Iyyapu Panduranga Rao, J.
1. A.S. No. 1234 of 1986 is an appeal against the judgment and decree dated November 9, 1983, of the learned Additional Subordinate Judge, Narasaraopet, in O.S. No. 282 of 1982 on his file.
2. A.S. No. 1240 of 1986 is an appeal against the judgment and decree dated April 18, 1985, of the learned Subordinate Judge, Gooty, in O.S. No. 90 of 1984 on his file.
3. A.S. No. 1211 of 1986 is an appeal against the judgment and decree dated January 13, 1985, of the learned Subordinate Judge, Addanki, in O.S. No. 67 of 1983 on his file.
4. A.S. No. 1861 of 1986 is an appeal against the judgment and decree dated November 9, 1983, of the learned Subordinate Judge, Narasaraopet, in O.S. No. 318 of 1982 on his file.
5. A.S. No. 1237 of 1986 is an appeal against the judgment and decree dated November 19, 1985, of the learned Principal Subordinate Judge, Vijayawada, in O.S. No. 256 of 1984 on his file.
6. A.S. No. 586 of 1986 is an appeal against the judgment and decree dated August 22, 1985, of the learned Subordinate Judge, Medak, in A.S. No. 90 of 1984 on his file.
7. A.S. No. 2017 of 1986 is an appeal against the judgment and decree dated January 22, 1986, of the learned principal Subordinate Judge, Anantapur, in O.S. No. 59 of 1983 on his file.
8. A.S. No. 1972 of 1986 is an appeal against the judgment and decree dated March 10, 1986, of the learned Principal Subordinate Judge, Narasaraopet, in O.S. No. 141 of 1985 on his file.
9. A.S. No. 232 of 1987 is an appeal against the judgment and decree dated September 8, 1986, of the learned Principal Subordinate Judge, Tenali, in O.S. No. 145 of 1984 on his file.
10. A.S. No. 1143 of 1988 is an appeal against the judgment and decree dated November 9, 1987, of the learned Principal Subordinate Judge, Narasaraopet, in O.S. No. 177 of 1985 on his file.
11. A.S. No. 2557 of 1988 is an appeal against the judgment and decree dated September 9, 1988, of the learned Additional District Munsif, Hindupur, in O.S. No. 54 of 1987 on his file.
12. A.S. No. 2159 of 1986 is an appeal against the judgment and decree dated January 21, 1986, of the learned Subordinate Judge, Nandyal, in O.S. No. 11 of 1985 on his file.
13. A.S. No. 1403 of 1989 is an appeal against the judgment and decree dated December 29, 1988, of the learned Subordinate Judge, Nalgonda, in O.S. No. 16 of 1986 on his file.
14. Some of the points that arise for consideration in all these appeals are common and, consequently, learned counsel appearing for both sides requested that the appeals may be heard together and disposed of by a common judgment. Hence these appeals are heard together and are disposed of by a common judgment. Separate points, if any, arising in each appeal, will be considered separately while disposing of these appeals.
15. The common points that arise for consideration in all these appeals are : [1] whether the provisions of the Usurious Loans Act, 1918 [hereinafter referred to as 'the Act'], overrides the provisions of section 21A of the Banking Regulation Act [10 of 1949] [as inserted by the Banking Laws Amendment Act, 1983 (1 of 1984] [hereinafter referred to as 'the Banking Regulation Act']; [2] whether the provisions of section 21A of the Banking Regulation Act have retrospective operation; and [3] to what relief
16. Point No. 1. - All these appeals excepting A.S. Nos. 586 of 1986 and 1972 of 1986 arise out of the suits filed by banking companies for the recovery of the amounts lent by the said banks while A.S. No. 586 of 1986 and A.S. No. 1972 of 1986 were filed by the borrowers. The borrowers took various defences including the defence that they are agriculturists within the meaning of the A.P. [Andhra Area] Agriculturists Relief Act (4 of 1938] [hereinafter referred to as 'the Agriculturists Relief Act'] and that the interest claimed is usurious. Having considered the defences raised in various suits, some of the suits were decreed in part and some of the suits were decreed as prayed for.
17. Section 4[e] of the Agriculturists Relief Act, so far as it is relevant, reads as follows :
'Nothing in this Act shall affect debts and liabilities of an agriculturist falling under the following heads : ....
[e] Any liability in respect of any sum due to any co-operative society including the land mortgage bank registered or deemed to be registered under the A.P. [Andhra Area] Co-operative Societies Act, 1932, or any debt due to any Corporation formed in pursuance of an Act of Parliament of the United Kingdom or of any special Indian Law or Royal Charter or Letters Patent.'
18. In Bank of India v. Vijay Transport : [1988]1SCR961 , the Supreme Court observed as follows [page 434 of 63 Comp Cas] :
'Accordingly, we hold that the Banking Companies Act is a special Indian law and the provisions of section 4[e] of the Agriculturists Relief Act is applicable to the appellant-bank.'
