MANAGING DIRECTOR, ECIL, HYDERABAD ETC. ETC. v. B. KARUNAKAR AND ORS. ETC. ETC.

E The next question is whether Mohd. Ramzan Khan ratio in its grant of relief to him and his companions is per incuriam? Adherence to prece- dents and retrospective overruling has its legacy from the declaratory theory of precedent propounded by Blackstone that the duty of the court is not to "pronounce a new law but to maintain and expound the old one" and the "if it is to be found that the former decision is manifestly unjust or absurd, it is declared, not that such sentence was bad law, but that it was not the law" Vide his Commentaries pp. 69-70. Steadfast adherence to stare decisis is being advocated for stability, consistence and certainty as in- herent values on the premise that it is much more conducive to the law' self-respect and it provides greatest deterrenr~ to judicial creativity tampering with the restraining influence of certainity. Lord Reid in Birmin- gham City Co. v. West Midland Baptist (Trnst) Ass., (1969) All. E.R. 172 at 180, Lord Simon in Johns v. Secretary of States for Social Science, (1972) A.C. 944 at 1026-27, Lord Devlin in his Article "J\ldges and Law Makers" (39 Modern Law Review p.1 at 11), Lord Lloyd of Hamnstead in his "Introduction to Jurisprudence, 4th Edn. 1979 P. 858" Prof. Rupert Cross H and Harris, "Precedent in English Law" (Oxford 4d. ed., 1991) pp.228-232,

MANAGING DIRECTOR, ECIL v. KARUNAKAR [RAMASWAMY, J.) 635

W. Friedmann, "Limits of the Judicial Lawmaking and Prospective Over- A ruling" (29 M.L.R. 593(1966)] and Anatomy of the Law by Leon. L. Fuller; A.G .L. Nicol in prospective overruling new device for English courts (39 M.L.R. 542 at 548 (1976)] opposed the application of prospective overrul- ing. On the other hand Prof. John Wigmore as early as in 1917 in "Judicial Function," is Science of Legal Method at p.27 and Justice Cardozo in "Selected Writings", 1947 Edn., p.35, Trayner in his Qua Vadis "Prospective B overruling" .. A question Judicial Responsibility [(1975) 39 M.L.R. 542]; Marsh in "What is wrong with the Law (2nd Edn.); English and American Judges as Law Makers by Louis L. Jafee (1969 Oxford Edn.); Prof. P.S. Atiyah and R.S. Summers "Form and Substance in Anglo American Law" (1987 Oxford ED. p.146 and Prof. Baker in his "Judicial Discretion" 254 C (1993 Ed.) are the proponents of the articulation and efficacy of prospec- tive overruling or prospective application of a new principle laid by the courts. Prof. J afee at p.37 stated that if the law is to function as a control, it is to set the limits within which innovation is to take place, the judge should rationalise his decision. We have come to believe that where dis- cretion is exercised, be it by administrator or judge, the requirement of rationalisation is crucial. In subtnitting himself to this discipline, the Judge alerts himself to the limits of his power, laying the basis for objective criticism, and enables the citizenry to anticipate and so to conform its conduct to the potentialities of the decision. This process imposes two requirements. First, the decision must be based upon a principle already found in the existing law. It may be a constitutional provision or a statute or a principle derived by the judges from common law rulings. The decision should be logically consistent with the texts on which it is founded. The second, logical consistency does not suffice to establish legitimacy. Since the authoritative legal texts will usually allow more than one conclusion, the choice must be rational in terms consistent with accepted modes of legal reasoning. At p.57 it was further stated that there are occasions where judicial innovation is valuable and appropriate. The legislatures are not perfectly organised to make law; they are not always well informed, articu- late majorities inciting our legislatures to action. Even an alert society needs leaders and teachers to formulate its objectives and to galvanise it into action. Inevitably a court, as is true of all our political organisations, will represent important minority interests. In a society overwhelmed by a consciousness of the vastness and variety of its tasks, there is opportunity for social responsibility in all branches of Govt. It may be true that judicial intervention occasionally relieves the legislamre of tasks better performed by them. Atiyah at p. 146 stated that the solution appears to be to H

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A overruling only prospectively.

