Consequences of applying laws and judgments with retrospective effects: Law in its own time

Source: The post consequences of applying laws and judgments with retrospective effects has been created, based on the article “Law in its own time” published in “Indian express” on 9th April 2024.

UPSC Syllabus Topic: GS Paper 2-governance-Important aspects of governance, transparency and accountability.

News: The article discusses how the Indian legislature and judiciary made laws and judgments with retrospective effects in 2012 and 2024. This approach, aimed at protecting sovereignty and democracy, led to unintended economic consequences and questioned the accountability of the judiciary.

What happened in 2012 and 2024 regarding retrospective laws and judgement?

In 2012, a retrospective tax law was passed to tackle tax avoidance by big corporations. In 2024, the judiciary declared electoral bonds illegal, also retrospectively, to prevent corporate influence in politics.

What are the consequences of applying laws and judgments with retrospective effects?

Economic Instability: The retrospective tax law of 2012 led to reduced private sector investment and job losses. This indicates how such laws can create economic uncertainty and discourage investment.

Legal Uncertainty: Applying laws retrospectively creates a sense of unpredictability about the legal environment. Individuals and businesses become unsure if their past actions might suddenly be deemed illegal.

Loss of Confidence: The retrospective application in both 2012 and 2024 cases likely eroded public confidence in the legal system. It implies that laws can change unpredictably, affecting past actions.

Questioning Judiciary’s Role: It raises questions about the judiciary’s accountability and its impact on economic and legal stability.

Violating Individual Rights: it can lead to the violation of individual rights, as actions that were legal at the time they were taken are judged illegal in hindsight. This was a concern with the invalidation of electoral bonds in 2024.

What should be done?

Ensure Judicial Prudence: The judiciary’s decision on electoral bonds in 2024 overlooked practical consequences, like returning to less transparent political funding methods. The courts should balance legal principles with practical outcomes.

Enhance Transparency in Political Funding: The electoral bond scheme, though flawed, was a step towards transparency compared to the previous anonymous system. A revised version could improve political funding transparency.

Strengthen Checks and Balances: Like the government, which is accountable to voters and oversight bodies, the judiciary also needs mechanisms for accountability, perhaps through public opinion surveys or other independent reviews.

Learn from Past Experiences: The UPA-2 government’s downfall due to perceived corruption highlights the need for transparent governance and the power of public opinion in a democracy.

Question for practice:

Discuss the implications of applying laws and judgments retrospectively, citing examples from 2012 and 2024, and propose measures to address the challenges posed by such retrospective actions.