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TMI Blog1993 (3) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that after coming into force of Section 21-A of the Banking Regulation Act, 1949 (for short 'Regulation Act, 1949') Courts are prohibited/debarred from reopening the transactions entered into between the Banking Company and its debtor invoking the provisions of Usurious Loans Act, 1918 (for short 'Act 10 of 1918') irrespective of the fact whether the transaction was entered into prior to the coming into force of Section 21-A of the Act. It is also contended that Section 21-A will be applicable to a suit filed prior to the coming into force' of the said provision and pending on the said date, as well as to a suit filed subsequent to the coming into force of Section 21-A of the Act. In other words, it was contended that irrespective of the fact that the transaction took place earlier to the coming into force of Section 21-A of the Act and whether the suit in respect of the said transaction is filed prior to the said date or not, the said provision will debar or prohibit the Court from reopening the transaction and scaling down the interest by applying the provisions of Act 10 of 1918. 4. On the other hand, it was contended by the counsel appearing for the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court consisting of P.A. Choudary and P. Kodanda-ramayya JJ. in Indian Bank, Alamuru v. M. Krishnamurthy, AIR 1983 Ap 347, held that the provisions of Madras Agriculturists Debt Relief Act (Act IV of 1938) are applicable to the transactions entered into between a Banking Company and it's agriculturists-debtors and the debtors are entitled to have the transactions reopened by the Court and the interest seated down as per the provisions of the said Act. Learned Judges held that Banking Companies will not come within the exemption enumerated in Section 4(e) of Act IV of 1938 as they are not Corporations formed pursuant to Act of Parliament of the United Kingdom or any special Indian Law. Subsequently, Section 21-A of the Act was amended by Amending Act 1 of 1984 and it came into force with effect from 15-2-1984. 8. While so, in another case M. Satyanarayana v. Andhra Bank Ltd., Eluru, AIR 1985 AP 77 question arose regarding the applicability of provisions of Act IV of 1938 to similar transactions. In the said case, on behalf of the banking company, which was the respondent therein, it was contended that Section 21-A of the Regulation Act, 1949 overrides any other law relatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready upheld by a Division Bench of this Court in Andhra Bank's case (1986 (2) APLJ (HC) 165) (supra). The said question was also referred to by another Division Bench of this Court consisting of B. P. Jeevan Reddy and K. Amareswari, JJ. in Yogendranath Raj v. State Bank,of India, (1987) 1 ALT 316. The learned Judges after referring to the Judgment of the Division Bench of this Court referred to supra (1986 (2) APLJ (HC) 165) observed as follows in para 17:-- Constitutional validity of Section 21-A is, therefore, not in issue before us Indeed, in our opinion, the competency of the Parliament to enact the said provision could never have been in doubt. 11. No arguments are advanced before us also with regard to the constitutional validity of Section 21-A of the Banking Regulation Act, 1949. 12. Now we proceed to deal with the points referred to us. 13. Sri V.L.N.G.K. Murthy, learned counsel appearing for the appellant in S.A. No. 268 of 1985 led the arguments on behalf of the nationalised banks which were adopted and supplemented by the other learned counsel appearing for the appellants, viz., Sri C. Trivikramara, Sri M. S. Ramarishn Rao and Sri T. S. Harnath. Sri B, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intendment. There is neither express provision giving retrospectivity to Section 21-A of the Act nor there is anything to necessarily imply retrospectivity. They contended that a vested right accrued or acquired by the debtors to claim the relief under the provisions of Usurious Loans Act, 1918 on the date of the transaction or at any rate on the date of filing of the suit, which are anterior to coming into force of the said provision i.e., 15-2-1984 and the same cannot be defeated by Section 21-A which came into force during the pendency of the suit or in some cases after the disposal of the suit. The contention is that Act 10 of 1918 not only gives power to the Court to re-open a transaction, but also creates corresponding rights and obligations on the parties and therefore, a decree passed in the suit prior to the enactment of Section 21-A will not be affected notwithstanding the pendency of an appeal against the said decree. 17. To appreciate the rival contentions, it is necessary to refer to the well settled principles of construction of statutes. Parliament as well as State Legislatures have plenary power to legislate within the legislation committed to them. They can do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny sum which it considers to be repayable in respect thereof; (iii) set aside either wholly or in part or revise or alter any security given or agreement made in respect of any loan, and if the creditor has parted with the security, order him to indemnify the debtor in such manner and to such extent as it may deem just: Provided that, in the exercise of these powers, the Court shall not- (i) reopen any agreement purporting to close previous dealings and to create a new obligation which has been entered into by the parties or any persons from whom they claim at a date more than twelve years from the date of the transaction; (ii) do anything which affects any decree of a Court. Explanation (i): If the interest is excessive, the Court shall presume that the transaction was substantially unfair; but such presumption may be rebutted by proof of special circumstances, justifying the rate of interest. Explanation (ii): In the case of a suit brought on a series of transactions the expression the transaction means for the purpose of proviso (i), the first of such transactions. (2)(a) In this section excessive means in excess of that which the Court deems to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction. However, there is an important aspect referred to in explanation (i) to Section 3, viz., that though a presumption is raised that the transaction is substantially unfair between the parties thereto, it is made a rebuttable presumption. Therefore, the creditor can rebut the presumption that the transaction was substantially unfair, by proof of special circumstances justifying the rate of interest. Having regard to the above, the scheme of the above mentioned provisions of Act 10 of 1918 is that in the case of loans to agriculturists if compound interest is charged, the Court shall presume that the interest is excessive and if it is excessive, the transaction is presumed to be substantially unfair. However, the presumption is rebuttable one which requires the creditor to prove special circumstances justifying the rate of interest. If he is able to rebut the presumption, the question of exercising the power of reopening the transaction by the Court under Section 3(1) will not arise. Therefore, merely because compound interest is charged in the case of loans to agriculturists, it will not automatically give a right to compel the Court to reopen the transaction exercising the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the transactions took place etc., are relevant considerations to come to the conclusion to find out as to whether the transaction is substantially unfair. It is open to the creditor to adduce evidence on those aspects and satisfy the court that the interest charged in a given case is not excessive and thereby rebut the presumption raised by explanation (i) to Section 3. 23. In General and Credit Corporation (India) Ltd. v. Venkata Rama Rao, AIR 1959 AP 433 , the learned Judges stated that the relevant consideration to rebut the presumption that the interest is excessive is to adduce evidence regarding the prevailing rates of interest in the locality/town and the availability of credit facilities and the advantage gained by the debtor and any other special circumstances to rebut the presumption raised by explanation (i) to Section 3. Further, it is pertinent to notice, at this stage, that the creditors, in the case before us, are all nationalised banks. They are bound by the directions issued by the Reserve Bank of India. Section 21 of Regulation Act, 1949 says that where the Reserve Bank is satisfied that it is necessary or expedient in the public interest or in the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into in June, 1955 between 'K' and Director of Public Works, according to which, 'K' was to develop the site by erecting buildings thereon within a certain time. If that is done, 'K' was to have a new lease or leases on terms which, effectively, would give him a period of seventy-five years from December, 1951. The erection of the new buildings obviously necessitated the demolition of the then existing buildings. The said existing buildings were subject to the Hong Kong Landlord and Tenant Ordinance. As per the terms of the said Ordinance, when a Crown lessee wanted to demolish the existing building, he could only recover the vacant possession of the premises after the Director of Public Works issues a rebuilding certificate. The Director of Public Works gave notice of his intention to grant rebuilding certificate and the lessee served notices in the prescribed form on the tenants. According to the provisions of the Act, the tenants can file an appeal within three weeks of the receipt of the notice to the Governor in Council against the proposal of the Director of Public Works to give a rebuilding certificate. The lessee could also present a cross-petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand, it was contended on behalf of the tenants and sub-tenants who were in possession, that the agreement was merely an agreement for lease and not for disposition of land. Until and unless the lessee had established the right to specific performance, he cannot claim that by virtue of the agreement a right was accrued to him etc. 27. While dealing with the said contention, the learned Judges stated as follows:-- In their Lordships' view, such an approach is not warranted by the facts. On April 9 the lessee had no right. He had no more than a hope that the Governor in Council would give a favourable decision. So the first submission fails. Again the learned Judges stated as follows : In their Lordships' view, the entitlement of the lessee in the period prior to April 9 to have the petitions and cross-petition considered was not such a right . On April 9 the lessee as quite unable to know whether or not he would be given a rebuilding certificate, and, until the petitions and cross-petition were taken into consideration by the Governor in Council, no one could know. The question was open and unresolved. The issue rested in the future. The lessee had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coining into force of the said provision or whether the suit instituted was pending in the trial Court, appellate Court or second appellate Court by the time the provision came into force, the jurisdiction of the Court to give relief under Act 10 of 1918 is ousted. As and when the matter is brought before the Court, the Court is debarred from giving relief. The learned counsel strongly relied upon the language of S. 21-A of the Regulation Act, 1949. 