New Delhi, Oct 15 (IANS) Brushing aside a plea to stay the government's recent decisions on easing FDI cap in retail, aviation, broadcasting and power sectors, the Supreme Court Monday asked the Reserve Bank of India (RBI) to expedite amendments to its rules and regulations within two weeks.
While not allowing the plea of lawyer M.L. Sharma, who filed a public interest litigation to restrain the government from taking any action in pursuance of its decision to ease Foreign Direct Investment (FDI) norms till the RBI amended its regulations, the court said: "It is not as if they (central government) have kept the RBI in dark" about the decision.
A bench of Justice R.M. Lodha and Justice Anil R. Dave gave the RBI two weeks' for completing the process, after Attorney General G.E. Vahanvati told the court that the central bank had already set in motion the process of amending its regulations with regard to FDI in these sectors.
The government had last month decided to implement its decision to allow 100 percent FDI in single-brand retail and 51 percent in multi-brand retail, apart from allowing more FDI in aviation, broadcasting and power sectors.
The court also took note of the submission by Vahanvati that the RBI had Sep 21 issued a circular to a category of banks in pursuance of the government decision to permit FDI in these areas. These banks are in the list of authorised dealers category-I.
The Section 6 (3) of Foreign Exchange Management Act (FEMA) empowers the reserve bank to make regulations to "prohibit, restrict or regulate, inter alia, the transfer or issue of any security" by a person residing outside India.
In exercise of these powers, the RBI framed the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.
The regulations have been framed under Section 6 (3) read with Section 47 of the FEMA, which empowers the reserve bank to make the regulations.
Trying to understand the reason for the RbI taking time to amend its regulations, Justice Lodha asked: "The regulations put a cap (on the FDI in retail and aviation sector), then how can you can amend a subordinate legislation by a policy decision or a circular?"
"Unless it (amendment) is done, how can a decision be taken or can the central government decision be implemented," he wanted to know.
The court aked these queries after Vahanvati submitted that amending the regulations was a legislative process, which would take time and it was not a precondition for opening up these sectors for FDI.
The attorney general told the court: "I have asked them (RBI). They are expediting. Once exercise under Section 6(2) of the FEMA was done, then it becomes an authorised list."
The court appeared accommodative on the government's position when it brushed aside the suggestion to stay the government's decision easing FDI norms till the mechanism giving it legal backing was in place.
"There is no problem. It is a legal process, which has to be taken to its logical conclusion," Justice Lodha said, adding: "We want the compliance of the legal requirement."
As Vahanvati pointed to the time-consuming process of effecting the amendment, Justice Lodha said: "Legislation that is necessary can be done in minutes and hours. It has been done in the past. It will be done in future."
Sharma sought suspension of the government's decision in the interim, but the court said that "at best it would be an irregularity, which will be curable after regulations are amended".
The court would next hear the matter Nov 5.