Chapter 1 Introduction

1.1 Introduction:
A trend very much in vogue today in all democratic countries is that only a relatively small part of the total legislative output emanates directly from the legislature. The bulk of the legislation is promulgated by the executive and is known as delegated legislation. Such legislation is made by a body by virtue of the powers conferred on it by a statute. Usually what happens is that the legislature enacts a statute covering only the general principles and policies relating to the subject- matter in question, and confers rule making powers on the government, or some other administrative agency, to fill in the details. This technique of delegated legislation has assumed central importance in modern Administrative Process. Delegated legislation is being increasingly used as a major component of the method of modern government. It is so extensively used today that there is no statute enacted by the legislature which does not delegate some legislative power to the executive. Delegated legislation is so multitudinous that the statute book will not only be incomplete but even misleading unless it be read along with the delegated legislation which amplifies and supplements it. In no democratic country does the legislature monopolise the whole of the legislative power; it shares this power with the government and other administrative agencies. Over the years, delegated legislation has increased not only bulk but in scope as well so much so that it is used not only to lay down details but also to lay down, amplify and change government policies from time to time.

1.2 Research Methodology: In making this project report the doctrinal method of
research has been used.

1.3 Focus area: This project report focuses on delegated legislation and a case study of
Kerala Samsthana Chethu Thozhilali Union v. State of Kerala 2006(4 SCC 327)

1.4 Scope of the study: In this project report meaning of delegated legislation, factors
leading to growth of delegated legislation and Kerala Samsthana Chethu Thozhilali Union v. State of Kerala 2006(4 SCC 327) case has been explained.
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Chapter 2 Conceptual Analysis

2.1 Definition of Delegated Legislation

It is very difficult to give any precise definition of the expression delegated legislation. It is equally difficult to state with certainty the scope of such delegated legislation. Mukherjee, J. rightly says: Delegated legislation is an expression which covers a multitude of confusion. It is an excuse for the legislators, a shield for the administrators and a provocation to the constitutional jurists.. According to Salmond, legislation is either supreme or subordinate. Whereas the former proceeds from sovereign or supreme power, the latter flow from any authority other than the sovereign power, and is, therefore, dependent for its existence and continuance on superior or supreme authority. Delegated legislation thus is a legislation made by a body or person other than sovereign in parliament by virtue of powers conferred by such sovereign under the statute. A simple meaning of the expression delegated legislation may be given as under: When the function of legislation is entrusted to organs other than the legislature by the legislature itself, the legislation made by such organs is called delegated legislation. According to Jain and Jain, the term delegated legislation is used in two senses: i. Exercises by a subordinate agency of the legislative power delegated to it by the legislature, or ii. Subsidiary rules themselves which are made by the subordinate authority in pursuance of the power conferred on it by the legislature. In its first application, it means that the authority making the legislation is subordinate to the legislature. The legislative powers are exercised by an authority other than the legislature in exercise of the powers delegated or conferred on them by the legislature itself. This is also known as subordinate legislation, because the powers of the authority which makes it are limited by the statute which conferred the power and consequently, it is valid only insofar as it keeps within those limits. In its second connotation, delegated legislation means and

includes all rules, regulations, bye-laws, orders, etc. Thus, the object of the minimum wages act, 1948 is to provide for fixing minimum wages in certain employments. The act applies to employments mentioned in the schedule. But the central government (executive) is empowered to add any other employment to the schedule if, in the opinion of the government the act should apply.

2.2 Subordinate Legislation and Supreme Legislation: Distinction

Whereas an Act, enactment or a statue is made by a legislature, subordinate or delegated legislation is created by an executive or administrative authority. Both are the products of legislative function (in wider sense) of the state having the force of law in their application to subjects. But there is distinction between the two. As Salmond states, an act of Legislature proceeds from Supreme power of the State and has no rival in the field. It also does not derive its authority from any other organ of the state. Subordinate legislation, on the other hand, is framed by the executive and owes its existence, continuance and validity on superior or supreme authority, i.e. legislature. An executive can make subordinate legislation only if such power is conferred on it by competent legislature, not otherwise. Again, subordinate law-making body is bound by the terms of its delegated or derivative authority.