Though by far the legislature must be responsible for the formulation and promulgation of principles of conduct which are of general, and prospective applicability to a given community for an indeterminate num- ber of situation, administrators must apply such general and often specific B Principles within the community - even though administrative orders and regulations often have certain legislative aspect; and the courts must also apply the prescriptions of legislators, or the generalised principles deduced from a series of precedents to individual disputes. Such a separation of functions is not confined to the democratic doctrine of separation of powers; it is part of the essential structure of any developed legal system. c In a democratic society, the process of administration, legislation and adjudication are more clearly distinct than in a totalitarian society. The courts can act when indeed called upon to adjust the rights and law in accordance with the changing tenet~ of public policy and needs of the society. Equally discretion assumes freedom to choose among several lawful alternatives of which the judge is entitled to choose the one that most appeals to him, not a choice between two decisions, one of which may be said to be almost certainly right and the other almost certainly wrong, but a choice so nicely balanced that when once it is announced, a new right and a new wrong will emerge in the announcement. Justice Cardozo described this process in his inimitable style in selected writings that "there have been two paths, each open, though leading two different goals. The fork in the road has not been neutralised for the traveller by a barrier across one of the prongs with the label of "no thoroughfare". He must gather his wits, pluck up his courage, go forward one way or the other, and pray that he may be walking, not into ambush, morass, and darkness, but into safety, the open space, and the light". F When judicial discretion has been exercised to establish a new norm, the question emerges whether it would be applied retrospectively to the past transactions or prospectively to the transactions in future only. This process is limited not only to common law traditions, but exists in all the G jurisdictions. Though Lord Denning is the vocal proponent of judicial law making and the House of Lords consistently overruled him, judicial law making found its eloquent acceptance even from the House of Lords and hurried the remnants of the Blackstone's doctrine in the language of Prof. Friedmann, "has long been little more than a ghost". In Candler v. Crane, H Christmas & Co. (1951) 2 K.B. 164 the dissenting opinion of Denning, L.J.

MANAGING DIRECTOR, ECIL v. KARUNAKAR (RAMASWAMY, J.] 637

as he then was, has now received approval and Candler was overruled by the House of Lords in Hedley Byrene & Co. Ltd. v. Heller & Partners Ltd. (1964) A.C. 465 interpreting whether a banker has a special relationship of duty of care in making careless misrepresentations, Lord Devlin held that the duty of care arises where the responsibility is voluntarily accepted or undertaken either generally, where a general relationship is created, or specifically in relation to a particular transaction, the law hitherto was existing. But, per majority held that the banker, though honest misrepresen- tation, spoken or written, was negligent, and it may give rise to an action for damages for financial loss caused thereby, any contract or fiduciary relationship apart, since "law will imply a duty of care when a party seeking information from a party possessed of a special skill trusts him to exercise due care, and that party knew or ought to have known that reliance was being placed on his skill and judgment". Without holding prospective operation of Hedley ratio, the House of Lords while setting aside the previous precedents laid new liability impliedly applicable to future con- tracts. Prof. Robert Stevens of Yale University commenting on Yedley D Bryne ratio said that common law embodying the policy that "sticks and stones may break my bones but words will never harm me" has been seriously eroded [vide 27 M.L.R. p.5 (1964)).

Similarly, in Rook v. Bamrd, [1964) AC. 465, the House of Lord E revived an all but forgotten stort of intimidation, and resurrected the tort of conspiracy for economic disputes which had been all but hurried in Crofter Handwoven Harris Tweed Co. v. Veith [(1941) AC. 435) establishing a legal responsibility for damages in the case of a typical union action instigated by a union organiser and two fellow employees designed to F coerce the employer into certain behaviour. Similarly in Milangas v.George Textiles Ltd.,(1976) Appeal Cases 443, the House ,of Lords overruled the previous decision of its own. Accordingly the rule that on a claim for a liquidated damages payable in foreign currency, debt has to be given for the appropriate amount of English currency as on the date when the payment was due, was overruled prospectively from the date of the judg- G ment without disturbing past trans3:ctions.

Prospective overruling, therefore, limits to future situations and ex- clude application to situations which have arisen before the decision was evolved. Supreme Court of United States of America in interpretation of H

