MANOHAR LAL SHARMAversusUNION OF INDIA AND ANOTHER

                 [2013] 2 S.C.R. 1161


                 MANOHAR LAL SHARMA                            A
                             v.
             UNION OF INDIA AND ANOTHER
            (Writ Petition (C) No. 417 of 2012)
                       MAY 1, 2013
                                                               B
         [R.M. LODHA, MADAN B. LOKUR AND
                 KURIAN JOSEPH, JJ.]

    ADMINISTRATIVE LAW:
                                                               c
      Policy of Foreign Direct Investment in Multi-Brand Retail
Trading - Held: Under the Constitution, executive has been
accorded primary responsibility for formulation of
governmental policy - The executive function comprises both
detennination of policy as well as carrying it into execution - 0
If Government after due reflection, consideration and
deliberation feels that by allowing FD/ up to 51% in Multi-
Brand Retail Trading, country's economy will grow and it will
facilitate better access to market for producer of goods and
will enhance employment potential, then, it is not open for E
Court to go into merits and demerits of such policy - On
matters of policy, Court does not interfere unless the policy
is unconstitutional or contrary to statutory provisions or
arbitrary or irrational or in abuse of power - Impugned policy
that allows FD/ up to 51% in Multi-Brand Retail Trading does F
not appear to suffer from any of these vices.

     Policy of FD/ - Competence of Central Government -
Held: Department of Industrial Policy and Promotion (DIPP)
as per Allocation of Business Rules, 1961 is allocated the
subject of 'Direct foreign and non-resident investment in G
industrial and seNice projects, excluding functions entrusted
to the Ministry of Overseas Indian Affairs' - Thus, DIPP is
empowered to make policy pronouncements on FD/ -
Competence of Central Government to fonnulate a policy
                            1161                              H
    1162    SUPREME COURT REPORTS                 [2013) 2 S.C.R.

A relating to investment by a non-resident entity/person resident
    outside India, in the capital of an Indian company is beyond
    doubt - Reserve Bank of India is empowered to prohibit,
    restrict or regulate various types of foreign exchange
    transactions, including FD/, in India by means of necessary
e   regulations - RBI Regulates foreign investment in India inl
    accordance with Government of India's policy - A/location of
    Business Rules, 1961 - Foreign Exchange Management
    (Transfer or Issue of Security by a Person Resident Outside!
    India) Regulations, 2000 - Foreign Exchange Management           1



c   (Transfer or Issue of Security by a Person Resident Outside.
    India) (Third Amendment) Regulations, 2012 - Foreign
    Exchange Management Act, 1999 - ss. 6(3) and 47.
       Policy of FD/ in Multi-Brand Retail Trading - Held:
  Impugned policy is only an enabling policy and State
D Governments/Union Territories are free to take their own
  decisions in regard to implementation of policy in keeping
  with local conditions - It is, thus, left to choice of State
  Governments/Union Territories whether or not to implement
  the policy to allow FD/ up to 51% in Multi-Brand Retail Trading.
E        Policy of FD/ in Multi-Brand Retail Trading - Objectives
    of - Discussed.
        CIVIL ORIGINAL JURISDICTION : Writ Petition (Civil) No.
    417 of 2012.
F       Under Article 32 of the Constitution of India.
       G.E. Vahanvati, AG, Siddharth Luthra, ASG, Anoopam
  Prasad, Supriya Juneja, Nitam Pasha, J. Narula {for B. Krishna ·
  Prasad}, Vikramjeet Banerjee, P.S. Sudheer, S.S. Shamshery,
G R.C. Kohli, for the appearing parties and Manohar Lal Sharma
  Petitioner-in-person.
        The following order of the Court was delivered by
                               ORDER
H       1. We have heard Mr. Manohar Lal Sharma - petitioner in
    MANOHAR LAL SHARMA v. UNION OF INDIA                      1163


person and Mr. Goolam E. Vahanvati, learned Attorney General.          A
We have also heard Mr. Vikramjit Banerjee, learned counsel
for the intervenor - Swadeshi Jagaran Foundation in I.A. No. 2
of 2012.

     2. Mr. Manohar Lal Sharma - petitioner in person prays for        B
withdrawal of the rejoinder-affidavit in its entirety in view of the
objectionable statements contained therein. We allow him to
do so. It is directed that no part of the rejoinder-affidavit shall
be treated as part of the record.

    3. In the Writ Petition, the petitioner has prayed for             C
quashing Press Note Nos. 4,5,6,7 and 8 of (2012 Series) dated
20th September, 2012 being unconstitutional and without any
authority of law.

     4. By these Press Notes, the policy of Foreign Direct             D
Investment (FOi) in Single-Brand Product Retail Trading, Multi-
Brand Retail Trading, Air Transport Services, Broadcasting
Carriage Services and Power Exchanges has been reviewed.
In the forwarding circular, it is mentioned in para 5 that
necessary amendments to Foreign Exchange Management                    E
(Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000 (for short "Regulations, 2000) are
being notified separately.

    5. When the matter came up for consideration on
15.10.2012, learned Attorney General submitted that the                F
process for necessary amendments to Regulations 2000 by
the Reserve Bank of India was on and that necessary
amendments in Regulations 2000 would be made soon.