'In view of the discussion made above we hold that the provisions of the Act are not applicable to the appellant-bank and, therefore, there is no question of scaling down the debt due to the bank by the respondents' [page 437 of 63 Comp Cas].
Thus, a debt contracted by agriculturists within the meaning of the Agriculturists Relief Act is not liable to be scaled down as per the provisions of the Agriculturists Relief Act. This decision was reiterated in a subsequent decision of the Supreme Court in Bank of Baroda v. R. Rangachaya Devi, : AIR1989SC2105 . Thus, the above two decisions clearly lay down that any agriculturist within the meaning of the Agriculturists Relief Act is not entitled to ask for scaling down of the debt as per the provisions of the Agriculturists Relief Act in the event of their borrowing monies from the banking companies.
Section 21A of the Banking Regulation Act reads as follows :
'21A. Rates of interest charged by banking companies not to be subject to scrutiny by courts. - Notwithstanding anything contained in the Usurious Loans Act, 1918 [10 of 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 reopened by any court on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive.'
19. A Division Bench of this court consisting of Ramarao J. and Kodandaramaiah J. in Andhra Bank Ltd. v. Bonu Narasamma [1988] 63 Comp Cas 328 [AP], upheld the constitutional validity of section 21A of the Banking Regulation Act and the constitutional validity of the said provision was also upheld by a Division Bench of this court in Yogendranath Raj v. State Bank of India [1988] 63 Comp Cas 405.
20. It is now to be seen whether the provisions of the Usurious Loans Act override the provisions of section 21A of the Banking Regulation Act. In K. C. Venkateswarlu v. Syndicate Bank, : AIR1986AP290 , a Division Bench of this court observed as follows [at page 291, para 5] :
'It is clear that the said provisions [referring to section 21A of the Banking Regulation Act] makes the provisions of the Usurious Loans Act inapplicable to any transaction between a banking company and its debtor. The courts have power to reopen the transaction under the provisions of the Usurious Loans Act on the ground that the rate of interest charged is excessive is no longer available.'
21. In a subsequent decision, a Division Bench of this court in Yogendranath Raj's case at para 11 [1989] 1 APLJ 419; [1988] 63 Comp Cas 405 [AP] observed as follows (page 417 of 63 Comp Cas) :
'The question next arises whether section 21A of the Banking Regulation Act, 1949, introduced by the Banking Laws [Amendment] Act, 1983, with effect from June 21, 1984, applies to the present case. Section 21A expressly seeks to override not only the Usurious Loans Act, 1918, but 'any other law relating to indebtedness in force in any State.' By virtue of the said provision it would not be permissible to the courts to reopen a transaction between a Banking Company and its debtor on the ground that the rate of interest charged by the banking company in respect of such transaction is excessive.'
22. Thus Yogendranath Raj's case [1988] 63 Comp Cas 405 [AP] clearly lays down that section 21A of the Banking Regulation Act expressly overrides the provisions of the Usurious Loans Act including any other law relating to indebtedness in any State. Accordingly, this point is answered.
23. Point No. 2. - Section 21A of the Banking Regulation Act came into force with effect from February 15, 1984. Some of the suits against which the present appeals are filed were instituted long prior to February 15, 1984, while some matters against which appeals were preferred were instituted after February 15, 1984. As such, the application of section 21A of the Banking Regulation Act to these cases can be examined.
24. In so far as the suits instituted after February 15, 1984, are concerned, there is no difficulty and such suits [suits instituted after February 15, 1984], are attracted by the provisions of section 21A of the Banking Regulation Act.
25. It is now to be seen whether section 21A of the Banking Regulation Act applies to the suits instituted prior to February 15, 1984. In K. C. Venkateswarlu v. Syndicate Bank, : AIR1986AP290 , considering the applicability of section 21A of the Banking Regulation Act, it was observed as follows [page 291] :
'It is not disputed that it affects the pending proceedings also, though the Act came into force on February 15, 1984.'
26. This decision [K. C. Venkateswarlu's case, : AIR1986AP290 ] was considered by a Division Bench of this court in Yogendranath Raj's case [1988] 63 Comp Cas 405, and considering the above observations regarding the retrospective application of section 21A of the Banking Regulation Act, it is observed at page 419 as follows :
'It is thus evident that the question of retrospective operation of section 21A was not put in issue, was not argued and was not pronounced upon by the Bench. The observations made therein are based upon a concession and cannot, therefore, operate as a decision of this court.'