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A the constitution, statutes or any common law rights, consistently held that the constitution neither prohibits nor requires retrospective effect. It is, therefore, for the court to decide, on a balance of all relevant co considera- tions, whether a decision overruling a previous principle should be applied retrospectively or not. In Great Nonhem Railway Company v. Sunburst Oil & Refining Co. (287 US 358, 77 L.Ed. p.360, 1932), Justice Cardozo speak- B ing for the unanimous Supreme Court of U.S.A. for the first time applied prospective operation of the decision from the date. of the judgment. The Supreme Court of Montana overruled a previous decision granting ship- pers certain rights to recover excess payment regulated by Rail-Road Commission of intrastate freight rate. The Montana Court held that the C statute did not create such a right. While approving the above rule it was held that it would not apply to past contracts or carriages entered into in reliance upon earlier decision. The Court held that "we have no occasion to consider whether this division in time of the effects of a decision as a sound or an unsound application of a doctrine of stare decisis as known to the common law. Sound or unsound, there involved in it no denial of a D right. protected by the Federal constitution. This is not a case where a court in overruling an earlier decision, has given to a new ruling a retroactive bearing, and thereby has made invalid what was valid in the doing .....The choice for any state may be determined by the juristic philosophy of the judges of her courts, their conceptions of law, its origin and nature. We review not the wisdom of their philosophies, but the legality of their acts." E In Dollree Mapp. v. Ohio, 367 US 643, 12 L.Ed. 2nd 1081, (1961), it was held that evidence seized in a search and seizure violates the Fourth Amendment. Whether the ratio in Mapp's case could be applied retrospec- tively had come up in Victor Linkletter v. Victor G. Walker 381 US 618, 14 L.Ed. 2nd 601, (1965). Per majority it was held that though the evidence collected in illegal search and seizure violated Fourth Amendment, the ratio in Mapp would apply prospectively. The court further laid down that in determining whether to give its decision a prospective or retrospective operation, the court must weigh the merits and demerits in each case by looking to the previous history of the rule in question, its purpose and effect, and whether retrospective operation will accelerate or retard its operation; this approach is particularly correct with reference to the fourth amendment's prohibitions as to unreasonable search and seizures. In Ernesto A. Miranda v. State of Arizona, 384 US 436, 15 L.Ed. 2nd, 694, (1966) the court dealt with the admissibility of the confessional statement obtained from the accused during custodial interrogation without warnings or counsel being present. While holding that such evidence was inadrnis- H

MANAGING DIRECTOR, ECIL v. KARUNAKAR [RAMASWAMY, J.] 639

sible, the court per majority set aside the conviction and sentence. Similar A was the case in Danny Escobedo v. lllinois [378 US 478, 12 L.Ed. 2nd 977]. In Svlvester Johnson v. State of New Jersey 384 US 719, 16 L.Ed. 2nd 882, (1966), the question arose whether retrospectivity would be given to con- stitutional guarantee laid in Miranda case. Johnson was convicted and was sentenced to death and that became final. When certiorari was sought placing reliance on Escobedo and Miranda ratio, the Court per majority held that even in criminal litigation court would made a new judicial rule prospective where the exigencies of the situation require such an applica- tion. The court held that even though it involved constitutional right of accused it would look into the purpose of the newly evolved rule, the reliance placed on the former rule and the effect on the administration of justice of a retrospective operation of the new rule have to be considered. The retroactivity or non-retroactivity of a new judicial rule involving a constitutional dictate is not automatically determined by the provision of the constitution on which the dictata is based. The Court must determine in each case, by looking to the peculiar traits of the specific rule in question even if the new rule has already been applied to the parties before the court in the case in which the rule was announced, its impact on the administra- tion of justice be taken into account, the extent to which safeguards other than that involved in the new rule are available to protect the integrity of the truth determining process at trial. Such an application of new rule does not fore-close the possibility of applying the decision only prospectively and with respect to other parties. Accordingly due process in Miranda and Escobedo ratio was denied to Johnson. In TA. Jenkins v. State of Delaware 395 US 213, 23 L.Ed. 2nd, 253, (1969), the Miranda ratio was not applied retrospectively to the pending appeals in Jenkins case. It was held. that Miranda rule did not have to be applied to post Miranda triru of a case originally tried prior to the Miranda decision. It was further held that there is a large measure of judicial discretion involved in deciding the time from which that new principle is to be deemed controlling. In P.B. Rodrique v. Aetna Casualty Co. 395 US 352, 23 L.Ed. 2nd 360 (1969) at an action brought in United States Dist. Court in Lusiana for damages for death of the workman while in service, the Dist. Court on the basis of the Outer G Continental Shelf Lands Act, held that damages claimed was not available. The suit was dismissed on appeal it was confirmed. On certiorari, the Supreme Court of United States reversed the decision and held that the constitutional right gives them the remedy for damages. In Chevron Oil Co. v. Gaines Ted Huson 404 US 97, 30 L.Ed. 2nd 296 a Civil action was laid H

