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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,

NAGPUR BENCH, NAGPUR

WRIT PETITION NO.1154 OF 2020

Dr.Sharda w/o Sharad Gavande, aged

about 62 years, occupation : retired Principal,
R/o Kshitij, Shantiniketan Colony, Court Road,
Paratwada, taluka Achalpur, district Amravati. ….. Petitioner.

:: V E R S U S ::

1. Nagpur Municipal Corporation, through its

Commissioner, Civil Lines, Nagpur.

2. Deputy Municipal Commissioner (Property

Tax), Nagpur Municipal Corporation, Civil
Lines, Nagpur.

3. Assistant Commissioner, Zone No.3,

Hanuman Nagar, Nagpur Municipal
Corporation, Hanuman Nagar, Nagpur.

4. Dilip Harish Katiyar, aged about 43 years,

Occupation : business, r/o plot No.407,
Sindhi Colony, Khamla, Nagpur – 440 025.

5. Amitkumar Kashinathji Dhage, aged about

31 years, occupation : business, r/o plot No.11,
Near Hanuman Temple, Somalwada
East, Wardha Road, Nagpur – 440 025.

6. Sandeep Diwakar Joshi,

R-6, Bhagwan Mahavir Marg, Laxmi Nagar,
Nagpur – 22, mobile No.: +91-9823105681, Email:-
connect@sandipjoshi.in ….. Respondents.
======================================
Shri M.M.Agnihotri, Counsel for the Petitioner.
Shri S.M.Puranik, Counsel for Respondent Nos.1 to 3.
Shri Anand Parchure, Counsel for Respondent Nos.4 & 5.
Shri N.B.Kirtane, Counsel for Respondent No.6.
======================================

.....2/-
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CORAM : A.S.CHANDURKAR & URMILA JOSHI-PHALKE, JJ.

JUDGMENT RESERVED ON : August 04, 2022

JUDGMENT PRONOUNCED ON : August 30, 2022

ORAL JUDGMENT (Per : Urmila Joshi-Phalke, J.)

1. Heard Shri M.M.Agnihotri, learned counsel for the

petitioner, Shri S.M.Puranik, learned counsel for respondent Nos.1

to 3, Shri Anand Parchure, learned counsel for respondent Nos.4

and 5 and Shri N.B.Kirtane, learned counsel for respondent No.6.

Rule. Rule made returnable forthwith.

2. The petitioner has challenged the action of respondent

Nos.1 to 3 – the Nagpur Municipal Corporation (for short, “the

NMC”) of recovery of property tax by attachment and sale of

property by auction dated 15.11.2017. The petitioner is permanent

resident of Paratwada, taluka Achalpur, district Amravati. She is co-

owner of open plot No.102 which is part of khasara No.54/2 situated

at mouza Somalwada, Patwari Halka No.44, Ward No.15, taluka and

district Nagpur, admeasuring 270m2 of Nagar Vikas Cooperative

Housing Society, Nagpur (hereinafter referred to as, “the said

property”). Initially, the said property was purchased by registered

sale deed dated 22.7.1999 by one Mrs.Lalita w/o Diliip Patne. After

execution of the sale deed, Mrs.Lalita Patne applied for mutation in

her name on 2.3.2007. Accordingly, name of Mrs.Lalita Patne was

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mutated with the NMC on 12.3.2007. During the mutation, notice

under Section 125 of the City of Nagpur Corporation Act, 1948 was

served in the name of Mrs.Lalita Patne calling her to pay the

Property Tax. The assessment notice for revision of the Property

Tax in relation to the said property was served on her. As per the

contention of the petitioner, though the notice of assessment was

served on Mrs.Lalita Patne, no bill demanding the Property Tax after

the revision was served on her. The said property was regularized

by the Nagpur Improvement Trust by Regularization Permit dated

30.6.2006 in favour of Mrs.Lalita Patne. The Nagpur Improvement

Trust regularized area to the extent of 258.75m2 only.

