W.P.(C) No.-000134-000134 / 2013. JAYANT VERMA . vs UNION OF INDIA. Supreme Court, 16-02-2018

Party Name:W.P.(C) No.-000134-000134 / 2013. JAYANT VERMA . vs UNION OF INDIA. Supreme Court, 16-02-2018
Judgement Date:February 16, 2018
Court:Supreme Court
 
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IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO. 134 OF 2013
JAYANT VERMA & ORS. … PETITIONERS
VERSUS
UNION OF INDIA & ORS. … RESPONDENTS
J U D G M E N T
R.F. NARIMAN, J.
1. A writ petition, by way of a Public Interest Litigation,
filed under Article 32 of the Constitution of India, assails
the constitutional validity of Section 21A of the Banking
Regulation Act, 1949. The aforesaid section was
introduced into the Banking Regulation Act by the
Banking Laws (Amendment) Act of 1983 with effect from
Digitally signed by
VISHAL ANAND
Date: 2018.02.16
15:31:24 IST
Reason:
Signature Not Verified
15.2.1984. Section 21A of the Banking Regulation Act
reads as under:
21A. Rates of interest charged by banking
companies not to be subject to scrutiny by
courts
Notwithstanding anything contained in the
Usurious Loans Act, 1918 (10 of 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 re-
opened by any court on the ground that the
rate of interest charged by the banking
company in respect of such transaction is
excessive.”
2. It will be seen that Section 21A interdicts the
reopening by courts of a debt between a banking
company and its debtor, on the ground that the rate of
interest charged by the banking company, in respect of a
loan transaction, is excessive. The section seeks to keep
out of harm’s way the Usurious Loans Act, 1918 and/or
any other State legislation relating to indebtedness, and
then declares that no such loan transaction shall be
reopened by any court on the ground of charging of
excessive rates of interest. The writ petition has been filed
by certain public spirited citizens, who rely on the report of
the Parliamentary Standing Committee on Agriculture for
the year 2006-2007 to say that Section 21A should be
abolished, insofar as it applies to rural indebtedness. The
Standing Committee’s Report reads as follows:
“The Committee feels that the worst
exploitation of farmers is through the adverse
credit policies of the financial institutions
which compel farmers to starve under the
burden of loans and commit suicides. The
Committee finds that in 1918, the British
passed the Usurious Loans Act which
provided that no farmer could be charged a
rate of interest higher than the authorised
rate- which at that time was 5.5 per cent, and
if charged, the case could be re-opened in
court and the entire account re-settled.
Moreover, the total amount of interest could
not be higher than the original capital. But in
1949, the Banking Regulation Act was passed
which made a special provision under Section
21 (A) saying that these will not apply to
banking companies including cooperative
banks.
In view of the plight of farmers due to heavy
burden of credits, the Committee recommend
that section 21 (A) of the Banking Regulation
Act should be scrapped. All out concerted
efforts should be made to bring down the rate
of interest on Farm Credit to the level of 5.5%
simple interest, as it used to be in the early

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