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2002 DIGILAW 718 (AP)

Andhra Bank, Proddatur v. Challa Subba Reddy

2002-06-14

P.S.NARAYANA

body2002
P. S. NARAYANA, J. ( 1 ) THE second appeal is filed by the Andhra bank, Proddatur, questioning the judgments and decrees of the Courts below to the limited extent of scaling down the interest on the ground that the respondent-defendant is an agriculturist and hence entitled to the benefits of Act IV of 1938. ( 2 ) THE appellant-plaintiff bank had filed a suit against the respondent-defendant for recovery of Rs. 3,226-06 paise being the principal and interest due on a demand promissory note dated 4-10-1974 executed by the respondent-defendant in favour of the appellant-plaintiff bank for Rs. 2,000. 00 with a minimum interest of 17% per annum with quarterly rests and for costs and since the respondent-defendant deposited title deeds also in respect of the plaint schedule property, a mortgage decree was prayed for. The appellant-plaintiff is a banking institution with its registered office at hyderabad having branches all over India and O. S. No. 295 of 1981 on the file of the principal District Munsif, Proddatur was instituted by the Andhra Bank, Proddatur represented by its then Branch Manager for recovery of the aforesaid amount. No doubt several other details had been pleaded in the plaint and a specific stand was taken that the appellant-plaintiff bank is exempted from the purview of the Andhra Pradesh (Andhra area) Agriculturists Relief Act, 1938 (Act IV of 1938) and also Act 7 of 1977. The respondent-defendant had taken specific stand that the appellant-plaintiff is not entitled to charge compound interest and also the said debt is liable to be scaled down and the Court of first instance after recording evidence of P. W. I and D. W. I and also marking Exs. A-1 to A-4 had no doubt decreed the suit. But, however, the suit debt was scaled down following the decision reported in Indian Bank, Alamur v. Muddana krishna Murthy and the appellant-plaintiff bank aggrieved by the same had preferred a. S. No. 50 of 1984 on the file of the subordinate Judge, Proddatur taking specific stand that the ratio laid down in indian Bank, Alamur v. Muddana Krishna murthy is not applicable and the scaling down of the interest under the provisions of the Act IV of 1938 is not sustainable in law. But, however, the appellate Court had also arrived at the same conclusion and aggrieved by the same, the present appeal is filed. But, however, the appellate Court had also arrived at the same conclusion and aggrieved by the same, the present appeal is filed. ( 3 ) SRI D. Gopala Krishna, the learned counsel representing the appellant-plaintiff-Andhra Bank (In short hereinafter referred to as the Bank ) had made the following submissions. ( 4 ) THE learned counsel would contend that the substantial question of law which arises in the present second appeal, is whether in the case of the banking institutions in view of the specific provision, section 21-A of the Banking Regulation Act 1949 as inserted by Amending Act 1 of 1984, scaling down of interest in the present case, is in accordance with law. The learned counsel also submitted that the trial Court as well as the appellate Court had followed the ratio laid down in Indian Bank, Alamur v. Muddana Krishna Murthy and in view of the decision of the Apex Court in Bank of India v. M/s Vijay Transport, the said decision is no longer good law. The learned counsel also would further maintain that this question, in fact, had been decided by the Full Bench of this Court reported in State Bank of hyderabad v. Advath Sakru. The learned counsel thus had contended that the appellant-plaintiff bank is entitled to get the relief as prayed for without the interest being scaled down in view of the said legal position. ( 5 ) SRI M. N. Narasimha Reddy, the learned counsel representing the respondent-defendant had submitted that the provisions of the Act IV of 1938, in fact, are applicable since a finding had been recorded by the Court below that the respondent-defendant is an agriculturist and this is a finding of fact. The learned counsel had also taken me through the finding, which had been recorded by both the Courts below. ( 6 ) HEARD both the learned counsel and alsp perused the material available on record. ( 7 ) AS can be seen from the finding, which had been recorded by both the Courts below, the relief of scaling down of interest in accordance with the provisions of the Act iv of 1938 had been granted to the respondent-defendant on the strength of the decision reported in Indian Bank, Alamur v. Muddana Krishna Murthy (supra ). ( 7 ) AS can be seen from the finding, which had been recorded by both the Courts below, the relief of scaling down of interest in accordance with the provisions of the Act iv of 1938 had been granted to the respondent-defendant on the strength of the decision reported in Indian Bank, Alamur v. Muddana Krishna Murthy (supra ). However, in Bank of India v. M/s Vijay transport (supra), it was held that the banking Companies Act is a special Indian law and the provision of Section 4 (e) of agriculturists Relief Act is applicable to the bank which was nationalized under the banking Companies Act and consequently in view of Section 4 (e) the provisions of the act are not applicable to the bank and, there would be no question of scaling down the debt due to the bank by the firm the partners of which were agriculturists. The Apex court in the said decision while referring to the decision (supra) had observed as follows:"the reasons given by the Division bench of the Andhra Pradesh Court in krishna Murthy s case (AIR 1983 andhra Pradesh 347) for holding the latter part of S. 4 (e) of the Act as void are that S. 4 (e) of the Act was enacted to protect the British economic interests and although such a law could permissibly be enacted under the constitutional Scheme of the 1935 government of India Act, that law after the inauguration of our Sovereign democratic Republic cannot but be held to have become void as making invidious discrimination in favour of the British Corporation offending against the equality clause under art. 14 of the Constitution. Before declaring the same as void, the division Bench took the view that the words any special Indian law could not have been intended to refer to any law made by any Legislature of our country, but to a law made by the british Imperial Parliament as a piece of special legislation applicable to india. It has already been discussed by us that the words any special Indian law refers and relates to a law made by the Indian Legislature and not by the British Parliament. It has already been discussed by us that the words any special Indian law refers and relates to a law made by the Indian Legislature and not by the British Parliament. In that view of the matter, the reasons given by the division Bench for holding the latter part of S. 4 (e) to be void as making a discrimination in favour of corporations created by British parliament will not apply to corporations formed or created by any special Indian law which, in the instant case, is the Banking Companies Act. In our opinion, therefore, the Banking companies Act is quite legal and valid. No other point has been urged by either party in this appeal. " ( 8 ) APART from this aspect of the matter, the Full Bench of this Court in State Bank of hyderabad s case (supra) had an occasion to examine Section 21-A of the Banking regulation Act, 1949 as inserted by amending Act 1 of 1984 vis-a-vis the provisions of the Usurious Loans Act, 1918 and also the A. P. Agriculturists Relief Act, 1938 (Act IV of 1938) and the Full Bench after elaborate discussion had arrived at a conclusion that after introduction of section 21-A of the Banking Regulation Act 1949, the Courts have no power to scale down debts due to banks. In the light of the same, I have no hesitation in arriving at the conclusion that the appellant-plaintiff bank is entitled to the interest as claimed and the respondent-defendant is not entitled to the relief of scaling down of the interest as per the provisions of the Andhra Pradesh agriculturists Relief Act, 1938 (Act IV of 1938) and in view of the same, the appellant-plaintiff bank is bound to succeed in the second appeal. ( 9 ) ACCORDINGLY, the Second Appeal is allowed with costs.