JUDGMENT

Dr. Anand, J.-Leave granted.

This appeal is directed against an award made by the Banking Ombudsman, Hyderabad, (appointed under the Banking Ombudsman Scheme, 1995) dated 26.2.1997, in a complaint filed by the respondents against the appellant bank. The appeal arises in the following circumstances :

2. On 12.1.1980, the appellant bank sanctioned a loan of Rs. 80000/- in favour of respondent No. 3 for construction of a strong room. A further loan of Rs. 25000/- was granted to respondent No. 3 on 21.2.1986 to meet part of the construction cost of the premises which were to be taken on lease by the appellant. On 22.2.1991, an additional loan of Rs. 200000/- was granted by the appellant bank to respondent No. 3 to construct a bigger strong room. The entire premises, after the construction/renovation, were taken on lease by the appellant bank. In respect of the loan granted on 12.1.1980, respondent No. 3 executed a Demand Promissory Note undertaking to pay interest at the rate of 5% above the Reserve Bank of India rate of interest with minimum rate of interest @ 14% per annum compounded quarterly. So far as the loan granted on 21.2.1986 is concerned, respondent No. 3 executed a De