[Tanvi and Gayatri are students at NALSAR University of Law.]
A clarificatory amendment declares the law by resolving any ambiguities in an existing statute. Since it merely clarifies the legislation, such an amendment is applied retrospectively from the date of enforcement of the parent statute. However, despite such amendments not actually changing the existing law, they are subjected to criticism due to their association with retrospectivity. This is because retrospective application raises concerns like divesting of rights or unfairness. The Supreme Court, in its recent decision of Sree Sankaracharya University of Sanskrit v. Dr Manu (Sree Sankaracharya), too, has resonated with this view.
The authors of this article have argued that clarificatory amendments do not deserve the sharp criticism that they receive. After briefly describing what clarificatory amendments are, this article engages with the reasons for the negative judicial trend. The article concludes that despite such negative treatment, clarificatory amendments are a necessary evil.
At the outset, the legal framework for the retrospective application of laws in India needs to be outlined. The Indian Constitution expressly prohibits the retrospective application of criminal statutes. On the other hand, the legislature's power to enact retrospective laws for civil matters is well recognised. In Rai Ramakrishna v. Bihar, a 5-judge bench of the Supreme Court explained that the fact of retrospectivity would not, by itself, render a legislation unconstitutional under the Constitution. While it was an important factor to be considered to render a statute invalid, unreasonability needed to be shown otherwise. It is upon the affected party to prove that the application of the Act is so unreasonable that it would contravene the provisions of Part III of the Constitution. This is a settled position of law upheld in multiple cases. One set of such retrospective legislations is clarificatory amendments. Thus, while retrospective application of clarificatory amendments has negative connotations attached, the legislature’s power to enact them is well recognised.
Understanding Clarificatory Amendments
Clarificatory amendments declare the meaning of the law already in place. Such regulations aim to resolve ambiguities in the existing statute by providing a definitive meaning. Unlike regular amendments, they do not substantively change the law; they merely clarify it. There usually exists a presumption of prospective application of statutes dealing with substantive rights (as opposed to merely procedural). However, clarificatory amendments are treated differently. Since they merely clarify or reinstate the existing law, they are given effect from the date of operation of the parent statute. This has been the trend across common law countries. For instance, Australia also recognises clarificatory amendments. This is evident from the amendments to the Australian Education Act 2013. Ambiguities in this statute had led to errors in calculation of funding entitlements for authorities. In pursuance of this, an amendment was introduced a year later to correct such errors that had become apparent since the introduction of the statute. This amendment was considered clarificatory and hence was applied retrospectively.
In India as well, retrospective application of clarificatory amendments has been upheld by the courts. The following cases are instances of when the amendments neither divested rights nor imposed new duties on the public. Rather, they solely resolved underlying ambiguities for a uniform application of the parent statute. In Zile Singh v. State of Haryana, an amendment to a statute 12 years after its enactment was upheld as clarificatory by the Supreme Court. This amendment had solely removed ambiguity and furthered the intention of the legislature behind the parent statute, which could not have been done by the general reading of the statute prior to the amendment. Further, in CIT v. Poddar Cement (Poddar), an amendment was held to be clarificatory by the apex court because it clarified an omission in a section of its parent statute. Adding on, in Government of India and Others v. India Tobacco Association, an amending notification for a central government scheme was applied retrospectively by the Supreme Court. This is because the notification neither enforced any penal consequences nor produced any substantive changes; it had only clarified an obvious mistake.
Navigating Through the Negative Connotations Attached to Clarificatory Amendments
If clarificatory amendments merely reinstate the existing law, their retrospective application should not be a cause for concern. However, the situation is far from ideal because the legislature often makes substantive changes to the law in the guise of a clarificatory amendment. This would grant the legislation an easy pass to retrospective application compared to terming it as a new law altogether. Substantial jurisprudence exists on this phenomenon in common law countries of Australia and United Kingdom. In the case of Hawkesbury City Council v. Sammut [ [2002] NSWCA 18], the Australian Court of Appeal held that rather than the phrases used in the legislation, the effect the legislation would create was to be given more importance. So, despite the legislature declaring it retrospective, the court could hold it otherwise based on its substance. As far as the position of the United Kingdom is concerned, the House of Lords has held that an amendment would be given retrospective effect only when it either explains its parent legislation or clarifies an obvious omission in it (reference L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. [(1994) 1 AC 486 : (1994) 2 WLR 39 : (1994) 1 All ER 20 (HL)].
Likewise, in India, the legislature conveniently enacts amendments that substantively modify the existing law by terming them as clarificatory. The rising number of such legislations has led to the judiciary taking a more cautionary approach. The Supreme Court, in CIT v. Alom Extructions, has held that the benefits once granted to the public should not be taken away through a retrospective amendment and that a duty must not be created retroactively. It was further held in this case that a law could be held as non-clarificatory by the judiciary irrespective of the use of phrases such as "it is declared" or "for the removal of doubts" by the legislature; the courts would instead have to look at the substance of the statute to verify that it is not making a substantive change to the law. As per the authoritative text of G P Singh in his treatise on the Principles of Statutory Interpretation, a change in substance is not reflected when the meaning of the amended provision is the same as that of the un-amended provision. In Poddar, it was further held that such a change is also not reflected when the amendment is clarifying a provision that had been subject to diverse interpretations by the court. Additionally, in the case of Keshavlal Jethalal Shah v. Mohanlal Bhagwandas, the apex court did not consider the amending statute as declaratory since the parent statute was clear with neither any obvious omission nor ambiguity in its understanding. In the Sree Sankaracharya case, a government order related to the University Grants Scheme 1998 substantially modified the existing law. It imposed new burdens on and took away anticipated benefits from the PhD teachers whom the provisions concerned with. Hence, it was not given a retrospective effect.
Apart from the legislature creating new rights and obligations using the garb of a clarificatory statute, two other reasons can explain the rising negative connotations towards retrospectivity, and, in turn, clarificatory amendments. First, the frequency of these legislations is a cause of concern. For instance, the amendments to the Income-tax Act 1961 have been described as so short-lived that new provisions are substituted even before a strong judicial opinion on the existing law can be formed. This leads to a loss of stability and certainty in the legal system, which also ties into the second reason - the change in the country's economic circumstances. While the recent wave of disguised clarificatory amendments is a problem that predominantly plagues the tax system, the effect is cross-sectorial. Retrospectively making substantive changes to the law erodes the basic foundations of certainty and lends a negative perception to the legal system overall. The increased requirement to negate such a perception of the legal system is due to the changed economic situation. The country's economic growth needs foreign investments, which, in turn, requires a global image to be painted. Such a heightened necessity has led to the degradation of the concept of retrospective application of law, including in cases of clarificatory amendments.
Way Forward
Despite the recent wave of criticism terming clarificatory legislations as a menace, as discussed above, retrospective application of such amendments has been necessary given the benefit they serve to the public. As recent as 2017, in State of Bihar v. Ramesh Prasad Verma, the Supreme Court upheld the retrospective application of the Bihar Minor Mineral Concessions Rules (Amendment) Act 2001 since it was found to be explanatory both in its purpose and nature without any indication to the contrary.
On the other hand, to nip this controversy in the bud, the government should take a cautionary approach towards retrospective application of laws. Explanatory amendments must be within the scope of the earlier provision and must not introduce a substantive change to the existing law. The effects of the latter statute, like divesting rights already vested, should be carefully scrutinized, especially before calling it a clarificatory amendment.
Therefore, while most tend to term clarificatory amendments as entirely negative, it is pertinent to understand that such a characterization is an oversimplification. Despite the pitfalls, clarificatory amendments are a necessary evil.