( 1 ) THIS appeal has been preferred against the Judgment and Decree dated september 15, 1984 passed by the Civil judge, Hospet, in O. S. No. 45/84.

( 2 ) IT was a suit instituted by the bank of India ("the Bank") which isthe appellant herein, for recovery of a sum of Rs. 30,564/- which was said to be the amount due and outstanding from defendants 1 and 2 out of the loan of rs. 10,000/- granted to them for raising sugar-cane crop. Defendant-3 guaranteed repayment of the loan by executing a letter of guarantee. The documents exchanged between the parties seem to suggest that defendants 1 and 2 ware liable to pay interest at the rate of 4 per cent above the rate prescribed by the reserve Bank of India subject to the minimum of 13 per cent with quarterly rests. The Bank, however, has charged only half yearly rests and also claimed at the same rate in the suit.

( 3 ) DEFENDANTS while admitting the loan taken, however, denied their liability to pay interest with quarterly rests on the ground that the loan was for agricultural purpose and the Bank by the settled practice has no right to charge periodical compound interest. They also prayed for grant of instalments to repay the loan in fi

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