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Restriction on bank deposits to qualify for 80 C relief

What is the amendment made in the Finance Bill before it was passed by the Lok Sabha on March 20, 2006?

Sec. 80C was amended to include term deposits for a fixed period of not less than five years with a scheduled bank. An amendment accepted by the Lok Sabha now will empower the Central Government to frame a scheme for purposes of this clause. Apparently the conditions prohibiting foreclosure and pledge along with a minimum limit are expected to be prescribed. The period of five years itself is long and further conditions depending upon their nature will make such deposits probably even less attractive.

It is also hard that no guidelines are prescribed for this delegated power as has happened in a number of other such delegated powers recently. The law generally is that legislature ordinarily does not delegate its power without guidelines as to the manner and the parameters within which such power may be exercised. This is because otherwise the authority to which such powers are delegated becomes a parallel legislative authority. Law-making power without guidelines may be faulted for excessive delegation. It has been pointed out in Shree Siddeshwar Sahakari Sakhar Karkhana Ltd. v State of Maharashtra AIR 1984 Bom 81 which referred to the settled law on the subject as under:

"It is also well established that delegation of legislative power is permissible only when the legislative policy and principles are adequately laid down and the delegate is only empowered to carry out the legislative policy within the guidelines laid down by the Legislature. It is also well established that the legislature cannot abdicate its authority and cannot pass on to some other body the obligation and responsibility imposed on it by the Constitution, but it can only utilise other bodies or authorities for the purpose of working out details of essential principles laid down by it."

The courts have also held that where the delegated authority frames rules, which are beyond the framework of guidelines, these would be vulnerable. By this test, the present amendment to the bill leaving the matter of rules for qualification of eligible fixed deposits suffers for lack of guidelines.

There is a long list of delegated powers as is evident from the amendment listing out many powers delegated with one more now added in the Bill, not a welcome trend in our law-making.

S. Rajaratnam

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