The Supreme Court Monday Oct 15,2012 refused to stay the Centre's decision to allow Foreign Direct Investment (FDI) in retail sector.
A bench of justices R M Lodha and A R Dave, however, said that the policy suffers from "curable" irregularity of want of legal sanction and asked the RBI to amend the Foreign Exchange Management Act (FEMA) regulations to allow implementation of the government's policy.
The court was hearing a PIL filed by lawyer M L Sharma, who has said that RBI's nod was missing from the Centre's policy allowing FDI in retail sector.
The apex court on October 5 had sought the assistance of top law officers in hearing the PIL filed by Sharma against opening the multi-brand retail sector to the FDI saying there was a need for clarification since some link is missing pertaining to the RBI regulation on the issue.
The bench said the RBI should have amended the FEMA regulations before the implementation of FDI policy and asked the banking regulator to take steps to remove the lacunae in the way of giving a final shape to the policy.
The court observed that the regulations should have been amended before the Centre issued the notification, but clarified that the irregularity can now be cured with RBI amending FEMA regulation.
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