Supreme Court refuses to stay FDI policy in retail, asks RBI to amend FEMA

While refusing to stay the decision to allow FDI in retail, the apex court asked RBI to amend the FEMA regulations to allow implementation of the policy

New Delhi: The Supreme Court on Monday refused to stay the Centre's decision to allow foreign direct investment (FDI) in retail sector, reports PTI.
A bench of justices RM Lodha and AR Dave, however, said that the policy suffers from 'curable' irregularity of want of legal sanction and asked the Reserve Bank of India (RBI) to amend the Foreign Exchange Management Act (FEMA) regulations to allow implementation of the government's policy.
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 RBI amending FEMA regulation.
"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 GE 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 5th November.
The court was hearing a public interest litigation (PIL) filed by lawyer ML Sharma, who has said that RBI's nod was missing from the Centre's policy allowing FDI in retail sector. 
The apex court on 5th October 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 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." 
"The Constitution does not provide that the policy should be in the name of the President." 
It further said a policy is never required to be placed before Parliament.
The apex court had also said that correctness of the policy has to be challenged on the touch stone of the circular whether it is ultra vires of the law or not.




5 years ago

Will someone clarify:
• Even if it was an ‘omission’, does it not sound a little odd to ask/order RBI to initiate an amendment to FEMA to regularize an executive order which could have been issued after due diligence? was RBI consulted?
• The position that a ‘policy’ need not be in the name of the President or need not be placed before parliament is a legalistic view and coming from the Apex court, must be the right view. But enforcing measures which need legislative sanction through executive order and then going to parliament for passing Bills to regularize them where there was no ‘emergent’ situation warranting such action getting the tacit approval sends disturbing signals. In the absence of necessary numbers in both the houses, this method is being resorted to more often. Should not this tendency be discouraged?

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Check existence of info before seeking exemption: CIC to PMO

CIC asked the PMO to first find out if the information itself exists and only then to decide if the information could be disclosed or not, instead of routinely seeking exemption under one or the other provisions of the RTI Act

New Delhi: The Central Information Commission (CIC) has directed the Prime Minister's Office (PMO) to first ensure existence of information within the department before seeking exemption under the Right to Information (RTI) Act for not disclosing them, reports PTI.


The CIC's observation came recently while it was hearing a plea by Delhi-based RTI activist Vivek Garg, who sought to know the details of correspondence made by the PMO with the Central Bureau of Investigation (CBI), Directorate of Revenue Intelligence (DRI), Enforcement Directorate (ED) and Research and Analysis Wing (RAW) in connection with the 2G spectrum allocation.


The PMO has declined to give information citing exemption clause of the transparency law.


"In the scheme of things, it is very unlikely that the Prime Minister of India or the PMO would enter into correspondence with individual investigating or intelligence agencies on any such matters.


"Instead of routinely seeking exemption under one or the other provisions of the RTI Act, it would always be better to first find out if the information itself exists and only then to decide if the information could be disclosed or not," the CIC said in its order.


In the present case, the CIC said, there was a feeling that the concerned office in the PMO had not verified the records to find out if indeed such correspondence had ever been made.


"Needless to say, if any report or letter written by any of these organisations to their respective nodal departments had been forwarded to the PMO by the respective department in connection with any query from the PMO, that information is not what the Appellant has sought.


"All that he has wanted is to get the copies of the correspondence and other related documents directly arising between the PMO and those organisations," Chief Information Commissioner Satyananda Mishra said.


The CIC asked the PMO to address each queries raised by the appellants separately and confirm if the desired information exists and whether it can be disclosed.


"If the information or some of it can be disclosed, the Central Public Information Officer shall send the same to the Appellant," Mishra said in his order.


Garg had sought copies of correspondences made with the investigating agency by Indian Prime Minister Manmohan Singh or the PMO over the allocation of second generation spectrum to certain telecom companies.


The 2G spectrum allocation is being investigated by the CBI for alleged irregularities. Trial in the 2G case is also continuing in a court in the national capital.


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