Section 21-A bars reopening bank loan transactions for excessive interest, overriding usury-based relief and pending claims.

Section 21-A of the Banking Regulation Act, 1949 bars reopening any loan transaction between a banking company and its debtor on the ground that the interest charged is excessive, notwithstanding the Usurious Loans Act, 1918 or any other law relating to indebtedness. The prior relief available under Section 3 of the Usurious Loans Act, based on excessive interest and substantial unfairness, is displaced in banking transactions covered by Section 21-A. The provision also applies to pending proceedings, so claims seeking reconsideration of bank lending terms on the basis of excessive interest cannot be maintained.

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Issues: Whether the loan transaction between the bank and its debtor could be reopened under the Usurious Loans Act, 1918 on the ground that the rate of interest was excessive, after insertion of Section 21-A in the Banking Regulation Act, 1949.

Analysis: The issue of excessiveness of interest under Section 3 of the Usurious Loans Act, 1918 was examined in the light of the statutory scheme that permitted relief where interest was excessive and the transaction was substantially unfair. However, Section 21-A of the Banking Regulation Act, 1949 introduced a direct bar against reopening any transaction between a banking company and its debtor on the ground that the rate of interest charged is excessive, notwithstanding anything contained in the Usurious Loans Act, 1918 or any other law relating to indebtedness. The provision was held applicable to pending proceedings as well.

Conclusion: The transaction could not be reopened on the ground of excessive interest, and the contention based on the Usurious Loans Act, 1918 failed.

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