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14. The contention of Mr. Murthy, learned counsel is that Section 21-A of the Regulation Act, 1949 mandates that Courts cannot reopen a transaction between a banking company and its debtor on the ground that the rate of interest charged is excessive or unreasonable notwithstanding the provisions of Usurious Loans Act, 1918 (Act 10 of 1918). According to the learned counsel, the language of the said provision makes it clear that the exercise of the jurisdiction by the Courts under the provisions of Usurious Loans Act or any other law relating to indebtedness for the purpose of giving relief to any party is ousted. Therefore, whenever the Court is called upon to exercise jurisdiction under the provisions of Usurious Loans Act or any other law relating to indebtedness so as to give relief to the debtor, the court will be precluded to do so by virtue of the mandatory terms incorporated in Section 21-A of the Regulation Act, 1949, irrespective of the fact whether the transaction sought to be reopened took place anterior to the invoking the jurisdiction of the Court. This applies equally to a suit filed prior to the coming into force of the said provision (15-2-1984) and pending as on that date. Prohibition also embraces cases where the suit was filed and decreed before 15-2-1984 and an appeal is pending as on the said date before the appellate or second appellate Authority, as the case may be. It is also contended that the question whether Section 21-A is prospective or retrospective does not arise and as and when the Court is called upon to exercise the jurisdiction under the provisions of Usurious Loans Act or any other law relating to indebtedness in the States, the jurisdiction of the Court is ousted by Section 21-A of the Regulation Act, 1949.

47. Having regard to what is stated above, it is clear that even though the transaction between the banking company and the debtor is anterior to the coming into force of S. 21-A, the provision applies and the Court is divested of its power to give relief under the Usurious Loans Act. This is so even if the suit is filed earlier and pending as on the date of coming into force of the provision.

48. It was next contended by the learned counsel appearing for the banks that the object of the Amending Act in respect of the above provision also will have to be taken into consideration in interpreting the statute. In this connection, it is contended that there were divergent views expressed by different Courts with regard to the applicability or otherwise of the Debt Laws of the respective States and the Usurious Loans Act to the transactions between the banking companies and its debtors. A Division Bench of this Court held that notwithstanding the directions of the Reserve Bank of India to the Banking Companies to charge interest on the loans given by them at certain rates, the Courts are empowered to give relief under the provisions of Act IV of 1938. This was the view expressed in Union Bank of India v. Dhanekula Koteswara Rao, (1979) 2 Andh WR 165 as well as by the Kerala High Court in State Bank of Travancore v. George, while the Madras High Court held in Indian Bank, Tiruvannamalai v. V. A. Balasubramania Gurukal, that the provisions of the Banking Regulation Act, 1949, alone regulate the rate of interest on advances by nationalised bank and the provisions of the Regulation Act prevail over the provisions of Usurious Loans Act.

50. Having regard to the views expressed by different High Courts and also in view of the fact that the banking companies are bound by the directions issued by the Reserve Bank of India in respect of charging interest, violation of which will entail penal consequences, the Parliament stepped in to set at rest the controversy and enacted Section 21-A to enable the banking companies to charge interest as per the directions issued under the provisions of Regulation Act, 1949. Therefore, the intention of the Parliament is clear that the laws relating to indebtedness prevailing in the respective States and the provisions of Usurious Loans Act 10 of 1918 should not be made applicable to the banking companies which are bound to charge the rates of interest as directed by the Reserve Bank of India under the provisions of Banking Regulation Act, 1949. If this is to be construed otherwise, there will be conflict with reference to the actions taken pursuant to the respective laws themselves. If the banking companies are bound to charge the interest as per the directions of the Reserve Bank of India under the provisions of Regulation Act, 1949, it cannot be said at the same time that the transactions can be reopened by the Courts and the rates of interest are scaled down as per the different laws relating to indebtedness of the respective States and Usurious Loans Act on the ground that the rate of interest charged is impermissible. This is the mischief which the Parliament wanted to remedy and therefore, according to the learned counsel for the Banks, the intention of enacting Section 21-A is made clear by necessary implication that Parliament wanted to divest the Court of the power to give relief under the respective debt laws of the States as well as under the provisions of Usurious Loans Act 10 of 1918.

"Therefore, it follows that in the case of a Banking Company, a fortiori, its claim to interest at the agreed rate for the period prior to the suit cannot be ignored and the Court is bound to grant interest at that rate. The Court has no discretion in the matter."

It is true that there is no detailed discussion with regard to the question whether Section 21-A is prospective or retrospective and what is its effect on the pending proceedings in Court etc.

54. Likewise in Syndicate Bank's case referred to supra (1993 (76) Com Cas 392) a Division Bench of the Bombay High Court considered the effect of Section 21-A of the Regulation Act, 1949, vis-a-vis the provisions of Usurious Loans Act, 1918. In this case, two loan facilities were granted by the plaintiff-bank of October 16, 1978 for the purchase of weighing scales. Interest was charged with quarterly rests and a suit was filed for recovery of the amount with compound interest. Suit was resisted by the debtor on the ground that the plaintiff-bank cannot charge interest more than the rate permitted by the Usurious Loans Act. The trial Court accepted the said contention and stated that in view of the first proviso to Section 3(2)(a) of the Usurious Loans Act, 1918, the transaction is liable to be re-opened and the debtor is relieved of the excess rate of interest. Questioning the said judgment and decree of the trial Court, appeal was preferred to the High Court and it was admitted on October 14, 1983. During the pendency of the appeal, Section 21-A was inserted by the Amending Act 1 of 1984. It came into effect from 15-2-1984. At the time of hearing of the appeal, it was contended on behalf of the bank that in view of Section 21-A of the Regulation Act, 1949, the Courts are barred from re-opening the loan transaction. The Division Bench of the Bombay High Court after referring to the judgment of the Supreme Court in Amarjit Kaur's case (supra) which stated that the appeal is a rehearing of the suit, applied Section 21-A of Regulation Act, 1918 and allowed the appeal and decreed the suit as prayed for. The relevant observations of the Division Bench are as follows: