Section 21-A of the Banking Regulation Act, 1949 is constitutional and does not apply to debts eligible to benefits under A. P. Agriculturists Relief act (Act IV of 1938 ).

( 1 ) A. S. No. 532 of 1978 :- 1. The plaintiff is the appallent. The plaintiff filed a suit for recovery of Rs. 1,60,425-04 together with interest personally against defendants 1, 2,4 to 8, 10 to 13 and against the assests of defendants 3 and 9 in the hands of defendants 14 to 22 and in default of payment for sale of the suit property for realisation of the decree debt. The suit is filed on the basis of the promissory note executed for a sum of Rs. 1,30,000/- and agreeing to repay the loan with interest at 5% over and Reserve Bank rate with a minimum of 11% per annum subject to periodical enhancement. The plea of the defendants is that the interest is abnormal and excessive. Apart from other pleas it is stated that the amount has to be scaled down fixing a reasonable rate of interest. The learned Judge found that for the principal amount of Rs. 1,30,000/-, rs. 52,280-04 is claimed. The learned Judge held that this is usurious, penal and unconscionable. In the result the suit is decreed for the principal amount and the interest theron at the rate of 12% per annum. A. S. No. 631 of 1979 :

( 2 ) THIS appeal arises out of a suit filed for recovery of Rs. 2,87,681-85 with interest and in default of payment for the sale of the suit schedule properties to realise the suit debt. The first defendant borrowed from the plaintiff-Bank a sum of Rs. 1,85,000/- repayable with interest at 6 1/2% over the reserve Bank rate with minimum of 12 1/2% per annum subject to periodical enhancement. The plea in the written statement is that the interest is abnormal and excessive. One of the issues viz. , issue No. 3 is whether the interest claimed is penal. Issue No. 5 is whether the defendant is entitled to the benefits under the provisions of the , Andhra Pradesh Agricultural indebtedness Relief Act. It was held that the defendant is not entitled to the benefits of Act IV of 1938. In so far as issue No. 3 it was held that for the principal amount of Rs. 1,85,000/- the interest has come to Rs. 1,02,681-85 for a period of two years, 11 months and 8 days and it was held by the learned Judge that it is usurious and hampers the trade and commerce and the interest at the rate of 12% per annum simple will meet the ends of justice.

( 3 ) THE learned counsel for the appellant in both the appeals contended that the levy of interest by Andhra Bank is linked and based upon the rate of interest fixed by the Reserve Bank and the question of charging penal or unconscionable interest does not arise and in any event such contention does not survive in view of Section 21-A of the Banking Regulation Act. The learned counsel for the respondents seeking to sustain the judgments of the Courts below contended that the levy of such exorbitant interest by nationalised bank is unconscionable and Section 21-A of the Banking Regulation act is unconstitutional as it is beyond the legislative competence of the parliament and is in breach of Article 14 of the Constitution.

( 4 ) AT the outset it is necessary to clear one factual aspect. The claim of benefit under the provisions of A. P. Agricultural Indebtedness Relief act is negatived in one of the suits and in the other suit no claim is made.

( 5 ) TO appreciate the rival contentions it is necessary to have grips over the relevant provisions of the Banking Regulation Act, 1949. Section 5 (b) connotes the banking as follows : "banking" means the accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise". Section 21 relating to the control of Reserve Bank to the extent relevant is as follows :"section 21 (1) : Where the Reserve Bank is satisfied that it is necessary cr expedient in the public interest or in the interests of deposits or banking policy so to do, it may determine the policy in relation to advances to be followed by Banking Companies generally or by any Banking Company in particular and