The judgment established the principles of interpreting the applicability of debt relief acts, determining interest rates based on contractual agreements, and considering the nature of transactions in relation to loan classification.

1. The State Bank of Travancore, the decree-holder in the suit, is the appellant; the judgment-debtors are the Respondents. The Respondents, as defendants in the suit, pleaded inter alia that they were entitled to the benefits of the Kerala Agriculturists' Debt Relief Act, Act XI of 1970 (for short the Act). The trial court accepted the contention of the defendants and granted the relief as prayed for by them. What has been stated in Para.22 of the judgment reads as follows:

"Now we come to the question as to the benefits of Act XI of 1970 to which the defendants are entitled. The debt is due to a banking company and it exceeds Rs. 3,000/ and so the number of half yearly instalments in which the debt shall be repaid is eight, because of the proviso (a) to S.4(2) and the interest payable will be at 7 percent per annum because of S.5 (2) of the Act. These are the benefits to which the defendants are entitled to under Act XI of 1970".

2. Though in the memorandum of appeal, various grounds have been raised to challenge the correctness of the decision of the trial court that the judgment-debtors were entitled to the benefits under the Act, in view of the provisions contained in Act XIII of 1973, the Counsel for the appellant did not press his contention relating to the applicability of the provisions of the Act to the debt contracted by the judgment-debtors. He, however, took strong objection to that portion of the decree by which the court below directed the judgment-debtors to pay interest only at 7% per annum instead of 12% per annum stipulated in the mortgage deed. He has also submitted that though the debt has been allowed to be paid in eight instalments, inasmuch as the judgment-debtors did not pay any instalments so far, and the period for paying the instalments is already over, they have virtually forfeited the right to pay the amount in instalments. As far as the latter contention is concerned, it is not necessary for us to go into the question as it is a matter which could be urged before the execution court itself.

3. Counsel submitted that the trial court, while granting the relief to the judgment-debtors under proviso (a) to S.4(2) of the Act overlooked the provisions contained towards the end of the proviso to Clause (1) of subsection (4) of S.2 of the Act. The proviso to the said clause reads as follows:

"Provided that in the case of any debt exceeding three thousand rupees borrowed under a single transaction and due before the commencement of this Act to any banking company any agriculturist debtor shall be entitled to repay such debt in eight equal half yearly instalments as provided in sub-section (3) of S.4, but the provisions of S.5 shall not apply to such debt". (emphasis supplied)

We find force in this contention. The wording in the proviso to S.4(2) (a) (1) is unequivocal; besides a Division Bench of this Court in Nafeesumma v. Indian Overseas Bank (1974 K.L.T. 853) has observed as follows:

"We might state that really the appellant here is not entitled to take advantage of the provision in S.5(2), because it is specifically provided in S.2(4)(1) that the provision of S.5 shall not be applicable to a debt exceeding three thousand rupees."

We are therefore of the view that the court below has gone wrong in decreeing interest only at 7% per annum under S.5 (2) of the Act, whereas under the terms of the contract, the appellant was entitled to interest at 12% per annum.

4. Counsel for the Respondents has a contention that as no element of borrowing in involved in the instant case, which arose out of a hypothecation bond executed by the prized subscribers to a Kuri the disability under the proviso referred to above would not be applicable to the judgment-debtors. To support this contention, he has cited the Division Bench ruling of this Court in Varkey Thomas v. Travancore Forward Bank Ltd. (1962 KLT 383); speaking for the Bench, Govindan Nair J. (as he then was) observed as follows:

"We think that sub-clause ha