2.3 Reasons for Growth of Delegated Legislation

Many factors are responsible for the rapid growth of delegated legislation in every modern democratic State. The traditional theory of laissez faire has been given up by every state and the old police state has now become a welfare state. Because of this radical change in the philosophy as to the role to be played by the state, its functions have increased. Consequently, delegated legislation has become essential and inevitable. In opinion of the committee on ministers powers, the factors responsible for the growth of delegated legislation are: a) PRESSURE UPON PARLIAMENTARY TIME As a result of the expanding horizons of state activity, the bulk of legislation is so great that it is not possible for the legislature to devote sufficient time to discuss all
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the matters in detail. Therefore, legislature formulates the general policy the skeleton and empowers the executive to fill in the details thus giving flesh and blood to the skeleton so that it may live by issuing necessary rules, regulations, bye-laws, etc. Delegated legislation is a growing child called upon to relieve the parent of the strain of overwork and capable of attending to minor matters, while the parent manages the main business. b) TECHNICALITY Sometimes, the subject-matter on which legislation is required is so technical in nature that the legislator, being himself a common man, cannot be expected to appreciate and legislate on the same, and the assistance of experts may be required. Members of parliament may be the best politicians but they are not experts to deal with highly-technical matters which are required to be handled by experts. Here the legislative power may be conferred on experts to deal with the technical problems, e.g. gas, atomic energy, drugs, electricity, etc. c) FLEXIBILITY At the time of passing any legislative enactment, it is impossible to foresee all the contingencies, and some provision is required to be made for these unforeseen situations demanding exigent action. A legislative amendment is a slow and cumbersome process, but by the device of delegated legislation, the executive can meet the situation expeditiously, e.g. bank-rate, police regulations, export and import, foreign exchange, etc. for that purpose, in many statutes, a removal of difficulty clause is found empowering the administration to overcome difficulties by exercising delegated power. d) EXPERIMENT The practice of delegated legislation enables the executive to experiment. This method permits rapid utilization of experience and implementation of necessary changes in application of the provisions in the light of such experience, e.g. in road traffic matters, an experiment may be conducted and in the light of its application necessary changes could be made. Delegated legislation thus allows employment and application of past experience.

e) EMERGENCY In times of emergency, quick action is required to be taken. The legislative process is not equipped to provide for urgent solution to meet the situation. Delegated legislation is the only convent indeed the only possible remedy. Therefore, in times of war and other national emergencies, such as aggression, break down of law and order, strike, bandh, etc. the executive is vested with special and extremely wide powers to deal with the situation. There was substantial growth of delegated legislation during the two world wars. Similarly, in situation of epidemics, floods, inflation, economic depression, etc. immediate remedial actions are necessary which may not be possible by lengthy legislative process and delegated legislation is the only convenient remedy. f) COMPLEXITY OF MODERN ADMINISTRATION The complexity of modern administration and the expansion of the functions of the state to the economic and social sphere have rendered it necessary to resort to new forms of legislation and to give wide powers to various authorities on suitable occasions. By resorting to traditional legislative process, the entire object may be frustrated by vested interests and the goal of control and regulation over private trade and business may not be achieved at all. The practice of empowering the executive to make subordinate legislation within the prescribed sphere has evolved out of practical necessity and pragmatic needs of the modern welfare state. There has, therefore, been rapid growth of delegated legislation in all countries and it has become indispensable in the modern administrative era.

