Delegated Legislation

Subject : Polity

In upholding the Centre’s 2016 decision on demonetisation, one of the key questions to decide for the Supreme Court was whether Parliament gave excessive powers to the Centre under the law to demonetise currency.
While the majority ruling upheld the validity of the delegated legislation, the dissenting verdict noted that excessive delegation of power is arbitrary.

About Delegated legislation:

When an entity or individual other than parliament creates a law, it is said to have “delegated legislation,” meaning that parliament has authorised the law’s creation.
The authority is established in a parent act of parliament called a “enabling act,” which establishes the framework of the legislation and then delegate’s powers to others to make more comprehensive law in the field.
An Act of Parliament establishes the framework for a particular law and typically includes a synopsis of the Act’s rationale.
When Parliament delegates its legislative authority to the Executive or another subordinate body, that body or individuals within it are given the authority to add specifics to the enacted law.
In this way, Parliament grants authority to others to make laws and guidelines through delegated legislation through essential enactment (such as an Act of Parliament). Any law passed by an authorised individual must have one of the justifications listed in the Act of Parliament as its basis.
It can be necessary for legislative power to be delegated for any of the following reasons:
to save pressure on parliamentary time
the legislation is too technical or detailed to be suitable for parliamentary consideration
to deal with rapidly changing or uncertain situations
to allow for swift action in the case of an emergency.

Delegation of power in the demonetisation case

Section 26(2) of the Reserve Bank of India Act, 1934 essentially gives powers to the Centre to notify that a particular denomination of currency ceases to be legal tender.
Here, Parliament, which enacted the RBI Act, is essentially delegating the power to alter the nature of legal tender to the central government.
The Centre exercised that power by issuing a gazette notification, which is essentially the legislative basis for the demonetisation exercise.