Ravi Agrawal vs. Union of India
Background
The petitioner, acting as a public interest litigant, sought directions from the Supreme Court to strike down a part of Section 80DD of the Income Tax Act, 1961, arguing it discriminated against persons with disabilities and violated Article 14. Section 80DD gives a tax deduction to a caregiver (an individual or Hindu Undivided Family) who pays into an insurance/annuity scheme, such as LIC's Jeevan Adhar policy, meant to financially support a dependant with disability after the caregiver's death. Parliament had already amended the provision in the 2022-23 Budget to address part of the petitioner's underlying grievance, but only with prospective effect, and the petitioner also wanted this benefit extended retrospectively to policies taken out before 2014.
Decision Breakdown
The Court noted that Parliament had already amended Section 80DD to benefit disabled persons and their caregivers going forward, largely addressing the concerns raised in an earlier related writ petition, which had led to a contempt petition being disposed of on that basis. On the specific request to make the amendment retrospective, the Court declined, reasoning that an insurance policy such as Jeevan Adhar is essentially a commercial contract entered into on specific terms, and that allowing a subscriber to discontinue such a policy after turning 60 (as would follow from retrospective application) would defeat the entire purpose of the scheme, ensuring a disabled dependant is provided for after the caregiver's death. Considering international and domestic disability-rights instruments alongside the insurance law framework, the Court held that giving retrospective effect would harm, not help, the interests of the disabled beneficiaries the provision is meant to protect. The writ petition was accordingly disposed of, with the Court recording its appreciation for the amicus counsel's assistance.
Lesson Learnt
A change in tax or welfare law benefiting a class of people does not automatically apply retrospectively, especially where doing so would unsettle the terms of an existing insurance contract taken out to protect a vulnerable dependant. Courts will weigh whether "retrospective relief" genuinely serves the intended beneficiary before granting it.