Background Note.

The Kerala Housing Board disburses various kinds of house loans to citizens. As security for the loan the Board insists on the mortgage of the property. This requires additional expenses by way of stamp duty and registration charges. Most of the loanees belong to lower middle class or are economically weaker sections. It has been suggested to amend the Kerala State Housing Board Act, 1971 (19 of 1971) in order to empower the Board to advance loans for construction of new houses, repairs to existing houses, purchase of ready built houses etc. to individuals and institutions on the basis of principles of valuation, by creating a Gehan in favour of the Board, which may not involve any additional expenditure to the loanee.

DRAFT

THE KERALA STATE HOUSING BOARD (AMENDMENT) BILL, 2002

A Bill further to amend the Kerala State Housing Board Act, 1971.

Preamble.- WHEREAS, it is necessary and expedient further to amend the Kerala State Housing Board Act, 1971, for the purposes hereinafter appearing;

BE it enacted in the Fifty-third Year of the Republic of India as follows:-

1. Short title and Commencement.- (1) This Act may be called the Kerala State Housing Board (Amendment) Act, 2002.

(2) It shall come into force at once.

2. Insertion of new sections after section 68.- After section 68 of the Kerala State Housing Board Act, 1971 (19 of 1971) the following sections shall be inserted, namely:-

"68A. Powers of Board to advance loans.- Subject to the provisions of this Act and the rules and regulations made there under, it may be competent for the Board to advance loans for the following purposes, namely:-

(a) construction of new houses;

(b) repairs of existing houses;

(c) purchase of ready built houses with land;

(d) purchase of ready built flats;

(e) purchase of land and construction of houses;

(f) construction of houses as per the schemes of the Board or Government.

68B. Security for loans.- (1) Subject to the provisions of this Act, the Board may advance loans to individuals and institutions on the security of lands and other fixed assets or assets acquired by the loan borrowed which have been hypothecated to the Board on the basis of principles of valuation approved by the Board.

(2) Notwithstanding anything contained in any other law for the time being in force, the Board may, under any housing scheme prepared and approved under the provisions of this Act, grant or advance loans to any person with or without security of land for construction of house specified in the scheme, subject to such terms and conditions as may be fixed by the Board.

(3) All loans and advances granted and all amounts payable to or recoverable by, the Board shall, in case of default of payment, in addition to other remedies available to the Board, be recoverable in the same manner as if they are arrears of public revenue due on land.

68C. Charge on movable or immovable property of borrower for amounts borrowed.- (1) Notwithstanding anything contrary contained in this Act or in any other law for the time being in force, but subject to any claim of the Government in respect of land revenue, whether prior in time or subsequent, any person owning any land or owning any other movable or immovable property who applies to the Board for a loan, shall make a declaration in the prescribed form creating a Gehan or mortgage or hypothecation in favour of the Board on the land or other movable or immovable property or interest therein or any immovable properties or assets to be acquired with the loan, specified in the declaration, for repayment of the loan or advance granted or to be granted to him by the Board, together with interest on such amount of the loan or advance and expressly reserving in favour of the Board a right of sale without intervention of court, in case of default.

Explanation:- For the purpose of this section “Gehan” means a special charge on movable or immovable property in favour of the Board by a declaration in writing by the borrowers for securing the payment of money advanced or to be advanced by way of loans, which will have the characteristics of a valid mortgage.

(2) A declaration under sub-section (1) may be varied or cancelled at any time by the person executing the same with the prior approval of the Board.

(3) No land or other movable or immovable property or assets to be acquired with the loan or advance in respect of which a declaration under sub-section (1) has been made and no part thereof or the interest in such land or movable or immovable property shall, without the consent of the Board, be sold or otherwise transferred until the entire amount of the loan or advance taken from the Board together with interest thereon has been passed to the Board, and any transaction made in contravention of this sub-section shall be null and valid.

(4) Notwithstanding anything contained in the Registration Act, 1908 (Central Act 16 of 1908) or any other law for the time being in force, it shall not be necessary to register any Gehan or mortgage or hypothecation created or executed in favour of the Board, provided the Board sends within such time and in such manner as may be prescribed, a copy of the declaration or instrument whereby the Gehan or mortgage or hypothecation has been created or executed for the purpose of securing repayment of the loan, to the registering office within the local limits of whose jurisdiction the whole or any part of the properties to which the Gehan or mortgage or hypothecation relates is situate.

(5) On receipt of the copy of the declaration or instrument sent under sub-section (4), the registering officer shall file a copy or copies thereof, as the case may be, in Book No.1, referred to in section 51 of the Registration Act, 1908 (Central Act 16 of 1908) and thereupon, such Gehan or mortgage or hypothecation shall be deemed to create an interest in the property to which the declaration or instrument relates and shall constitute notice to any one dealing with the said property

(6) Any person who makes any false statement in a declaration under sub-section (1) shall be punishable with imprisonment for a term, which may extend to six months or with fine, which may extend to two thousand rupees or with both.''

Statement of Objects and Reasons

Government decided to amend the Kerala State Housing Board Act, 1971 (19 of 1971) in order to empower the Board to advance loans for construction of new houses, repairs to existing houses, purchase of ready built houses etc. to individuals and institutions on the security of lands and other fixed assets, on basis of principles of valuation, by creating a gehan or mortgage or hypothecation in favour of the Board.

The Bill seeks to achieve the above object.

Financial Memorandum

The Bill, if enacted and brought into operation, would not involve any additional expenditure from the Consolidated Fund of the State.