THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY WRIT PETITION No.23367 of 2005 ORDER: The petitioner obtained loan of Rs.4,00,000/- in the year 2001 from respondent No.1-bank for the purpose of establishing an industry. The loan was to be repaid in equal monthly instalments of Rs.10,000/- over a period of five years. The petitioner, no doubt, paid certain instalments, but committed default. Respondent No.1 recalled the loan and proceedings under Section 61 of the A.P. Co-operative Societies Act, 1964 (for short ‘the Act’) were initiated before respondent No.2. An award was passed on 28.05.2002 directing that the petitioner shall be under obligation to pay the principal amount of Rs.4,00,000/- and the interest of Rs.82,000/-, calculated at the rate of 21% quarterly rests. The petitioner filed C.T.A.No.146 of 2002 before the A.P. Co-operative Tribunal at Hyderabad. Through its order, dated 05.05.2005, the Tribunal upheld the award, but directed that the interest shall be simple in nature without any rests. The petitioner feels aggrieved by the award as confirmed by the appellate Tribunal. According to him, the rate of interest specified under Section 34 C.P.C. is applicable and the award of interest at the rate of 21% is exorbitant. Heard the learned counsel for the petitioner, learned Standing Counsel for respondent No.1 and the learned Government Pleader for Co-operation for respondent No.2. The petitioner committed default in payment of instalments and accordingly, the loan was recalled by respondent No.1. The repayment of the loan is secured by deposit of title deeds. Respondent No.1 is a banking company and Section 21-A of the Banking Regulation Act, 1949, applies to it. The bank is entitled to levy interest according to the prevailing rates. The matter between the petitioner and respondent No.1 was adjudicated by respondent No.2 under Section 61 of the Act. It is, no doubt, true that this Court in A.P. STATE CO- OPERATIVE BANK LIMITED vs. CO-OPERATIVE TRIBUNAL[1] held that Section 34 C.P.C. does not apply in relation to the proceedings under Sections 61 and 62 of the Act. The fact, however, remains that in N.M.VEERAPPA vs. CANARA BANK[2], the Hon’ble Supreme Court held that Section 21-A of the Banking Regulation Act, 1949 does not override Section 34 C.P.C. A Division Bench of this Court in SRI PANDURANGA TRADERS vs. STATE BANK OF INDIA[3] scaled down the interest levied by a co-operative bank, where the loan is secured by deposit of title deeds. This Court is of the view that 21% of interest levied by respondent No.1 is excessive and it cannot be sustained in law. Even if one goes by the principle underlying Section 34 C.P.C. for commercial transactions, the interest can be more than 6%, but it should be reasonable in nature. This Court is of the view that levy of simple interest at the rate of 15% would meet the ends of justice and protect the interest of the parties. The petitioner has already deposited the entire principal amount, in compliance with the interim orders passed by this Court. Hence, the writ petition is allowed, scaling down the interest levied upon the loan obtained by the petitioner from 21% to 15% simple. There shall be no order as to costs. _______________________ L.NARASIMHA REDDY,J Dt: 01.04.2010. kdl [1] 2002(4) ALT 580 [2] 1998 (2) ALT 6 (SC) [3] 2000(2) ALT 511 (D.B.)