In Brief
A public interest writ petition challenged the constitutional validity of Section 21A of the Banking Regulation Act, 1949, which prevents courts from reopening loan transactions between banks and debtors on grounds of excessive interest. The petitioners, citing farmer suicides and Parliamentary Standing Committee recommendations, argued the section violated Articles 14 and 32 and encroached on states' exclusive power over agricultural indebtedness relief. The Court held Section 21A valid as falling within the Union's banking power (Entry 45, List I), but recognized it incidentally encroaches on states' exclusive agricultural indebtedness relief power (Entry 30, List II). Accordingly, Section 21A will not apply in states with Debt Relief Acts covering bank debts; in other states or against non-specified banks, it applies. This balances federal and state powers through harmonious construction rather than federal supremacy.
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