The writ petition is filed challenging the judgment passed by the Co-operative Tribunal. Hyderabad in CT A No. 269 of 2000 dated 2-7-2001.

2. The facts, which are not in dispute are that the petitioner is Society that is involved in business of lending money to other societies. The 1st respondent, a Co-operative Housing Society, took loan of considerable amount to provide flats to its members. The properties of the 1st respondent have been mortgaged with the petitioner while obtaining the loans, phase-wise. Many of the flats have been constructed and distributed to its members. As per the agreement, the rate of interest is 14.20% and 14.30% per annum and as many as four different mortgage deeds were executed for different properties. At one point, the 1st respondent became defaulter. The petitioner initiated proceedings under the provisions of the A.P. Co-operative Societies Act, 1964 (for short 'the Act') and proceedings under Section 71 of the Act in order to recover the loan amounts. The competent authority under Section 71 of the Act calculated the interest at a compounding rate. The first respondent has no dispute with regard to the amounts defaulted but disputed only the calculation of interest at the compounding rate. According to the 1st respondent, the rate of interest should be only as prescribed under the terms and conditions of the mortgage and they are entitled to a further slash in the rate of interest because of the pendency of the litigation for a considerable period. Since the competent authority under Section 71 of the Act did not accept the plea of the 151 respondent, permitted the petitioner to collect the dues with compounding rate of interest as claimed by the petitioner. The same has been challenged by the first respondent by way of an appeal before the Tribunal. The Tribunal having gone into the matter and after appreciating the whole issue held that the petitioner-Society is entitled to calculate at 14.20% to 14.30% simple interest and also awarded future interest at the rate of 6% per annum from the date of certificate under Section 71 (1) of the Act. Hence, the Writ Petition.

3. It is the specific contention of the petitioner that the Society being involved in banking business is entitled to recover the dues with compounding interest after recalling the dues if necessary as contemplated under the agreement.

4. Learned counsel for the 151 respondent submits that though the petitioner is involved in the money lending business, it is not covered by the Banking Regulation Act, and even otherwise it can calculate the rate of interest only at the rate prescribed under the terms and conditions of the mortgage. He further brings to the notice of the court that penal interest at the rate of 2.5% per annum has also been prescribed under the, terms and conditions. Therefore, he contends that only at the rate specifically prescribed under the deed of mortgage, i.e., simple interest per annum, has to be calculated inasmuch as penal interest also is being calculated per annum. He further contends that like any other financial institution the installments are not being collected either at quarterly or half yearly rests. From the very terms and conditions of the deed of mortgage, it is clear that the rate of simple interest has to be calculated on actual basis spreading over a period of 20 years and that the Society is not doing any business. It is only to cater to the needs of its members the amounts are borrowed and that only 1 % extra is being collected from its members in order to meet the administrative and other incidental charges.

5. In the light of the relevant contentions, it is to be seen that the petitioner and the 151 respondent are strictly governed by the terms and conditions of the agreement. The mortgage deed, which is on record at Condition NO.3 reads as under:

"The Mortgager-Society covenants with the Mortgagee-Federation that it shall pay 14.3% interest per annum on the installments of the loan dr