Delegated Legislation – When Can the Rules, Regulations, etc. Issued by the Administrative Body Under Ministry be Termed Legally Invalid?

Thanks to civics subject in our school we know that an Act is passed by the Parliament; Ordinance is issued by the Governor of the State or by the President. Thus both the Act and the Ordinance are made by elected representatives. Whereas the Rules, Regulations, Guidelines, letters, etc are issued by the administrative branch of the Ministry.

Let me frankly admit as a commercial executive on a daily basis I was more exposed to Governmental letters, Tender documents, notifications, etc, and some of these documents appeared blatantly biased. But I was trained to find path to achieve the objective, for eg. To win the bid, I would draft contract wherein the risk could be mitigated. Now as a student of law I can dare ask, Is any Regulation issued by the quasi-judiciary body or a Regulation issued by Ministry valid as a Law?

The Constitution of India under Article 13(3)(a) reads, “law” includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of law.

Post passing of the Act or issuance of Ordinance the rule making process is delegated to the administrative branch of the government as this requires technical knowledge and expertise which our elected representatives lack. Thus orders, rules, regulations, notifications, etc are made by the Executives. The Act is referred as Primary Legislation and the law made by the Executives which should be made only within the contours of Primary Legislation is called Delegated/Sub-ordinate legislation.

India follows the Realist principle of law, meaning validity of a law is checked by the Courts (judicial review), for this the Courts reads the Law and also refers to Judicial Precedents.

Let’s examine certain judicial precedents

Supreme Court in P. Electricity Regulatory Commission v. R.V.K. Energy Pvt. Ltd. and Anr[1]. held that the purpose of delegated legislation is to implement the Act, it cannot bring into existence substantive rights or obligations or disabilities not contemplated by the provisions of the Act itself.

Global Energy Ltd. and Ors. vs. Central Electricity Regulatory Commission[2]. CERC had by exercising jurisdiction under section 178 of the Electricity Act 2003 made Central Electricity Regulatory Commission (Procedure, Terms and Conditions for Grant of Trading License and other related matters), Regulation 2004.

Global Energy Ltd., was a power trading firm having its operation even before the enactment of Electricity Act, 2003. The Company applied to CERC for grant of trading licence and was granted interim trading licence. In 2006, CERC amended 2004 Regulations by inserting Regulation 6A through which it introduced parameters for disqualifications of a trading licence and made these regulations applicable with retrospective effect. Based on these retrospective regulations, CERC rejected the application filed by Global Energy for grant of Trading Licence.

The amended 6A regulations read as,

“(a) …

(b) The applicant, or any of his partners, or promoters, or Directors or Associates is involved in any legal proceedings, and in the opinion of the Commission grant of licence in the circumstances, may adversely affect the interest of the electricity sector or of the consumers; or

(f) The applicant is not considered a fit and proper person for the grant of licence for any other reason to be recorded in writing;”

Holding the clauses (b) and (f) in Regulation 6A as ultra vires therefore not valid under Law, Supreme Court held that “All law making, be it in the context of delegated legislation or primary legislation, have to conform to the fundamental tenets of transparency and openness on one hand and responsiveness and accountability on the other. ….. When the provision inherently brings uncertainty and arbitrariness it would be best to stop the government in the tracks.

Petroleum and Natural Gas Regulatory Board (PNGRB) vs. Indraprastha Gas Ltd. (IGL)[3]. The Question in this case was whether the PNGRB have the power to fix tariff for determination of network tariff for city or local gas distribution network and compression charge for CNG.

PNGRB as per its drafted 2008 Regulations determined network tariff and compression charges for CNG in respect of IGL and based on this ordered IGL to reduce the selling price of CNG. IGL contended that PNGRB did not have power to fix such tariff.

On applying the doctrine of harmonious construction both the High Court and the Supreme Court held that PNGRB Act, 2006 did confer powers on PNGRB to make Regulations to carry out the purpose of Act but this however does not include “city network”.  And since the entire Regulation, 2008 centres around the said subject, the said Regulation was declared ultra vires.

SC in State of T.N. & Anr. vs. P. Krishnamurthy & ors[4],

Held that “the court while considering the validity of a subordinate legislation, will consider the nature, object and scheme of the enabling Act, and also the area over which power has been delegated under the Act and then decide whether the subordinate legislation conforms to the parent statute. Where a rule is directly inconsistent with a mandatory provision of the statute, then, of course, the task of the court is simple and easy. But where the contention is that the inconsistency or non-conformity of the rule is not with reference to any specific provision of the enabling Act, but with the object and scheme of the parent Act, the court should proceed with caution before declaring invalidity.”

In Conclusion:

There is a saying in law which in simple English reads, the law comes to the assistance of those who are vigilant with their rights, and not those who sleep on their rights. So next time you are faced with any Regulation or a Rule or Government letter which appears to be outside the limits set by the Primary Legislation; or when a Regulation appears to be arbitrary or vague or inconsistent to a specific provision of the enabling Act then do discuss with your in house law department, The Courts have power to would quash such law and declare them to be ultra vires meaning illegal.

[1] MANU/SC/2615/ 2008 : 2008(9)SCALE529

[2] MANU/SC/0979/2009

[3] (01.07.2015 – SC) : MANU/SC/0728/2015

[4] (2006) 4 SCC 517

About Author – This article has been authored by Padma Chinta. She has 20+ years of experience in corporate world in Energy sector. The last position she held was Director in KPMG, one of the top 4 consulting firm. She then took break from work to pursue Law from Symbiosis Law School, Pune. The author is currently in 3rd year of her LL.B course.

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