Sort out differences on financial issues, SC tells Kerala and Centre

Justice Surya Kant said the Centre is free to impose every other condition that it may feel appropriate to give sanction to borrow an additional Rs 13,608 crore “except the condition to withdraw the suit …”.

Responding to objections by the Centre to the suit, he said, “the point whether all these fiscal management, the allocation, approvals…can at all be raised inside the courtroom is a very sound preliminary objection from your side. But that preliminary objection is something only the court can answer…before we proceed to decide the suit on merits, we can first determine this preliminary objection…”. The judge said, “Incidentally, this is the first suit raising all these issues. When you look to the literal or plain language of Article 293 (3), there is an element of discretion vested in you…”. The court said it will try to settle the question before it rises again.

“You see you can’t say withdraw a suit. It’s a constitutional right under Article 131”, said Justice K V Vishwanathan.

Attorney General R Venkataramani said “therefore the threshold question to be answered is whether the state has a right under Article 131 to file the suit”. Additional Solicitor General (ASG) N Venkataraman said if the court starts allowing suit after suit by each state on the topic, “it will become judicially unmanageable”.

Appearing for the state government senior advocate Kapil Sibal countered saying the Centre had borrowed over Rs 8 lakh crores in the current financial year. The ASG said to compare the two will be like comparing apples and oranges. “Fiscal deficit of the Union is 5.8 per cent of which 2.5 per cent is on state allocation and centrally sponsored schemes…Balance is railways, defence and foreign affairs”, he said, adding “their breakdown is 82.5 per cent salaries, pensions and services. Not comparable at all”.

The ASG then said the Centre was willing to give the consent for the Rs 13,608 crore, while the suit remains pending. The bench agreed with this and said, “Fully correct. That is the right approach”. The court said the meeting can be held Wednesday or Thursday and gave the parties liberty to come back to it.