Row over Jagan government using Governor's name in loan agreement

The insertion of Andhra Pradesh governor Biswa Bhusan Harichandan's name as the guarantor in a loan agreement has landed the Jaganmohan Reddy government in a soup.

The governor reportedly expressed his displeasure over his personal name being included in the guarantor's address for notices in the agreement to secure a Rs 25,000-crore loan by the Andhra Pradesh State Development Corporation from financial institutions.

The matter came to light recently when the Andhra Pradesh High Court had, while reviewing various petitions challenging the APSDC purpose, questioned the government about using the governor's name.

Several government proceedings are carried out “in the name of the governor”, the Constitutional head of the state like the President at the centre. It refers to the institution, not the immediate person occupying the chair.

But the inclusion of Harichandan's name in the address column for serving notices, some senior officials opined, made it look like he was personally guaranteeing the debts.

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The “description of guarantor” under Schedule 3 of the APSDC's bank loan document mentions “BiswaBhusan Harichandan, governor of Andhra Pradesh” followed by the C/O address of the finance department in the AP Secretariat, Amaravati.

“The matter came to the Governor office's notice after the HC observations. This is strange as putting the governor's name as guarantor goes against Article 361 of the Indian constitution,” a senior official told DH.

Article 361 states that the President, or the state Governor, “shall not be answerable to any court for the exercise and performance of the powers and duties of his office or for any act done or purporting to be done by him in the exercise and performance of those powers and duties.”

Following the controversy, the state finance department officials have sought to provide an explanation to the governor and are said to be renegotiating the writing in the loan deed with the banks.

“This is definitely not a clerical mistake. The government has to come clean on many aspects like – why did the banker ask for inclusion of the governor's name, if he had, and why did the government not seek the Governor's approval before doing so,” former Andhra Pradesh chief secretary IYR Krishna Rao tells DH.

Rao has charged the YSRCP government of circumventing rules and procedures to procure huge amounts of loans from banks. The Reddy government is purportedly pledging government assets like buildings and future revenue to avail loans.

Last Thursday, a few days after the HC's query, Reddy met with Governor Harichandan at Raj Bhavan. CMO officials stated it as a courtesy visit along with his wife.