from the decisions in Adhunik Steels Ltd. v. Orissa Manganese & Minerals Pvt. Ltd (2007), Radheshyam Kamila v. Kiran Bala (1971) and Moulvi Ali Hossain Mian v. Rajkumar Halda (1943).
In Moulvi Ali,while ruling on the enforceability of the right of pre-emption in respect of immovable property, the Calcutta High Court observed:
“It is difficult to see how an interest in land can be considered to be created when it is in the discretion of the Court whether to recognise it or not. If an interest had already existed there can be no power in the Court to take away the existing rights of the parties. Moreover, the Specific Relief Act embodies what in essence is adjective law and the substantive law must be looked for elsewhere. In our judgment the substantive law, the foundation for specific relief provided for in Section 27(b), Specific Relief Act, is to be found in para. 2 of Section 40, T.P. Act.” [emphasis supplied]
Similar observations were made in Adhunil Steels and Radheshyam Kamila indicating that the law of specific relief is procedural in nature.
However, it is submitted that a closer examination of the above precedents reveals that this argument is unsustainable for the following reasons. First, the courts in both Adhunik Steels Ltd and Moulvi Ali had no occasion to consider any amendment or its retrospective operation. It is only Radheshyam Kamila that dealt with this issue. Second, even if these precedents are understood to indicate that the Specific Relief Act is procedural in nature, it is submitted that the general nature of the statute is irrelevant while determining whether retrospective operation is warranted. Instead, it is the nature of the amendment, and the specific provisions that have been amended, that need to be analysed to ascertain whether an amendment has altered procedural or substantive rights. For instance, while the Code of Civil Procedure, 1908 (CPC) is considered to be a procedural statute, the right to appeal enshrined in the provisions of the CPC has consistently been held to constitute a substantive right. In N.K. Bajpai v. Union of India (UOI) (2012), it was observed:
“Justice G.P. Singh, in his Principles of Statutory Interpretation (12th Edition, 2010) has stated that the classification of a statute, as either a substantive or procedural law, does not necessarily determine whether it may have retrospective operation. For example, a statute of limitation is generally regarded as procedural, but its application to a past cause of action has the effect of reviving or extinguishing a right to sue. Such an operation cannot be said to be procedural.” [emphasis supplied]
Similarly, a division bench of the Supreme Court has held that amendments to procedural statutes would not be applied retrospectively, if doing so resulted in the imposition of new obligations and duties in respect of past transactions. In view of the findings in the previous post, it is submitted that the amendment to the Specific Relief Act alters substantive provisions involving vested rights, including by way of nullifying defences which previously existed, and should therefore be construed prospectively.
Interestingly, the above line of reasoning has been affirmed by the Patna High Court in the specific context of prior amendments to Specific Relief Law in Girdhar Das Anandji & Another v. Jivaraj Madhavji Patel & Others (1970). Here, one of the sides relied on the decision of Moulvi Ali to argue that Specific Relief Law was procedural in nature, and therefore section 12 of the Specific Relief Act, 1963, which replaced the erstwhile Specific Relief Act, 1877, should have applied to pending proceedings. The contention was rejected. It was observed that the general nature of law was irrelevant. Holding the provision to be prospectively applicable, the Court observed:
“It may be that the Specific Relief Act, by and large, may be said to deal with procedural aspect of the law of specific performance; but that in itself does not mean that none of the provisions of the Act deal with or confer rights on the parties. The Code of Civil Procedure is in its essence a law of procedure. Nevertheless the right of appeal, provided for in the Code, has been consistently hold to be a provision conferring substantive rights on the parties. It is not the general nature of the Act as a whole which is really relevant for our purpose. What is of real importance is to see whether the provisions with which we are directly concerned is substantive law or adjective law….” [emphasis supplied]
Furthermore, it was observed that Moulvi Ali was decided in the context of section 27(b) of the Specific Relief Act, 1877, which was a procedural provision, and therefore would need to be distinguished from scenarios that involve amendments to substantive provisions. It is submitted that the distinction maintained by the Patna High Court would continue to be relevant with respect to the question of retrospective operation of the Specific Relief (Amendment) Act, 2018 which, as the previous post indicates, has amended provisions concerning substantive rights.
