Overruling of Earlier Judgment by Subsequent Ruling Applies Retrospectively, Unless Stated Otherwise : Supreme Court
In Directorate of Revenue Intelligence v. Raj Kumar Arora & Ors., the Supreme Court held that when a prior decision is overruled by a subsequent judgment, the latter operates retrospectively, as it merely clarifies the correct legal position that may have been previously misunderstood. The Court emphasized that such overruling does not create new law but rather reflects the discovery and proper interpretation of existing law. Accordingly, the law declared in the overruling decision applies from the outset, unless expressly stated to have prospective effect.
The bench of Justices J.B. Pardiwala and Manoj Misra explained that the doctrine of prospective overruling must be invoked explicitly and only in exceptional circumstances, not routinely. Unless the judgment expressly limits its effect prospectively, it will apply retrospectively, binding on all pending and future cases, except for matters already adjudicated or settled.
The case pertained to the NDPS Act and the classification of "Buprenorphine Hydrochloride", a psychotropic substance listed in the NDPS Schedule but not in the NDPS Rules. The Court examined conflicting precedents: in State of Uttaranchal v. Rajesh Kumar Gupta (2007), it was held that substances not listed in the NDPS Rules could not attract prosecution under the NDPS Act. This view was later overruled in Union of India v. Sanjeev V. Deshpande (2014), where the Court held that all substances listed in the NDPS Schedule, regardless of their omission in the Rules, fall within the NDPS Act's purview.
Since Deshpande did not expressly state that it applies prospectively, it is deemed retrospective. The Trial Court, relying on the overruled Gupta decision, had deleted NDPS charges against the accused under Section 216 CrPC. This was upheld by the High Court. However, the Supreme Court, setting aside these findings, ruled that the Deshpande judgment, being the correct interpretation of law without prospective limitation, must be applied retrospectively.
The Court reiterated that prospective overruling must only be applied where necessary to prevent disruption or injustice and should not affect matters already finalized, but in the absence of such express declaration, retrospective application is the norm.