2.4 Facts of the Case

The Kerala State Government banned the sale of arrack on 1 April 1996 and the persons who lost their jobs were paid a compensation of Rs.30, 000. In addition to this, they said workers were entitled to benefits prescribed under the Akbari Workers Welfare Fund Board Act. After a lapse of six years from the date of ban on the sale of arrack, the government framed rule 4(2) of the Kerala Abkari Shops Disposal Rules 2002 (Rules 2002) of Kerala Abkari Act, 1902, (Act 1902). Under this rule it was made mandatory for each licensed toddy shop to absorb one arrack worker. In fact, this benefit given to the arrack workers was also extended to the toddy workers, of the toddy shops that were closed having no limit in number for
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absorption. The benefit was given only to those workers who were registered with the Toddy Workers Welfare Fund Board as on 31st March 2000. The expressions "Arrack" and "toddy" have been defined in Sections 3(6A) and 3(8) of the Act as under: "3(6A) "Arrack" means any potable liquor other than Toddy, Beer, Spirits of Wine, Wine Indian made spirit, foreign liquor and any medicinal preparation containing alcohol manufactured according to a formula prescribed in a pharmacopoeia approved by the Government of India or the Government of Kerala, or manufactured according to a formula approved by the Government of Kerala in respect of patent and proprietary preparations or approved as a bona fide medicinal preparation by the Expert Committee approved under section 68A of the Act. 3(8) "Toddy" means fermented or unfermented juice drawn from a coconut, Palmyra, date, or any other kind of palm tree;" Aggrieved by the Rule 4(2), the Kerala Samsthana Chethu Thozhilali (Toddy Tappers) Union and the Toddy Shop Owners (license holders) filed a case before the learned single Judge of the Kerala High Court. They questioned the validity of rule 4(2). The learned single judge upheld the validity of rule 4(2) on the ground that the action of State as a Welfare State banning the sale of liquor is valid. The State is entitled to make such rule for the pr otection of workers who were unemployed. Further, it held that the State is empowered to frame such rule on the basis of entries 23 and 24 of List III of the Seventh Schedule of the Constitution of India. Dissatisfied with the decision of the learned single Judge, the parties of dispute filed an appeal to the Division Bench of the High Court. The Division Bench upheld the judgment of the learned single Judge. Aggrieved by the decision of the division bench, the toddy workers union appealed to the Supreme Court of India.

2.5 Contention of the Parties

Appellants

The following are the contentions made by the learned counsel of the appellants: -

The State in framing rule 4(2) acted beyond its power of delegated legislation because the Act does not contain any provision of welfare measures to be taken by the State. - The social purpose for which they said rule was made is also governed by the provisions of the Industrial Disputes Act, 1947. - The matter relating to the terms and conditions of employment of workmen is covered by the parliamentary legislation. Thus, the State had no competence to make such a rule. - The entries contained in the three lists of the Seventh Schedule of the Constitution of India enumerate only the legislative field, specifying the source of legislation by the Parliament and the State legislatures and in terms thereof. Thus, the State has no power to make the concerned rule. The State has the exclusive privilege of carrying on business in liquor but the same would not mean that while parting with the said privilege, the State can impose any unreasonable restriction which would be violative of Article 14 of the Indian constitution. Respondent:

The following are the contentions of the respondent: Imposition of such a condition is within the domain of the State within the terms of the Act 1902 inasmuch as while granting a license for sale of toddy. The State merely parts with a privilege which is exclusively vested in it and in that view of the matter if in terms of the policy decision of the State, arrack workers were to be rehabilitated, it could direct employment of unemployed arrack workers. Thus, there was absolutely no reason as to why such a condition cannot be imposed while parting with the privilege by the State which enables the State to impose such conditions or restrictions as it may deem fit for the purpose of grant of a license to sell intoxicating liquor. - As arrack and toddy both come within the purview of the Act, the State is entitled to exercise its control. In turn, it would mean t hat a provision enabling the arrack workers thrown out of employment, to be employed in toddy shops has a reasonable nexus with the purposes of the Act and such a provision cannot be said to be extraneous to the provisions of the Act and would come within the purview of the Act. - The rules which are impugned in these appeals enable the State to direct employment of toddy workers also who are displaced by the relocation of the toddy shops or reduction in their number and as such the workers cannot successfully question the validity of the Rules.

