The Supreme Court has taken a significant step in addressing the ongoing dispute between the State of Kerala and the Central government concerning the state's power to borrow and regulate its finances. 

On Monday, the Court referred the plea filed by Kerala to a Constitution bench, indicating the gravity and complexity of the legal issues involved.

The decision comes after a bench of Justices Surya Kant and KV Viswanathan framed six questions of law to be considered by the Constitution bench, underscoring the constitutional interpretation required in this matter. 

While the Court has acknowledged the concerns raised by Kerala, it has declined to provide interim relief, citing the balance of convenience leaning towards the Central government's argument.

At the heart of the dispute lies Kerala's allegation that the Central government's imposition of borrowing limits has adversely affected the state's financial autonomy, leading to unpaid dues, including salaries. On the other hand, the Central government contends that Kerala's financial health is precarious due to off-budget borrowings and compromised fiscal stability.

The Court's decision not to grant interim relief to Kerala underscores the complexities surrounding the issue, particularly the potential consequences of overborrowing highlighted by the Central government. It's worth noting that the Central government has already agreed to release a substantial amount to Kerala following the Court's intervention, demonstrating some progress in resolving the matter.

This development follows earlier suggestions by the bench for the Central government to provide a one-time package to Kerala, subject to strict conditions, to address the state's financial crisis. While the Central government agreed to additional borrowing, Kerala argued that it wouldn't be sufficient to meet its needs.

In light of these developments, Kerala had urged the Court to consider its plea for interim relief and make a decision accordingly. 

Case: State of Kerala vs. Union of India.