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Hudco to file suit against Orissa

Bhubaneswar, March 13: The Housing and Urban Development Corporation (Hudco) will sue the Orissa government for failure to repay state housing board loans.

Hudco will file a suit before the Cuttack office of the debt recovery tribunal soon to recover its dues of Rs 66.58 crore. It has already recalled the loan given to the Orissa State Housing Board and will invoke the sovereign guarantee given by the state government by the month-end.

If the summary trial in the tribunal goes against the state government, the tribunal may attach the RBI account of the state government and the housing board's properties, thereby endangering the monthly salary and pension payment of its employees.

The housing board had borrowed Rs 124.71 crore from Hudco till 1997 at 13.75 per cent per annum. The total loan burden of Rs 66.58 crore on the housing board till date includes an interest of Rs 40.42 crore and a principal of Rs 21.18 crore. Besides, Rs 4.97 crore as penal interest has not been paid.

In July last year, the state government had assured the Assembly that it would pay Hudco Rs 20 lakh every month towards repayment of the dues. But the repayment has been highly erratic.

The last payment was done in January, while in February, it did not have enough money in its coffers to repay.

Hudco officials said the repayments so far have barely covered the penalty interest. 'How can we be sure if they can pay the interest and the principal amount when they can't pay the penal interest' a Hudco official said. Hudco has discussed the issue with the state government, but the latter's response seemed to be lacklustre, he added.

However, state housing minister Ananga Udaya Singhdeo seemed optimistic that the housing board would come out of the mess.

'It's an empty threat. I am sure Hudco would not take us to court. We are holding discussions with Hudco officials,' he said.

Sources said the state government is already holding talks with other companies like LIC Housing Finance to take over the entire loan burden at a band interest rate of 8.5-9.5 per cent per annum. If the government manages to swap the high-cost Hudco loan, it would save about Rs 3.5 crore per annum.

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