- The right of the State to impose conditions is recognized by the Act and in that view of the matter while considering the validity of the Rules made in terms of the Act, the jurisdiction of this court should not be confined only to looking at the object and purport of the Act but also look to the purposes which are sub served thereby. - The Act also confers a statutory flavor on the rules made under the Act and rules validly made in terms thereof become a part of the Act itself.

2.6 Issue
Whether Rule 4(2) of the Kerala Abkari Shops Disposal Rules 2002 of Kerala Abkari Act, 1902, is valid?

2.7 Court Observations

The following are the observations made by the court: While framing the rules, the legislative policy cannot be abridged. The Rules must be framed to carry out the purposes of the Act. The Act 1902 was enacted to consolidate and amend the law relating to the import, export, transport, manufacture, sale and possession of intoxicating drugs in the state of Kerala. It does not lay down any provisions for employment of a worker. In the given case, the rule 4(2) of Rules 2002 clearly states that the workers who lost employment due to banning of arrack shops shall be provided employment in the licensed toddy shops. This rule on employment is not within the ambit of the provisions of the said Act. In course of providing employment to the unemployed workers, the State has violated Article 14 of the Indian Constitution (Right to Equality). Article 14 is violated because the u unemployed workers to take up the employment in the licensed toddy shops. Instead of making such rule, it would have been better for the State to provide them with alternative opportunities giving them a choice to accept or not. Article 14 is violated even with regard to the license holders of the toddy shops because an employer is allowed to employ the persons of his choice and not otherwise. An employer is entitled to employ any person he likes and no person can be forced on the unwilling employer for e employment unless there exists a provision in a special statute operating in the field.
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Thus, framing of Rule 4(2) by the State is invalid because such a provision empowers the State to exercise its power under delegated legislation which is not within the objective of the Act. And unless the same is expressly conferred by the Statute, if any, provision are made is ultra vires. In terms of Indian Contract Act, 1972, a contract of employment shall be entered into when an employer and employees enter into a contract. The rights of the citizen to enter into any contract holds good unless it is specifically prohibited by law, or is opposed to public policy. However in the given case it is nowhere discussed by the High Court while adjudicating the case as to the extent of the legislative power that can be exercised in their behalf. The rules made are therefore contrary to the Indian Contract Act, 1972 and also the Specific Relief Act, 1963. In general sense, the work of toddy employees is much tedious when compared to that of the arrack employees. Because toddy workers not only work in the shops but they also work as toddy tappers. In simple words, a specialized skill is required for most of the toddy workers, which is not necessary for an arrack worker. Thus, there exists no reasonable explanation for replacing the unemployed arrack workers in the toddy shops. The Supreme Court in this case cited various authorities on the point that the subordinate legislation must be framed in consonance with the legislative intent. In Ashok Lanka and Another v. Rishi Dixit and Others,1 it was held: "We are not oblivious of the fact that framing of rules is not an executive act but a legislative act; but there cannot be any doubt whatsoever that such subordinate legislation must be framed strictly in consonance with the legislative intent as reflected in the rule-making power contained in Section 62 of the M.P. Excise Act,1951." In Bombay Dyeing & Mfg. Co. Ltd. v. Bombay Environmental Action Group & Ors .,2 this Court has stated the law in the following terms: "A policy decision, as is well known, should not be lightly interfered with but it is difficult to accept the submissions made on behalf of the learned counsel appearing on behalf of the Appellants that the courts cannot exercise their power of judicial review at all. By reason of
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(2005) 5 SCC 598 2006 (3) SCALE 1

