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.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3197 OF 2016
PUNJAB & SIND BANK
V
PUNJAB BREEDERS LTD. & ANOTHER.
Citation:(2016) 13 SCC 283
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;
(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
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.
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 appellantbank
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.
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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