UNION BANK OF INDIA Vs. JOGI MOHAN RAO

JUDGEMENT

(1.) THIS appeal by the plaintiff-Union Bank of India, Vijayawada, from the judgment and decree of the learned Subordinate Judge, Vijayawada, in O. S. No. 236 of 1979, raises the question as to the applicability of the proviso to section 3 of the Usurious Loans Act, 1918, as amended by Act VIII of 1937.

(2.) THE parties in this appeal are referred to in their original character as they appeared in the court below. The first defendant borrowed a sum of Rs. 1,12,356 from the plaintiff-bank for doing abkari business. Defendants Nos. 2 to 4 are the guarantors. The second defendant, it was alleged, mortgaged the plaint schedule properties which comprise two houses, and the first defendant executed a promissory note, exhibit A-3, dated September 29, 1976, in respect of the amount borrowed. The contractual rate of interest is 15% with quarterly rests.

(3.) THE second defendant filed a written statement specifically contending that the interest charged with quarterly rests was usurious and "opposed to public policy". He also pleaded that all the defendants are agriculturists and "they are entitled to the benefits of Act IV of 1938 and Act VII of 1977".