Advocates:
['M/S PRAFULLA KU RATH', '', 'P K SAHOO', 'A K BEHERA', 'A K ROUT', 'S K BEHERA', 'S K PATTNAIK', 'B K DASH', 'R N PARIJA', 'R N DASH', 'S K SINGH', 'A BEHERA', 'M/S N K DASH', 'G N MISHRA', 'N K SETHY', 'D PANDA']

WPC No.9327 of 2016

07.9.2017

Heard learned counsel for the parties.

This writ petition has been filed challenging the notice dated 29.02.2016 (Annexure-1)

, issued by the opposite parties-Bank under Section 13(2) of the SARFAESI Act and the subseque

nt response/reply of the Bank dated 17.5.2016 (Annexure 1/A), under which the representation o

f the petitioners with regard to the demand raised by the Bank has been rejected.

Learned counsel for the petitioners submits that the notice issued by the opposite par

ties-Bank under Section 13(2) of the SARFAESI Act is not valid and in accordance with law, as

the same has been issued not by the Bank but by its Advocate. It is further submitted that the

letter issued by the Bank dated 17.5.2016 (Annexure 1/A) rejecting the representation of the

petitioners with regard to the levy of floating rate of interest is not proper and justified i

n as much as, the same is in violation of the guidelines prescribed by the Reserve Bank of Ind

ia.

Learned counsel for the opposite parties-Bank submits that the notice under Section 13

(2) of the SARFAESI Act has been issued by the Bank through its Advocate, to intimate the peti

tioners with regard to the outstanding loan dues and therefore the same is in accordance with

law. It is further submitted that the Bank in response to the representation of the petitioner

s has clearly indicated by its letter dated 17.5.2016 (Annexure-1/A), with regard to the levy

of floating rate of interest and explaining the detailed reasons for levy of the same in respe

ct of the petitioners loan account.

From the notice dated 29.02.2016 (Annexure-1), we find that the same has been issued b

y the Bank through its Advocate, under Section 13(2) of the SARFAESI Act, demanding payment of

the outstanding loan dues, which cannot be faulted.

On a perusal of the letter of the Bank dated 17.5.2016 (Annexure 1/A), it is seen tha

t the Bank has given a detailed response to the representation of the petitioner, indicating t

he reasons for levying floating rate of interest to the petitioners loan account, the relevant

portion of which reads as under:-

With a view to ensure transparency, a benchmark rate FRR was introduced for determinin

g the rate of interest ROI for floating rate loans as per Reserve Bank of India guidelines. Th

is ensures that borrowers of such floating rate loans have a transparent rate which gets revie

wed from time to time throughout the tenure of the loan. FRR is linked to ICICI Banks cost of

funds and appropriate cost of operations for the relevant period, credit charge and margin. As

cost of funds is one of the components of FRR, any change in cost of funds would therefore im

pact all borrowers whose loans are linked to FRR. Please note that the spread between the FRR

and the actual rate of interest (ROI) offered to the borrower is called as Margin. Any change

in the ROI is on account of the changes in the FRR. The final rate offered to a borrower is a

function of the benchmark rate and the margin associated with the loan. The margin remains con

stant throughout the loan. The appropriation of instalments toward interest and principal woul

d depend on the rate of interest applicable to you. Please note that there was no excess inter

est levied to your loan accounts at any point of time.

In the said letter, the Bank has also requested the petitioners that if they have any

further grievance, they may approach the Bank for further clarification.

The guidelines of the Reserve Bank of India with regard to the levy of floating rate

of interest, as contained in its Master Circular dated 01.7.2010, reads as under:-

2.4.1. Banks have the freedom to offer all categories of loans on fixed or floating rates, sub

ject to conformity to their Asset-Liability Management (ALM) guidelines. The methodology of co

mputing the floating rates should be objective, transparent and mutually a