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A in the United States Dist. Court for the Eastern in Dist. of Lusiana to recover for personal injury prospectively two years earlier to the date of filling the suit. While the action was pending in view of Rodrique inter- pretation, the Dist. Court held that one year limitation prescribed under Lusiana Act bars the action for damage for personal injuries. On appeal B reversed the decree and remanded the matter holding that Lusiana statute of limitation being prospective and the remedy though barred, right to recover is not extinguished, the Supreme Court of U.S.A. held on cer- tiorari, that the limitation as interpreted in Rodrigue's case being prospec- tive, the remedy was not extinguished and the claim was not barred as the action was controlled by Federal Law. It was further held that the question c of non-retroactivity application of judicial issue is not limited to the area of criminal process but also pertains to decisions outside a criminal area, in both constitutional and non-constitutional cases. Where a decision of the court could produce substantial inequitatble results, if applied retrospectively, there is ample basis for avoiding injustice or hardship by a D holding of non-retrospectivity. Accordingly the Court held that the suit was within limitation and remanded the matter for trail according to law. In Northern Pipeline Constrnction Co v. Marathon Pipeline Co. 458 US 50, 73 L.Ed. 2nd 598, 1982, the question was whether the Bankruptcy Act 1978 and bankruptcy courts applied to Federal Dist. established earlier and the appointments of the tenure judges by 1978 Act were contrary to Art. III E protection. While declaring, per majority, that the appointment of tenure judges was violative of Art. III protection offending independence of judiciary, the court applied the law prospectively while giving relief to the plaintiff therein, stayed its operation until a further date affording oppor- tunity to the Congress to amend the Law to reconstitute bankruptcy courts F or to adopt other valid means of adjudication without impairing the interim administration of the bankruptcy laws.

In U.S. v. James Robert Peltier 422 U.S. 531, 45 L.Ed. 2nd 374 [1975], the respondent was convicted for Federal Narcotics office. The Border G Patrol Agent conducted a search at 70 air miles from the Mexican border and seized the contraband for which he was convicted. While the appeal was pending in the Court of Appeal, the Supreme Court of the United States of America in Almeida-Sanchez v. U.S. 413 US 266, 37 L.Ed. 2nd 596, held that warrantless automobile search conducted about 25 air miles from the Mexican border by the Border Patrol Agent was without probable

MANAGING DIRECTOR, ECIL v. KARUNAKAR [RAMASWAMY, J.] 641 ' cause offending Fourth Amendment of the Constitution. Therefore, the search was declared unconstitutional and the conviction was set aside. On concession by the State, the court of appeal set aside petitioner's conviction ·giving him the benefit of the Almeida-Sanchez rule. On appeal, the Supreme Court of the United States of America, per majority, held that Almeida-Sanchez's ratio would not be applied retrospectively if search was conducted prior to the date of the decision, since Border Patrol Agents had· acted pursuant to be statutory and regulatory authority to conduct warrantless searches of the vehicles within 100 air miles from the border, existing law was that it was permissible. The same ratio was reiterated in Bowen v. U.S. 422 U.s. 916, 45 L.Ed. 2nd 641. In this case the ratio in Almeida-Sanchez was laid while his petition for certiorari was pending c .iii consideration in the .Supreme Court of the United States of America. The matter was remitted to the appellate Court to consider in the light of Almeida-Sanchez ratio. The Court of Appeal again affirmed the appellant's ~ conviction holding that the search was conducted at traffic check point according to the law then prevailing and, therefore, Almeida-Sanchez ratio D was not applicable to the search conducted prior to the date of the decision. The Supreme Court of U.S.A. affirmed the decision by majority holding that Ahneida-Sanchez ratio was not applicable retrospectively reiterating Peltier's ratio. E In United States v. Raymond Eugene Johnson 457 US 537, 73 L.Ed. 2nd 202, (1982) applying the ratio in Payton v. New York (1980) 445 US 573, 63 L.Ed. 2nd 639 it was held that warrantless arrest on suspicion at his home and suppression of his oral or written statements obtained on account of unlawful arrest offend Fourth Amendment constitutional right. F The respondent was convicted by the District Court. The appeal was dismissed, but an application for rehearing was pending before the appel- late Court, before Payton's case was decide. Thereon it was contended that the respondent will be entitled to the benefit of the ratio in Payton. The state argued that the ratio in Payton should not be applied retrospectively to an arrest that had occured before Payton was decided. The court of G -1 appeal did not agree and held that Payton ratio did apply retrospectively. On appeal the Supreme Court of the United States of America per majority held that the rule announced in Payton's case would apply retrospectively to pending direct appeal since Fourth Amendment Iiri- munization ·.vas extended and the conviction was set aside. H

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A In Golak Nath & Ors. v. State of Punjab & Anr. [1967] 2 SCR 762, this Court while declaring that Sankari Prasad Singh Deo v. Union of India, [1952] SCR 89 and Sajjan Singh v. State of Rajasthan, [1965] 1 SCR 933 were wrongly decided, held that the constitutional amendments offend the fun- damental rights and the Parliam.ent has no power to amend fundamental B rights exercising the power under Art. 368, applied Golak Nath rule prospectively and upheld the pre-existing law as valid, Mohd. Ramzan Khan treat on the same path.

