In a recent decision dated October 24, 2016, a bench of the Supreme Court comprising of Justice Dipak Misra and Justice Shiva Kirti Singh, observed that after the legislature came into existence, it has the competence to enact any law retrospectively or prospectively within the constitutional parameters. The Court also held that the legislature has the power to enact laws including the power to retrospectively amend laws and thereby remove causes of ineffectiveness or invalidity, and that when a law is enacted with retrospective effect, it is not considered as an encroachment upon judicial power when the legislature does not directly overrule or reverse a judicial dictum.
These observations of the Supreme Court came to be delivered in the case of Cheviti Venkanna Yadav v. State of Telangana and Ors. [Civil Appeal No. 13604 of 2015, decided on October 24, 2016]. In the case, the issue in question was the legal acceptability of the judgment passed by the High Court of Judicature at Hyderabad for the State of Telangana and for the State of Andhra Pradesh wherein the Division Bench of the high court had upheld the constitutional validity of sub-section (3) of Section 5 of the Andhra Pradesh (Agricultural Produce and Livestock) Markets (Amendment) Act, 2015. During the final disposal of the matter, the High Court took note of the question framed at the initial stage which was as follows:
“Whether the Legislature while making an enactment can flout the constitutional provisions and that the retrospective operation of Amendment Act from the date even before the State of Telangana was formed stands to scrutiny of constitution provisions.”
The High Court had held that the legislature of State of Telangana has authority to legislate with retrospective effect before coming into force of the Reorganization Act; that the amended provisions did not usurp the judicial power and that the provisions were neither arbitrary nor discriminatory and did not offend any limb of Article 14 of the Constitution.
In appeal against the said high court judgment, inter alia, the following issues were considered by the Supreme Court: a) Whether the State Legislature could have legislated for the period prior to coming into existence of the State? b) Whether the base of earlier judgment has been removed to erase the effect of the judgment?
On the first issue, the Supreme Court relied upon its earlier judgment in the case of Rattan Lal and Co. v. The Assessing Authority, Patiala, (1969) 2 SCR 544 : AIR 1970 SC 1742, in which while dealing with competence of State of Haryana pertaining to a legislation enacted by State of Haryana by way of an amendment prior to the reorganisation of the State, had held as under:
“It is argued that the reorganisation of the State took place on November 1, 1966 and the amendment in some of its parts seeks to amend the original Act from a date anterior to this date. In other words, the legislature of one of the States seeks to amend a law passed by the composite State. This argument entirely misunderstands the position of the original Act after the reorganisation. That Act applied now as an independent Act to each of the areas and is subject to the legislative competence of the legislature in that area. The Act has been amended in the new States in relation to the area of that State and it is inconceivable that this could not be within the competence. If the argument were accepted then the Act would remain unamendable unless the composite State came into existence once more. The scheme of the States Reorganization Acts makes the laws applicable to the new areas until superseded, amended or altered by the appropriate legislature in the new States. This is what the legislature has done and there is nothing that can be said against such amendment.”
The Court held that the aforesaid passage thus makes it clear as crystal that after the legislature came into existence, it has the competence to enact any law retrospectively or prospectively within the constitutional parameters.
Further, dealing with the second question as to whether the base of an earlier judgment can be erased by the legislature, the Supreme Court held as under:
“…it is settled that there is a demarcation between legislative and judicial functions predicated on the theory of separation of powers. The legislature has the power to enact laws including the power to retrospectively amend laws and thereby remove causes of ineffectiveness or invalidity. When a law is enacted with retrospective effect, it is not considered as an encroachment upon judicial power when the legislature does not directly overrule or reverse a judicial dictum. The legislature cannot, by way of an enactment, declare a decision of the court as erroneous or a nullity, but can amend the statute or the provision so as to make it applicable to the past. The legislature has the power to rectify, through an amendment, a defect in law noticed in the enactment and even highlighted in the decision of the court. This plenary power to bring the statute in conformity with the legislative intent and correct the flaw pointed out by the court, can have a curative and neutralizing effect. When such a correction is made, the purpose behind the same is not to overrule the decision of the court or encroach upon the judicial turf, but simply enact a fresh law with retrospective effect to alter the foundation and meaning of the legislation and to remove the base on which the judgment is founded. This does not amount to statutory overruling by the legislature. In this manner, the earlier decision of the court becomes non-existent and unenforceable for interpretation of the new legislation. No doubt, the new legislation can be tested and challenged on its own merits and on the question whether the legislature possesses the competence to legislate on the subject matter in question, but not on the ground of over-reach or colourable legislation.”
Full court order dated 24 October 2016 is given below: