Section 21-A of the Banking Regulation Act, 1949, does not override Order XXXIV Rule 11 of CPC, which empowers courts to exercise discretion in levying interest from the date of the suit till the date of realization.

( 1 ) THIS appeal is filed against the decree and judgment of the Principal Subordinate judge, Eluru, in O. S. No. 100/92 passed on 26-3-1996. The defendants are the appellants. The plaintiff-State Bank of India, vatluru Branch, West Godavari District, filed the suit for recovery of Rs. 3,77,751/-

( 2 ) THE facts in brief are as follows: the 1st defendant is the proprietory concern, 2nd defendant is the guarantor for the loan transaction between the plaintiff-Bank and the 1st and 2nd defendants. An amount of Rs. 1. 50 lakhs was allowed as cash Credit Mundy by the plaintiff-Bank to the defendants in 1986. The defendants executed various security documents and furnished immovable property as collateral security by creating equitable mortgage. They have also agreed to pay interest at 17. 5% per annum with quarterly rests. In 1987, the defendants approached the plaintiff-Bank for enhancement of the limit by another sum of Rs. 50,000/- and the plaintiff-Bank enhanced the limit by another sum of Rs. 50,000/ -. Again on 18-5-1987 another loan of Rs. 60,000/- was given. Thus, the defendants availed a total limit of Rs. 2,60,000/- and the defendants had executed, on 1-8-1989 and 19-4-1990, revival letters acknowledging the debt and security. In spite of the demand, the defendants have not paid the loan amount. Hence the suit.

( 3 ) THE 1st and 2nd defendants filed a written Statement which was adopted by the 3rd defendant. The defendants had denied the loan transaction and also execution of the loan documents and creation of equitable mortgage in favour of the plaintiff-Bank. The defendants claim that they are liable for waiver benefit under agriculture Rural Debt Clearing Scheme to the tune of Rs. 10,000/- as they are small farmers, that the rate of interest is excessive and penal, and that the suit is barred by limitation and therefore prayed for dismissal of the suit.

( 4 ) ON the basis of the above pleadings, the following issues were framed: (1) Whether defendants 1 and 2 created equitable mortgage against the plaint schedule properties by deposit of title deeds? (2) Whether defendants acknowledged the debt? (3) Whether the suit claim is barred by limitation? (4) Whether the defendants are small farmers and entitled to the benefits of Act 45 of 1987? (5) To what Relief?

( 5 ) IN support of their case, the plaintiff-Bank examined F. W. 1 and marked exs. A-1 to A-28. For the defendants, defendant No. 3 was examined as D. W. 1 and Defendant No. 2 was examined as d. W. 2 and no documents were marked on behalf of the defendants. On the basis of the evidence adduced, the trial Court decreed the suit with interest at 15. 5% p. a. with costs for Rs. 3,77,751/- together with interest at 15. 5% per annum on Rs. 2,60,000/- from the date of the suit till the date of redemption and thereafter. Three months time was granted for redemption. Aggrieved by the same the present appeal is filed.

( 6 ) THE main argument of the learned counsel for the appellants Sri t. V. S. Prabhakar Rao is that the Supreme court in N. M. Veerappa vs. Canara Bank has held that it is open to the Courts to exercise the discretion under Order XXXIV Rule 11 of Civil Procedure Code (CPC) and reduce the rate of interest in the case of mortgage decrees. Therefore, the learned Judge ought to have reduced the rate of interest from the date of the suit till the date of realisation and the interest should have been awarded at 6% per annum.

( 7 ) WHILE the learned Standing Counsel for the respondent-Bank relying on corporation Bank vs. D. S. Gowda and State bank of India vs. Yasangi Venkateswara Rao contended that the Supreme Court in these two cases held that in view of Section 21-A of the Banking Regulation Act, 1949, the courts cannot reopen any account maintained by the banks relating to transactions with its customers on the ground that the rate of interest charged, in the opinion of the Courts, is excessive or unreasonable. Section 21-A of the Banking regulat