It would, thus, be clear that the Supreme Court of the United States c of America has consistently, while overruling previous law or laying a new principle, made its operation prospective and given the relief to the party '... succeeding and in some cases given retrospectively and denied the relief in other cases. As a matter of constitutional law retrospective operation of an overruling decision is neither required nor prohibited by the constitution but is one of judicial attitude depending on the facts and circumstances in each case, the nature and purpose of the particular overruling decision seeks to serve. The court would look into the justifiable reliance on the overruled case by the administration; ability to effectuate the new rule adopted in the overruling case without doing injustice; the likehood of its operation whether substantially burdens the administration of justice or retard the purpose. All these factors to be taken into account while overruling the earlier decision or laying down a new principle. The benefit of the decision must be given to the parties before the Court even thought applied to future cases from that date prospectively would not be extended to the parties whose adjudication either had become final or matters are pending trial or in appeal. The crucial cut off date for giving prospective operation is the date of the judgment and date of the cause of action of a particular litigation given rise to the principle culminated in the overruling decision. There is no distinction between civil and criminal litigation. Equally no distinction could be made between claims involving constitu- G tional right, statutory right or common law right. It also emerges that the new rule would not be applied expost facto laws nor acceded to plea of denial of equality. This Court would adopt retroactive or non-retroactive effect of a decision not as a matter of constitutional compulsion but a matter of judicial policy determined in each case after evaluating the merits and demerits of the particular case by looking to the prior history of the rule in question, its purpose and effect and whether retroactive operation

MANAGING DIRECTOR, ECIL v. KARUNAKAR (RAMASWAMY, J.] 643

will accelerate or retard its operation. The reliance on the old rule and the cost of the burden of the administration are equally germane and be taken into account in deciding to give effect to prospective or retrospective operation.

The ratio of the Supreme Court of U.S.A. consistently given the · B benefit of overruling decision to the successful party received commenda- tion from the academic lawyers. In 'Introduction to Jurisprudence' 4th Ed. Lord Lloyd of Hampstead at p.858 stated that a strong argument against the Sunburst approach is that potential litigants faced with outmoded doctrine are given no incentive to litigate. If they win, their case is governed by the old doctrine and new rule would apply only to disputes subsequently arising. Litigants who provide the courts with opportunities to rid the normative order of outmoded doctrine are performing a social service, and deserve some reward for their exertions. Andrew G.L. Nicol in his 'Prospective Overruling - a Text for English Courts' 39 MLR 542 at 546 also stated that 'excepting the parties to the overruling decision from the denial of retroactivity, the Courts which use this variation talk in terms of reward for the party who has persuaded them to see the error of their ways. They argued that unless the party to the instant case is given the benefit of new decision, there will be no incentive for him to raise the correctness of the old decision. Finally they say that if the new rule is not applied in the instant case, the overruling will be obiter only. Cross and E Harris in their 'Precedent in English Law' have also argued on the same lines to give benefit to the party in the overruling case. P.S. Atiyah and R.S. Summers in their 'Form and Substance in Anglo-American Law' at page 146 also stated that: "if litigants who persuade the' court to overrule a bad precedent are not themselves accorded the benefit of the new law, would they have sufficient incentive to litigate such cases so that bad law is not perpetuated". It is, therefore, argued to extend the benefit to the successful party in the case. ·

Mohd. Ramzan Khan's ratio giving the benefit to him and companion appellants was valid in law and not, therefore, per-inquarium and was legally given . the reliefs. The contention of the counsel for the employees/Govt. Servants that the denial of Ramzan Khan's ratio to the pending matters offend Art. 14 is devoid of substance. It is seen that placing reliance on the existing law till date of Ramzan Khan, the employers treated that under law they had no obligation to supply a copy H

644 SUPREME COURT REPORTS [1993) SUPP. 2 S.C.R.

A of the enquiry report before imposing the penalty. Reversing the orders and directing to proceed from that stage would be a needless heavy burden on the administration and at times encourage the delinquent to abuse the office till final orders are passed. Accordingly I hold that the ratio in Mohd. Ramzan Khan's case would apply prospectively from the date of the B judgment only to the cases in which decisions are taken and orders made from the date and does not apply to all the matters which either have become final or are pending decision at the appellate forum or in the High Court or the Tribunal or in this Court.

T.N.A. Matters disposed of.