3. The petitioner along with her daughter Poorva had

purchased the said property from Mrs.Lalita Patne by registered

sale deed dated 31.10.2007. Thus, the petitioner along with her

daughter became joint owners of the said property since

31.10.2007 to the extent of regularized area of 258.75m2. Their

names were also recorded in the PR Card with the City Survey

Department on 17.6.2009. The petitioner along with her father had

also purchased adjoining plot No.120 from Dilip Kisanrao Patne who

is the husband of Mrs.Lalita Patne on 31.10.2007. The petitioner

had erected common compound wall and also installed a board

showing her ownership. After purchasing of the said property,

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neither the petitioner nor her daughter nor her father nor erstwhile

owner received any notice or demand for the Property Tax from the

NMC. In the year 2015-2016, as per the data sheet for the Property

Tax, the Property Tax of the said property was assessed from 2007

to 31.3.2016 as Rs.28,776/-. As per the contention of the

petitioner, no yearly demand was served on her or on co-owner (her

daughter) or on her father or erstwhile owner and the tax was

assessed retrospectively for the period from 2007 to 31.3.2016

which is illegal and contrary to the provisions of law. The NMC had

taken an action under Rule 42 of the Taxation Rules of the

Maharashtra Municipal Corporations Act, 1949 (for short, “the MMC

Act”) without service of bill or notice and issued warrant of

attachment. The NMC attached the said property on 6.2.2016

without issuing any notice to the petitioner or co-owner of the said

property. The NMC had also issued proclamation of 31 properties

including the said property on 18.1.2017 in local newspaper. As per

the contention of the petitioner, the said proclamation was in

contravention of Rule 45 of the Taxation Rules of the MMC Act. On

31.10.2017, in absence of any Standing Orders framed, the NMC

issued public notice for auction of the said property. The area of the

property was also incorrectly shown as 278.70m2 in the said public

notice and upset price Rs.75,36,048/- was shown. Though the

.....5/-
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petitioner had purchased the said property, the tax assessment was

not transferred in her name or in the name of co-owner. The

petitioner contended that the NMC had not issued any notice of

auction to her or co-owner or erstwhile owner. The NMC without

issuing notice held auction on 15.11.2017 and respondent Nos.4

and 5 (the auction purchasers) purchased the said property for

Rs.86.00 lacs. It is further contended by the petitioner that though

the auction purchasers deposited 25% of the bid amount, that is

Rs.21,50,000/-, they failed to deposit the remaining balance 75%

amount within a period of 27 days from the date of auction which

was 15.11.2017. Though the auction purchasers failed to deposit

the remaining balance 75% amount, the NMC granted approval to

the auction sale. The NMC issued final public notice before

transferring the said property to the auction purchasers. The

auction purchasers had not deposited the balance amount of

Rs.64,50,000/- within the prescribed limit. However, the NMC in

contravention of their own Standing Orders issued a communication

to the auction purchasers to deposit the remaining balance 75%

amount. The auction purchasers did not adhere to the

communication, but one of the auction purchasers, respondent

No.4, submitted an application on 25.4.2018 to respondent No.3 -

Assistant Commissioner, Zone No.3, Nagpur Municipal Corporation,

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Nagpur for reducing the auction amount. The respondent No.3

rejected the said application on 2.6.2018 and intimated the auction

purchasers that if they fail to deposit the remaining balance 75%

amount, the auction sale would be cancelled. Again, respondent

No.4 submitted similar application on 12.6.2018 to re-consider the

request. As the auction purchasers failed to deposit the remaining

balance 75% amount, the request of the auction purchasers was

rejected. The auction of the said property was cancelled by the

NMC. The re-auction was also approved in terms of Clause No.18 of

the Standing Orders. The aforesaid decision of cancelling of the

auction sale and re-auction of the said property was communicated

to the auction purchasers on 4.12.2018.

