TMI Blog1989 (8) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... 82, Appellant instituted the Original Suit 47 of 1983 on the file of Subordinate Judge, Eluru, for the recovery of a sum of ₹ 18,076.45 alleged to be due towards principal and the balance of accrued interest under in agricultural-loan obtained by the respondent on 16.1.1971 on the security of certain properties respecting which a charge was created in favour of the appellant under a mortgage by deposit of title deeds. Appellant claimed to be entitled to interest, as agreed to between the parties, at four half per cent above the Reserve Bank rate, with quarterly rests. Appellant alleged that respondent who had periodically acknowledged the liability for repayment of the balance outstanding having failed and neglected to repay, appellant had to call-up the account and institute the suit. 3. Respondent inter-alia, contended that she had, indeed, paid far in excess of what the appellant was legitimately entitled to recover under the law; that as against the sum of ₹ 15,000/- originally borrowed she had paid two sums of ₹ 20,000/- each on 8.9.1980 and 15.12.1981 respectively; that she was entitled to the benefit and protection of the A.R. Act and that, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f compound interest from the agriculturists. 6. In the Second Appeal, however, a new dimension to the controversy was imparted by the circumstances that the decision in Indian Bank's case on which both the Trial Court and the First Appellate Court had relied was itself over-ruled by this Court in Bank of India v. Vijay Transport and Ors. in which it was held that a nationalised bank within the purview of the Banking Companies [Acquisition and Transfer of Undertakings] Act, [5 of 1970] [Banking Companies Act for short] fell within the ambit of and attracted the exemption contained in Section 4[e] of the A.R. Act and that, therefore, loans advanced by such banks did not attract the provisions of the A.R. Act . It is relevant to recall that Section 4(e) of the A.R. Act exempted from the scope of its provisions, debts and liabilities owed by the agriculturists to any corporation formed in pursuance of an Act of Parliament of United Kingdom or of any special Indian Law or Royal Charter or Letters Patent . In the Indian Bank's case the Andhra Pradesh High Court was persuaded to the view that the words Special Indian Law occurring in Section 4[e] of the A.R. Act had no appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e constitutional validity of Section 4[e] that question was yet open to the High Court to examine and pronounce upon. The classification of debtors implicit in the scheme of Section 4[e] is not based on any differentium special to them to but on the identity of the creditor. In the ultimate analysis, the differentium has no rational nexus with the object sought to be achieved by the A.R. Act, viz., relief to agriculturists from excessive interest. Accordingly Section 4[e] of the A.R. Act, to the extent it exempts loans advanced by banks to agriculturists from the operation of the said Act, brings about an impermissible classification of debtors based on the irrelevant consideration as who their respective creditors are. This classification is violative of Article 14. This principle is recognised in State of Rajasthan v. Makhanchand AIR 1974 SC 1633. If Section 4[e] is thus out of the way, there is no impediment to the attraction of the benefit of Section 13 of the A.R. Act to the debtors in the position of the respondent. (b) that Section 21-A of the Banking Regulation Act, 1946, introduced by the Banking Regulation [Amendment] Act, 1984, with effect from 5.2.1984 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any pleadings, singularly inappropriate for the examination of that question. 11. It was further contended by Sri Bobde that the following observation of the learned Judge : The scope of Act 1 of 1984 would, however, have to be examined in the event that exemption granted by Section 4(e) of the Rajaji Act is for any other reason is held by this Court not available to the plaintiff-bank. As the Supreme Court neither considered the constitutional validity of Section 4(e) of the Rajaji Act nor the scope of Act 1 of 1984, consideration of those two questions is still open to this Court. is factually and demonstrably inaccurate in view of the circumstance that at paras 16 and 17 of the Judgment of this Court in Bank of India's case, this Court had specifically considered the contention as to the vice of discrimination and the consequent invalidity of Section 4(e) under Article 14 and negatived the same. Sri Bobde invited our attention to the following passages in the judgment of this Court in Bank of India's case : At this stage, it may be stated that in Krishna Murthy's case AIR 1983 Andh. Pra. 347 (supra) it has been held by the Division Bench that the latt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. For the reasons aforesaid, the judgment and decree of the High Court in so far as the same direct the scaling down of the debt due to the Bank by the respondents are set aside. the Bank will be entitled to realise the amount decreed in its favour by the High Court without any scaling down of the same under provisions of the Act. 12 Sri Bobde submitted that it was not open to the High Court to examine the constitutionality of Section 4(e) even if it be that a particular ground or argument, however weighty, had not been considered in the decision of this Court. learned Counsel referred to the following observation in Somavanti v. state of Punjab : ...The binding effect of a decision does not depend upon whether a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided. That point has been specifically decided in the three decisions referred to above. The decisions in T. Govindaraja Mudaliar v. state of Tamil Nadu , An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the serious adverse consequences if the agricultural loans advanced by banks were exempted from the A.R.Act. After neatly formulating the question which, according to him, should be examined as a constitutional question the learned Judge made these somewhat impassioned and emotive, pace-setting prefatory observations pace : The first issue in this Second Appeal is of considerable moment both for the agriculturists as a class and the State, but more for the agriculturists than for the State. Let it be noted that can the agriculturist be legally charged compound interest by the Banks is not a metaphysical and speculative enquiry. It is a question of life and death for the agriculturist. The recent spate of suicides committed by the young agriculturists of Guntur and Prakasam Districts sometimes in tragic compact with their young wives and children being unable to pay the banks the quarterly compounded interest only highlight the tragic dimensions of this question. For ages the Indian agriculturist has been the victim of vagarious monsoons and predatory debt laws.... Quoting Mahatma Gandhi the learned judge said : ...No sophistry, no jugglery in figures can explain away t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of hostile discrimination. It is, perhaps, relevant to re-call the observations of Fazal Ali, J. in Rajpur Ruda Meha v. State of Gujarat : Neither in the application for adducing additional grounds or in the order of the Court directing the matter to be placed before the Constitution Bench, there was any reference to the validity of Section 384 of the Cr.P.C. Neither was it pleaded during the arguments' that Section 384 of the Cr.P.C. is ultra vires of the Constitution. As the question of validity of Section 384 of the Cr.P.C. was neither raised nor argued, a discussion by the Court after pondering over the issue in depth would not be a precedent binding on the Courts.... 19. On a consideration of the matter we think we ought to hold that it was not appropriate for the High Court to have itself taken-up this question in the present case. We accordingly set aside the finding of the High Court on the unconstitutionality of Section 4[e] of the A.R. Act. Consequently we hold that no defence under the A.R. Act could be urged against the appellant's claim in these proceedings. We are unable to accept the submission of Sri Subba Rao for the Respondent that the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld against the applicability of the Usurious Loans Act, 1918, to any debt due to a banking company and observed: ...The Division Bench in Venkateswarlu's case of which Kodandaramayya. J was also a party held that the rate of interest charged by the banking companies to an agriculturist cannot be reopened because of Section 21-A of the Banking Regulation Act. The division bench held that the Usurious Loans Act is no longer applicable to any debt due to a banking company.... 22. In Vankateshwarlu's case referred to by the learned judge a division bench of the High Court had held : It is clear that the said provision makes the provisions of Usurious Loans Act inapplicable to any transaction between a banking company and its debtor. The Courts' 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. It is not disputed that it affects the pending proceedings also though the Act came into force on 15.2.1984. Thus it is clear that the Usurious Loans Act is no longer applicable to any debt due to a Banking Company. [Emphasis Supplied] The learned judge als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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