S. 21-A of the Banking Regulation Act, 1949 barred reopening of accounts between a banking company and its debtor on the ground of excessive interest.

( 1 ) AGGRIEVED by the judgment and decree for recovery of "a sum of Rs. 12, 466 / 54 p. with compound interest at 11% per annum from 1-1-1977 till 1-11-1979 (for simplicity, suit being filed on 5-11-1979), and simple interest at this rate thereafter till realisation, and proportionate costs of the suit, from the defendants 1 to 3 (jointly and severally) "passed by the Court below, only one of the defendants, i. e. , Kamla Prasad has filed this first appeal.

( 2 ) ON 25-2-1972 the respondent No. 2 Mohammad Hakim was advanced a loan of Rs. 10,750 /- by the respondent No. 1 for purchase of a Tempo. The appellant and the respondent No. 3 Nazar Mohammad Khan were the guarantors. As per agreement, the rate of interest was 5% above the Reserve bank rate with the minimum of life per annum with quarterly rests. The loan was not repaid and, therefore, the respondent No. 1 filed a suit on 5-11-1979 for recovery of a sum of Rs. 20,817 /- with pendente lite and post decree interest at the rate of 14% per annum. The suit was resisted by the appellant and the respondent No. 3, but was decreed as aforesaid. Being aggreived, the defendant No. 2 Kamla Prasad alone has preferred this first appeal.

( 3 ) HAVING heard the learned counsel for the appellant and the respondent No. 1, I am of the view that this appeal has no substance and deserves to be dismissed. The first argument of the learned counsel for the appellant that the interest charged is excessive in the light of S. 3 of the Usurious Loans Act, 1918, deserved to be rejected in the light of S. 21-A of the Banking Regulation Act, 1949, which reads as follows:- notwithstanding anything contained in the Usurious Loand Act, 1918 (10 of 1918), or any other law relating to indebtedness in force in any State, a transaction between a banking company and its debtor shall not be reopened by any Court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive. Section 21-A of the Banking Regulation Act came into force from 15-2-1984. It relates to procedure in the matter of reopening of accounts. It would, therefore, be applicable to the suit transaction which began in the year 1972. The suit itself was decided by the Court below after the date of coming into force of S. 21-A of the Banking Regulation Act. It may also be mentioned that as pointed out in paragraph 17 of the impugned judgment, the provisions of the Usurious Loans Act were made inapplicable to nationalised Banks by notification No. F. 1-45-VII-N-1-80, dated 122-1981. In view of this notification as well, the suit transaction could not be reopened as the respondent No. 1 was a nationalised Bank.

( 4 ) THE second contention of the learned counsel for the appellant on limitation also deserves to be rejected. In clause 9 of the Agreement of Guarantee (Ex. P. 10), it was provided that :-"the Guarantor also agrees that any balances or debts confirmed by the Borrower or his authorised agent or any acknowledgment of liability concerning the same made and signed by the Borrower or his authorised agent shall be binding on the guarantor in the same manner and to the same extent as if the Borrower or his authorised agent was their authorised agent to make such acknowledgment of liability or confirming the balances and the said acknowledgment and confirmation shall be binding on them, as if made by themselves. They further agree that every such acknowledgment by the Borrower or his authorised agent would renew their liability as Guarantor and the Guarantor would be liable for the payment of such acknowledged debts in the same way as for the debts hereby guaranteed. "the borrower Mohammad Hakim had acknowledged the debt of Rs. 12,466. 54p / on 3-1-1977 vide Ex. P. 26. The suit was filed on 5-11-1979. It was, therefore, in time against the borrower as well as against the guarantor in the light of clause 9 of the Agreement of Guarantee (Ex. P. 10 ).

( 5 ) IT was also argued by t