4. The petitioner has further contended that due to

political intervention, the NMC illegally reduced the total auction

amount of the said property to Rs.79,84,508/- and by

communication dated 12.7.2019 directed the auction purchasers to

deposit 75% balance amount of Rs.58,34,508/- within a period of

seven days. As per the said communication, the auction purchasers

had deposited amount of Rs.58,34,508/-. The NMC issued Sale

Certificate on 23.7.2019. The grievance of the petitioner is that the

auction purchasers are required to deposit the amount of bid as

provided under Clause Nos.12 and 13 of the Standing Orders dated

.....7/-
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7.11.2017 framed under Section 466(1) and (2) read with Section

128(4) and Scheduled-D, Chapter-VIII, Taxation Rules, Rule

No.47(5) of the MMC Act. As per the Taxation Rules, the auction

purchasers had not paid the balance amount within the time, as

provided under Clause No.12 of the Standing Orders, and,

therefore, the only remedy available to the NMC was to proceed for

re-auction of the said property. Hence, the entire process carried

out by the NMC is contrary to the Standing Orders as well as

contrary to the legal provisions and unsustainable in law and the

same needs to be quashed. As such, the petitioner, had claimed

that the entire process of the auction and the issuance of the Sale

Certificate be declared as illegal, arbitrary and contrary to the legal

provisions. The petitioner also claimed that the auction dated

15.11.2017 be declared as illegal, unconstitutional and deserves to

be quashed and set aside.

5. The NMC, in response to notice issued by this Court,

filed their reply and took a stand that the petition filed by the

petitioner is devoid of merits. It is the contention of the NMC that

respondent No.1 – the NMC, being the statutory body, had

conducted the auction by applying all mandates of the NMC Act,

Taxation Rules and the Standing Orders thereunder. There is no

violation of the aforesaid Rules and Regulations. The warrant for

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recovery of the tax was issued in the year 2015 and the auction was

complete by issuance of Sale Certificate on 23.7.2019. Thus, the

process was complete within a period of four years and during this

period the petitioner never approached to the answering

respondents to save her private property by paying the property

taxes though notices were issued in newspaper in respect of the

property taxes. The NMC admitted that for recovery of the property

taxes plot No.120 of Nagar Vikas Cooperative Housing Society,

Nagpur has been attached and sold by auction dated 15.11.2017.

It is the contention of the NMC that as per Rule 1(1) of the Taxation

Rules, Chapter–VIII, Schedule-D of the MMC Act, the duty to give

notice of transfer of title in writing to the answering respondents

within a period of three months from the date of execution of the

instrument is cast upon the person whose title is so transferred and

the person to whom the same shall be transferred. No such

intimation was given to respondent No.1 either by the erstwhile

owner or by the present petitioner. It is further contended that the

employees of the respondent No.1 though visited the house of the

erstwhile owner Mrs.Lalita Patne, she refused to take the demand

notice and informed that the said property had been sold and that

she was not aware about the address of the present petitioner. The

petitioner had also not moved to the respondent No.1 for paying the

.....9/-
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property tax or mutation and, therefore, the demand could not be

served on the petitioner. It is the contention of the respondent No.1

that the NMC by following due process published Hukumnama under

Rule 45 on 18.1.2017, Jahirnama on 31.10.2017 and, thereafter,

the auction carried on 15.11.2017. Thus, there is no violation on

the part of the NMC. Hence, the writ petition deserves to be

dismissed.

6. The auction purchasers i.e. respondent Nos.4 and 5

came with a defence that the petitioner was not diligent and has

failed to safeguard her legal right and they are bona fide

purchasers. They have purchased the said property by paying

consideration amount. As they are bona fide purchasers, no

interference is called for. Hence, the writ petition deserves to be

dismissed.

