NEW DELHI: Observing that Kerala‘s financial hardship is the creation of its own monetary mismanagement,
Supreme Court
Monday refused to grant
interim relief
to allow the state to borrow more money and referred its petition against Centre’s decision to limit
borrowing capacity
of states to Constitution bench for adjudication.
A bench of Justices Surya Kant and K V Viswanathan held that Kerala has failed to establish the three judicial prongs – proving a prima facie case, balance of convenience, and irreparable injury – and the state was not entitled to the interim injunction on borrowing cap.
“If the state has essentially created financial hardship because of its own financial mismanagement, such hardship cannot be held to be an irreparable injury that would necessitate an interim relief against the Union. There is an arguable point that if we were to issue an interim mandatory injunction in such cases, it might set a bad precedent in law that would enable the states to flout fiscal policies and still successfully claim additional borrowings,” the bench said.
The apex court also noted in its order that the state had already got substantial relief as the Centre agreed to release Rs 13,608 crore after the petition was filed.
SC said several questions of significant importance impacting the Federal Structure of Governance arise for consideration and it should be adjudicated by a five-judge Constitution bench and framed four questions to be decided by the larger bench.
“Is fiscal decentralisation an aspect of Indian federalism? If yes, do the impugned actions taken by the defendant purportedly to maintain the fiscal health of the country violate such principles of federalism? Are the impugned actions violative of Article 14 of the Constitution on the ground of ‘manifest arbitrariness’ or on the basis of differential treatment meted out to the plaintiff vis-a-vis other states?” the bench said.
SC ruling a setback to Kerala govt
Supreme Court’s decision has come as a setback for the LDF govt. Going into Lok Sabha polls, one of the main planks of LDF has been the allegation that Centre has been slowly strangulating Kerala by denying it loans and much-needed funds earmarked for development, a claim that has fallen flat with SC pointing out that there has been economic mismanagement on the part of the state and that there is no proof of “irreparable damage” to the state due to Centre’s alleged actions. If Supreme Court had granted interim relief, it would have given political mileage to LDF besides helping the state govt clear long-pending dues and arrears to pensioners and others.