SC seeks expert help on plea against retail FDI

The Centre's notification on the opening up of FDI in multi-brand retail sector came under the Supreme Court scanner on Friday. The court sought a clarification from the government's top law officers over the legal sanctity of the FDI circular in the light of the RBI regulations and the Foreign Exchange Management Act (FEMA).

Without issuing a formal notice to the Centre, a Bench led by Justice RM Lodha asked the petitioner to serve a copy of his PIL to Attorney General GE Vahanvati or Solicitor General Rohinton Nariman for obtaining a clarification on the "missing link" which the petitioner was "unable to show" in his petition with respect to some aspects relating to the legal sanctity.

Putting the matter for further hearing on October 12, the court, which was initially reluctant to entertain the PIL after calling it a matter of policy decision, sought the law officer's views on the petitioner's contention that the RBI nod — a must in such a case, was missing while allowing FDI in retail.

Advocate ML Sharma, petitioner in the case, had claimed that retail trading is strictly prohibited under the FEMA and the RBI was hence vested with the power to issue a circular in this regard.

Since, RBI has not passed any regulation after 2008 and that no law supporting the impugned notification had either been passed, Sharma claimed, it was clear that the notification on FDI was 'void and unconstitutional'.

"We want a little clarification whether in the absence of issuance of any amendment by the RBI, this circular has any legal sanctity...We just want to have little clarity on the issue because some link is missing," said the Bench.

The Bench said the 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.

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