Delegation of financial powers
🧠 What Is Delegation of Financial Powers?
“Delegation of financial powers” refers to the authority granted by the legislature (e.g., Parliament or Congress) to the executive or administrative bodies to:
Collect taxes
Spend public money
Approve budgets
Implement economic or monetary policies
Allocate resources
🧩 It is necessary for governance but also sensitive, because control of the purse is a core legislative power. Courts monitor delegation to ensure:
Constitutional limits aren’t breached
Delegated powers don’t become arbitrary or unchecked
There’s parliamentary oversight and accountability
⚖️ Key Principles of Delegation of Financial Powers
No taxation without representation – Only Parliament can impose taxes.
Spending must be authorized by law – Executives can’t spend public money without legislative approval.
Delegated financial powers must be specific, limited, and reviewable.
Judicial review ensures executive and administrative compliance with financial statutes and constitutional norms.
🔍 Landmark Cases on Delegation of Financial Powers
1. Field v. Clark (U.S., 1892)
🔹 Facts:
Congress passed a law delegating to the President the power to suspend tariff exemptions if other countries imposed unfair duties.
🔹 Issue:
Was this an unconstitutional delegation of legislative power?
🔹 Holding:
No. The Court upheld the delegation, saying it involved factual determination (a “contingency”), not law-making.
🔹 Significance:
Allowed conditional delegation in financial matters.
Recognized executive discretion in applying tariffs.
2. U.S. v. Butler (1936)
🔹 Facts:
The Agricultural Adjustment Act imposed taxes to fund subsidies for farmers.
🔹 Issue:
Did Congress exceed its spending power?
🔹 Holding:
Yes — the tax was unconstitutional because it attempted to regulate agriculture, which was seen as a state power.
🔹 Significance:
Marked a limit on financial delegation where it masked regulatory overreach.
Spending must serve general welfare, not specific policy manipulation.
3. J.W. Hampton Jr. & Co. v. United States (1928)
🔹 Facts:
Congress allowed the President to adjust tariff rates based on economic data.
🔹 Holding:
Delegation was valid if Congress provides an “intelligible principle” to guide the executive’s discretion.
🔹 Significance:
Foundation of the “intelligible principle” test in U.S. administrative law.
Applied in financial and economic delegations (taxes, tariffs, subsidies).
4. R v. HM Treasury, ex parte Smedley (UK, 1985)
🔹 Facts:
UK government agreed to the European Communities budget, which had financial implications, without full Parliamentary scrutiny.
🔹 Issue:
Could executive commit public funds without full parliamentary authority?
🔹 Holding:
Parliamentary control of public spending must be preserved. Executive can’t bypass Parliament in financial matters.
🔹 Significance:
Reinforced parliamentary supremacy over the public purse.
Courts can intervene if executive oversteps financial authority.
5. Comptroller and Auditor General of India v. Jagannathan (India, 1986)
🔹 Facts:
Concerns over unauthorized use of funds by a government company.
🔹 Issue:
Can public money be used without proper legislative sanction?
🔹 Holding:
No — all public expenditures must be accountable to Parliament.
🔹 Significance:
Established judicial oversight over financial accountability.
Government companies using public funds fall under audit and legislative control.
6. R v. Secretary of State for Social Services, ex parte Association of Metropolitan Authorities (1986)
🔹 Facts:
Government changed funding formula for local councils, affecting grant allocation.
🔹 Issue:
Was the change lawful under the statute?
🔹 Holding:
Executive must comply with statutory conditions — it cannot change funding arbitrarily.
🔹 Significance:
Reinforces rule of law in financial decision-making.
Delegated financial powers must be used within legal boundaries.
7. AIR India v. Nergesh Meerza (India, 1981)
🔹 Facts:
Challenged discriminatory financial benefits and retirement rules for air hostesses.
🔹 Issue:
Were the rules, framed under delegated powers, violating equality and due process?
🔹 Holding:
Some financial regulations were struck down as arbitrary and discriminatory.
🔹 Significance:
Even financial rules made under delegated authority must comply with constitutional principles.
🧾 Summary Table
| Case | Jurisdiction | Financial Issue | Holding | Key Principle |
|---|---|---|---|---|
| Field v. Clark (1892) | U.S. | Tariff delegation | Valid | Executive may apply laws with discretion |
| U.S. v. Butler (1936) | U.S. | Subsidy funding | Invalid | Spending must not overreach federal limits |
| J.W. Hampton (1928) | U.S. | Tariff adjustment | Valid | "Intelligible principle" guides delegation |
| Smedley (1985) | UK | EC budget approval | Invalid without Parliament | Parliamentary control of funds is essential |
| Jagannathan (1986) | India | Audit of government spending | Oversight valid | Public money requires legislative sanction |
| Metropolitan Authorities (1986) | UK | Local council funding | Must follow statute | Executive discretion is limited by law |
| AIR India (1981) | India | Employment benefits | Partly invalid | Financial rules must respect constitutional rights |
🧠 Key Takeaways
Legislatures can delegate financial powers, but only within clear legal limits.
Delegated powers must include:
An intelligible principle
Mechanisms for accountability
Respect for constitutional or parliamentary supremacy
Courts can strike down:
Arbitrary spending rules
Overbroad or vague delegations
Spending that undermines legislative authority or equality
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