Very often the term Acts, Rules and Regulations are confused as being one and the same. But these terms hold distinct meaning albeit have a connection to each other. The constitution of India under article 13 (3)(a) says “law” includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of law.
The current article focuses on the three terms- Laws, Rules and Regulations and their distinction to each other.
WHAT DOES AN “ACT” MEAN?
In a democratic country, the work of making or drafting a law is that of legislature. The legislature has the authority to make laws for a political entity like a country. An act is a law which is passed by the law. For an act to be called as a law has to go through a lot of procedure.
Firstly, a draft is proposed in the parliament which is called a bill. This bill can be proposed by any member of parliament or by the government itself. If the bill passes through both the houses of parliament i.e. Rajya Sabha and the Lok Sabha with the majority of votes required it then has to receive the accent of the President.
When the president gives his accent the bill finally becomes an act. This process of arranging, collecting, restating and writing down of law on a particular subject matter in a structured manner is called codification of laws. This act consists of definitions, scope of its applicability, various provisions, fines, punishments and remedies.
The act contains a broad structure of law to be implemented on a particular subject matter and can be enacted by both the central and state legislatures.
- The companies act, 2013. The matters relating to companies from its formation to dissolution are covered under the blanket of the companies act.
- The Indian Contract Act, 1872 prescribes the law relating to relating to contracts in India.
WHAT ARE “RULES”?
As mentioned earlier, an act contains a broad structure of law. But for the law to be all rounded and fulfilling in all the intricate matters is a difficult task. This is where ‘Rules’ are important.
Rules are the prescribed guidelines for the proper conduct and can be adjusted accordingly. It is not always necessary that the act shall contain every minute details of the subject matter, if done so the act would end up in lengthy and tedious. Thereby rules are made to supplement the act.
The power to make rules comes from a particular section in the act itself. As given in the article 13 (3)(a) of the constitution, these rules shall be deemed to have the effect of law. They provide the procedural aspect of the laws and can never contradict the act albeit can be altered. In case of any conflict between the act and the rules, the provisions of the act will prevail.
- The Companies act, 2013 u/s 469 empowers the central government to make rules for carrying out the provisions of this Act. There are various rules under the companies act relating to aspects of incorporation, dividend, directors, auditors etc. These rules are notified by the ministry of corporate affairs from time to time.
Note: The term in the act “as may be prescribed” indicates the rules which may be enacted according to the act. It is important to note that the act is made by the legislation whereas the rules are provided by the executive. The two pillars of the democracy work together for the better enforcement of the laws in the nation.
- The Industrial Employment (Standing Orders) act, 1946 u/s 15 empowers the appropriate government to make rules to carry out the provisions of the act. Therefore the Industrial Employment (Standing Orders) Central Rules are made by the central government to give proper enforcement to the act.
- The Foreign Exchange Management Act, 1999 (FEMA) an act to consolidate and amend the laws relating to foreign exchange. This act contains provisions u/s 46 the power to make rules. This provision gives the central government the power to make rules to carry out the provisions of the act.
Regulations are made through delegate legislation. It is when the executive authority is given powers by a legislation to make laws in order to implement and administer the requirement of that legislation. These are also called subordinate legislation. Regulations are passed for the proper implementation of the act.
There are regulatory bodies created for implementing regulations. SEBI, RBI, IRDA etc. are some regulatory authorities.
- Under the FEMA act, 1999 as mentioned before rules are made by the central government u/s 46. Likewise, the act also provides provisions u/s 47 to make regulations and such regulation making power is given to the Reserve Bank of India.
- SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations 2018 was made by SEBI by the power conferred to it u/s 30 of the SEBI Act, 1992.
- The Protection of Human Rights Act, 1993 was enacted by the legislature and the regulation making power is contained with the NHRC i.e. the national human rights commission u/s 10(2) of the act.
The three terms Act, Rules and Regulations have an interwoven relationship. The act is the main source from which rules and regulations derive their power. Acts are embodiment of laws on a particular matter whereas rules provide a complimentary source of guidelines for proper conduct. Regulations are laid down by statutory/ executive bodies and are deemed as standard laws which ought to be followed.