JUDGMENT 1. - The petitioners borrowed a loan of Rs. 85,000/-, on 30.4.88, from the respondent-bank, for agricultural purposes, and the amount was to be re-paid in instalments. The borrowers mortgaged their land, as the security. According to the petitioners, they deposited Rs. 40,000/-, with the bank. The bank moved an application before the Respondent No. 1 (Assistant Collector, Nagar, District-Bharatpur) for the recovery of the loan. The proceedings were initiated for the recovery of Rs. 3,43,999.65. The petitioners contested the application of the bank. But, the learned Assistant Collector, on 27.9.97, passed the order for attachment of the mortgaged land. Thereupon, the petitioners filed their objections, challenging the entire proceedings and praying for the withdrawal of the attachment order. According to the petitioners, the bank did not give them the statement of accounts and there is no proper calculation of interest. Feeling aggrieved by the order of the Assistant Collector, this writ petition has been preferred. 2. In the reply, the respondent No. 3 bank has admitted that a loan of Rs. 85,000/-, was taken by the petitioners at the interest of 2.5 per cent over bank-rate, subject to minimum 12.5 per cent per annum with half-yearly rests. The bank has also admitted that the interest has been charged on the basis of half-yearly rests. The bank (respondent No. 3) has also admitted that the loan was agricultural loan. According to the bank, the petitioners have not re-paid the amount and, therefore, the loan, along with the interest, amount to Rs. 3,73,626.65, became due against the petitioners on 31.3.98. According to the bank, the procedure, provided under the Rajasthan Agricultural Credit Operation (Removal of Difficulties) Act, 1974 and the rules framed thereunder, has been followed and complied with by the learned Assistant Collector (respondent No. 1), before passing the impugned order, and as such, the impugned order does not suffer from any legal infirmity. The respondent bank moved an application under Article 226(3) of the Constitution of India, along with the reply to the writ petition, for vacating the ex-parte stay order dated 1.5.98. Upon this, in the file of the stay application, it was ordered on 7.10.98 that the writ petition be listed for final disposal on 28.10.98. 3. On 28.10.98, the arguments of both the sides, on the writ petition, have been heard. 4. Upon this, in the file of the stay application, it was ordered on 7.10.98 that the writ petition be listed for final disposal on 28.10.98. 3. On 28.10.98, the arguments of both the sides, on the writ petition, have been heard. 4. In the case of Corporation Bank v. D.S. Gowda & another and other connected appeal (1994) 5 SCC 213 , Hon'ble The Supreme Court has held as under: "In so far as Civil Appeal No. 544 of 1986 is concerned, it relates to the bank's agricultural advances. We have already referred to the various circulars, issued by the Reserve Bank from time to time in exercise of power conferred by Section 21/35-A of the Banking Regulation Act. We have pointed out that the said circulars/directives provide that agricultural advances should not be treated on a par with commercial loans in so far as the rate of interest thereon is concerned because the farmers do not have any regular source of income except sale proceeds of their crops which income they get once a year. The question of recovery of interest with quarterly or six-monthly rests from farmers is, therefore, not feasible. The fact that the farmers are fluid at a given point of time every year has to be kept in mind in determining the point of time when they should be expected to repay the loan or pay the instalment/interest on advances. Therefore, to allow the banks to charge interest on quarterly or half-yearly rests from farmers would tantamount to virtually compelling them to pay compound interest, since they would not be able to pay the interest except once in a year, i.e., when they receive the income from sale proceeds of their corps. The Reserve Bank has shown concern for the farmers by directing all banking institutions to so regulate the recovery of interest as to coincide with the point of time when the farmers are fluid. It has, therefore, been emphasised by the Reserve Bank that interest should be charged once a year to coincide with the point of time when the farmer is fluid and interest on current dues should not be/compounded, although, it may be done when the advance/instalment becomes overdue. Thus, According to the circulars/directives, so far as loans for agricultural purposes are concerned, at best interest may be charged with yearly rests and may be compounded if the loan/instalment becomes overdue. Thus, According to the circulars/directives, so far as loans for agricultural purposes are concerned, at best interest may be charged with yearly rests and may be compounded if the loan/instalment becomes overdue. In the present case, since interest was charged with six-monthly rests that was clearly in contravention of the Reserve Bank circulars/directives. Compounding of interest on current dues on agricultural advances having been discouraged, the Bank was not entitled to charge interest with shorter periodical rests and compound the same. The Bank could add interest outstanding to the principal and compound the interest when the crop loan or term loan becomes overdue having regard to the tenor of the circular dated 14.3.1972. The High Court was, therefore, fully justified in coming to the conclusion that the Bank was not entitled to charge interest with half-yearly rest. ......In the case of agricultural loans/advances the interest can be fixed with annual rests coinciding with the time when the farmer is fluid and if thereafter the farmer fails to pay the interest, it would be open to compound the interest on the crop loan or instalments upon the term loans becoming overdue............" In the instant case in hand, admittedly, the loan is the agricultural loan. The respondent No. 3 has admitted that the bank has charged interest on the basis of half-yearly rest. According to the above decision of Hon'ble The Supreme Court, a bank is not entitled to charge interest with half-yearly rest. The interest can be determined with annual rests, coinciding with the time when the farmer is fluid, and if thereafter the farmer fails to pay the interest, it is open to compound the interest upon the term loan becoming overdue. Obviously, the respondent-bank has not properly determined the interest and therefore should re-determine the liability of loan, by charging the interest, as indicated by Hon'ble The Supreme Court, in the above case. The amount, so determined, may be placed before the respondent No. 1 (Assistant Collector), who should pass orders afresh, after giving an opportunity of hearing to both the sides. The impugned order, therefore, deserves to be set aside. 5. In the result, the writ petition is allowed. The impugned order dated 27.9.97, is set aside. The respondent No. 3 bank is directed to re-determine the liability of loan against the petitioners, by charging the interest, as indicated by Hon'ble The Supreme Court, above. The impugned order, therefore, deserves to be set aside. 5. In the result, the writ petition is allowed. The impugned order dated 27.9.97, is set aside. The respondent No. 3 bank is directed to re-determine the liability of loan against the petitioners, by charging the interest, as indicated by Hon'ble The Supreme Court, above. This may be done within four weeks from today, and thereafter, the amount, so re-determined, may be placed before the Assistant Collector (the respondent No.1), who would pass orders afresh, after giving an opportunity of hearing to both the sides.Writ Petition Allowed. *******