CORPORATION BANK Vs. D S GOWDA

JUDGEMENT

(1.) These appeals brought by the aforementioned banks by special leave raise certain important questions of law touching the business activities of the banks in the matter of grant of loans/advances and recovery thereof which may be formulated as under:- 1. Whether the bank is entitled to claim interest with periodical rests, e. g. , a monthly rest, a quarterly rest, a six monthly rest, or a yearly rest, or compound interest in any other manner, from a borrower who has obtained a loan or an advance for agricultural/ commercial purposes, as the case may be?

(2.) Whether the banks are bound to follow the directives/circulars issued by the reserve bank of India in exercise of power conferred by Section 21 of the Banking Regulation Act, 1949 prescribing the structure of interest to be charged on loans/advances made from time to time, and if yes, to what extent?

(3.) Whether in view of the insertion of Section 21a in the Banking Regulation Act, 1949 by banking loans (Amendment) Act, 1983 (act. no. 1 of 1984) , courts are precluded from subjecting transactions entered into between the banks and borrowers from scrutiny under the Provisions of the usurious loans Act, 1918 or any other similar state law, with a view to giving relief thereunder, and, if yes, whether relief under such laws is wholly impermissible? And