State of Kerala vs Union of India

Held: Since Article 293 has so far not been the subject of any authoritative interpretation by this Court, the questions arising in the present suit squarely fall within the ambit of Article 145(3) of the Constitution – Questions referred to Constitution Bench of five judges – Matter be placed before Hon’ble the Chief Justice of India for constitution of an appropriate Bench – Further, the Plaintiff-State also sought mandatory injunction and hence, was required to meet a higher standard for the triple-test of interim relief – Prima facie, the argument of the Union is accepted that where there is over-utilization of the borrowing limit in the previous year, to the extent of overborrowing, deductions are permissible in the succeeding year, even beyond the award period of the 14th Finance Commission– Plaintiff failed to establish a prima facie case regarding its contention on under-utilization of borrowing – The mischief that is likely to ensue in the event of granting the interim relief, will be far greater than rejecting the same – Balance of convenience clearly lies in favour of the Union of India – Plaintiff sought to equate ‘financial hardship’ with ‘irreparable injury’ – Prima facie ‘monetary damage’ is not an irreparable loss, as the Court can always balance the equities in its final outcome by ensuring that pending claims are adjusted along with resultant additional liability on the opposite party – If the State has essentially created financial hardship because of its own financial mismanagement, such hardship cannot be held to be an irreparable injury that would necessitate an interim relief against Union – Since the Plaintiff-State failed to establish the three prongs of proving prima facie case, balance of convenience and irreparable injury, it is not entitled to the interim injunction. [Paras 8, 10, 27, 28, 32, 33] Injunctions – Mandatory injunctions vis-à-vis prohibitory injunctions – Triple-Test – Prima facie case; Balance of convenience; Irreparable injury – Standard of scrutiny in applying these parameters for ‘prohibitory’ and ‘mandatory’ injunctions:

Held: Prohibitory injunctions vary from mandatory injunctions in terms of the nature of relief sought – While the former seeks to restrain the defendant from doing something, the latter compels the defendant to take a positive step – Prohibitory injunctions are forward-looking as they seek to restrict a future course of action – Conversely, mandatory injunctions are backward-looking because they require the defendant to take an active step and undo the past action– Courts are, therefore, relatively more cautious in granting mandatory injunction as compared to prohibitory injunction and thus, require the plaintiff to establish a stronger case – In the present case, the Plaintiff sought mandatory injunction and not a prohibitory one – Instead of arguing that the Defendant-Union of India should refrain from imposing a Net Borrowing Ceiling during the next F.Y., the Plaintiff applied for a backward-looking injunction, i.e., for an injunction to undo the imposition of the Net Borrowing Ceiling that covered various liabilities and to restore the position that existed before such ceiling – Hence, was required to meet a higher standard for the triple-test of interim relief. [Paras 13-15] Words and Phrases – “if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends” in Article 131 of the Constitution of India.