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1. This appeal is directed against the judgment and decree dated December 12, 1980, passed by the City Civil Judge, Bangalore City, in O.S. No. 2530 of 1980.

2. The appeal raises some questions of considerable importance as to the constraint on banking institutions to charge interest on loans/advances/overdrafts or any other financial accommodation and the power of courts to examine the rigour of such transaction and give relief to the debtor by calling into aid the usury enactments.

3. The facts, in brief, are these :

Sections 10, 13 to 15, 17, 19 to 21, 23 to 28, 29 (excluding sub-s. (3)), 31, 34, 35, 35A, 36 (excluding clause (d) of sub-s. (1)), 46 to 49, 50, 52 and 53.

33. The provisions of the B.R. Act has conferring power on the RBI :

The B.R. Act has conferred enormous powers on the Reserve Bank. Section 21 of the B.R. Act confers a power to control advances by commercial banks and to regulate the interest rates structure on which advances or other financial accommodation may be made.

34. Section 27 confers power on the reserve Bank to call for returns and information before the close of every month. That return may also pertain to any information regarding the investment of a banking companies and the classification of its advances in respect of industry, commerce and agriculture.

39. Under s. 47A, the Reserve Bank itself may imposed the penalty for a contravention or default of the nature referred to in sub-section (3) or sub-section (4) of section 46.

40. Directives and circulars on interest rate policy issued by the Reserve Bank.

41. A major instrument of credit control in the hands of the Reserve Bank has been the BANK RATE which may include, the rate at which banks get financial accommodation from the Reserve Bank, but also the rates of interest to be charged by banks in respect of advances or other financial accommodation and rates of interest to be allowed on fixed deposits.

42. In exercise of the powers conferred by s. 21 of the B.R. Act, the Reserve Bank issued a directive dated May 31, 1973, to be effective from June 1, 1973, stating that the scheduled banks not being co-operative banks shall not charge interest less than 10 per vent. per annum in respect of a loan or advance or other financial accommodation made or provident or renewed by it. Certain categories of loans and advances where, however exempted from the operation of the said notification. This minimum lending rate of 10 per cent. was raised to 12.5 per cent. per annum by another notification dated July 22, 1974.