30. It is necessary in this connection to refer to the said provision which is as under : 21-A. Rates of interest charged by banking companies not to be subject to scrutiny by Courts .-- Notwithstanding anything contained in the Usurious Loans 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. According to the learned counsel, the words a transaction between a banking company and its debtor , indicates that the transaction can only be anterior in point of time to the re-opening by any co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n S. 3 applies to every stage of the suit. 33. The above decision clearly indicate that irrespective of the fact whether a suit was filed and a decree was passed and appeal or second appeal is pending in the Courts, whatever is applicable to a suit is equally applicable even to an appeal or second appeal as they are nothing but stages in the suit and any decree that is passed in the appeal or second appeal will be a decree in the suit. On that ground, the learned Judges upheld the dismissal of the suit by the High Court at the second appellate stage by applying the bar contained in S. 3 of the Punjab Pre-emption (Repeal) Act, 1973. 34. The learned Judges also put it on another ground, viz., that in moulding the relief to be granted in a case on appeal, the Court of appeal is entitled to take into account even facts and events which have come into existence after the decree appealed against. 35. To a similar effect is the judgment in Sadhu Singh v. Dharam Dev, AIR 1980 SC 1654 . In this case also the effect and applicability of S. 3 of Punjab Pre-emption (Repeal) Act (11 of 1973) came up for consideration. The learned Judges clearly pointed out that even though a decree was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a continuation of the suit and when the appellate Court affirms, modifies or reverses the decree on the merits, the trial Court's decree merges in the appellate decree and it is only the appellate Court's decree which rules. Further, the learned Judges, while dealing with the argument that a decree was already passed in a suit instituted by the time the Tenancy Act was made applicable to the concerned area and, therefore, the prohibition contained in sub-section (1) of S. 13 will not apply, stated as follows: 8. The next point is whether sub-section (1) of S. 13 can be invoked where the suit was instituted before the Act came into force. In the instant case, the suit was instituted long before the Act was extended to Memari. Sub-s. (1) of S. 13 directs the Court not to make any order or decree for possession subject, of course, to the statutory exceptions. The legislative command in effect deprives the Court of its unqualified jurisdiction to make such order or decree. It is true that when the suit was instituted the Court possessed such jurisdiction and could pass a decree for possession. But it was divested of that jurisdiction when the Act was brought into force. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention, next relied upon the case in Darshan Singh v. Ram Pal Singh, AIR 1991 SC 1654 . The question that arose in the said case before the learned Judges of the Supreme Court was whether the Punjab Custom (Power to Contest) Amendment Act, 1973 (Act 7 of 1973) which came into force on 23-1-1973 would or would not apply to the pending proceedings. In fact, in this case, suits were filed earlier to the coming into force of the Act and they were pending in appeals in different appellate stages. Section 7 of the Amending Act 7 of 1973 is as follows (para 14 of AIR): Alienation of non-ancestral property :--Notwithstanding anything to the contrary contained in S. 5, Punjab Laws Act, 1872, no person shall contest any alienation of non-ancestral immovable property or any appointment of an heir to such property on the ground that such alienation or appointment is contrary to custom. A contention was raised before the learned Judges of the Supreme Court that the Amending Act of 1973 shall not affect any right to contest any alienation or any appointment of an heir made before the date on which the Act came into force. The basis of the said contention was that S. 7 of the Amending A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88 for the proposition that the suit, appeal and second appeal etc., are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. Therefore, it is contended that whatever may be the stage at which the suit is pending, whether at the stage of suit, appeal or second appeal etc., when once the Court is prohibited from re-opening any transaction on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive, the Court cannot re-open the transaction. It is significant to note that the prohibition contained in the said section for re-opening the transaction is in respect of any Court . That means, whether it is a trial Court, appellate Court or any Court for that matter, the Court is injuncted from re-opening the transaction between a banking company and its debtor on the ground that interest charged is excessive notwithstanding anything contained in Usurious Loans Act, 1918 or any other law relating to indebtedness in force in any State. 