Supreme Court - Daily Orders
Punjab & Sind Bank vs Punjab Breeders Ltd. &Amp Anr. on 29 March, 2016
Bench: Kurian Joseph, Rohinton Fali Nariman
REPORTABLE
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) 6