7. Shri M.M.Agnihotri, learned counsel for the petitioner

submitted that undisputedly the petitioner along with her daughter

is the owner of the said property. She purchased the said property

from Mrs.Lalita Patne. A sale deed was duly executed between

them. It is a part of record that erstwhile owner Mrs.Lalita Patne

submitted an application with respondent No.2 to enter her name in

the tax record. Accordingly, her name was entered in the tax

.....10/-
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10

record. The unauthorized construction over the said property was

also regularized by the Nagpur Improvement Trust. Subsequently,

the petitioner along with her daughter had purchased the said

property from Mrs.Lalita Patne. Admittedly, the name of the

present petitioner and her daughter was entered in the property

card, but her name was not entered in the municipal record that is

the tax record. It is also a matter of record that till 2016 neither

any bill nor demand was made to the present petitioner or earlier

owner Mrs.Lalita Patne. For the first time, one data sheet was

issued showing that since 2007 to 2016 the property tax is due from

said Mrs.Lalita Patne and the notice was issued to her. Thereafter,

the said property was attached without issuing any notice to the

petitioner or the earlier owner. Subsequently, the said property was

auctioned and sold to the auction purchasers. It is vehemently

submitted by learned counsel for the petitioner that the procedure

followed by respondent No.1 while attaching the said property and

the procedure of auction carried out are contrary to the Standing

Orders issued by respondent No.1. The resolution passed in the

Standing Committee Meeting shows that the said Standing Orders

are approved in the said meeting dated 7.11.2017. Clause Nos.11,

12, 13 and 14 of the said Standing Orders are as under:

.....11/-
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11

Clause No.11 :- A person who would

participate in the bid and whose bid would be
accepted has to deposit 25% cash amount
immediately to the Auction Officer.

Clause No.12 :- After 20 days, the said bidder

has to deposit remaining 75% amount within a
period of 7 days in the office of the NMC.

Clause No.13 :- If the bidder fails to deposit

the said 75% amount, the property would be
declared for re-auction and for resale and the
bidder would not get any right over the said
property.

Clause No.14 :- If earlier bidder fails to deposit

the auction amount, the Municipal Corporation
has to issue fresh publication.

8. According to the learned counsel for the petitioner, the

above clauses of the said Standing Orders are not complied with by

the issuing body that is the NMC. He submitted that the auction of

the said property was concluded on 17.1.2018 as final notice was

issued by respondent No.1. On 19.3.2018, respondent No.1 issued

letter to the auction purchasers to deposit remaining 75% of

amount of the auction. Admittedly, the auction purchasers

purchased the said property for Rs.86.00 lacs and though the

.....12/-
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12

auction purchasers deposited 25% of the bid amount, that is

Rs.21,50,000/-, they failed to deposit the remaining balance 75%

amount of Rs.64,50,000/- within a period of 27 days from the date

of auction which was held on 15.11.2017. As the auction

purchasers failed to deposit the said amount, respondent No.1

issued a letter on 19.3.2018 and called upon the auction purchasers

to deposit the said amount. But, the auction purchasers instead of

depositing the amount made a request to reduce the Sale Price and

to issue the Sale Certificate. The said application was rejected by

respondent No.3 assigning the reason that once sale price was fixed

by publication, the same could not be change in any circumstance

and called the auction purchasers to deposit the remaining balance

amount. Again, the auction purchasers made a request on

12.6.2018 to reduce the Sale Price. Again, respondent No.3 on

4.12.2018 informed the auction purchasers that if they fail to

deposit 75% amount, as per Clause No.18 of the Standing Orders,

the NMC would cancel the entire auction process and would publish

a new publication to sell the said property. Learned counsel further

submitted that due to the political intervention, though there was

earlier communications by the NMC that no such change is

permissible, granted the request of the auction purchasers to

reduce the Sale Price to the extent of Rs.79,84,508/- and directed

.....13/-
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13

the auction purchasers to deposit the remaining 75% of the balance

amount Rs.58,34,508/-. Learned counsel submitted that thus these

communications are sufficient to show that the NMC acted contrary

to the Standing Orders and the legal provisions.

9. Learned counsel for the petitioner invited our attention

to Clause No.57(1) of the Second Schedule of the Income Tax Act,

1961, which reads thus:

Deposit by purchaser and resale in default.

57(1) On every sale of immovable property, the

person declared to be the purchaser shall pay,
immediately after such declaration, a deposit of
twenty - five percent on the amount of his
purchase money, to the officer conducting the
sale; and, in default of such deposit, the
property shall forthwith be resold.

(2) The full amount of …..

Learned counsel further invited our attention to Clause

No.11 of the Standing Orders issued by the NMC, which is as under:

Clause No.11 :- A person who would

participate in the bid and whose bid would be

.....14/-
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14

accepted has to deposit 25% cash amount

immediately to the auction Auction Officer.

