Why SC refused Kerala relief on borrowing cap set by Centre but referred case to constitution bench

New Delhi: The Supreme Court Monday gave no interim relief to Kerala on its plea challenging the limitations placed by the central government on its borrowing capacity...

Since Article 293 (dealing with borrowing powers of states) of the Constitution has not been so far the subject to any authoritative interpretation by this court, in our considered opinion, the aforesaid questions squarely fall within the ambit of Article 145(3) (invoked to refer a matter to five-judges bench)of the Constitution, reasoned the bench while making the reference...

The case was referred to the court following Keralas lawsuit against the Union government, alleging that the central authoritys restrictions on borrowing have pushed the state to the verge of a financial crisis, jeopardising its ability to disburse salaries, pensions, and meet other critical financial obligations...

Rejecting the plea for interim relief, it said, Prima facie, we are inclined to accept the argument of the Union that where there is over-utilisation of the borrowing limit in the previous year, to the extent of over-borrowing, deductions are permissible in the succeeding year, even beyond the award period specified in the 14th Finance Commission report...

Hence, the court said, We are unable to accept the argument of the plaintiff at the interim stage that there is fiscal space of unutilised borrowing of either Rs 10,722 crore, as was orally prayed during the hearing, or Rs 24,434 crore, which was the borrowing claimed in the negotiations with the Union.. (Edited by Richa Mishra)..

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