CHANDER Vs. STATE OF U P

JUDGEMENT

(1.) THE common question mooted in the above batch of writ petitions relates to agricultural loan advanced by different banks and therefore, all the petitions have been heard and are disposed of by a composite judgment.

(2.) IN Writ Petition No. 3463 of 2007 and also in Writ Petition No. 4585 of 2007, Reserve Bank of India was impleaded and notices were issued. Sri Yashwant Verma, learned counsel appearing for Reserve Bank of India, assisted the Court by placing certain material facts relating to agricultural land. It has been submitted by Sri Yashwant verma that so far as rate of interest is concerned, the same is covered by the guide-lines in the matter of loan up to the extent of Rs. 2 lac in the priority sector issued by the Reserve Bank of India and the same cannot exceed Bench Mark Prime Lending Rate (B. P. L. R.) and for the loaned amount above rs. 2 lacs, it is stated, the Banks are free to determine rate of interest. In the matter of short term production Credit to farmers up to Rs. 3 lac, it is stated that rate of interest was fixed at 7% with 2% interest subvention to be provided by the Government of india. He has also placed graphs by which it is sought to be indicated that so far as state Bank and other Associates are concerned, the agricultural land is provided at the rate of Rs. 11. 7%, Regional Rural Bank at the rate of 50. 4%, Foreign Bank at the rate of 0. 7%, Nationalised Bank at the rate of 12%, and other Scheduled Commercial banks at the rate of 4. 5% and all scheduled commercial Banks 10. 8%. So far as agricultural sector is concerned, it is submitted that so far as agricultural sector is concerned, except the Banks mentioned above, the banks are free to fix their respective interest rate.

(3.) IN the matter of recovery, the question involved is whether the Bank could get the recovery made of agricultural could vehicles seized and possession of vehicles taken through persons within the legitimate parametes or by engaging private individuals or agencies not recognized by any provision of law as the agency for recovery and further whether such persons could seize the property at any time and Bank could fix for auction privately without taking recourse to the law as envisaged under the U. P. Agricutural Credit Act. The second question is whether any recovery of interest could be made beyond the principal amount and whether principle of Damdupat will be applicable to loans in which certain immovable properties are mortgaged. The third question that begs consideration is whether in case mortgage of agricultural property against loaned amount what would be the effect of such mortgage regard being had to prohibition contained in Section 155 of the u. P. Z. A. and L. R. Act if any such mortgage is impermissible and if agreement is entered between the Bank and tenure holder after mortgaging land to secure loaned amount.