Holding that governments can’t make rules that go beyond the scope of statutory provisions, the Supreme Court has declared illegal the part-time appointment of chairperson and members of the Appellate Tribunal for Foreign Exchange.
"If a rule goes beyond the rule-making power conferred by the statute, the same has to be declared ultra vires. If a rule supplants any provision for which power has not been conferred, it becomes ultra vires,” a bench of justice BS Chauhan and justice Dipak Misra said dismissing the Centre’s appeal against a 2006 verdict of the Delhi HC.
The HC had declared as ultra vires the appointment of part-time chairperson and part-time members of the tribunal. However, the orders passed by the part-time members will remain valid.
“To avoid any confusion, we clarify the judgments and orders passed by the Appellate Tribunal by the chairperson or members who were not qualified and whose appointments have been quashed shall not be treated to be null and void,” the SC said.
As its reply, the government told the bench that now it was scrupulously following the mandate of the Act and only qualified persons were being appointed as members and chairperson.
The SC agreed with the HC’s finding declaring Rule 5 of the Appellate Tribunal for Foreign Exchange (Recruitment, Salary and Allowances and Other Conditions of Service of Chairperson and Members) Rules, 2000 ultra vires of the Foreign Exchange Management Act, 1999 as it provided for part-time members.
When the original act did not envisage any concept of part-time member, the authorities had no power under the statute to introduce such a provision, the SC pointed out.
Clarifying the legal position on rule-making power conferred on the government by a statute, the SC said, "The basic test is to determine and consider the source of power which is relatable to the rule" and “a rule must be in accord with the parent statute as it cannot travel beyond it”.
According to the act, a chairperson should have all the qualifications required for appointment of a high court judge and in the case of the members, he/she shall have all the qualifications required for appointment as a district judge.
But ignoring the provisions of the act, the government appointed certain law officers as part-time members, which was in contravention of the act, the bench said.
Noting that section 46 of the act, which confers power on the government to make rules for implementation of the act, nowhere envisaged part-time members in the tribunal, the bench wondered as to how the government went on to introduce the concept of part-time members by using its rule-making power.