Supreme Court Disapproves Centre’s condition for additional borrowing Consent for Kerala

The Supreme Court, on Wednesday disapproved Union Government’s requirement for the State of Kerala to withdraw its suit filed in the Supreme Court as a condition for granting additional borrowing consent. The bench, comprising Justices Surya Kant and KV Viswanathan, was hearing Kerala’s suit against the Union under Article 131 of the Constitution, challenging borrowing limits imposed by the Union.

During the hearing, the bench expressed dissatisfaction with the Union’s stance, questioning the validity of such a condition. It emphasized that while other conditions could be considered within constitutional parameters, the demand for withdrawal of the suit was unwarranted.

Addressing the Attorney General for India R Venkataramani and Additional Solicitor General N Venkataraman, Justice Surya Kant emphasized the importance of not imposing a condition that infringes upon the litigant’s constitutional right to file a suit.

Senior Advocate Kapil Sibal, representing Kerala, highlighted the urgency of the financial crisis faced by the State, urging for additional borrowing beyond the offered amount of Rs 13,608 crores.

The bench instructed both parties to hold discussions to resolve the issues, excluding the condition of withdrawing the suit. It acknowledged the need for a thorough examination of the constitutional issues raised in the suit, indicating that this case marks a precedent in its nature.

The suit revolves around the interpretation of Article 293 of the Constitution and the fiscal autonomy of states regarding borrowing. Kerala argues that its unique economic circumstances necessitate borrowing without Union consent to meet essential needs like education and health services.

The bench committed to a comprehensive examination of the issues raised, recognizing the gravity of the situation and its implications on the economy.