Kerala v. Centre on borrowing powers: Supreme Court refers plea to Constitution Bench, no interim relief

The Supreme Court on Monday referred to the Constitution bench the plea filed by the State of Kerala against the Central government with regard to the alleged interference with the State’s power to borrow and regulate its own finance [State of Kerala vs Union of India]..A bench of Justices Surya Kant and KV Viswanathan said that it has framed six questions of law to be considered by the Constitution bench of the Court."We have formulated six questions other than constitutional interpretation. We have held that these questions fall within article 145 of the Constitution and thus the matter to lie before five-judges Constitution bench," the Court said.It, however, refused to grant any interim relief to Kerala saying that balance of convenience lay with the Central government."For interim aspect, we are inclined to accept submission of union that when there is overborrowing then there can be reduction in the next years. Balance of convenience in this case lies with Union," the order said.The Court also noted that the Centre had already agreed to release ₹13,068 crores after the intervention of the top court..The verdict came on a plea filed by the Kerala government, which claimed that the Central government was unduly interfering with the State’s power to borrow and regulate its finances.In its suit filed in December last year, the Kerala government alleged that the Centre's decision 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 by claiming that Kerala's financial health is in dire straits due to substantial off-budget borrowings and a compromised fiscal edifice.The bench had on March 12 suggested that Central government provide a one-time package to Kerala, subject to strict conditions, to bail out the State from its current financial crisis. It had asked officials of Centre and State to discuss the issue and arrive at a solution. The Centre had then agreed to allow ₹5,000 crore as additional borrowing but the State told the Supreme Court that the same will not be sufficient, with the bare minimum need being at least ₹10,000 crore.Hence, it said that the Court should hear its plea for interim relief and pass an order on the same.