In Brief
Section 21A of the Banking Regulation Act, 1949, which prohibits courts from reopening banking transactions on grounds of excessive interest, was challenged as unconstitutional. The Supreme Court upheld Section 21A as valid legislation falling within Parliament's exclusive power over banking under Entry 45, List I of the Constitution. However, the Court reconciled this with State power over agricultural debt relief under Entry 30, List II by holding that Section 21A will not apply where a State has enacted a Debt Relief Act covering bank debts to farmers. The judgment balances federal and state powers by allowing State legislation on agricultural indebtedness relief to prevail over the federal banking law where they directly conflict, protecting the exclusive agricultural domain reserved to States.
The lawyer headnote and full judgment text are available to registered users.