STATE BANK OF PATIALA Vs. HARBANS SINGH

JUDGEMENT

(1.) Leave granted.

(2.) This appeal arises against the order of the High court of Punjab and Haryana in Second Appeal No. 1165 of 1993 dated 28/5/1993 dismissing the appeal of the appellant in lirnine. "the respondent is the landlord who obtained loan from the appellant and constructed a building for the business of the appellant in ground floor of the premises bearing No. 55 at Tripurari Sadan, Patiala. The appellant charged interest @ 16% per annum with quarterly rests thereon. Impugning the liability, the respondent laid the suit and the trial court reduced the rate of interest to 15% p. a. and also set aside the liability of quarterly rest. On appeal it was confirmed. As said earlier, the second appeal was dismissed in limine. Thus this appeal by special leave.

(3.) The contention of the appellants is that the respondent had approached for a term loan for construction of the building with a condition to lease it out to the appellants. In the promissory note and the documents executed by the respondent, it was specifically agreed that the term loan granted by the appellants would carry not only the interest at the rate stipulated therein, but also quarterly rest. It is stated that the word 'term loan' would include not only the loan lent for commercial purposes but also the loan advanced to construct the houses to lease back to the bank for their business purpose and the courts below have, therefore, committed illegality in reducing the liability of quarterly rest. Though we have given sufficient time andadjourned the case from time to time to produce all the records, the bank has not chosen to produce the records; in particular, circular letter of Reserve Bank of India bearing DBOD No. DCDC 106/c 168 (61-80 dated 15/9/1980 on the subject of minimum lending rates of interest in respect of advances to the landlords. Therefore, we are constrained to proceed on the basis of the material placed by the appellants and the respondent.