YOGENDRANATH RAJ Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) Two questions of law arise in this appeal, viz., whether the expressions "agriculture" and "agriculturist" in their ordinary sense include "horculture" and "horticulturist" and whether Section 21-A of the Banking Regulation Act, 1946, which came into force with effect from 31-6-1984. applies to appeals pending on that date ? Section 21-A declares : "Notwithstanding anything contained in the Usurious Loans Act, 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 re-opened by any Court on the ground that the rale of interest chafged by the banking company in respect of such transaction is excessive" Factual matrix :

(2.) Defendants are the appellants. The respondent, State Bank of India, filed the suit for recovery of a sum of Rs. 2, 35, 927.86 Ps. with interest at the rate of 14% per annum on the said amount from the date of suit till realisation. The Bank's claim, in short is the following : the 1st defendant (2nd defendant is the wife of the 1st defendant) was given an overdraft facility, as also term-loan facility by the plaintiff-Bank. The 1st defendant executed a mortgage in a sum of Rs. 1,70,000/-on 5-5-1971. On the date of suit an amount of Rs. 2,17,161.59 Ps. was due on Medium Term Loan Account, and a sum of Rs. 18,766.27 Ps. on Cash Credit Crop Loan Account. The loans were sanctioned to the 1 st defendant for developing a grape garden. The mortgage executed by the 1st defendant pertains to the medium term loan besides the personal guarantee, while the second loan was secured by hypothecation of the crops, farm tools, etc., evidenced by a hypothecation deed dated 16-10-1973 and a promissory note of the same date. The 2nd defendant is the guarantor under both the documents. The defendants did not pay inspite of repeated notices. The 1st defendant by this letter dated 22-6-1974 requested the plaintiff-Bank to inform the amount payable by him, and he was accordingly intimated by letter dated 1-7-1974. Interest payable on the said loans is; 11/2% over and above the State Bank of India advance rate with a minimum of 10% per annum. Under the Second loan, the rate of interest is the same, with the difference that monthly rests are also provided for.

(3.) The defendants filed a common written statement They admitted the transactions and the documents executed by them. They however disputed the amounts claimed in the suit as incorrect and exaggerated. They submitted that the plaintiff has charged compound interest, and also that the raie of interest charged is against the stipulated interest. According to them, the dues from them cannot exceed Rs. 50,000/-. They submitted that inspite of repeated requests, the plaintiff-Bank did not furnish the correct and full accounts. They submitted further that they approached the plaintiff-Bank for loans believing in their public declarations that they propose to encourage the agriculturists. The amount mentioned in the mortgage was not paid to the 1st defendant in lumpsum but is made Up of past transactions; the rate of interest charged is not correct ; it is illegal. The inability of the defendants to discharge the loans completely was due to the plaintiff's default and refusal to supply full and correct accounts, showing the principal and interest due from the defendants. Accordingly. they prayed that the suit being premature, may be dismissed with costs.