SC does not grant interim relief to Kerala on borrowing limits by Centre

New Delhi: In a lawsuit brought by the Kerala government to challenge the borrowing restrictions placed on the state by the central government, the Supreme Court on Monday declined to issue any interim orders.

A Bench of Justices Surya Kant and KV Viswanathan referred the plea filed by the state's Chief Minister, Pinarayi Vijayan-led government, to a 5-judge Constitution Bench for an authoritative pronouncement, stating that the suit raises multiple substantial questions regarding the interpretation of the Constitution and that Article 293 has not yet been the subject of any authoritative interpretation.

“As regard to the interim relief, we have considered the triple test of primary case, balance of convenience and irreparable injury. Prima facie, we are inclined to accept the argument of the Union (government) that where there is over utilisation of the borrowing limit in the previous year, reductions to the extent of overborrowing are permissible in the succeeding year,” the Bench ruled on Kerala’s application seeking interim relief.

In an earlier hearing, the Kerala government had refused to accept a one-time bailout package of Rs 5,000 crore offered by the Centre saying that it is entitled to borrow Rs 10,000 crore under the law.

Senior Advocate Kapil Sibal, appearing for the Kerala government, had said that the conditions in the Centre’s offer were very stringent and based on the assumption that the suit is liable to be dismissed.

In a suit filed under Article 131 of the Constitution, the Kerala government has raised questions over the authority of the Union government to interfere with the powers of the state to regulate its own finances under several provisions of the Constitution.

The Kerala government has asserted that the state has the exclusive power to regulate its finances through the preparation and management of its budget and borrowings.

With inputs from IANS