Companies & Sectors
Supreme Court seeks law officers’ assistance on plea against FDI

During an hour-long hearing, the SC bench said opening the retail sector to FDI is a policy matter and 'policy is exclusively in the domain of the government of the day'

 
New Delhi: The Supreme Court on Friday sought the assistance of top law officers, that of the Attorney General or the Solicitor General, in hearing a petition against the opening of the multi brand retail sector to foreign direct investment (FDI), reports PTI.
 
Without issuing notice to the Centre, a bench of justices RM Lodha and AR Dave asked the petitioner to serve the copy of the petition to Attorney General (AG) GE Vahanvati or Solicitor General (SG) Rohinton Nariman saying it needs some necessary clarification on the issue.
 
The bench, which posted the matter for hearing on 12th October, directed the petitioner to delete the name of the Prime Minister as a party in the petition.
 
While seeking the assistance of top law officers, the bench said, "We just want to have little clarity on the issue" as some link is missing.
 
During an hour-long hearing, the bench said opening the retail sector to FDI is a policy matter and "policy is exclusively in the domain of the government of the day. Some may say it is good and some may say it is bad but nothing is ultra vires." 
 
"These are matters dealt with exclusively by ministries," the bench further observed.
 
The court was hearing a public interest litigation (PIL) petition filed by advocate ML Sharma who has alleged that the notification was issued without the authority of law as approval of neither the President nor the Parliament was secured.
 
The bench, however, observed that "this assumption that the policy has to be in the name of the President is flawed and unfounded." 
 
While seeking the assistance of law officers, the bench told the petitioner that "there may be some provisions which you are unable to show." 
 
"Do one thing, for little clarification serve this writ petition to the Attorney General or the Solicitor General," the bench said.
 
During the hearing, the bench also wanted to know from Sharma whether subsequent to the government's circular on the issue of FDI in retail, any follow up circular was issued by the Reserve Bank of India (RBI) as there is some missing link in the petition.
 
The advocate said the RBI has not issued any regulation after 2008.
 
After hearing his submissions, the bench said it was concerned whether the circular issued by the government on the FDI in retail sector will have legal sanction.
 
The advocate contended that the recent FDI policy decision was not in consonance with the RBI regulations under the Foreign Exchange Management Act (FEMA).
 
When the advocate submitted that the opening of FDI in retail sector will affect the livelihood of 35 crore families as they were self-employed in kirana, food, vegetables and other small businesses and more than 20 crores people were trading on footpaths, the bench asked him to refrain from making these submissions.
 
"Do not bring all these submissions. The government perspective is different from your perspective. They feel differently and think that it will give more livelihood. Your concept may not be correct. We are on the legality and constitutionality of the policy," the bench said.
 

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SEBI initiates probe into 900-point 'flash crash' on Nifty

SEBI would also look into whether adequate safeguard mechanism was in place to avoid a 'flash crash' like situation, as the so-called freak trades were executed in a number of well-known blue-chip stocks, including some large banking shares

 
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has begun initial probe into the 'flash crash' of NSE index Nifty, which fell by nearly 900 points on Friday morning, halting the trade on the exchange for about 15 minutes, reports PTI.
 
While the National Stock Exchange (NSE) blamed "abnormal" orders placed by stock broker Emkay Global in multiple trades of various stocks at low prices for the crash, sources said that regulator is looking into all aspects of the incident.
 
NSE has claimed there were no technical glitches in its system and the crash was due to 'erroneous' trade orders worth over Rs650 crore by Emkay Global, which has been now disabled by the bourse for trading.
 
However, a senior regulatory official said that SEBI would look into whether adequate safeguard mechanism was in place to avoid a 'flash crash' like situation, as the so-called freak trades were executed in a number of well-known blue-chip stocks, including some large banking shares.
 
While there are no circuit filters in large blue-chip stocks, the market systems are generally well-prepared to handle any mischief or large erroneous trades.
 
The regulator is also concerned that the instances of 'freak trades' seem to be on the rise, including the recent one that involved the shares of Reliance Industries.
 
NSE said the abnormal orders were 'non-algo' in nature and were entered for an erroneous quantity which resulted in executing trades at multiple price points across the entire order book. The exchange has also identified these orders to a specific dealer terminal.
 
The incident occurred on a day when expectations were high for a significant upward rally on the bourses, following some major reform measures approved by the government last evening, including on foreign direct investment (FDI) in sectors like insurance and pension.
 
SEBI is also looking into the issues related to 'algorithmic' trade -- a latest-technology mechanism that allows execution of orders at a very high speed to take benefit of smallest of the change in share price, the official said.
 
This trade mechanism has been criticised in various quarters on apprehensions that it helps market manipulators to take benefit of the high-speed technology.
 
The trading had commenced normally today at both the BSE and the NSE, with the Nifty opening with a gain of nearly 27 points.
 
While trading continued normally at BSE, a 'flash crash' like situation occurred later in the morning at Nifty.
 
The NSE index showed a sudden fall of nearly 900 points or over 15% within seconds, triggering the circuit filter (maximum permissible limit of movement in the index), halting the trade at 0950 hours.
 
The NSE, on its part, said that the exchange's systems functioned normally without any glitch and the abnormal trades caused market closure automatically as the index circuit filter was triggered.
 
Trading resumed at NSE at 1005 hrs, NSE said, adding that the market is functioning normally since then and the incident is being investigated.
 
The Sensex had also fallen about 300 points in the morning, in reaction to the Nifty crash, as many stocks are common to the two indices.
 

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Rahul Gandhi backs FDI in retail, says it will benefit farmers

Rahul said FDI in retail will help farmers store their produce safely for a longer duration, thus ensuring best value for their crops

Srinagar: Backing the Centre's decision to allow foreign direct investment (FDI) in multi-brand retail, Congress leader Rahul Gandhi has said the decision will help farmers prosper by removing middlemen from the supply chain and generate new jobs, reports PTI.

 

Addressing the national executive of Indian Youth Congress in Srinagar, Rahul said FDI in retail will help farmers store their produce safely for a longer duration, thus ensuring best value for their crops.

 

The 42-year-old AICC general secretary, who is here on a two-day visit beginning yesterday, said around 60 to 70% of all perishable products in the country eventually rot due to lack of proper storage facilities.

 

The situation, however, will change once FDI in retail comes in, Rahul was quoted as saying in a Youth Congress release.

 

He said farmers could not get good price for their produce as the middlemen in the 'Mandis' would buy from them at very low rates and sell the same at a much higher price in cities.

 

But once FDI comes in, they will be taken out of this equation, he said.

 

FDI will also create lot of new jobs, which will not only lead to higher income generation but also significantly reduce unemployment, thereby having a salutary effect on the economy, he said.

 

He, however, said all contractual agreements that farmers get into with the retailers "should be carefully monitored" in order to ensure that interests of the farmer are not harmed.

 

Rahul noted that in the contemporary world, all economies are interconnected, thus having impact on each other.

 

"If something happens in the US, it will most likely affect events in India, and vice versa," he said.

 

Earlier, talking to members of the Jammu and Kashmir NSUI national executive, Rahul said it was important to win the hearts and minds of the student community in Kashmir.

 

"We need to earn their trust, their faith. I am here to win their trust through dialogue and deeds," he said.

 

Rahul also asked state NSUI leadership to bring a delegation of students to Delhi and meet Union HRD Minister Kapil Sibal to sort out all issues concerned to them.

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