JAYANT VERMA AND OTHERS Vs. UNION OF INDIA

JUDGEMENT

(1.) A writ petition, by way of a Public Interest Litigation, filed under Article 32 of the Constitution of India, assails the constitutional validity of Section 21A of the Banking Regulation Act, 1949. The aforesaid section was introduced into the Banking Regulation Act by the Banking Laws (Amendment) Act of 1983 with effect from 15.2.1984. Section 21A of the Banking Regulation Act reads as under:

(2.) It will be seen that Section 21A interdicts the reopening by courts of a debt between a banking company and its debtor, on the ground that the rate of interest charged by the banking company, in respect of a loan transaction, is excessive. The section seeks to keep out of harm's way the Usurious Loans Act, 1918 and/or any other State legislation relating to indebtedness, and then declares that no such loan transaction shall be reopened by any court on the ground of charging of excessive rates of interest. The writ petition has been filed by certain public spirited citizens, who rely on the report of the Parliamentary Standing Committee on Agriculture for the year 2006-2007 to say that Section 21A should be abolished, insofar as it applies to rural indebtedness. The Standing Committee's Report reads as follows:

(3.) Shri Sanjay Parikh, learned counsel appearing on behalf of the writ petitioners, took us through the Usurious Loans Act to show that in British India, even a foreign power was alive to the fact that courts need to interdict excessive rates of interest, and have been given complete freedom to do so, depending on the facts of each case, including taking into account the plight of the farmer debtor. He also referred to and relied upon various State Debt Relief Acts, by which every State has recognized this, and has, thus, provided, by way of legislation, that loans and interest thereon either be waived totally or partially or that courts may come to the rescue of the farmer debtor by lowering the rate of interest. According to him, many States adopted the rule of Damdupat so that in no circumstance can interest charged, for any period whatsoever, exceed the principal amount of loan. He strongly relied upon this Court's judgments in Fatehchand Himmatlal & Ors. v. State of Maharashtra etc., 1977 2 SCC 670 and Pathumma and Ors. v. State of Kerala and Ors, 1978 2 SCC 1, to show that State Debt Relief Acts have been unsuccessfully challenged in this Court, and are referable to Entry 30, List II of the Seventh Schedule to the Constitution. He referred to the Constituent Assembly Debates to show that that part of Entry 30, List II, which speaks of relief of agricultural indebtedness, was introduced by the Constitution for the first time, not being in the predecessor entry in the Government of India Act, 1935. He also referred to and relied upon a proposed amendment by Shri Shibban Lal Saxena, by which it was sought to place the aforesaid Entry 30 into the Concurrent List, so that Parliament may also have a say in the relief of agricultural indebtedness. However, this was turned down by the Constituent Assembly, so that this subject is exclusively within the domain of the State legislature.