The main legal point established in the judgment is the interpretation of the agreement to pay compound interest and its implications under the Usurious Loans Act. The court's decision was influenced by the applicability of the Usurious Loans Act and the entitlement of the first respondent to relief under the Act.

1. The plaintiff, the State Bank of Travancore is the appellant. The first respondent had dealings with the Chaldean Syrian Bank, Trichur by way of overdraft current account. On 611951, he executed Ext. Al, a hypothecation bond for Rs. 8750/- made up of the balance outstanding in his account and the expenses in connection with the deed. Ext. Al stipulated that the 1st respondent should pay interest at 9% per annum with quarterly rests. On the same day, the 1st respondent executed Ext. A2, a possessory mortgage of the same properties for Rs. 1000/- in favour of one F. C. George, an officer of the Bank. The properties were taken by the 1st respondent on lease-back under Ext. A3. The pattom was fixed under Ext. A3 as Rs. 1500/-. An amount of Rs.1410/- was to be retained by the 1st respondent towards the upkeep and maintenance of the rubber trees and for payment of jenmi dues and interest to the Chaldean Syrian Bank. The balance Rs. 90/- was to be paid as purappad. Interest at the rate of 9% per annum was fixed for arrears of purappad, if any. F.C. George transferred the rights under Exts. A2 and A3 to the Chaldean Syrian Bank as per Ext. A4 dated 10 11951. The Bank was maintaining separate accounts for the two transactions. Exts. A5 and A6 are the copies of the accounts. On 18 31965, the bank issued Ext. A10 notice stating that consequent on the rise in Bank rate, interest would be charged at 12% per annum from 1-3-1965, in case the amount under the loan account was not paid before 31-3-65. The assets and liabilities of the Chaldean Syrian Bank became merged in the appellant-bank with effect from 1-10-1965 as per the order, Ext. All issued by the Director of Banking under sub-ss. 2 and 3 of S.38 of the State Bank of India (Subsidiary Banks) Act of 1959. The first respondent was called upon by the appellant-bank to confirm the correctness of the amount entered in the bank accounts and the balance due on 110 65 under the two transactions. Exts. A13 and A14 are the confirmation statements signed by the first respondent. Thereafter on 4121965, the appellant-bank issued a registered notice calling upon the first respondent to discharge the amount due under the two transactions. On failure on his part to make payments, the suit was instituted on 1312 65 for recovery of amounts due. Interest at the rate mentioned in the documents was claimed till 1101965 and thereafter at 12%. The second respondent is a subsequent mortgagee. Several pleas were raised by the first respondent. Those relevant for this appeal are:

(1) that the first respondent being an agriculturist was entitled to relief under the Usurious Loans Act as amended by Act 8 of 1938 (Madras) and was not bound to pay compound interest or interest at the rate of 12% and;

(2) that the first respondent was liable to pay off the debt as per the provisions of Act 31 of 1958.

The first respondent also contended that the confirmatory statements were signed by him without reference to the accounts, which were not available to him and that the said documents would not debar him from claiming whatever reliefs that he was otherwise entitled under law.

2. The District Judge, Kozhikode, who disposed of the case held that the first respondent was an agriculturist coming under S.3 of the Usurious Loans Act as amended by Madras Act 8 of 1937 which does not favour charging of compound interest in respect of loans by agriculturists. The contention that he waived his rights by signing the confirmation letters, Exts. A13 and A14 was not accepted by the trial Court. The court refused to reopen the accounts prior to 6-1-1951. Relief under Act 31 of 1958 was not granted to the first respondent. A decree was passed for the principal amounts under Exts Al and A2 with simple interest at 9% per annum till 1-3-65 and at 12% per annum thereafter less the amounts appropriated as per the loan accounts, Exts. A5 and A6. Aggrieved by the above decree, the plaintiff-bank has come up in appeal. The first r