G.P. Mathur, A.K. Yog, J. - (1.) WITH the consent of the learned Counsel for the parties, this special appeal is being disposed of finally at the admission stage. The respondents in the special appeal filed writ petition No. 924 of 2000 impleading (1) State of U.P. through Collector, Gorakhpur; (2) Tehsildar, Sahjanwa, District Gorakhpur; and (3) State Bank of India, Branch Gaksara, District Gorakhpur as respondents. The relief claimed was that a writ of mandamus be issued commanding the respondents not to proceed against the petitioner by using any coercive measure and not to attach or sell their immovable property. The writ petition Was disposed of by the learned Single Judge on 11.1.2000 with the following direction: In view of the aforesaid facts, this petition is disposed of finally with the direction that recovery proceedings initiated against the petitioners shall remain stayed for a period of six months provided the petitioner deposit the amount in question in three instalments. The first instalment shall be deposited within a period of two months, second instalment within a period of four months and the third and last instalment within a period of six months from today. The amount, if any, already deposited by the petitioner shall be adjusted. In case the property of the petitioners has not been attached or sold the respondents shall not be entitled to charge the recovery charges from the petitioners in view of law laid down in Mirza Javed Murtaza v. U.P. Financial Corporation : AIR 1983 Alld. 234. The respondent No. 1 will charge simple interest from the petitioners in view of the decision of Apex Court in Corporation Bank v. Gowda and another,, JT 1998 (7) SC 87. Being aggrieved by the direction that simple interest shall be charged from the petitioners the State bank of India has filed the present appeal. Sri R.B. Sahai learned Counsel for the appellant has submitted that in view of Section 21 -A of Banking Companies Regulation Act, it is not open to the Court to alter the agreement and direct that simple interest would be charged. In support of this proposition, he had placed reliance on a recent pronouncement by the Apex Court in State Bank of India v. Yasangi Venkateswara Rao : JT 1999 (1) SC 145, Section 21 -A of Banking Companies Regulation Act reads as follows: 3. Notwithstanding anything contained in the Usurious Loans Act, 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.
(2.) IN State of Bank of India v. Yasangi Venkateswara (supra), it was held as follows: We also find it difficult to agree with the observation of the High Court normally when a security is offered in the case of mortgage or property, charging of compound interest would be regarded as excessive. Entering into a mortgage is a matter of contract between the parties. If the parties agree that in respect of the amount advanced against a mortgage compound interest will be paid, we fail to understand as to how the court can possibly interfere and reduce the amount of interest agreed to be paid on the loan so taken. The mortgaging of a property is with a view to secure the loan and has no relation whatsoever with the quantum of interest to be charged. Having heard learned Counsel for the parties, we are of the opinion that the direction given by the learned Single Judge that the bank will charge simple interest from the petitioners cannot be legally sustained in view of Section 21 -A of the Banking Companies Regulation Act. The writ petitioners are bound to pay interest in accordance with the agreement. The Special Appeal is partly allowed and the direction given by the learned Single Judge to the effect that simple interest will be charged from the writ petitioner is set aside. The appellant - -State Bank of India will be entitled to charge interest in accordance with the agreement which was executed by the parties at the time when the loan was given to the writ petitioners.;