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May 14, 2024

Kerala Government’s Borrowing Lawsuit to Be Heard by Constitution Bench: Supreme Court Assures Listing

The Supreme Court of India on Tuesday assured the Kerala government that its lawsuit against the central government’s imposition of a borrowing ceiling will be considered for listing before a five-judge Constitution bench. This assurance comes amidst ongoing tensions between state and central authorities over financial regulations.

A bench comprising Justices Sanjiv Khanna and Dipankar Datta took note of the urgent plea presented by senior advocate Kapil Sibal, representing the Kerala government. Sibal emphasized the urgency of the matter and requested that the case be scheduled for hearing immediately after the summer vacation. “We will see and take a call on listing,” responded Justice Khanna, acknowledging the importance of the issue.

Previously, on April 1, another bench, including Justices Surya Kant and K V Viswanathan, had already referred Kerala’s lawsuit to a five-judge Constitution bench. This step was taken to address the critical constitutional questions raised by the Kerala government regarding the limits imposed on state borrowing.

Despite the referral, the Supreme Court had declined to grant any interim relief to Kerala. The Court noted that the state had already obtained “substantial relief” while the interim application was pending, thus alleviating the immediate financial pressures.

The crux of Kerala’s lawsuit lies in its accusation against the central government for encroaching upon its sovereign powers to manage state finances autonomously. The Kerala government argues that the Centre’s imposition of a borrowing cap interferes with the state’s “exclusive, autonomous, and plenary powers” to regulate its financial matters.

At the heart of this legal battle is Article 293 of the Indian Constitution, which governs the borrowing powers of states. The Supreme Court, while referring the matter to the Constitution bench, highlighted that this particular provision has never before been subjected to an authoritative interpretation by the apex court. This lawsuit, therefore, presents a significant opportunity for the Court to clarify the constitutional boundaries and interplay between state and central financial powers.

The resolution of this case holds considerable implications not just for Kerala but for all Indian states, as it will determine the extent of state autonomy in financial matters vis-à-vis central oversight. The outcome could potentially redefine the financial governance framework within India’s federal structure.

In anticipation of the hearing, legal experts and state officials are closely watching the developments. The case underscores the ongoing friction in India’s federal system, where states often grapple with the Centre over financial autonomy and resource allocation.

As the Supreme Court gears up to deliberate on this crucial issue, the decision to list the case before a Constitution bench signifies the gravity of the questions involved. The forthcoming interpretation by the five-judge bench will be pivotal in setting precedents for future disputes regarding state borrowing and financial independence.

In conclusion, the Supreme Court’s decision to potentially list Kerala’s borrowing lawsuit before a Constitution bench marks a critical juncture in Indian federal jurisprudence. The resolution of this case will not only impact Kerala but will also shape the financial autonomy of states across the country, providing much-needed clarity on the scope of Article 293 of the Constitution

Jhumpa Lahiri

Jhumpa Lahiri

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