UNION OF BANK OF INDIA Vs. DHANEKULA KOTESWARA RAO

JUDGEMENT

(1.) A question of some importance, particularly for the agriculturists arises in these three appeals, and they are disposed by a common judgment.

(2.) Union Bank of India granted loans to some of the defendants and the other defendants stood as guarantors for repayment of the loan. Promissory notes were duly executed by all the defendants. The defendants agreed to pay interest at 4% over and above the Reserve Bank rate with a minimum of 9% per annum. The interest claimed in the suits is 11% per annum with half yearly rests. Since the defendants failed to pay the amount the suit was filed for recovery of the amount. The defendants contested the suit by contending that they are agriculturists, that the debt was liable to be scaled down under the Andhra Pradesh Agriculturists Relief Act, (Act IV of 1 938) and even otherwise, the interest charged was usurious, within the meaning of the Usurious Loans Act as amended by the Madras Amendment Act VIII of 1937.

(3.) It is not disputed that the defendants are agriculturists. Both the lower Courts held that the defendants were entitled to the benefits of the Andhra Pradesh Agriculturists Relief Act. In two suits they also held that the interest charged was usurious.