The Supreme Court on Monday referred to the Constitution Bench, a petition filed by the State of Kerala against the Central government over the alleged interference with the State’s power to borrow and regulate its own finance.
The order was passed by the Bench of Justice Surya Kant and Justice KV Viswanathan on a petition filed by the Kerala government claiming that the Central government was unduly interfering with the State’s power to borrow and regulate its finances.
The Apex Court said it has formulated six questions other than constitutional interpretation to be considered by the Constitution Bench. It held that these questions fell within Article 145 of the Constitution and thus, the matter would now be heard by a five-judge Constitution Bench.
However, the top court of the country refused to grant any interim relief to Kerala saying that the balance of convenience lay with the Central government.
It further said that it was inclined to accept the submission of the Union of India that when there was overborrowing, then there could be reduction in the next years.
The Union government had already agreed to release Rs 13,068 crore after the intervention of the top court, it added.
Kerala government had moved the Apex Court in December last year, alleging that the decision of the Union of India to impose certain limits on the State’s borrowings had led to an accumulation of unpaid dues, including salaries.
The Central government countered the contentions in the suit claiming that Kerala’s financial health was in dire straits due to substantial off-budget borrowings and a compromised fiscal edifice.
On March 12, the Apex Court suggested the Union government to provide a one-time package to Kerala, subject to strict conditions, to bail out the State from its current financial crisis.
It also asked the officials of both the Central and State governments to discuss the issue and arrive at a solution.
The Union of India had then agreed to allow Rs 5,000 crore as additional borrowing, however, the State told the Supreme Court that the same will not be sufficient, with the bare minimum need being at least Rs 10,000 crore.
The State urged the Apex Court to hear its plea for interim relief and pass an order on the same.