any legislation whether enacted by the legislature or by way of subordinate legislation, the State gives effect to its legislative policy. Such legislation, however, must not be ultra vires the Constitution. A subordinate legislation apart from being intra vires the Constitution should not also be ultra vires the parent Act under which it has been made. A subordinate legislation, it is trite, must be reasonable and in consonance with the legislative policy as also give effect to the purport and object of the Act and in good faith." In Craies on Statute Law, 7th edition, it is stated at page 297: "The initial difference between subordinate legislation and statute law lies in the fact that a subordinate law-making body is bound by the terms of its delegated or derived authority, and that courts of law, as a general rule, will not give effect to the rules, etc., thus made, unless satisfied that all the conditions precedent to the validity of the rules have been fulfilled. The validity of statutes cannot be canvassed by the courts, the validity of delegated legislation as a general rule can be. The courts therefore (1) will require due proof that the rules have been made and promulgated in accordance with the statutory authority, unless the statute directs them to be judicially noticed; (2) in the absence of express statutory provision to the contrary, may inquire whether the rule-making power has been exercised in accordance with the provisions of the statute by which it is created, either with respect to the procedure adopted, the form or substance of the regulation, or the sanction, if any, attached to the regulation : and it follows that the court may reject as invalid and ultra vires a regulation which fails to comply with the statutory essentials. In G.P. Singh's Principles of Statutory Interpretation, Tenth Edition, it is stated at page 916: "Grounds for judicial review: Delegated legislation is open to the scrutiny of courts and may be declared invalid particularly on two grounds: (a) Violation of the Constitution; and (b) Violation of the enabling Act. The second ground includes within itself not only cases of violation of the substantive provisions of the enabling Act, but also cases of violation of the mandatory procedure prescribed. It may also be challenged on the ground that it cannot be said to be in conformity with the statute or Article 14 of the Constitution or that it has been exercised in bad faith. The limitations which apply to the exercise of administrative or quasijudicial power conferred by a statute except the requirement of natural justice also apply to the exercise of power of delegated legislation. Rules made under the Constitution do not qualify as legislation in true sense and are treated as subordinate legislation and can be
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challenged in judicial review like delegated legislation. Compliance with the laying requirement or even approval by a resolution of Parliament does not confer any immunity to the delegated legislation but it may be a circumstance to be taken into account along with other factors to uphold its validity although as earlier seen a laying clause may prevent the enabling Act being declared invalid for excessive delegation." In Clariant International Ltd. & Anr. v. Securities & Exchange Board of India,3 this Court observed: When any criterion is fixed by a statute or by a policy, an attempt should be made by the authority making the delegated legislation to follow the policy formulation broadly and substantially and in conformity therewith. [See Secy., Ministry of Chemicals & Fertilizers, Govt. of India v. Cipla Ltd.4] In State of Kerala and Others v. Maharashtra Distilleries Ltd. and Others,5 this Court took notice of the provisions of Section 18A of the Act. It was held that the State had no jurisdiction to realise the turn over tax from the manufacturers in the garb of exercising its monopoly power. It was held that turn-over tax cannot be directed to be paid either by way of excise duty or as a price of privilege. The said decision, therefore, is an authority for the proposition that the State while implementing the purposes of the Act must act within the four- corners thereof. It may be true that all types of intoxicating liquors including 'toddy' are subject matter of control but the power to control has been arbitrarily exercised. Whereas in the case of Arrack, the trade has totally been prohibited, the trade in toddy has merely been subjected to the control within the purview of the provisions of the Act. So far as trade in toddy is concerned, the toddy workers not only act in the shops, some of them are also toddy tappers. It requires a specialised skill. They form a different class. Even assuming that both toddy and former arrack workers belong to the same class, the rehabilitation of arrack workers who had been thrown out of employment because of an excise policy on the part of the State, do not have any reasonable nexus with the purpose of the Act, namely, the prohibition of grant of excise license in relation to the trade in arrack.
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(2004) 8 SCC 524 AIR 2003 sc 3078 5 (2005) 11 SCC 1

