In Brief
The State of Kerala challenged the Union of India's imposition of a Net Borrowing Ceiling under Article 293 of the Constitution, seeking interim relief to restore pre-ceiling borrowing and borrow INR 26,226 crores immediately. A two-judge bench found that Article 293 raises substantial, hitherto unresolved constitutional questions requiring a five-judge bench interpretation. Applying the triple-test for interim mandatory injunctions, the Court held: (1) no prima facie case because over-borrowings from prior years remain adjustable against current limits, leaving no fiscal space; (2) balance of convenience favours denying relief due to macroeconomic risks; and (3) financial hardship from the State's own mismanagement does not constitute irreparable injury. The Union's offer of INR 13,608 crores in additional borrowing was noted. The interim injunction was denied; the substantive suit was referred to the Chief Justice for constitution of a five-judge Bench.
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