ORDER

1. Leave granted. This appeal arises against the order of the High Court of Punjab & Haryana in Second Appeal No. 1165/93 dated May 28, 1993 dismissing the appeal of the appellant in limine. 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 the appeal by special leave.

2. 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 and adjourned 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 September 15,1980 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.

3. Shri Goel, learned senior counsel for the appellants, has strenuously contended that the word term loan would include not only the loan advanced for commercial purpose, but also the loans advanced to the landlords for construction of the building to lease back to the lending bank for their commercial purpose, which loan carries liability to pay interest at quarterly rest. In the promissory note and the agreement executed by the respondent it was also mentioned that the liability on interest is also with quarterly rest. He stated that in Clause l(ii) of the letter (exhibit P-7, filed by them on the paper book) addressed by the Reserve Bank of India, Department of Banking Operations to all the commercial banks on March 13, 1976 it was mentioned that:

"l(ii) no scheduled commercial bank incorporated in India and having aggregate demand and time liabilities of Rs. 25 crores or above but less than Rs. 50 crores as on the 12th March, 1976 or at any time thereafter, shall charge interest on loans/advances/cash credits/overdrafts or any other financial accommodation made or provided by it or renewed by it, or discount usance bills at a rate, in either case, higher than 17.50 per cent annum: interest shall be charged with quarterly rests."

4. This clearly shows that landlord is liable to pay quarterly rest. But when we see the letter DBOD No. DC.DC.42/c. 168(61)-81 dated 18th April 1991 addressed by the Reserve Bank to all the commercial banks including the regional rural banks. We find it was decided by the Reserve Bank that the minimum lending rates of interest in respect of advances to landlords/lessors or premises for banks use, should be refined and the same should be 15.0% in respect of such advances in urban/metropolitan centres. This letter does not mention about quarterly rest.

5. The appellant bank itself have stated that in the letter of the Reserve Bank of India dated March 7, 1986 it has been reiterated in paragraph 2 that the matter regarding rates of interest to be charged by the banks on advances gr