40. It is necessary to refer to the relevant portion of S. 3 of Usurious Loans Act (Act 10 of 1918) in juxtaposition with S. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e suit. As the learned Judges of the Supreme Court put it, with great respect, in the decision referred to supra [1985] 2 SCR 202 , it is not a case where the provision is prospective or retrospective, but as and when the matter comes before the Court, whether in a suit, appeal or second appeal etc., so long as the proceeding is pending in any Court as on the date of coming into force of S. 21-A of Regulation Act, 1949, the prohibition automatically comes into play and the Court is bound to apply the same and refuse to re-open the transaction in view of the mandate contained in S. 21-A. 43. In this connection, it must be stated that the fact that S. 21-A came into force with effect from 15-2-1984 is not at all decisive to come to the conclusion that the section has no application to the transactions entered into prior to the coming into force of the provision. In fact, sub-section (2) of S. 1 of the Punjab Custom (Power to Contest) Amendment Act, 1973 specifically provided that the amendment shall be deemed to have come into force on 23-1-1973. On the basis of the said provision, it was contended in the case referred to supra [1985] 2 SCR 202 that since the amendment came int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88). Section 4 of the said Act reads as follows: (1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property. (2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property. 46. A similar contention was raised to the effect that the Act was not made retrospective by any specific provision or can be said to be retrospective by necessary implication and, therefore, it will not affect the suits which are already pending. After an exhaustive consideration of the case law on the subject and the provisions of the Acl, the learned Judges of the Supreme Court stated as follows [1989] 177 ITR 97 (SC) : The expression any property held benami is not limited to any particular time, date or duration. Once the property is found to have been held benami, no suit, claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he directions of the Reserve Bank of India to the Banking Companies to charge interest on the loans given by them at certain rates, the Courts are empowered to give relief under the provisions of Act IV of 1938. This was the view expressed in Union Bank of India v. Dhanekula Koteswara Rao, (1979) 2 AWR 165 as well as by the Kerala High Court in State Bank of Travancore v. George, AIR 1975 Ker 169 while the Madras High Court held in Indian Bank, Tiruvannamalai v. V. A. Balasubramania Gurukal,: AIR 1982 Mad 296 that the provisions of the Banking Regulation Act, 1949, alone regulate the rate of interest on advances by nationalised bank and the provisions of the Regulation Act prevail over the provisions of Usurious Loans Act. 49. On the other hand, a Division Bench of Karnataka High Court in D. S. Gowda v. Corporation Bank, AIR 1983 Kant 143 held that even though directions issued by the Reserve Bank of India under the Banking Regulation Act, 1949 are statutory, the transactions entered into by the Banking companies with their customers cannot be treated as statutory agreements and, therefore, the directions of the Reserve Bank of India will not disable the Courts from granting nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into prior to the coming into force of Section 21-A. 52. In Kamla Prasad Jadawal's case AIR 1992 MP 45 (supra), the facts of the case are as follows: Respondent No.2 in the appeal before the High Court was advanced a loan of ₹ 10,750/- by the Punjab National Bank on 25-2-1972 for purchase of a Tempo. The appellant and the respondent No. 3 before the High Court were the guarantors. The rate of interest was 5% above the Reserve Bank of India rate with the minimum of 11% P.A. with quarterly rests. The Bank was forced to file the suit as the loan was not repaid. Suit was decreed granting compound interest from 1-1-1977 to 1-11-1979 (suit having been filed on 5-11-1979) and thereafter simple interest till realisation. Questioning the said judgment and decree, appeal was preferred by one of the guarantors to the High Court of Madhya Pradesh. The contention raised before the High Court was that the interest charged is excessive and is liable to be reopened and scaled down in the light of Section 3 of Usurious Loads Act, 1918. The learned Judge rejected the contention holding that Section 21-A of the Regulation Act, 1949 which came into force on 15-2-1984 relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of interest. Questioning the said judgment and decree of the trial Court, appeal was preferred to the High Court and it was admitted on October 14, 1983. During the pendency of the appeal, Section 21-A was inserted by the Amending Act 1 of 1984. It came into effect