JUDGEMENT
SURYA KANT,J. -
(1.)State of Kerala has instituted this Original Suit under Article 131 of the Constitution of India against the Union of India, challenging, inter alia, the following (collectively, the "Impugned Actions"):
(a) Amendment Act No. 13 of 2018 (dtd. 28/3/2018):
By this Amendment Act, the Parliament has amended Sec. 4 of the Fiscal Responsibility and Budget Management Act, 2003, whereby the Central Government is obligated to ensure that the aggregate debt of the Central Government and the State Governments does not exceed sixty percent of the gross domestic product by the end of Financial Year (F.Y.) 2024-25;
(b) Letter No. 40(1)/PF-S/2023-24 (dtd. 27/3/2023):
Through this letter, the Defendant has imposed a Net Borrowing Ceiling on the Plaintiff - State, to restrict the maximum possible borrowing that Plaintiff could make under law. This ceiling was quantified as three percent of the projected Gross State Domestic Product (GSDP) for the F.Y. 2023-24, which came to INR 32,442 crores. This Net Borrowing Ceiling covered all sources of borrowings, including open market borrowings, loans from Financial Institutions, and the liabilities arising out of the Public Account of the Plaintiff. Additionally, to prevent the States from by-passing the Net Borrowing Ceiling by using State-Owned Enterprises, the ceiling has also been applied to certain borrowings by such enterprises; and
(c) Letter No. 40(12)/PF-S/2023-24/OMB-52 (dtd. 11/8/2023):
In this letter, the Defendant has accorded its consent to the Plaintiff to raise open market borrowing of INR 1,330 crores. It has also noted that the total open market borrowing allowed to the Plaintiff for the F.Y. 2023-24 was INR 21,852 crores.
(2.)The instant suit has been filed on the premise that by undertaking the Impugned Actions, the Defendant - Union of India has exceeded its power under Article 293 of the Constitution of India, which provides:
"293. Borrowing by States.-
(1) Subject to the provisions of this article, the executive power of a State extends to borrowing within the territory of India upon the security of the Consolidated Fund of the State within such limits, if any, as may from time to time be fixed by the Legislature of such State by law and to the giving of guarantees within such limits, if any, as may be so fixed.
(2) The Government of India may, subject to such conditions as may be laid down by or under any law made by Parliament, make loans to any State or, so long as any limits fixed under article 292 are not exceeded, give guarantees in respect of loans raised by any State, and any sums required for the purpose of making such loans shall be charged on the Consolidated Fund of India.
(3) A State may not without the consent of the Government of India raise any loan if there is still outstanding any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Government of India or by its predecessor Government.
(4) A consent under clause (3) may be granted subject to such conditions, if any, as the Government of India may think fit to impose."
(3.)Besides the afore-mentioned final relief in the suit, the Plaintiff -State also seeks interim injunction, inter alia, to mandate Union of India: (a) to restore the position that existed before the Defendant imposed ceiling on all the borrowings of the Plaintiff; and (b) to enable the Plaintiff to borrow INR 26,226 crores on an immediate basis.
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