Punjab & Sind Bank vs Punjab Breeders Ltd. &Amp Anr.

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 Signature Not Verified recompense that the mortgaged properties shall not be Digitally signed by sold within a period of three years and if the Rajni Mukhi Date: 2016.04.05 16:54:02 IST properties are sold within the next three years; Reason: (a) The parties obtain prior permission of the bank. (b) The parties shall share with the bank 50% of

1 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:

2 “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

3 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 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.

4 12. There shall be no order as to costs.

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

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

New Delhi; March 29, 2016.

5 ITEM NO.61 COURT NO.11 SECTION IVB

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 106/2013 (Arising out of impugned final judgment and order dated 27/09/2012 in CWP No. 4792/2011 passed by the High Court of Punjab & Haryana at Chandigarh)

PUNJAB & SIND BANK Petitioner(s)

VERSUS

PUNJAB BREEDERS LTD. & ANR. Respondent(s) (with interim relief and office report)

Date : 29/03/2016 This petition was called on for hearing today.

CORAM : HON'BLE MR. JUSTICE KURIAN JOSEPH HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN

For Petitioner(s) Mr. Rajinder Wali, Adv. Mr. B. K. Satija,Adv.

For Respondent(s) Mr. Nidhesh Gupta, Sr.Adv. Mr. Tarun Gupta,Adv. Mr. Puneet, Adv.

Mr. Parag Tripathi, Sr.Adv. Mr. Atul S.Mathur, Adv. Ms. Priya Singh, Adv. M/s. Khaitan & Co.,Adv.

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

The appeal is dismissed in terms of the signed reportable Judgment.

All pending application(s), if any, shall stand disposed of.

(Rajni Mukhi) (Renu Diwan) SR. P.A. COURT MASTER

(Signed reportable Judgment is placed on the file)

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