Prospective overruling implies that an earlier decision of the same issue shall not be disturbed till the date of the later judgement. It is resorted to mould relief claimed to meet the justice of the case.
It means that relief though the Petitioner may be entitled to in law because of interpretation of the law made by the Supreme Court, the same shall not be applicable to past transactions.
Frequently such situations arise in service matters or tax matters where in the person already appointed for a long time based on interpretation of a law by the Apex Court in its earlier judgment, but the same is overruled in the later judgement, and therefore the person already in public employment need not be directed to vacate the post or the tax already imposed and collected is not directed to be refunded.
In normal course, a law declared by Supreme court is the law assumed to be from the date of inception and prospective overruling is only an exception when the Supreme Court itself make the applicability of the ration of the judgement prospectively to do complete justice to the parties or to avoid chaos.
It is therefore necessary that if a law is to be made applicable prospectively, the same is required to be so declared in the judgement when it is delivered. M.A. Murthy v/s State of Karnataka (2003) 7 SCC 517.
If Supreme court does not exercise such discretion to hold that the law declared by it would operate only prospectively, High Court can not of its own do so. Sarwan Kumar v/s Madanlal Agarwal AIR 2003 SC 1475; (2003) 4 SCC 147.
The law laid down by Supreme Court of India is binding upon all courts in the country under Article 141 of the Constitution, and numerous cases all over the country are decided in accordance with the view taken by Supreme Court.
Now it is desirable that some light should be thrown on the future precedents. As observed above, the courts are performing a very valuable creative function in modern times. This role of the court is assuming in favour importance and their field of any activity is rapidly widening.
On the other hand, the trend of opinion is in favour of freedom from the binding effect of precedents, at the first place these two trends may appear divergent but they are not so and are perfectly consistent. It is the creative spirit that desires the removal of the shackles of the binding precedents.
In England the doctrine of stare decisis has been modified. It may be hoped that some device would be invented to get rid of it. However the decisions of higher tribunals shall remain binding on subordinate courts.
There is no possibility of departing from this rule in the near future nor are there very strong reasons for to undergo any considerable modification. The federation, as envisaged by the Indian Constitution, requires it, It will help in bringing about national integration and uniformity in law, and will cause a uniform development of law.
But some technique or method will have to be envolved to save the lawyer and the judge from the labour and wastage of time in finding from the rapidly multiplying volumes of reports and the constant danger of overlooking authorities.