With the Supreme Court observing on Monday that the Centre’s policy decision permitting FDI in multi-brand retail sector lacked legal sanction, the Attorney General (AG) G. E. Vahanvati assured that the Reserve Bank of India (RBI) would come out with amended Regulations within two weeks.
A Bench of Justices R. M. Lodha and Anil R. Dave, while refusing to stay the policy decision, gave the RBI two weeks’ time after Mr. Vahanvati told the court that the RBI had already set in motion the process of amending the Foreign Exchange Management (Transfer or Issue of Security by a Person, Resident outside India) Regulations 2000 permitting foreign direct investment in the retail sector. When advocate Manohar Lal Sharma, who had challenged the Centre’s notification on allowing FDI in retail sector through an executive order without parliamentary approval, sought an interim stay of the process, Justice Lodha told the counsel, “There is no question of any stay on the policy decision.”
The Bench also refused to stay the government’s meeting scheduled for October 19 to give licences to 50 companies for FDI in retail sector. Justice Lodha told the AG, “The RBI has not amended the regulations which will legitimise government’s FDI policy till date. It is a legal process, which has to be taken to its logical conclusion. This is a policy done by the Central Government and it is not that the RBI has been kept in the dark by the Centre. We want to know from the Attorney General when this amendment will formally take place.”
The AG told the court that he would speak to the RBI Governor to expedite the process and the Regulations would be amended within two weeks.
Justice Lodha made it clear to the AG, “We adjourn the matter but you have to give the policy a legal shape by amending the regulations.”
