Examining the Legality of Partial Retrospective Enforcement in the Payment and Settlement System Act

The Payment and Settlement System Act, enacted on July 4, 2024, did not specify an effective date. However, a subsequent gazette notification declared that certain provisions would apply retrospectively from August 12, 2024, while others would become effective from the date of the gazette notification. This situation raises an intriguing legal issue deserving detailed analysis.

Legislation given retroactive effect, altering the legal consequences or status of actions undertaken or relationships established prior to the enactment of such legislation is commonly referred to as ex post facto laws. Ex post facto laws are generally deemed unconstitutional as they violate fundamental principles of justice and fairness.

This article examines whether the principle of ex post facto law, which prohibits retroactive application of criminal laws under Article 35(1) of the Constitution, applies to non-criminal laws and to actions undertaken within the interim period between the enactment of a criminal law and the subsequent gazette notification that grants it retrospective effect.

The prohibition on ex post facto laws, enshrined in Article 35(1) of the Constitution of Bangladesh, applies to criminal offenses and ensures no one is convicted for an act that was not an offense under the law in force at the time of commission. In Gul Muhammad v. State (PLD 1963 SC 237), it was clarified that retrospective application is only prohibited for criminal laws where it imposes liabilities or penalties on actions that were not offenses at the time of commission.

In the context of Bangladesh, Article 35(1) of the Constitution of Bangladesh prohibits the retrospective application of criminal laws. This article examines whether the principle of ex post facto law, which prohibits retroactive application of criminal laws under Article 35(1) of the Constitution, applies to non-criminal laws and to actions undertaken within the interim period between the enactment of a criminal law and the subsequent gazette notification that grants it retrospective effect.

In the current context, the Payment and Settlement System Act 2024 relates to payment and settlement systems, which likely concerns financial and regulatory mechanisms rather than criminal offenses. While the Constitution prohibits retrospective criminal laws, it does not explicitly forbid retrospective civil legislation. The legislature can enact laws with retrospective effect in civil matters, provided they do not infringe upon fundamental rights or constitutional safeguards. In Collector of Customs v. T.K. Exports (1988), the court held that the general principle against retrospective application of laws, particularly in criminal matters. The court acknowledged that retrospective application concerning civil (fiscal laws like customs duties) or regulatory issues is permissible unless they are unreasonable or violate constitutional protections. The court also emphasized that the legislative intent and the nature of the fiscal measure are crucial considerations.

The retrospective application of the Payment and Settlement System Act, 2024, from August 12, 2024, does not violate the principle of ex post facto law, as it does not pertain to criminal liability. A key consideration is whether the retrospective enforcement of the Payment and Settlement Act imposes penalties or invalidates rights for actions performed before the effective date.

For criminal offenses, the ex post facto prohibition applies to acts done before enactment but does not generally extend to acts done after enactment but before the law’s effective date, unless the law imposes new criminal liabilities retrospectively.

Acts done after the enactment of the Payment and Settlement System Act, 2024, but before the gazette notification making it effective, would not be prohibited by the principle of ex post facto law, as they occurred after the law’s enactment.

Acts performed after August 12, 2024, would be considered valid under the law, provided they comply with the provisions enforced retrospectively. Conversely, the legal status of actions undertaken between July 4, 2024 (the date of enactment), and August 12, 2024 (the date of retrospective applicability) presents a nuanced scenario. As the Act was not in force during this interim period, individuals could not have been reasonably expected to be cognizant of its provisions.

The legislature possesses the authority to enact laws with retrospective effect, subject to the caveat that such laws do not infringe upon fundamental rights or contravene established constitutional principles. Courts generally uphold retrospective legislation when it is deemed reasonable and serves a legitimate public interest, provided that it does not impose criminal liability retroactively. In the case of Government Of The Peoples Republic Of Bangladesh Vs. Md. Kazemuddin Miah, the court observed that an enactment is presumed to be prospective unless expressly provided otherwise. The court further stated that the question of retrospective operation does not arise if the statute’s language clearly indicates that it should have prospective operation. This dictum signifies that, absent express language to the contrary, a statute is presumed to have prospective operation.

An act lacking a specific enforcement date at the time of enactment, with the enforcement date contingent upon a subsequent government gazette notification, strongly suggests that the legislature did not intend for it to have immediate effect. In the context of the Payment and Settlement System Act, 2024, the court may infer the reasonableness and public interest served by the Act based on the actions undertaken by the government or the relevant statutory body, provided that the retrospective application does not impose criminal liability.

Furthermore, while the legislature possesses the authority to enact laws with retrospective effect in civil matters, applying the Payment and Settlement System Act, 2024, to actions undertaken between its enactment and the designated retrospective effective date may present legal and procedural challenges. Such retrospective application could be construed as altering the legal status of actions that were lawful at the time of their performance, potentially raising concerns regarding principles of natural justice and legal certainty.