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2022 (3) TMI 55 - AT - Insolvency and BankruptcyEntitlement of interest of 19.40% in terms of 2015 circular - maximum lending rate were defined as 19.75% p.a whereas it has been paid at the ‘Cash Credit’ rate applicable to the utilization of the Cash Credit facilities - direction to ‘admit’ the entire claim at higher rate of interest - HELD THAT:- Letter of Credit is a non-fund based facilities which is not to carry any rate of interest but bank charges of Letter of Credit for issuance commission. When Letter of Credit is debited by the bank and if the fund is not available in the current account of the customer, then in that case, a forced debit is made in the cash credit account / overdraft in the current account of the customer/CD and naturally the rate of interest applicable to the cash credit facilities are made applicable to the Letter of Credit overdue amounts. Accordingly, the ‘Liquidator’ has allowed the rate of interest applicable to the Cash credit facilities to Letter of Credit facilities. It is not a case of providing term loan or other temporary non -fund based facilities to be guided by rates provided in the sanction letter and for Letter of Credit facilities no such rate of interest was provided specifically to be charged at a higher rate of interest of 20% p.a plus penal interest or so. The Appellant being an ‘Assignor’ is only producing the ‘Ledger Account’ of the Karur Vysya Bank who is the ‘Assignor’ of the Agreement and the same is not supported by the requisite authority letters - as per details provided at page 230 of the Appeal paper book the base rate was 9% p.a and that over base rate a spread of 4% p.a. was provided with maximum lending rate of 20% p.a. The Appellant cannot be agreed upon ,that Liquidator has no power to reduce the claim of the Appellant and his duty is only to verify the claim. It is made clear vide Section 39 of the Code that the Liquidator is suppose to verify the claim and Section 35 of the Code empowers it to verify the claims. The available banking practices as also such exorbitant maximum high rate of interest alleged by the Appellant is not justifying the allowing of appeal. Hence, we uphold the order of the Adjudicating Authority dated 04.10.2021 as it does not require any review - Appeal dismissed.
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