PUNJAB & SIND BANK Vs. PUNJAB BREEDERS LTD. & ANR.
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 3197 of 2016, Judgment Date: Mar 29, 2016
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.
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.
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;
The parties obtain prior permission of the bank.
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.”
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.
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 direction not to sell the property for a period of
three years from 01.03.2012. Aggrieved, the appellant-bank is before this
Court.
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?
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?
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?”
Heard the learned Counsel appeared on both sides.
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.
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.
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 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.
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.
There shall be no order as to costs.
................J.
(KURIAN JOSEPH)
.....................J.
(ROHINTON FALI NARIMAN)
New Delhi;
March 29, 2016.
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