News India Supreme Court refuses to interfere with FDI in retail policy

Supreme Court refuses to interfere with FDI in retail policy

New Delhi, Nov 5 : The Supreme Court on Monday refused to interfere with the policy on FDI in retail saying that if it does not stand in Parliament then it would be at government's

supreme court refuses to interfere with fdi in retail policy supreme court refuses to interfere with fdi in retail policy
New Delhi, Nov 5 : The Supreme Court on Monday refused to interfere with the policy on FDI in retail saying that if it does not stand in Parliament then it would be at government's peril.



A bench of justices R.M. Lodha and A.R. Dave said that the policy making is the “sole prerogative of the executive” and refused to direct the government to place it in Parliament saying that the Centre might do it on its own in the coming winter session.  

It said that apprehension that the Centre would not place it before the Parliament is “unfounded” and posted the matter for hearing on January 22 after winter session of the Parliament.

“You (petitioner challenging FDI policy) are assuming that it won't be placed before the Parliament. Your assumption is ill-founded. We would know about it only after the winter session of the Parliament... Let's see whether it is placed before the Parliament or not and then we will see,” the bench said.

“They are at their own peril. They can take risk. If their action does not stand in Parliament then they made policy at their own peril,” the bench observed when the petitioner contended that the apex court should intervene in the case as a Parliamentary committee has also given opinion against FDI in retail sector.

Section 48 of The Foreign Exchange Management Act, 1999 says that every rule and regulation made under this Act in order to allow FDI shall be laid before each House of Parliament.

The bench said that the Executive has right to frame policy and it had been “mandated” to rule the country but it has to listen to the Parliament which it is accountable to.

“Policy formulation is the sole prerogative of the executive. Parliamentary committee may advise as philosopher and guide. But what is good is to be decided by the executive. Executive must listen to the Parliament as it is accountable to the Parliament,” the bench said.

“Executive is entitled to have their own perception. It has been mandated to rule,” the bench said adding “We have not said that economic policy must be beyond the judicial review but court should be extremely slow in interfering in policy matters.”

The court was hearing a PIL filed by lawyer M L Sharma, challenging Centre's policy allowing FDI in retail sector.

In the meanwhile the Attorney General informed the bench that RBI has amended the Foreign Exchange Management Act (FEMA) regulations to allow implementation of the government's policy and it has also been notified.

The lawyer also challenged the constitutional validity of the provision under which companies would be allowed to operate in the country despite not getting approval of the Parliament.

The bench said that it will hear his contentions and the Attorney General on this aspect if it was necessary and adjourned the case.

On the last hearing on October 15 the had refused to stay the Centre's decision to allow FDI in retail sector saying that the policy suffers from “curable” irregularity of want of legal sanction and asked the RBI to amend the FEMA regulations to allow implementation of the government's policy.

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.

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