Interest on agricultural advances cannot be compounded by quarterly rests without banking practice or Reserve Bank authority.

Interest cannot be charged twice on the same aggregate amount where the plaint claim already includes interest up to a stated date; the proper basis is the principal balance after removing the embedded interest component, with future interest governed by the applicable procedural rule. Quarterly rests on an agricultural advance are not recoverable unless supported by proof of recognised banking practice or an operative Reserve Bank direction. Section 21A of the Banking Regulation Act bars reopening a transaction merely because interest is excessive, but it does not permit recovery contrary to binding Reserve Bank norms. The decree was modified by disallowing quarterly rests and requiring recalculation of interest in accordance with law.

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Issues: (i) Whether interest was wrongly awarded from 1 April 1972 at 13% per annum on an amount that already included interest upto 16 June 1972; (ii) Whether the Bank could levy interest with quarterly rests on the agricultural advance in the absence of proof of banking practice or Reserve Bank authority.

Issue (i): Whether interest was wrongly awarded from 1 April 1972 at 13% per annum on an amount that already included interest upto 16 June 1972.

Analysis: The amount claimed in the plaint already included interest calculated upto 16 June 1972. Interest could therefore not be awarded again from 1 April 1972 on the same aggregate sum. The proper basis was the principal balance outstanding after excluding the interest component already included in the suit claim. Future interest after the decree was governed by the limitation applicable to agricultural advances under Section 34 of the Code of Civil Procedure.

Conclusion: The award of interest from 1 April 1972 on the full sum was set aside and the decree was modified to that extent.

Issue (ii): Whether the Bank could levy interest with quarterly rests on the agricultural advance in the absence of proof of banking practice or Reserve Bank authority.

Analysis: Quarterly rests were not proved as a recognised banking practice. The Bank also failed to show any operative Reserve Bank circular or notification authorising such recovery for agricultural advances. Section 21A of the Banking Regulation Act prevented reopening of a banking transaction merely on the ground that the rate of interest was excessive, but it did not authorise a Bank to charge interest in breach of Reserve Bank directions. Where the levy exceeded the permitted norm fixed by the Reserve Bank, the Court could grant relief notwithstanding Section 21A.

Conclusion: The Bank was not entitled to recover interest with quarterly rests on the agricultural loan.

Final Conclusion: The appeal succeeded only in part. The decree was modified by disallowing quarterly rests and by directing recalculation of interest, while sustaining the Bank's entitlement to interest at the approved rates and future interest as allowed by law.

Ratio Decidendi: A banking transaction cannot be reopened under Section 21A of the Banking Regulation Act merely for excessiveness of interest, but a court may grant relief where interest is charged contrary to binding Reserve Bank directions, and quarterly rests on agricultural advances are not permissible unless duly authorised.

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