Aside from the Constitution Bench decisions mentioned above, even if it were presumed that the general nature of the statute (as opposed to specific provisions) is relevant for determining whether an amendment should entail retrospective operation, it is submitted that the decisions cited by practitioners do not conclusively indicate that the Specific Relief Act is procedural in nature. For instance, the following observations in Adhunik Steels have been relied upon in favour of the view that the Act is procedural in nature:
“the law of specific relief is said to be, in its essence, a part of the law of procedure, for, specific relief is a form of judicial redress.”
However, subsequent observations of the Court reveal that Adhunik Steels cannot conclusively be relied upon in support of this view. Here, the question before the Court was whether the principles concerning the grant of injunction under the Specific Relief Act would apply to interim injunctions sought under section 9 of the Arbitration and Conciliation Act, 1996. The Court subsequently proceeded to observe that since the Specific Relief Act constituted the “substantive law relating to interim relief”, it would therefore apply. Not surprisingly, the Gauhati High Court has relied on Adhunik Steels to, in fact, hold that the Specific Relief Act constitutes substantive law.
Argument (b): That the principle against retrospectivity is inapplicable where the entire provision is substituted
Some practitioners have argued that the principle against retrospective operation is inapplicable to enactments which ‘substitute’ as opposed to ‘amend’ provisions. In other words, it is contended that while amendments that affect vested rights should ordinarily be construed prospectively, such a rule of construction is inapplicable to amendments which ‘substitute’ as opposed ‘amend’ provisions. Support for this view has been purported to be derived from the decision in Gottumukkala Venkata Krishamraju v. Union of India (UOI) (2018).
However, the author submits that the decision in Gottumukkala Venkata is inapplicable to the present controversy for the following reasons. First, the Court in Gottumukkala Venkata primarily relied on the decision of Government of India v. Indian Tobacco Association (2005). In Indian Tobacco, the amendment in consideration was observed to not affect any substantive rights, in contrast to the amendment to the Specific Relief Act, which alters substantive rights.
Further, Gottumukkala Venkata concerned an amendment, the retrospective operation of which resulted in the conferral of benefits without the imposition of corresponding liabilities. In this case, the question before the Court was whether the amendment to the Recovery of Debts due to Banks and Financial Institutions Act, 1993, which increased the retirement age of Presiding Officers of the Debt Recovery Tribunal, would be retrospectively applicable. It is in this context that it was held that where a provision is substituted, the enactment should entail retrospective operation. Accordingly, the amendment was held to be retrospective.
It is therefore submitted that amendment in consideration in Gottumukkala Venkata is materially distinct to the amendment to the Specific Relief Act since the rule against retrospective operation, as discussed here, is premised on the principle that it is unfair to impose liabilities in respect of past transactions and agreements. The amendment to the Specific Relief Act, as opposed to the amendment considered in Gottumukkala Venkata, imposes new duties and obligations on defendants to suits of specific performance (as noted here). On this basis, it is submitted that the amendments to the Specific Relief Act can be differentiated from amendments that confer benefits without imposing corresponding duties, and therefore attract the rule against retrospective operation.
The differentiation drawn above may be better understood in light of the following observations of the Constitution Bench of the Supreme Court in Commissioner of Income Tax v. Vatika Township Private Limited (2014). It was observed:
“where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. ….. However, we are confronted with any such situation here. In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectively” [emphasis supplied]
It is important to note that the Supreme Court drew a differentiation similar to the one undertaken by the author, by distinguishing Indian Tobacco on the ground that the facts in that case involved the retrospective imposition of a benefit, without the imposition of a corresponding obligation.
Moreover, the Court in Gottumukkala Venkata was influenced by the Lok Sabha Joint Committee Report, and the Statement of Objects and Reasons with respect to the amendment in consideration, which indicated that the legislature had intended the amendment to apply to existing members of the tribunal. However, as the analysis in the next post will make clear, no such intention can be deduced with respect to the amendment to the Specific Relief Act.
Finally, adopting the stance that Gottumukkala Venkata is an authority for the proposition that the mere substitution of a provision would warrant the retrospective operation of an amendment would render the decision inconsistent with constitution and coordinate bench decisions of the Supreme Court which have held that enactments that alter substantive rights can only be applied prospectively, even if the relevant provisions are amended by way of substitution (see here, here and here).
In view of the above, it is submitted that the ratio in Gottumukkala Venkata requires to be understood in its specific context and cannot be applied to the present issue.
Arguments (c) and (d), will be explored in the next post.
[continued here]
– Rahul Sibal
