The Supreme Court on Monday refused to stay the Centre’s decision to allow Foreign Direct Investment (FDI) in multi-brand retail sector, but said the policy suffered from “curable” irregularity of want of legal sanction.
It asked the RBI to amend the Foreign Exchange Management Act (FEMA) regulations in two weeks to allow implementation of the government’s policy.
The government on September 21 issued five Press Notes permitting up to 51% FDI in multi-brand retail, opening the country’s vast retail sector to international super-chains like Wal-Mart.
A bench comprising justice RM Lodha and justice Anil R Dave said it is an irregularity that is curable and as soon as amendment is brought out by the RBI. ?…This is a must before the policy is given a legal shape. RBI regulations haven’t been amended which is necessary. We want to know when it will be amended.? the bench said.
The court also refused to stay the government?s meeting scheduled for October 19 to give licences to 50 companies for FDI in retail, as sought by PIL petitioner ML Sharma. Attorney General GE Vahanvati while conceding that the steps for amending regulations had not been followed by the government told the court that the regulator had already taken steps for amending its regulation on permitting FDI.
He submitted that he would talk to the RBI Governor to expedite the whole process.Sharma had sought to restrain the government from taking any action in pursuance of its decision till the RBI amended its regulation.
The apex court on October 5 had sought the assistance of top law officers to clear the issue raised by Sharma against opening the multi-brand retail sector. Sharma has said in his petition that that retail trading is strictly prohibited under the law of FEMA under which the power to issue any circular is vested with the RBI, which has not issued any regulation after 2008.
The PIL further alleged that the Centre’s notification was issued without the authority of law as approval of neither the President nor the Parliament was secured.
