- (1.) THE petitioners in W. P. Nos. 3387 and 5570 to 5576 of 1998 feeling aggrieved by the order of the learned Single Judge of this Court, dated 7th April, 1999 have preferred these writ appeals. Learned Single Judge by the impugned order has dismissed the writ petitions.
(2.) THE background facts leading to the filing of the writ petitions be noted briefly as under: the first appellant claims to be an Association of Borrowers from financial Institutions in Karnataka (FIK ). Second appellant is the president of the said Association. The appellants 3 to 9 are SSI units. They are borrowers from the Karnataka State Financial Corporation (for short, 'ksfc' ). fourth respondent herein. KSFC is a Corporation established under the State Financial Corporations Act, 1951 (for short, 'the act' ). KSFC receives offers from the State Government and also borrows money from several Financial Institutions like Industrial Development bank of India (IDBI), Small Industries Development Bank of India (SIDBI), fifth respondent herein and other Commercial Banks. In regard to certain loans sanctioned and disbursed by it, KSFC obtains refinance from IDBI or SIDBI. The interest rates stipulated by KSFC to its borrowers is subject to the guidelines of IDBI and SIDBI in cases where there is refinance by IDBI and/or SIDBI. Many loans advanced by KSFC are not refinanced by IDBI or SIDBI. The loan documents executed by the borrowers in favour of KSFC specify the rates of interest and also provide for revision of interest in certain circumstances.
(3.) THE SIDBI issued a circular dated 9-10-1991 revising the interest rate on term loans to Small-Scale Units and under their refinance scheme in consonance with the revision of the interest rates announced by the Reserve Bank of India on 8-10-1991. The above circular provides that the revised rate of interest would apply to all cases of refinance sanctioned on or after 9-10-1991 and would also apply to the transaction where the sanction was prior to 9-10-1991 but the loan documents were executed after 9-10-1991. Consequent upon such revision of interest rates, KSFC revised the rate of interest from 13. 5% to 19. 5% per annum in respect of loans sanctioned on or after 9-10-1991 as also in regard to loans for which refinance was yet to be disbursed by SIDBI even though the sanction/disbursement was earlier.;