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If a policy decision is taken, the consequences therefore must ensue. Rehabilitation of the workers, being not a part of the legislative policy for which the Act was enacted, we are of the opinion that by reason thereof, the power has not been exercised in a reasonable manner. Rehabilitation of the workers is not one of the objectives of the Act. In Hotel Balaji and Others v. State of A.P. and Others,6 it is stated: "The necessity and significance of the delegated legislation is well accepted and needs no elaboration at our hands. Even so, it is well to remind ourselves that rules represent subordinate legislation. They cannot travel beyond the purview of the Act. Where the Act says that rules on being made shall be deemed "as if enacted in this Act", the position may be different. (It is not necessary to express any definite opinion on this aspect for the purpose of this case.) But where the Act does not say so, the rules do not become part of the Act." It is trite that the State in all its activities must not act arbitrarily. Equity and good conscience should be at the core of all governmental functions. It is now well settled that every executive action which operates to the prejudice of any person must have the sanction of law. The executive cannot interfere with the rights and liabilities of any person unless the legality thereof is supportable in any court of law. The impugned action of the State does not fulfils the aforementioned criteria."

2.8 Judgment
The Supreme Court allowed the appeal by setting aside the impugned judgment and held that Rule 4(2) of the Kerala Akbari Shops Disposal Rules, 2002 was ultra vires in its entirety as even that part of it, vis a vis, the toddy workers was not severable.

1993 Supp (4) SCC 536

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Chapter 3 Conclusion

Delegated legislation essentially is bureaucratic legislation. It involves transfer of legislative power from the legislature to the administration. It is very necessary to have an effective control mechanism so that the benefits and advantages of the institution of delegated legislation may be utilized but its disadvantages minimized. The court review delegated legislation on a number of grounds. Delegation legislation may be struck down because its substance infringes the parent Act, another primary statute, or constitutional principle. Substantive ultra vires means that the rule-making authority has no substantive power under the empowering Act to make rules in question. It refers to the scope, extent and range of power conferred by the parent statute to make delegated legislation. Briefly stated, the principle is that the delegate cannot make a rule which is not authorized by the parent statute. If the subordinate legislative authority keeps within scope and bounds of the power delegated, the delegated legislation is valid: but if it falls outside the scope of the power, the courts will declare it invalid. Delegated legislation to be valid must fall within the corners of the powers conferred by the statute. Thus, while adjudging the vires of delegated legislation, th courts do not concern themselves with the merits, demerits, wisdom or unwisdom of the underlying policy. A court never quashes a rule because in its opinion the policy underlying it is not wise or prudent. The courts only concern is to see whether the impugned delegated legislation falls within the scope of the rule making power conferred on the concerned authority by the parent statute. In this case where the assessment was made in strict compliance of the rules whose validity had been upheld by the Apex Court, the assessment cannot be challenged on the ground of non-compliance of rules. While framing the rules for the purposes of the Act, the legislative policy cannot be abridged. The rules must be framed to carry out the purposes of the Act. A rule is not only required to be made in conformity with the provisions of the act whereunder it is made, but the same must be in conformity with the provisions of any other Act, as a subordinate legislation cannot be violative of any plenary legislation made by Parliament or the State Legislature,
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rules could not be framed in matters not contemplated under the Act. They could be made only for the purposes of the Act and not dehors the same. The rules in terms of Section 29(1) of the kerala Akbari Act, 1 of 1077, thus, could be frame rules and the power to impose terms and conditions are, therefore subject to the provisions of the Act. They must not be framed in contravention of the constitutional os statutory scheme. The judgment given by the Supreme Court in this case is right because no one can be forced to accept any kind of employment against his wishes. If the State wants to protect the unemployed workers of the banned arrack shops then it should give them the alternatives to select. The employees may be given this discretion. The judgment would have been different if the State has taken some action for rehabilitation of workers under Article 39 (certain principles of policy to be followed by the State), Article 42 (provision for just humane conditions and maternity benefit) and Article 43 (Living wage, etc., for workers) of the Indian Constitution instead of taking shelter under a State Act of 1902.

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