Section 28 of The Indian Contract Act, 1872

My Lord, 1997 Amendment to Section 28 of The Indian Contract Act, 1872 – Retrospective?


What emerges on a reading of the Law Commission Report together with the Statement of Objects and Reasons for the Amendment is that the Amendment does not purport to be either declaratory or clarificatory. It seeks to bring about substantive changes in the law, which are remedial in nature and cannot have retrospective effect. Section 28, being substantive law, operates prospectively as retrospectivity is not clearly made out by its language.”

Hon’ble Justice R.F. Nariman, Union of India v. M/s. IndusInd Bank Ltd. [Civil Appeal No. 9087-9089 of 2016].  


In Vatika Township, (2015) 1 SCC 1 Constitution Bench of this Court has analyzed the principle concerning retrospectivity. It is crystal clear that an essential requirement for application of a legislation retrospectively is to show that the previous legislation had any omission or ambiguity or it was intended to explain an earlier Act. In absence of the above ingredients, a legislation cannot be regarded as having retrospective effect.

In IndusInd Bank, this Court, while examining whether the Amendment made to Section 28 of The Indian Contract Act, 1872 was prospective or retrospective, has noted that the said provision is remedial in nature and not clarificatory.

Hon’ble Justice A.M. Khanwilkar, M/s. L.R. Brothers Indo Flora Ltd. v. Commissioner of Central Excise, [Civil Appeal No. 7157 of 2008].