GULABCHAND LAXMICHAND BHUTADA Vs. CENTRAL BANK OF INDIA

JUDGEMENT

(1.) A substantial question of law that arises in the present appeal is : whether the interest awarded by the courts below was liable to be scaled down under the provisions of the Usurious Loans Act, 1918, or otherwise liable to reduction on account of breach of the circulars issued by the Reserve Bank of India under section 21 of the Banking regulation Act, 1949 ?

(2.) THE relevant facts giving rise to the present second appeal are these :

(3.) THE appellant, Gulabchand (hereinafter referred to as "defendant No. 1"), who is an agriculturist by profession obtained a loan from respondent No. 1, Central Bank of India (hereinafter referred to as "the bank") from its branch at Yeotmal, District Yeotmal, as a crop loan on August 5, 1970, in the sum of Rs. 4,000 and executed a promissory note, a mortgage deed and hypothecation deed witnessing the said transaction. It was agreed that interest at 4. 5 per cent. per annum over the bank rate subject to the minimum of 9. 5 per cent. per annum subject to periodical changes in accordance with the change in the bank rate was to be paid by defendant no. 1. It was also agreed that interest was to be charged at six monthly rests. On July 26, 1973, after taking into account payment already made, a fresh promissory note for the balance amount was executed. Since defendant No. 1 failed to clear all the dues in spite of notice of demand, ultimately in the year 1976, the bank filed Civil Suit No. 123 of 1976 to recover the amount of rs. 1,261. 11 from defendant No. 1.