IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 8TH AUGUST 2008 / 17TH SRAVANA 1930 WP(C).No. 9298 of 2006(F) ------------------------- PETITIONER: ------------ N. SOMARAJAN, RESIDING AT KARTHIYAYANI BHAVAN, MACHIRA THEKKATHIL, KILIKOLLOOR P.O., KOLLAM-691 004. BY ADV. SRI.JOHNSON GOMEZ RESPONDENTS: ------------- 1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, LOCAL ADMINISTRATION, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE KOLLAM DEVELOPMENT AUTHORITY, REPRESENTED BY ITS SECRETARY, KOLLAM. 3. THE DISTRICT COLLECTOR, KOLLAM. 4. THE TAHSILDAR, KOLLAM. BY ADV. SRI.A.MOHAMMED FOR R2 R1,3&4 BY G.P. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: P1: TRUE COPY OF SANCTION ORDER ISSUED BY R2 DT.27.4.1991. P2: TRUE COPY OF LETTER DT.21.2.92 ISSUED BY R2 TO THE PETITIONER. P3: TRUE COPY OF DEMAND NOTICE DT.28.2.2004 ISSUED BY R4. P4: TRUE COPY OF ATTACHMENT ORDER DT.20.10.2004 ISSUED BY R4. P5: TRUE COPY OF REPRESENTATION SUBMITTED BY PETIITONER BEFORE R1 DT.21.2.2006. P6: TRUE COPY OF COMMUNICATION DT.16.11.2004 ISSUED BY R1. TRUE COPY PA TO JUDGE C.N.RAMACHANDRAN NAIR, J. .................................................................... W.P.(C) No.9298 of 2006 .................................................................... Dated this the 8th day of August, 2008. JUDGMENT The petitioner is challenging recovery proceedings for recovery of arrears of house building loan availed by petitioner's father from Kollam Development Authority. The loan was availed in 1990 and in the next year, the borrower namely, petitioner's father died. Consequently there was chronic default and recovery was initiated against the assets which led to this W.P. According to the petitioner, Rs.15,965/- was already paid prior to the recovery proceedings and under interim orders of this court Rs.15,000/- was also paid. Balance due as on 2006 was Rs.89,229/-. The petitioner's case is that besides the contract rate of interest of 13%, Kollam Development Authority is charging penal interest at the rate of 5%. According to Standing Counsel, interest charged is in accordance with the contract. Even though OTS benefits are granted by commercial banks and Housing Board etc. for house building loans, it is stated in court that second respondent has no scheme for settlement under OTS. The rate of interest of house building loans have been systematically reduced as it is a priority sector loan. In fact the rate went down as low as 7.5%. However, having 2 regard to the fact that contract rate itself was 13% and loan was given at a time when higher rate of interest was prevalent, I direct the third respondent to allow the petitioner to settle balance liability after reckoning payments already made by charging 1% penal interest along with contract rate of 13%. However, this facility is granted on condition that petitioner will clear the balance liability with above rate of interest i.e. 14% simple interest on the outstanding loan amount after reckoning payment already made, on or before 31.10.2008. There will be direction to the second respondent to compute liability as above and give a statement to the petitioner to settle liability. Any other charges that are payable under the agreement, will also be payable by the petitioner. If liability is not settled by 31.10.2008, waiver of penal interest above 1% granted herein will stand automatically vacated. C.N.RAMACHANDRAN NAIR Judge pms