CENTRAL BANK OF INDIA Vs. N VENKATESWARARAO

JUDGEMENT

(1.) This appeal by the plaintiff-Bank is filed against the judgment and decree in O.S. No. 320 of 1983 dated 29th November, 1985 passed by the learned Additional Subordinate Judge at Guntur principally on the sole ground of not granting the interest in view of the amendment of Section 21-A of Banking Regulation Act.

(2.) The Court below relying on the judgment in Medikonda Satyanarayna and another vs. The Andhra Bank has rejected the claim. As regards the question of application of Act 4 of 1938 is concerned, the issue is no longer res integra and it is covered by my earlier judgment in Union Bank of India and others vs. G. Shiva Reddy and others wherein it was held that in view of the said amendment of Section 21-A of the Banking Regulation Act, 1949, the Act 4 of 1938 has no application in respect of the banking transactions and the interest charged in pursuance of a mortgage transaction is valid. However, the interest in respect of agricultural transactions has to be only on the basis of yearly rests and not with quarterly or half yearly rests; whereas, in respect of commercial transactions, charging of interest with quarterly or any such longer rests is admissible. There is no dispute as to the fact that the present case is pertaining to the loan obtained for agricultural purpose.

(3.) Accordingly the appeal is allowed granting interest on the basis of yearly rests. There shall be decree accordingly. No costs.