The bench on 1 April, had referred to a five-judge Constitution bench the lawsuit filed by the Kerala government raising the issue of a ceiling on net borrowing.
Published May 14, 2024 | 1:32 PM ⚊ Updated May 14, 2024 | 1:32 PM
Supreme Court of India. (Wikimedia Commons)
The Supreme Court on Tuesday, 14 May, assured the Kerala government that its lawsuit against the Centre raising the issue of ceiling on net borrowing will be considered for listing before a five-judge Constitution bench.
A bench comprising Justices Sanjiv Khanna and Dipankar Datta took note of the submissions of senior advocate Kapil Sibal, appearing for the state government, that the matter is urgent and be listed after the summer vacation.
“We will see and take a call on the listing,” Justice Khanna told Sibal.
A bench of justices Surya Kant and KV Viswanathan, on 1 April, had referred to a five-judge Constitution bench the lawsuit filed by the Kerala government raising the issue of ceiling on net borrowing.
The bench noted that the suit raised issues regarding the interpretation of Articles 131 and 293 of the Constitution.
The bench referred to Article 293 of the Constitution, which deals with borrowing by states. It said this provision has not been subject to any authoritative interpretation by the apex court.
Whether Article 293 grants states an enforceable right to borrow from the government and other sources and, if so, to what extent the Union can regulate it.
Additionally, the question of whether borrowing by state-owned enterprises and liabilities arising from public accounts should fall within the purview of Article 293(3) of the Constitution and the scope of judicial review regarding fiscal policy is also under scrutiny.
The apex court, however, had refused to grant any interim injunction to Kerala for additional borrowing for 2023-24, saying the state has secured “substantial relief” during the pendency of the interim application.
Regarding interim relief, the court applied the triple tests —prima facie case, balance of convenience, and irreparable injury.
It felt the Centre had a point that deductions can occur in subsequent years if a State exceeds limits in a financial year.
The court acknowledged that the State received substantial relief following the Court’s intervention.
The Court noted that it had disapproved of a condition imposed by the Union that the State should withdraw the suit for getting consent for additional borrowing of ₹13,608 crore.
Also, in a meeting held on 8 March, the Union offered consent for ₹5,000 crore.
The Union government informed the Supreme Court on 13 March that it would allow Kerala to borrow an additional ₹5,000 crore as a one-time measure in the current financial year ending 31 March.
Kerala had said the amount was too small.
On 19 March, the Union consented to ₹8,742 crore and ₹4,866 crore, totalling ₹13,608 crore.
Against this backdrop, the Court noted that the State has secured substantial relief for the financial year 2023-24.
Kerala demanded a directive to the Centre to lift the curbs on states’ borrowing limits. It wanted an immediate release of ₹19,000 crore that the Centre owed the state. Kerala thus insisted that the state had a ‘strong case’ for interim relief.
The Kerala government has accused the Centre of interfering in the exercise of its “exclusive, autonomous and plenary powers” to regulate the state’s finances by imposing a cap on borrowing.
(With PTI inputs)
