SC or Prez may take final call on changes to Fema

Written by fe Bureau | New Delhi | Updated: Dec 7 2012, 09:17am hrs
Unless BSP supremo Mayawatis decision to vote in favour of the government on the issue of foreign direct investment (FDI) in retail and a possible change in the SPs stance come to the governments rescue in in the Rajya Sabha on Friday, the question of whether amendments of rules/regulations under the Foreign Exchange Management Act or Fema need the approval of Parliament would finally be left either for the Supreme Court to decide on or the President who might call for a joint session of both Houses for a reconciliation of their views.

While the legal eagles in the government maintain that the regulations notified by the Reserve Bank of India (RBI) in this regard which are necessary for implementation of the decision to allow 51% FDI in multi-brand retail dont require Parliaments assent, others quoting Section 48 of Fema contend that any change in the rules/regulations made under the Act requires the approval of both Houses.

The power given to the RBI to change the regulations under Fema is a delegated one. Parliament indeed has the authority to decide if the delegated powers have been used in a way it thinks desirable, said Ajay Dua, former secretary at the department of industrial policy and promotion (DIPP).

Quoting Sections 46, 47 and 48 of Fema, he added that any rule change notified by the government or change in regulations by the RBI would need the consent of both Houses of Parliament in the ensuing session. Only those change that are of procedural/clarificatory in nature (as is the case with press notes issued) can be made without Parliaments assent. This means that if the Rajya Sabha votes in favour of the motion against FDI in retail or if any modification of the Fema regulations sought by a member is accepted by the Upper House, then a joint session of both Houses will take a final call

A public interest litigation on this issue is pending with the Supreme Court already, on which the court on October 15 asked the central government to carry out the necessary amendments in Fema rules and get them notified by the RBI. The petitioner, ML Sharma, had alleged that the government had allowed FDI in multi-brand retail without making necessary changes in the law and that it was trying to bypass Parliament.

Attorney general GE Vahanvati had assured the top court on behalf of the government that all rules and regulations would be followed. The apex court had remarked that policy making was the domain of the government, but the executive must hear the voice of the legislature

The next hearing in the Supreme Court is scheduled on January 22.

Senior BJP leader Yashwant Sinha has no doubts about how Fema amendments are carried out. Anyone who has read Section 48 of Fema will know that for modifications in rules/regulations, the consent of both Houses of Parliament is required. Every MP has a right to make amendments or modification.

External affairs minister Salman Khurshid doesnt quite agree. Fema is not being amended; there is a delegated legislation (which is being amended). An amendment requires a vote in the House. That is not what is happening. So Fema is not being amended but consequential changes, subordinate legislation which normally are placed on the table of the House (and) as time passes, (they) get amended.

Basudeb Acharia, CPM leader in the Lok Sabha: We will definitely go ahead with Fema modifications sometime next week, after the Rajya Sabha debate on FDI. There is ample time for our party to challenge the Fema modification in the Lok Sabha. His statement is on the basis of the norm that any change in Fema rules/regulations can be sought to modified by the members within 30 days of the same being placed in the House.

The government tabled the changes on November 30, but the Speaker while clubbing the debate on FDI decision and Fema amendments had restricted the window for members to seek modifications to four days. This, sources say, is the Speakers discretion that cannot be challenged in court.

CPI leader Gurudas Dasgupta said his party hasnt decided yet whether it mould move an amendment to the modification in the regulation. Fema was an act passed in the winter session of Parliament in 1999. It replaced the Foreign Exchange Regulation Act.