from 15-2-1984. At the time of hearing of the appeal, it was contended on behalf of the bank that in view of Section 21-A of the Regulation Act, 1949, the Courts are barred from re-opening the loan transaction. The Division Bench of the Bombay High Court after referring to the judgment of the Supreme Court in Amarjit Kaur's case [1975] 1 SCR 605 (supra) which stated that the appeal is a rehearing of the suit, applied Section 21-A of Regulation Act, 1949 and allowed the appeal and decreed the suit as prayed for. The relevant observations of the Division Bench are as follows: We find much substance in this appeal and we hold that Section 21-A of the Banking Act is applicable in this case and, therefore, the learned trial Court has committed an error in ordering reopening of the accounts from the beginning of the transaction. The trial Court's judgment and decree to this extent is, therefore, liable to be set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous Loans (Madras Amendment) Act 8 of 1936. On the above finding, apart from others, the learned trial Judge decreed the suit as prayed for. Suit was instituted on 9-11-1974 and it was decreed on 19-8-1977 in favour of the plaintiff bank. Appeal was preferred to the High Court on 16-1-1978 and it came up before the Division Bench of this Court for hearing in March/April, 1986. As stated earlier, Section 21-A of the Regulation Act, 1949 was inserted by the Amending Act 1 of 1984 and came into force with effect from 15-2-1984. The learned Judges held, while reversing the judgment of the trial Court, that the appellant in the High Court was an agriculturist within the meaning of Usurious Loans Act as amended by the Usurious Loans (Madras Amendment) Act, 8 of 1936. Having held that the debtor is an agriculturist, the learned Judges had to consider the effect of Section 21-A of the Regulation Act, 1949 which came into force with effect from 15-2-1984. The learned Judges held as follows: Applying the principle of this decision to the facts of the case before us, we must hold that the interest on the debt advanced by the plaintiff-Bank to the 1st defendant was subject to the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation . It also provided that any suit, appeal or other legal proceeding pending by or against the insurer relating to his life insurance business, it will not be prejudicially affected by reason of the transfer to the Corporation of the business of the insurer but may be continued by or against the Corporation. 61. The defence was raised in the suit which was brought in the year 1961 by the debtor that he is an agriculturist and entitled to the benefits under Act IV of 1938 and contended that he is entitled to have the transaction reopened and the excess interest scaled down. The trial Court upheld the contention of the debtor-defendant, scaled down the interest and decreed the suit for the amount found after scaling down the interest. On appeal, the High Court affirmed the decision of the trial Court. Life Insurance Corporation of India preferred appeal to the Supreme Court of India. In that connection, the learned Judges had to consider whether the Life Insurance Corporation is exempted from the provisions of Act IV of 1938 and whether the relief can be granted to the agricultural debtor. 62. While dealing with the said case, the learned Judges stated that under sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court in Yogendranath Raj case (supra) also placed reliance on Workmen of F.T. R. Co., v. The Management, (1973) ILLJ 278 SC . The said case in our opinion has no application to the present case. Section 11A of the Industrial Disputes Act was introduced by Amendment Act, 1971 and it came into force with effect from 15-12-1971. Question was whether it applies to an industrial dispute raised earlier to the coming into force of the Act, Learned Judges of the Supreme Court having noted that the proviso to Section 11A itself stated that it will apply in any proceedings under this section , held that the proceedings under the section mean only the proceedings instituted after the section has come into force. On that premise, among others, the learned Judges held that Section 11A has no application to disputes referred prior to 15-12-1971. This decision is not relevant for resolving the present controversy. 65. Consequently, we are of the opinion that the decisions rendered by Iyyapu Panduranga Rao, J. and M. D. Patnaik, J. in the cases referred to (1991 (1) Andh LT 455, 1990 (1) Andh LT 225 and AIR 1992 AP 345 ) (supra) following the judgment of the Division Bench of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taken away by Act 78 of 1956, viz., Hindu Adoptions and Maintenance Act, 1956. It was held in this case that the children born to a Sudhra through his Brahmin concubine as well as the concubine were entitled under the old law to be maintained from his estate and that is a vested right and the same cannot be affected by Hindu Adoptions and Maintenance Act, 1956 (Act 78 of 1956). 