Decided on January 13,2003

MATHEW Appellant
UNION OF INDIA Respondents


- (1.) DO the provisions embodied in Art. 292 and 293 of the constitution debar the Central and the State Governments from borrowing any money beyond the amount standing to their credit in the Consolidated Fund? This is the short question that arises for consideration in this petition. A few facts as relevant for the decision of this case may be noticed.
(2.) THE petitioner is the President of Nishabdha bhooripaksham. When translated, the organization means - "the silent majority. " It was started as an association of public-spirited persons. It is now a political party. THE petitioner himself is an assessee. He complains that the Union of India and the State Government of Kerala are arbitrarily borrowing money in violation of the "letter and spirit of Art. 14, 292, 293 and 39 (b) of the Constitution" THE State Government is throwing away "its precious largesse in gross violation of Art. 14 in the form of retention of excess employees. . . . " As a result, the total liabilities of the State Government during the five years from 1996-97 to 2000-01 have "grown by 108%". According to the report submitted by the Comptroller and Auditor General only 10% of borrowings was available for investment and other expenditure after meeting the debt servicing obligations during 1996-97. . . . However, during 2000-01, only 9 % of the net funds was available for other expenditure. " A copy of the report 'showing the time series of state Government finances" has been produced as Ext. P1. The petitioner alleges that "revenue expenditure is whopping 93% of the total expenditure. " The "non-plan expenditure salaries constituted 40% (Rs. 3969 crores) while interest payment was 23% (Rs. 2258 crores) during 2000-01. " The capital expenditure is "pegged at a dismal 5% in 2000-01. " In the year 2000-01 "the total amount standing to the credit of Consolidated Fund of the State of Kerala was Rs. 11004 crores. Outstanding public debt burgeoned from 2583. 30 crores as of March 1997 to Rs. 13729. 23 crores as of March 2001. Internal debt of the State increased by 157% to Rs. 7627. 34 crores in 2000-01. The Government of Kerala has incurred huge unpaid liability of Rs. 820 crores of contractor dues. The Government has also significant contingent liability in the shape of outstanding guarantees of Rs. 9553 crores. The amount of public debt is more than Rs. 30000 crores.
(3.) THE petitioner maintains that the State Government cannot be permitted to borrow beyond "the extent of the Consolidated fund". It has made no law "to fix the limits within the Consolidated fund of the State". At present "the accumulated debt of the State is thrice the Consolidated Fund. . . . " In view of the provisions of art. 293 (3), the "state cannot borrow if there are loans remaining unpaid to the Government of India without its consent". According to the petitioner, the State has "a large number of Government employees who are patently in excess. Any rational Government would as a permanent solution to the problem of wasteful revenue expenditure which becomes recurring, downsize the strength of the Government. THE fact that there are a huge number of excess posts is admitted by none less than the Chief Minister as being not less than 70,000. " THE jobs with the Government "constitute wealth doled out by a modern welfare State. " THE funds being scarce, the Government cannot be permitted to "maintain any person found to be" in excess of the required needs. THE action of the Government in allowing such persons to continue infringes the duty to act fairly. The Government has invested substantial funds in the statutory corporations and companies. Out of the four statutory corporations, three are running in loss. Similarly, out of the 94 Government companies, 57 are in loss. The accumulated losses are Rs. 2013. 09 crores. Despite that the corporations and companies are being maintained without laying down any norms and in violation of Art. 14 of the Constitution.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.