( 1 ) INVOKING the jurisdiction of this Court under Art. 226 of the Constitution of India, the petitioner a partnership firm claiming to be engaged in assisting the banking public has filed this petition in public interest praying to declare that the action of the Respondents-Banks in rounding up interest rates to the next higher 0. 25% is illegal, arbitrary and untenable. It is further prayed that respondents be commanded to refund the excess interest collected from the borrowers as result of the rounding up to the next higher 0. 25% for which Respondent No. 2 be commanded to direct all the Schedule Commercial Banks to refund the alleged excess interest collected from the borrowers.

( 2 ) ). It is submitted that respondents 3 to 29, which are all Banks, operating in the Country were charging interest on loans and advances granted to the public at rate which was in excess of what is permitted under the provisions of the Interest Tax Act, 1974 (hereinafter referred to as the Interest Tax Act) and the directions issued by the second respondent under S. 21 of the Banking Regulations Act, 1949 (hereinafter referred to as the Banking Regulations Act ). The alleged illegal collection is stated to have been continued solely on the basis of a decision taken by Respondent No. 30, an Association of the Indian Banks. It is contended that respondent No. 3 is a Banking Company established under the provisions of the State Bank of India Act, 1955, respondents 4 to 10 are the Banking Companies established under the State Bank of India (subsidiary Banks) Act 1959 and Respondents 11 to 29 are stated to be Banking Companies established under the provisions of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. In his way, respondents 3 to 29 are stated to be the instrumentalities of the State amenable to writ jurisdiction of this Court. The provisions of the Interest Tax Act are stated to have been reintroduced with effect from 1-10-1991 by virtue of the Finance Act, 1991. Section 4 of the said Act provides that the Bank shall charge for every assessment year commencing on and from 1st day of April, 1992 the interest tax in respect of its chargeable interest of the previous year at the rate of 3% of such chargeable interest. The said Act further provides that notwithstanding anything contained in any agreement under which any term loan is sanctioned, it shall be lawful for the credit institution to the agreement to which such institution is liable to pay the interest tax under the Act in relation to the amounts on the term loan which is due to the credit institution. While imposing the tax of 3% on the interest earned by the Banks, they were permitted to enhance the rate of interest to the consumers to the extent of 3% on interest on the term loans. Under the directions issued by the Reserve Bank of India, the other Banks were allowed to enhance the rate of interest by 3% of the interest rates, which were in operation prior to 1-10-1991. In pursuance to the directions issued by the Reserve Bank of India, all the Banks are stated to have issued directives to their Branches to debit to each borrowal account tax at the flat rate of 3% of the interest arising of accruing to the Bank from 1-10-1991. It is alleged that totally ignoring the provisions of the Interest Tax Act and the instructions issued by the Reserve Bank of India, the Respondent No. 30 vide its communication addressed to all Respondents-Banks advised that the rate of interest be loaded with the interest tax of 3% and rounded up to the higher 9. 25%. In this way, the Banks charged penal interest of 2% on the amounts in defaults in respect of loans and advances and the cum-tax period interest in that event is rounded to be 2. 06%, with the result, that small borrowers, agriculturists, artisans, small industries, self-employed and other weaker sections of the society are subject