Kerala Advocate General C P Sudhakara Prasad has told the state government that the Alapuzha district collectors report on alleged encroachment of land for a resort owned by Transport Minister Thomas Chandy has legal binding and its findings cannot be ignored, official sources said.

The state government had sought the legal opinion of the AG on the matter after getting the report from District Collector T V Anupama.

According to some media reports, there were allegations that a paddy field was filled to construct a road leading to the resort owned by Chandy. Chandy had also encroached on backwaters for constructing parking space, according to the collector's report. The findings of the district collectors report cannot be ignored, the sources said.

The collector, after a detailed probe, has confirmed that the paddy field was reclaimed for laying the road, they said.

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Challenging the report, Chandy moved the Kerala High Court saying the collector conducted an unfair inquiry into the "wild and baseless" allegations against his Water World Tourism Company. He said the allegations were levelled only to target him "with the set agenda orchestrated" by his political rivals, interested parties, and the media conjointly.

The petition is expected to come up before the court for hearing on Wednesday.

According to the sources, the AG has observed that since the collector's report has been challenged by Chandy, it was up to the state government whether to wait for the court's verdict or take a decision on the report before that.

The opposition Congress-led UDF and the BJP have been demanding Chandy's resignation.