( 1 ) SECOND Appeal Nos. 812 of 1987 and 832/87 were disposed of by our learned brother PA Choudary 4,, by judgment dated 29-6-1988 reported in Indian Bank represented by its Regional Manager, Palkole vs. Datla venkata Chinna Krishnam Raju (1) 1988 (2) aplj. 55 = 1988 (2) ALT 148. He issued notice to the Advocate General on the question of constitutional validity of Section 4 (e) of the agricultural Debt Relief Act in its inter action with the Banking Regulation Act, 1949, and usurious Loans Act, 1918. He dismissed the appeals holding that:". . . . . . . . . . SECTION 4 (e) of the Rajaji Act to the extent it exempts loans advanced by the banks to the agriculturists from the operation of Rajaji Act is discriminatory and violative of article 14 of the Constitution that the Court was bound notwithstanding Act 1 of 1984 to deny the Bank its help for recovery of compound interest from the agriculturists and that the operation of Rajaji Act is not in any way interdicted by Act 1 of 1984. " he also held that the above Act was fully operative after Central Act 1 of 1984 and that the Usurious Loans Act also operates even after commencement of Act 1 of 1984 in relation to debts incurred, prior to Act 1 of 1984. That judgment was subject mater of civil Appeal No. 1390 of 1988 in Bank of baroda vs. Radnam Nagachaya Devi (2) (1989) 4 SCC 470. The Supreme Court allowed the appeal setting aside the judgment of our teamed brother Chowdary J. in Indian Bank, Palakole (1 supra) without any pronouncement on the merits of the controversy and remitted the appeal to this court for consideration of the contention pertaining to the fact of Section 21-A of the banking Regulation Act, 1949 on the applicability of the Usurious Loans Act, 1980. The Supreme Court also observed that ". . . . . If the said Act is held attracted whether the appellant is able to rebut the presumption of excessiveness of interest and also whether there were other legal impediments of the nature adverted to by the high Court, a reference to which is made in para 23 (supra), to charge compound interest on agricultural advances shall also be considered" the Supreme Court also left it open to the respondent before it who is the present appellant in SANo. 832/87, to raise additional grounds before this Court and directed that "the High Court shall examine the same if additional grounds are raised". That is how, Second Appeal Nos. 812 and 832 of 1987 come up before us now. Since the same question arises in second Appeal nos. 268 of 1985 and 378 of 1986 have also been referred to us.

( 2 ) THE question of law which arises in these four appeals relates to the effect of section 21-A of the Banking Regulation Act, 1949 which was introduced by Act 1 of 1984 with effect from 5-2-1984 in Act 10 of 1948. Section 21-A reads as follows:"notwithstanding anything contained in the Usurious Loans Act, 1918 or any other laws relating to indebtedness in force in any state, a transaction between a banking company and its debtor shall not be reopened by any Court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive. "it is stated that this enactment by the Central legislature was provoked by the difference of opinion as to whether the Banking institutions are entitled to collect contractual rates of interest which included provision for compounding and periodic rests in accordance with the instructions issued by the Reserve Bank of India. Courts had taken different views in the matter. In State Bank of travancore vs. George (3) AIR 1976 Kerala 165, the Kerala High Court held that:"the question whether the rate of interest provided in the agreements with the banks for availing of loans amounting to excessive interest and requires scaling down in accordance with the provisions of the agricultural Debt Relief Act was considered by the Court notwithstanding the instructions of the Reserve Bank of India. "in Union Bank of India vs. Dhanekula k

Click Here to Read the rest of this document