If a judgement is overruled, the overruling judgement operates retrospectively. Any transaction would then be covered by the law declared by the overruling decision. If the Court desires that the overruling judgement should operate prospectively, it must be expressly stated

(i) A judicial decision acts retrospectively. It is not the function of the court to pronounce a “new rule” but to maintain and expound the “old one”. Therefore, if the subsequent decision alters or overrules the earlier one, it cannot be said to have made a new law. The correct principle of law is just discovered and applied retrospectively. In other words, if in a given situation an earlier decision of the court operated for quite some time and it is overruled by a subsequent decision, the decision rendered subsequently would have retrospective effect and would serve to clarify the legal position which was not clearly understood earlier. Any transaction would then be covered by the law declared by the overruling decision. The overruling is generally retrospective with the only caveat being that matters that are res judicatae or accounts that have been settled in the meantime would not be disturbed. (Assistant Commissioner, Income Tax, Rajkot v. Saurashtra Kutch Stick Exchange Limited (2008) 14 SCC 171 referred)

(ii) The intention to make the decision prospectively applicable or the application of the doctrine of “prospective overruling” must be express and clear. The doctrine of “prospective overruling” is an exception to the normal rule that a judgement or decision applies retrospectively and to the general rule of doctrine of precedent. The application of the doctrine is based on the philosophy that “The past cannot always be erased by a new judicial declaration”. That the Court can contemplate giving prospective application to a law declared by it, stems from the premise that the Court is neither required to apply a decision retrospectively nor is it prohibited from applying it retrospectively. The merits and demerits of retrospective or prospective application is examined and the doctrine is applied wherever appropriate and necessary. This is precisely why the express declaration by a court that its decision is prospectively applicable is a requisite condition. Prospectivity as a concept cannot be considered to be inhered in all situations since the intention to attribute prospectivity to a decision must be limpid and clear.