PUNJAB & SIND BANK versus PUNJAB BREEDERS LTD. & ANOTHER
[2016] 2 S.C.R. 876, Supreme Court of India, 2016
Outcome: Dismissed (Dismissed)
Segment: Body
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(2016] 2 S.C.R. 876 
PUNJAB & SINO BANK 
v. 
PUNJAB BREEDERS LTD. & ANOTHER 
(Civil Appeal No. 3197of2016) 
MARCH 29, 2016 
[KURIAN JOSEPH AND ROHINTON FALI NARIMAN, JJ.J 
Compromise: Settlement - One Time Settlement (OTS) Scheme 
- Appellant-bank offered OTS to the first respondent for sett/eme111 
of entire dues to the bank 011 payment of Rs. 5 . ./2 crores subject to 
bank's right to recompense that the mortgaged properties shall not 
be sold within a period of 3 years and if properties are sold within 
next 3 years then parties shall obtain prior permission of the bank 
and share with the bank 50% of increase in fair market value of the 
properties which is Rs.8.82 crores at the time of sanction of this 
settlement - In response to the offer of OTS, the first respo11dent 
managed to enter into a11 agreement with the seco11d respo11dent for 
sale of half of the mortgaged property a11d pursuant to that 
agree111ent, whole amount of Rs.5 . ./2 crores as per offer made by 
the bank was paid i11 terms of OTS - Holl'ever, bank refused to 
settle the accounts and release the mortgage on the grou11d that the 
third party i11terest having been created, the bank ll'aS entitled to 
50% affair market value - High Court directed the bank to accept 
the payment of Rs.5 . ./2 crores in fit!/ and final settlement of all the 
clai111s as per the OTS proposed and release the mortgaged property 
11·ith ji1rther direction not to sell the property for a period of'
ihree 
years - Whether appellant-bank is entitled to 50% of the increase 
i11 fair market value of property fixed at the time of settle111ent in 
ter111s of OTS - Held: The creation of third party i11terest or 
arrangement by way of agreement for sale within the three year 
period is different from sale - Admittedly, sale li'OS not 111ade within 
the period()/' three years of'settle111ent - The only restrictio11 was on 
sale of the property within three years of the settlement - That 
admittedly havi11g not bee11 done, the appella11t cannot rest a11y claim 
under law for the share of the increase in fair 111arket 1•alue by way 
of recompe11Se -Appel/a111-ba11k directed to release the title deed of' 
876
PUNJAB & SINO BANK v. PUNJAB BREEDERS LTD. & 
877 
ANOTHER 
the mortgaged property to the first re,pondent and also handover 
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the possession of the property to the first respondent. 
Dismissing the appeal, the Court 
HELD: 1. 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. [Para 9][880-A-Il] 
2. 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 fir~t 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 11arty 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 beeu done, the 
appellant cannot rest any claim under law for the share of the 
increase in fair market valnc by way of
rccom pensc. There is 
nothing to be recompensed since the bank has not suffered or 
lost anything. 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. [Paras 10 and 11] [880-C-E] , 
CIVlLAPPELLATE JURISDrCTION: Civil Appeal No. 3197 of 
2016. 
from the Judgment and Order dated 27.09.2012 of the High Court 
of Punjab and lfaryana at Chandigarh in Civil Writ Petition No. 4792 of 
2011 (O&M). 
Rajinder \Vali, B. K. Satija, Ad vs .• for the Appellant. 
Nidesh Gupta, Parag Tripathi, Sr. Advs., Tarun Gupta, Punect, 
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878 
SUPREME COURT REPORTS 
[2016] 2 S.C.R. 
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Atul S. Mathur, Ms. Priya Singh, Mis. Khaitan & Co., Advs. for the 
Respondents. 
The Judgment of the Court was delivered by. 
KURIAN, J. !. Leave granted. 
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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 
c the first respondent for settlement of the entire dues to the bank on 
payment ofRs.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 
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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 ofRs.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 ofRs.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
PUNJAB & SINO BANK v. PUNJAB BREEDERS LTD. & 
879 
ANOTHER [KURIAN,J.] 
bank to accept the payment ofRs.5.42 crores in full and final settlement 
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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: 
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"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 ofRs.5.42 erores and release 
the sale deed, notwithstanding the fact that as per terms of 
one time settlement sanction, the respondent No. I could 
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not have alienated the mortgaged prope_rty for three years? 
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Whether by the impugned order, the Hon 'hie High Court 
has failed to consider that as per terms of one time settlement 
dated 01.03.2012, there was baron alienation forthree years 
and if the properties are sold within the next three years, 
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the respondent No. I 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? 
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Whether by the impugned order, the Hon'ble High Court 
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failed to consider that inspite of bar on alienation as per 
sanction dated 01.03.2012, duly accepted by respondent no. I, 
the respondent No. I clandestinely
entered into an Agreement 
to Sell with respondent No.2 in respect of land measuring 
11855.5 sq.yds. for an amount ofRs.4.95 crores, without 
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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 
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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. 
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880 
SUPREME COURT REPORTS 
[20 I 6) 2 S.C.R. 
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9. We are afraid, the contentions cannot be appreciated. As per 
the OTS proposal dated 01 .03.2012. the restriction is on Jy 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 
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share 50% of the increase in fair market value of the property, fixed at 
the time of sanction of the settlement. 
I 0. 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 Jock 
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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 
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of the dues. The only restriction is on sal_e 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. 
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I l. Thus, we see no error
in the view taken by the High Court. 
The appeal is dismissed. The appellant-bank is directed to rek:1'c 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. 
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12. There shall be no order as to costs. 
Devika Gujral 
Appeal disn1isscd.