27. Thus, it was clearly held that K. C. Venkateswarlu's case, : AIR1986AP290 , is not an authority to show that section 21A of the Banking Regulation Act has got retrospective operation. Considering the retrospective nature of the application of section 21A of the Banking Regulation Act, speaking for the Bench, Jeevan Reddy J. [as he then was] in Yogendranath Raj's case [1988] 63 Comp Cas 405 observed as follows [at page 420] :
'The question is whether the benefit conferred upon the debtor by applying the provisions of the Usurious Loans Act can be taken away by the appellate court relying upon section 21A This is how the question of retrospectivity of section 21A arises [vide para 21 at page 426] :
Having regard to the object and purpose underlying the Usurious Loans Act and the Madras Amendment thereto we are of the opinion that the courts should be inclined to sustain and continue the said relief unless the statute says to the contrary, either expressly or by necessary implication. We may also mention in this behalf that the percentage of loans granted to agriculturists in this country is very small compared to the loans granted to industrial and business concerns. In any event it is not as if the entire interest is being deleted. All that it means is that if the interest stipulated is found to be excessive, the court will reopen the transaction and grant such interest as it thinks reasonable in the circumstances of the case.'
28. Thus Yogendranath Raj's case [1988] 63 Comp Cas 405 [AP] it was held that section 21A of the Banking Regulation Act has no retrospective operation and that it is only prospective. This decision was followed in a subsequent decision of this court in Union Bank of India v. J. Mohan Rao [1989] 1 APLJ 388; [1991] 72 Comp Cas 325 [AP], wherein it is observed as follows (at page 328) :
'The last contention advanced by Sri Harinath, learned counsel appearing for the appellant is that section 21A of the Banking Regulation Act [1 of 1984], saves the transactions concluded by the banking companies from the debt relief laws and, therefore, the scaling down of the interest by the court below must be set aside. Considering this aspect, the Division Bench of this court in Yogendranath Raj's case [1988] 63 Comp Cas 405 held that section 21A cannot take away the benefit granted by this court before that provision came into force.'
29. Thus, this court reiterated that section 21A of the Banking Regulation Act is only prospective and is not retrospective in operation.
30. Since, in Yogendranath Raj's case [1988] 63 Comp Cas 405 [AP] and J. Mohan Rao's case [1989] 1 APLJ 388; [1991] 72 Comp Cas 325 [AP], this court has clearly observed that section 21A of the Banking Regulation Act is only prospective in operation, a number of decisions cited to show as to whether a particular Act is prospective or otherwise in operation is of no consequence. As a matter of fact, many decisions cited before me for this purpose were cited before the Division Bench that heard Yogendranath Raj's case [1988] 63 Comp Cas 405 [AP], and having considered the said cases, it was held that section 21A of the Banking Regulation Act is only prospective in operation and, consequently, I find that it is not necessary to consider these decisions.
31. Thus, I find under this point that section 21A of the Banking Regulation Act is only prospective and is not retrospective in operation.
32. Point No. 3. - Regarding the rate of interest payable, the parties relied upon a number of decisions.
33. In M. Ramachandra Reddy v. S. Rajaratnam Naidu [1989] 1 APLJ 265, it was held that charging of compound interest at 18 per cent. per annum with yearly rests in respect of a transaction of mortgage entered into in the year 1966 is usurious attracting the provisions of the Usurious Loans Act. This was a case where Rs. 10,000 was borrowed in the year 1966 and, by 1987, the claim swelled to Rs. 2,75,000 and the court held that charging of interest at the rate of 18 per cent. per annum with yearly rests is usurious. In Mallavarapu v. Buddha Raj, : AIR1982AP313 , this court held that charging of compound interest in case of default at the same rate is not per se penal. In the said case, interest was provided at Re. 0.94 per cent. per mensem with half-yearly rests; in default it was provided that the amount would carry compound interest at the same rate with half-yearly rests. It was held that the claim for compound interest with half-yearly rests at the same rate stipulated in the mortgage bond was not excessive.
34. In Yogendranath Raj's case [1988] 63 Comp Cas 405 [AP], it was held that the decided cases show that the courts have awarded interest ranging from 12 per cent. simple to 18 percent. or 20 percent. simple and, in the said case, the court held that payment of interest at 14 per cent. per annum from the date of the suit was reasonable. Thus, there cannot be any hard and fast rule and what is reasonable interest has to be decided taking into consideration the facts and circumstances of each case. Bearing these principles in mind, interest has got to be awarded in these matters.
35. A.S. No. 2159 of 1986 is a case where the suit was filed on March 29, 1985. A.S. No. 1972 of 1986 is a case where the suit was filed on July 8, 1985. A.S. No. 1403 of 1989 is a case where the suit was filed on March 18, 1986. A.S. No. 1237 of 1986 is a case where the suit was instituted on June 23, 1984. A.S. No. 232 of 1987 is a case where the suit was instituted on November 12, 1984. In A.S. No. 586 of 1986, the suit was instituted on April 28, 1984. A.S. No. 1143 of 1988 is a case where the suit was filed on June 7, 1984, and A.S. No. 2557 of 1989 is a case where the suit was filed on June 1, 1987. Thus, in the appeals referred to above, the suits were instituted after section 21A of the Banking Regulation Act came into force and, consequently, the banking companies in the said cases are entitled to recover interest at the contract rate.
