Supreme Court to examine validity of FDI notification

Seeks A-G’s assistance in clarifying issues raised by the PIL petition

October 07, 2012 03:36 am | Updated October 18, 2016 02:46 pm IST - NEW DELHI

The Supreme Court will examine the validity of the notification the Centre issued on September 20 of its decision to allow Foreign Direct Investment (FDI) in multi-brand retail. On Friday, a Bench of Justices R.M. Lodha and Anil R. Dave, without issuing notice, sought Attorney-General G.E. Vahanvati’s assistance in clarifying certain issues, and directed advocate M.L. Sharma, who has challenged the notification, to hand over a copy of his public interest litigation petition to Mr. Vahanvati.

It scheduled further hearing for October 12. Mr. Sharma said the notification was issued without any source of law and parliamentary approval. Soon after the Union Cabinet decided to allow 100 per cent FDI in multi-brand retail and aviation, and disinvest in four public sector units, the notification was issued through an executive order.

The petition raised important questions of law: “whether an order/notification can be issued violating Article 77 of the Constitution; whether any law, rule, regulation can be framed… without being passed/approved by Parliament; and whether a rule, regulation or law which has the potential to damage life and livelihood of citizens of India is not unconstitutional and ultra vires.

Mr. Sharma argued that the Cabinet decision and the press note were against the Reserve Bank of India’s regulations issued on the strength of the powers derived from the Foreign Exchange Management Act; as such, it was ultra vires .

When counsel submitted that the policy could not go beyond regulations, Justice Lodha told him: “Opening up 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. Perhaps, a provision or two is missing which you [counsel] are unable to show us. Policies are the sole prerogative of the government, and nobody else.”

Mr. Sharma said the notification would affect more than 35 crore citizens, “who are surviving through their small retail trade on footpath, in small shops and hand trolley, and even door to door.”

Justice Lodha observed: “That is your perception. The government’s perception is otherwise. Don’t convert this court into a place for executive decisions.”

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