      6. On 5.11.2012, learned Attorney General placed for             G
consideration of the Court, a copy of the Foreign Exchange
Management (Transfer or Issue of Security by a Person
Resident Outside India) (Third Amendment) Regulations, 2012
{for short "2012 Regulations") published in the Gazette of India
- Extraordinary on October 30, 2012.
                                                                       H
    1164     SUPREME COURT REPORTS                 [2013] 2 S.C.R.


A        7. By the 2012 Regulations, Reserve Bank of India in
    exercise of the powers conferred by clause (b) of sub-section
    (3) of Section 6 and Section 47 of the Foreign Exchange
    Management Act, 1999 (for short "FEMA"), has made
    amendments to the 2000 Regulations.
B
       8. There is no challenge to the 2012 Regulations. In the
  absence of any challenge to the 2012 Regulations, the
  contention of the petitioner that Press Note Nos. 4,5,6,7 & 8
  (2012 Series) dated 20th September, 2012 have no force of
C law, does not survive for any scrutiny.

      9. Be that as it may. We have carefully considered the
  submissions of the petitioner and intervenor that the impugned
  FDI Policy is not founded on any material obtained from the
  government agency and no extensive consultation was made
D before formulation of the impugned Policy.

       10. In the Counter-affidavit filed by the Union of India, the
  benefits of FDI in Multi-Brand Retail have been enumerated.
  The impugned FDI policy have twin objectives, (one) benefit the
  consumer by enlarging the choice of purchase at more
E affordable prices; and (two) eradicating the traditional trade
  intermediaries/middlemen to facilitate better access to the
  market (ultimate retailer) for the producer of goods.

        11. It is stated that the amended FDI policy will generate
F employment, improve infrastructure and provide better quality
  products. The farmers will benefit significantly from the option
  of direct sales to organized retailers. In this regard, the Central
  Government has relied upon the study commissioned by the
  World Bank indicating that profit realization for farmers selling
G directly to organized retailers is about 60% higher than that
  received from selling in the Mandi. The views in the study
  commissioned by the World Bank are said to be supported by
  the findings of a study instituted by the Government of India on
  the subject of "Impact of Organized Retailing on the
H Unorganized Sector" through the Indian Council for research on
    MANOHAR LAL SHARMA v. UNION OF INOIA                     1165


International Economic Relations (ICRIER) submitted in May, A
2008. According to ICRIER report, unorganized and organized
retail not only co-exist, but also grow substantially in size.

     12. The salient features of the FOi Policy on Multi-Brand
Retail Trading are also indicated in the counter-affidavit. The B
policy mandates at least 30% of the value of procurement of
manufactured/processed products purchased shall be sourced
from Indian 'small industries' which have a total investment in
plant & machinery not exceeding US $ 1.00 million. It also
provides that retail sales outlets may be set up only in cities C
with a population of more than 1O lakhs as per 2011 Census
and may also cover an area of 10 Kms around the municipal/
urban agglomeration limits of such cities. In States/Union
Territories not having cities with population of more than 10
lakhs as per 2011 Census, retail sales outlets may be set up
in the cities of their choice, preferably the largest city and may 0
also cover an area of 10 Kms around the municipal/urban
agglomeration limits of such cities.

     13. We find that impugned policy is only an enabling policy
and the State Governments/Union Territories are free to take E
their own decisions in regard to implementation of the policy
in keeping with local conditions. It is , thus, left to the choice of
the State Governments/Union Territories whether or not to
implement the policy to allow FOi up to 51 % in Multi-Brand Retail
Trading.                                                              F

     14. The views on the efficacy of a government policy and
the objectives such policy seeks to achieve may differ. The
counter-view(s) may have some merit but under our
Constitution, the executive has been accorded primary
responsibility for the formulation of governmental policy. The G
executive function comprises both the determination of policy
as well as carrying it into execution. If the Government of the
day after due reflection, consideration and deliberation feels that
by allowing FOi up to 51% in Multi-Brand Retail Trading, the
country's economy will grow and it will facilitate better access H
    1166       SUPREME COURT REPORTS                [2013] 2 S.C.R.


A   to the market for the producer of goods and enhance the
    employment potential, then in our view, it is not open for the
    Court to go into merits and demerits of such policy.

          15. On matters affecting policy, this Court does not
B   interfere unless the policy is unconstitutional or contrary to the
    statutory provisions or arbitrary or irrational or in abuse of
    power. The impugned policy that allows FDI up to 51 % in Multi-
    Brand Retail Trading does not appear to suffer from any of
    these vices.

C      16. Notably, the Department of Industrial Policy and
  Promotion (DIPP) as per the Allocation of Business Rules,
  1961 is allocated the subject of 'Direct foreign and non-resident
  investment in industrial and service projects, excluding functions
  entrusted to the Ministry of Overseas Indian Affairs'. Seen thus,
D the DIPP is empowered to make policy pronouncements on
  FDI. There is no merit in the submission of the petitioner that
  Central Government has no authority or competence to
  formulate FDI Policy. The competence of the Central
  Government to formulate a policy relating to investment by a
E non-resident entity/person resident outside India, in the capital
  of an Indian company is beyond doubt. The Reserve Bank of
  India (RBI) is empowered to prohibit, restrict or regulate various
  types of foreign exchange transactions, including FDI, in India
  by means of necessary regulations. RBI Regulates foreign
F investment in India in accordance with Government of India's
  policy.

           17. Writ Petition is dismissed with no order as to costs.
    Interlocutory Applications stand disposed of.

G R.P.                                     Writ Petition dismissed.