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IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3197 OF 2016 (Arising out of SLP (C) No. 106/2013)

PUNJAB & SIND BANK ...  APPELLANT (S) VERSUS

PUNJAB BREEDERS LTD. & ANOTHER     ... RESPONDENT (S)

J  U  D  G  M  E  N  T KURIAN, J.:

Leave granted.  

2. The short question arising for consideration in this  case is whether the appellant-bank is entitled to fifty per  cent of the increase in fair market value of property fixed at  the time of settlement, in terms of the One Time Settlement  (OTS) Scheme.

3. As per letter dated 01.03.2012, the appellant offered  OTS to the first respondent for settlement of the entire dues  to  the bank  on payment  of Rs.542  lakhs, subject  to a  few  conditions. The one relevant for the purpose of the present  appeal reads as follows:

“The  OTS  shall  be  subject  to  Bank’s  right  to  recompense  that  the  mortgaged  properties  shall  not be sold within a period of three years and if  the  properties  are  sold  within  the  next  three  years;

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(a) The parties obtain prior permission of the  bank.

(b) The parties shall share with the bank 50% of  increase in FMV of the properties which is  Rs.882.00 lacs at the time of sanction of  this settlement.”

4. Prior  to  the  OTS  offer,  the  bank  had  made  several  attempts to sell property mortgaged by the first respondent.  Since the highest offer was of Rs.5.40 crores, the bank had  given an opportunity to the first respondent, by letter dated  03.03.2011, to get any buyer for more than 5.40 crores by  16.03.2011, and if not, the bank would be confirming the sale  of  Rs.5.40  crores.  Thereafter,  the  OTS  offer  was  made  for  settlement  of  the  dues  at  Rs.542  lakhs  by  letter  dated  01.03.2012. In response to the offer made by the bank, the  first respondent managed to enter into an agreement with the  second respondent for sale of half of the mortgaged property  and pursuant to that agreement, the whole amount of Rs.5.42  crores, as per the offer made by the bank, was paid in terms  of the OTS. However, the bank declined to settle the accounts  and released the mortgage on the ground that the third party  interest having been created, the bank was entitled to 50% of  the fair market value.

5. The High Court, as per the impugned judgment, directed  the bank to accept the payment of Rs.5.42 crores in full and  final settlement of all the claims, as per the OTS proposed on  01.03.2012 and release the mortgaged property with a further  

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direction not to sell the property for a period of three years  from 01.03.2012. Aggrieved, the appellant-bank is before this  Court.

6. Following are the main questions of law raised in this  appeal:

“E. Whether by the impugned order, the Hon’ble  High  Court  could  have  allowed  the  Writ  Petition  and  directed  the  petitioner  to  accept  the  amount  of  Rs.5.42  crores  and  release  the  sale  deed,  notwithstanding  the  fact  that  as  per  terms  of  one  time  settlement  sanction,  the  respondent  No.1  could  not  have  alienated  the  mortgaged  property for three years?

F. Whether by the impugned order, the Hon’ble  High Court has failed to consider that as  per  terms  of  one  time  settlement  dated  01.03.2012, there was bar on alienation for  three years and if the properties are sold  within the next three years, the respondent  No.1 had to take prior permission from the  petitioner and share 50% of increase in Fair  Market  Value  of  the  property  which  was  Rs.882 lacs at the time of sanction of the  settlement?

G. Whether by the impugned order, the Hon’ble  High Court failed to consider that inspite  of bar on alienation as per sanction dated  01.03.2012,  duly  accepted  by  respondent  no.1,  the  respondent  No.1  clandestinely  entered  into  an  Agreement  to  Sell  with  respondent No.2 in respect of land measuring  11855.5  sq.yds.  for  an  amount  of  Rs.4.95  crores,  without  either  seeking  prior  permission  from  the  petitioner  Bank  and/or  sharing  50%  increase  in  the  Fair  Market  Value of the Property?”

 7. Heard the learned Counsel appeared on both sides.

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8. The main contention advanced by the learned Counsel for  the appellant-bank is that the first respondent having entered  into agreement for sale of the property, as per OTS, the bank  is entitled to 50% of the fair market value in addition to the  OTS payment. It is further submitted that the first respondent  having created a third party interest, the appellant-bank is  entitled to claim the fair market value.

9. We are afraid, the contentions cannot be appreciated.  As per the OTS proposal dated 01.03.2012. the restriction is  only on sale of the mortgaged property for a period of three  years, and in case, the properties are sold within the said  lock in period of three years, the same should be done with  the  permission  of  the  bank  and  that  the  first  respondent  should share 50% of the increase in fair market value of the  property, fixed at the time of sanction of the settlement.

10. The undisputed factual position is that the appellant- bank  has  not  released  the  mortgage.  The  possession  of  the  mortgaged  property  has  not  been  delivered  to  the  first  respondent so far. The three year lock in period expired on  01.03.2015.  The  creation  of  third  party  interest  or  arrangement by way of agreement for sale within the three year  period is different from sale. Admittedly, sale has not been  made  within  the  period  of  three  years  of  settlement.  The  scheme  has  not  provided  for  any  other  restriction  of  involvement  of  third  party  interest  for  settlement  of  the  

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dues. The only restriction is on sale of the property within  three years of the settlement. That admittedly having not been  done, the appellant cannot rest any claim under law for the  share  of  the  increase  in  fair  market  value  by  way  of  recompense. There is nothing to be recompensed since the bank  has not suffered or lost anything.

11. Thus, we see no error in the view taken by the High  Court. The appeal is dismissed. The appellant-bank is directed  to release the title deed of the mortgaged property to the  first  respondent  and  also  handover  the  possession  of  the  property to the first respondent within two weeks.

12. There shall be no order as to costs.

................J.                 (KURIAN JOSEPH)

.....................J. (ROHINTON FALI NARIMAN)

New Delhi; March 29, 2016.

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