36. A.S. Nos. 1234 of 1986, 1240 of 1986, 1211 of 1986, 1861 of 1986 and 2017 of 1986 were filed on November 5, 1982, February 26, 1982, October 3, 1983, September 22, 1982, and March 19, 1983, respectively. Thus, in all these five matters, the suits were instituted prior to the coming into force of section 21A of the Banking Regulation Act and, in view of my findings under point No. 2, the respondents in these appeals are entitled to the benefits of section 3 of the Usurious Loans Act.
37. Since the suits out of which A.S. Nos. 2159 of 1986, 1403 of 1989, 2557 of 1988, 1143 of 1988, 232 of 1987 and 1237 of 1986 were filed after February 15, 1984, the date on which section 21A of the Banking Regulation Act came into force, the plaintiff-banks in the said suits are entitled to interest as prayed for. Consequently, all these appeals are allowed setting aside the judgment and decrees of the lower courts therein and all the suits are decreed as prayed for with costs in this court.
38. In A.S. No. 1240 of 1986, the stipulated rate of interest is 16% per annum over and above the Reserve Bank rate subject to a minimum of 15% per annum, while the lower court granted interest at the rate of 12.5% per annum till the date of institution of the suit and later on at 6% per annum. As laid down in Yogendranath Raj's case [1988] 63 Comp Cas 405 (AP), I find that granting of interest at 14% per annum simple is reasonable. Accordingly, the said appeal is allowed, remanding the matter to the lower court to ascertain the amount as per the directions given above and to pass a decree for the said amount. Since the parties have succeeded partly, they shall bear their costs in this court.
39. In A.S. No. 2017 of 1986, the contract rate of interest was 6.5 % per annum over and above the Reserve Bank rate and, subject to a minimum of 15% per annum, while the lower court, considering the defendants-respondents as agriculturists within the meaning of the Agriculturists Relief Act, calculated the interest at the rate of 5.5% till October 6, 1977, and thereafter at 12.5% per annum. Since the scaling down is not permissible as observed by me under point No. 1, the respondents in the said appeal have to pay interest at 14% per annum simple. Accordingly, the appeal is allowed remanding the case to the lower court to calculate interest at the said rate and to pass a decree. Since the parties have succeeded partly, they shall bear their costs in this court.
40. In A.S. No. 1211 of 1986, the plaintiff-bank prayed for interest at 12.5% per annum with half yearly rests, while the lower court granted interest at the rate of 12.5% per annum simple on the principal sum. In this case, the suit debt was scaled down in accordance with the provisions of the Agriculturists Relief Act, which is not permissible as per my observations on point No. 1. Consequently, the plaintiff-bank is entitled to interest at 14% per annum simple. Hence A.S. No. 1211 of 1986 is allowed remanding the matter to the lower court to ascertain the amount at the rate of 14% per annum simple and to pass a decree for the said amount. Parties shall bear their costs in this court.
41. In A.S. No. 1234 of 1986, the plaintiff-bank prayed for interest at 16% per annum with half yearly rests, while the lower court granted interest at 5.5% per annum on the principal sum lent by the bank. Since the scaling down of the debt is permissible, the plaintiff-bank is entitled to interest at 14% per annum simple. Hence, A.S. No. 1234 of 1986 is allowed remanding the matter to the lower court to ascertain the amount at the rate of 14% per annum simple and to pass an appropriate decree for the same amount. Parties shall bear their costs in this court.
42. In A.S. No. 1861 of 1986, the plaintiff-bank prayed for interest at 2% per annum over and above the usual rate of interest. The lower court scaled down the debt which is not permissible. The plaintiff-bank is entitled to interest at 14% per annum simple. Hence, A.S. No. 1861 of 1986 is allowed remanding the matter to the lower court to ascertain the amount due at 14% per annum simple and to pass an appropriate decree. Parties shall bear their costs in this court.
43. A.S. No. 586 of 1986 is an appeal filed by the debtor and the interest claimed by the bank is at 14% per annum which is reasonable. I find that the interest claimed is reasonable. The appeal is dismissed. No costs.
44. A.S. No. 1972 of 1986 is an appeal filed by the debtors, wherein the banking company claimed interest at 16% per annum with half-yearly rests. The suit was decreed as prayed for. Since the suit out of which this appeal arises was instituted after the coming into force of section 21A of the Banking Regulation Act, the banking company is entitled to interest at the contract rate as held by the lower court. Hence, A.S. No. 1972 of 1986 is dismissed without costs, confirming the judgment and decree of the lower court.