68. Having regard to the above discussion wherein we have held that there is no right, muchless a vested right, accrued to the debtors for getting the relief under the Usurious Loans Act 10 of 1918, we are of the opinion that the above case has no application. Even otherwise, the learned Judges clearly stated that it is a well recognised rule that a statute should be interpreted, if possible, so as to respect vested rights, and such a construction should never be adopted if the words are open to another construction. In the case on hand, we have held that no right was vested in the debtor to claim any relief under the provisions of the Act either on the date of transaction or on the date of filing of the suit or otherwise. The language of Section 21-A of Regulation Act, 1949 indicates clearly that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the Division Bench felt that in view of the fact that the provisions of the Punjab Relief of Indebtedness Act had been extended to Delhi, it was required to apply those provisions even at the appellate stage. Therefore, the relief was granted. 72. The learned Judges of the Supreme Court clearly stated that the amended Section 3 of the Usurious Loans Act is plainly mandatory because it makes it obligatory for a Court to reopen a transaction if there is reason to believe that the interest is excessive. Further, when the rate of interest exceeds 1% per annum, the Court must hold that it is excessive. The learned Judges also took into account the provisions of Section 6 which state that the provisions of the Usurious Loans Act as amended by Punjab Relief of Indebtedness Act apply to all suits pending or instituted after the commencement of the Act. Having regard to the same, the learned Judge applied the provisions of the Act and upheld the judgment and decree of the Appellate Court. 73. If it is the contention of Sri B. Adinarayana Rao, learned counsel that this decision held that the relief claimed under the Usurious Loans Act is a right which was vested in him on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language of Section 21-A by necessary implication, even assuming any rights accrued under the provisions of Usurious Loans Act to the debtors, affected those rights also. 75. Sri T. S. Harnath, learned counsel appearing for the Union Bank of India in A.S. No. 1778 of 1984 brought to our notice that Section 34 of the Code of Civil Procedure was also amended by the Code of Civil Procedure (Amendment) Act, 1976 so as to enable the Courts to grant interest in pending proceedings, at the rates charged by the banks in respect of commercial transactions. According to the learned counsel, this indicates that the Parliament recognised the rates of interest charged by the banks on commercial transactions and made it legal to grant the same even granted during pendency of the proceedings. It is also stated that the provisions of Act IV of 1938 are now held by the Supreme Court not to be applicable to the transactions between a banking company and its agriculturists-debtors and that a loan taken by an agriculturist even for agricultural purpose from banking companies cannot be re-opened for the purpose of scaling down the interest. Therefore, it is contended by the learned Counsel that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is overruled. 78. The judgment of N.D. Patnaik, J. in the case referred to supra AIR 1992 AP 345 was only dealing with Sec. 4(e) of Act IV of 1938. The learned Judge held that the distinction drawn between the transactions entered into by the banking companies and its debtors and others is based on a rational criteria and it cannot be said that the distinction attracts the vice of Article 14 of the Constitution of India. The constitutional validity of Section 4(e ) of Act IV of 1938 in respect of the transactions entered into by a banking company and its debtor is not referred to us and it is not before us and therefore, it is not necessary for us to go into the same. 79. The judgment of the same learned Judge in the case referred to supra (1990(1) Andh LT 225), to the extent it applied S. 21-A of the Regulation Act, 1949 to the suits instituted subsequent to the coming into force of the said provision is in accordance with the opinion expressed by us. 80. The opinion expressed by Sivaraman Nair and Jagannadha Raju, JJ. while referring the matter to the Full Bench that, the entitlement for re-opening of transaction under the Usurious Loans Act or the Agriculturists Relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g pendency of this appeal, Section 21-A of Regulation Act, 1949 came into force. 85. Having regard to the opinion given by the Full Bench today, this second appeal is allowed and the judgments and decrees of the Courts below are set aside and the suit is decreed as prayed for, with interest at 12 1/2 % p.a. from the date of suit till realisation. But in the circumstances, no order as to costs. S.A. No. 832 of 1987: 86. In this case, suit was filed by the plaintiff-bank on 16-10-1982 for recovery of ₹ 18,075-45 p., being the amount due on account of agricultural loan given to the defendant, The debt was incurred on 16-1-1971 for agricultural purpose. While the suit was pending, Section 21-A came into force i.e., on 15-2-1984. The learned trial Judge, relying upon the judgments in Indian Bank v. M. Krishna Murthy, (1983) 1 APLJ (HC) 371; (AIR 1983 AP 347) and also M. Satyanarayana v. Andhra Bank Ltd., Eluru, AIR 1985 AP 77 , re-opened the transaction and scaled down the debt as per the provisions of Act IV of 1938 and on that basis a decree was passed in favour of the defendant for the excess amount paid by him to the plaintiff-bank as claimed by the defendant. The sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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