Comments
The Supreme Court today refused to stay the Centre’s decision to allow Foreign Direct Investment (FDI) in retail sector.
A Bench of Justices R.M. Lodha and A.R. Dave, however, said that the policy suffers from “curable” irregularity for want of legal sanction and asked the RBI to amend the Foreign Exchange Management Act (FEMA) regulations to allow its implementation.
The Bench said the RBI should have amended the FEMA regulations before the implementation of FDI policy and asked the banking regulator to take steps to remove the lacunae in the way of giving a final shape to the policy.
The court observed that the regulations should have been amended before the Centre issued the notification, but clarified that the irregularity can now be cured with the RBI amending FEMA regulations.
“At least it can be said that it is an irregularity that is curable and as soon as amendment is brought, it would be cured,” the Bench said.
During the argument, the court said the policy cannot be stayed just because of this irregularity.
Attorney General G.E. Vahanvati submitted that he would talk to the RBI Governor to take immediate steps for bringing amendment in the FEMA regulations.
The Bench after hearing his submission adjourned the matter for further hearing on November 5. The court was hearing a PIL filed by lawyer M.L. Sharma, who has said that RBI’s nod was missing from the Centre’s policy allowing FDI in retail sector.
The apex court on October 5 had sought the assistance of top law officers in hearing the PIL filed by Sharma against opening the multi-brand retail sector to the FDI, saying that there was a need for clarification since some link is missing pertaining to the RBI regulation on the issue.
Sharma has said in his petition that that retail trading is strictly prohibited under the law of FEMA under which the power to come out with a circular is vested with the RBI which has not issued any regulation after 2008.
He has alleged in his PIL that the Centre’s notification was issued without the authority of law as approval of neither the President nor the Parliament was secured.
The apex court had, however, rejected the allegation saying “this assumption that the policy has to be in the name of the President is flawed and unfounded’’.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.