Inside Court News

Supreme Court Refers Kerala vs. Union of India Finance Dispute to Constitution Bench

Introduction:


In a recent development, the Supreme Court has taken a significant step in the ongoing dispute between the State of Kerala and the Central government regarding financial autonomy. The court, comprising Justices Surya Kant and KV Viswanathan, has referred the matter to a Constitution bench for further deliberation. This decision comes amidst Kerala’s allegations of undue interference by the Centre in its financial affairs, sparking a legal battle between the two entities. Let’s delve into the details of the case and the court’s ruling.

Issue:


The primary issue at hand revolves around the State of Kerala’s contention that the Central government’s actions impede its authority to borrow and regulate finances independently. Kerala alleges that such interference has led to a backlog of unpaid dues, including salaries, exacerbating the state’s financial woes.

Rule:


The bench, after careful consideration, has framed six key legal questions to be examined by the Constitution bench. Additionally, the court has underscored the significance of these questions falling within the purview of Article 145 of the Constitution, necessitating deliberation by a five-judge Constitution bench. Despite Kerala’s plea for interim relief, the court has declined, citing the balance of convenience favoring the Union government.

Application:


The court’s decision not to grant interim relief underscores its inclination towards the Union’s argument, emphasizing the repercussions of overborrowing and the subsequent need for fiscal prudence. However, it is noteworthy that the Centre has already committed to releasing a substantial sum of ₹13,068 crores following the court’s intervention, indicative of some acknowledgment of Kerala’s financial predicament.

Conclusion:


With the matter now referred to the Constitution bench, further scrutiny and deliberation await to ascertain the constitutionality and legality of the actions taken by both parties. The court’s decision marks a pivotal juncture in the dispute, setting the stage for comprehensive legal analysis and resolution of the contentious issues surrounding Kerala’s financial autonomy vis-à-vis the Union government.

Written by — Athi Venkatesh AVD

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