Rule-making, Regulation-making, Delegation and Removal of Difficulties (Sections 49 and 51 to 54)

The PFRDA Act is a framework law. It sets out the institutions, the basic features of the National Pension System and the enforcement powers, but leaves most operational detail to delegated legislation. Two bodies make it: the Central Government, by rules under Section 51, and the Authority, by regulations under Section 52. Section 53 subjects both to parliamentary scrutiny. Section 49 allows the Authority to delegate its powers, and Section 54 gave the Government a time-limited power to remove difficulties in implementing the Act.

1. Why Delegated Legislation Is Central to the Act

• Technical subject matter: investment limits, recordkeeping standards, fee caps and exit rules require specialist knowledge and frequent revision. Parliament cannot amend the Act every time markets or products change.
• Speed: regulations can be made and amended quickly. The 2025 changes to the NPS exit rules, for example, were made by amending regulations, not the Act.
• Limits: delegated legislation must stay within the parent Act. Parliament cannot delegate its essential legislative function, which is to lay down the policy and standards; it can delegate the working out of details within that policy.

2. Rules by the Central Government (Section 51)

The Central Government may, by notification, make rules to carry out the provisions of the Act. In particular, rules may provide for:

• (a) the salary, allowances and other conditions of service of the Chairperson and whole-time members;
• (b) the allowances of part-time members;
• (c) other functions of the Authority under Section 14(2)(p);
• (d) other matters in respect of which the Authority may exercise the powers of a civil court;
• (e) the procedure to be followed by authorised officers in search and seizure and related matters;
• (f) the form of appeal to the Securities Appellate Tribunal and the fees payable;
• (g) the procedure of the Tribunal in dealing with appeals;
• (h) the form of the annual statement of accounts of the Authority;
• (i) the form, manner and time of returns and reports to the Central Government;
• (j) any other matter which is required to be, or may be, prescribed.

The pattern is clear. Rules deal with matters where the Government is the natural decision-maker: the pay of the regulator's members, the Authority's accountability to the Government, and the procedure for appeals. Where the Act uses the word "prescribed", it refers to rules made by the Central Government.

3. Regulations by the Authority (Section 52)

The Authority may, by notification, make regulations consistent with the Act and the rules to carry out the provisions of the Act. The matters listed in Section 52(2) include:

Internal matters of the Authority

• the times, places and procedure of meetings, including quorum;
• the terms and conditions of service of officers and employees;
• delegation of powers and functions to committees of members.

The National Pension System and schemes

• the schemes to be regulated and their terms;
• changes in the features of the NPS where the Act permits;
• withdrawals from the individual pension account;
• exit from the system;
• conditions for the purchase of annuities;
• establishment and functions of the National Pension System Trust.

Intermediaries

• the functions and duties of the central recordkeeping agency;
• the manner of transmission of contributions and the functioning of points of presence;
• the management and operation of pension funds;
• the form of application for registration, the fees, and the conditions of registration;
• the procedure for suspension or cancellation of registration.

Enforcement and subscriber protection

• the grievance redressal mechanism for subscribers;
• the form of books of account and statements of intermediaries;
• the procedure for inquiries;
• the supersession of the governing board of an intermediary and the appointment and functioning of an Administrator;
• the administration of the Subscriber Education and Protection Fund;
• any other matter required to be, or which may be, specified by regulations.

Where the Act uses the word "specified", it refers to regulations made by the Authority. Examples of principal regulations include the regulations on exits and withdrawals under the NPS, pension funds, the central recordkeeping agency, the NPS Trust, points of presence, retirement advisers and redressal of subscriber grievances, each amended from time to time.

4. Parliamentary Control (Section 53)

• Laying: every rule and every regulation must be laid, as soon as may be after it is made, before each House of Parliament while it is in session, for a total period of thirty days, which may be in one session or two or more successive sessions.
• Modification or annulment: if, before the expiry of the session immediately following, both Houses agree to modify the rule or regulation, or agree that it should not be made, it thereafter has effect only in the modified form or is of no effect, as the case may be.
• Past acts saved: any modification or annulment is without prejudice to the validity of anything previously done under the rule or regulation.

This is the negative resolution procedure: rules and regulations take effect on notification, and Parliament may later modify or annul them. Both Houses must agree. In practice, parliamentary committees on subordinate legislation scrutinise these instruments, but modification or annulment is rare.

5. Delegation of Powers (Section 49)

• Delegates: any member, any officer of the Authority, or any other person. The last category permits delegation to outside experts or bodies, subject to conditions.
• Form: a general or special order in writing, which may attach conditions.
• Exception: the power to make regulations under Section 52 cannot be delegated. Regulations bind the whole sector and must be made by the Authority as a body.
• Committees (Section 49(2)): the Authority may, by order in writing, constitute committees of its members and assign to them such powers and functions as may be specified by regulations.

6. Power to Remove Difficulties (Section 54)

• Power: if any difficulty arises in giving effect to the Act, the Central Government may, by order published in the Official Gazette, make provisions not inconsistent with the Act that appear necessary to remove the difficulty.
• Time limit: no order may be made after five years from the commencement of the Act. Since the Act came into force on 1 February 2014, the power lapsed in February 2019.
• Laying: every order must be laid before each House of Parliament as soon as may be after it is made.

Removal of difficulties clauses are sometimes called Henry VIII clauses, because they allow the executive to adjust the working of a statute. The PFRDA clause is limited in three ways: the order must be consistent with the Act, it is available only for a transitional period, and it must be laid before Parliament. It cannot be used to amend the Act or change its policy.

7. Judicial Review of Delegated Legislation

Rules and regulations under the Act may be challenged in the High Courts or the Supreme Court on established grounds:

• Ultra vires the Act: the instrument goes beyond the power conferred, or conflicts with the Act;
• Excessive delegation: the Act itself fails to lay down sufficient policy (rarely successful against a detailed statute such as this);
• Violation of fundamental rights: for example, arbitrary classification of subscribers under Article 14;
• Manifest arbitrariness: the Supreme Court in Indian Express Newspapers v. Union of India (1985) held that subordinate legislation may be struck down for manifest arbitrariness or unreasonableness, in addition to the grounds on which a statute may be challenged.

Since the Securities Appellate Tribunal hears appeals against orders of the Authority and adjudicating officers, a challenge to the validity of a regulation itself is ordinarily brought in a writ petition before a High Court.

8. Questions Arising

Does a regulation take effect before it is laid before Parliament?

Yes. A regulation takes effect on notification in the Official Gazette, or from any later date it specifies. Laying under Section 53 is a later safeguard. Failure to lay does not ordinarily make the regulation invalid, because the laying requirement is treated as directory unless the statute makes laying a condition of validity.

Can the Authority amend the features of the NPS listed in Section 20 by regulation?

Only to the extent the Act permits. Section 20(2) sets out the essential features of the NPS, and some of them expressly leave details to regulations, such as the conditions for withdrawal and exit. A regulation that contradicted a feature fixed by the Act, for example by abolishing individual pension accounts, would be ultra vires.

Is a delegate's order appealable?

Yes. An order made by a member or officer under delegated power is an order of the Authority for the purposes of appeal, and lies to the Securities Appellate Tribunal under Section 36.

9. Related Topics and Provisions

• Duties, powers and functions of the Authority (Section 14)
• Meetings, officers and employees (Sections 8 to 11)
• Central Government control and the Pension Advisory Committee (Sections 43 to 46)
• Exit, withdrawal and annuity under the NPS
• Appeal to the Securities Appellate Tribunal (Section 36)