Learned counsel also invited our attention to Rule 84 of

Order XXI of the Code of Civil Procedure, which reads thus:

Rule 84. Deposit by purchaser are re-sale on

default -

(1) On every sale of immovable property the

person declared to be the purchaser shall pay
immediately after such declaration a deposit of
twenty-five per cent, on the amount of his
purchase-money to the officer or other person
conducting the sale, and in default of such
deposit, the property shall forthwith be re-sold.

(2) Where the decree-holder is the purchaser

and is entitled to set-off the purchase-money
under rule 72, the Court may dispense with the
requirements of this rule.

Learned counsel referred Clause Nos.57 to 58 of the

Income Tax Act, 1961, Rules 85 and 86 of Order XXI of the Code of

Civil Procedure and Clause Nos.12 and 14 of the Standing Orders

issued by the NMC. He submitted that after going through these

legal provisions, it is crystal clear that the NMC acted in

.....15/-
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15

contravention of these provisions and, therefore, the process of

auction deserves to be set aside.

10. Learned counsel for the petitioner, to buttress his

contentions, placed reliance upon the decision in the case of Manilal

Mohanlal Shah and others vs. Sardar Sayed Ahmed Sayed Mahmad

and another, reported at AIR 1954 SC 349, wherein it is held that

the provisions of Order XXI, Rules 84, 85 and 86 requiring the

deposit of 25 per cent of the purchase-money immediately, on the

person being declared as a purchaser, such person not being a

decree-holder, and the payment of the balance within 15 days of the

sale are mandatory and upon non-compliance with these provisions

there is no sale at all. The rules do not contemplate that there can

be any sale in favour of a stranger purchaser money in the first

instance and the balance within 15 days. When there is no sale

within the contemplation of these rules, there can be no question of

material irregularity in the conduct of the sale. Non-payment of the

price on the part of the defaulting purchaser renders the sale

proceedings as a complete nullity.

Learned counsel further relied upon a decision in the

case of State of U.P. and others vs. Swadeshi Polytex Limited and

others reported at (2008)12 SCC 596, wherein it is held that

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16

whether the procedure envisaged for recovery of arrears under the

Act and the Rules had been observed and in case they had been

breached, the effect thereof and after examining the various

provisions threadbare, held that the Act and the Rules prescribed a

procedure for the recovery of arrears of land revenue and that

before a recovery certificate could be issued, the defaulter was

required to be effectively served; that the Rules in question were

mandatory and required strict compliance.

Learned counsel further relied upon a decision in the

case of Shilpa Shares and Securities and others vs. National

Cooperative Bank Ltd. and others, reported at (2007)12 SCC 165

wherein it is held that the auction sale is rendered a nullity.

Learned counsel further relied upon a decision in the

case of Balram son of Bhasa Ram vs. Ilam Singh and others,

reported at (1996)5 SCC 705, wherein it is held that any mistake

made while claiming the set-off which results in failure to deposit

the full amount of purchase money within 15 days of the date of

sale renders the decree-holder purchaser liable to the same adverse

consequences which would ensue to any other purchaser due to

non-compliance of Rule 85.

.....17/-
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17

Learned counsel further relied upon a decision in the

case of State of Jharkhand and others vs. Ambay Cements and

another, reported at (2005)1 SCC 368, wherein it is held that failure

to comply with the requirements renders the writ petition filed by

the respondent liable to be dismissed. While mandatory rule must

be strictly observed, substantial compliance might suffice in the

case of a directory rule. Whenever the statute prescribes that a

particular act is to be done in a particular manner and also lays

down that failure to comply with the said requirement leads to

severe consequences, such requirement would be mandatory.

Learned counsel further relied upon a decision in the

case of Nandkishor Daulatrao Shelke vs. Baban Vitthal Mhaske and

another, reported at 2004 SCC Online Bom.817, wherein it is held

that perusal of provisions of Rule 84 Sub-rule (1) show that

respondent No. 1 has to pay 1/4th amount of his total purchase

price immediately after the auction in his favour is over by

tendering it to the officer or person conducting the same. Rule 85

mandates that the balance amount is to be paid by him in the Court

before the Court closes on 15th day from the sale of property.

Learned counsel lastly relied upon a decision in the

case of Shamrao Ganpat Chintamani vs. Kakasaheb Laxman Gorde,

.....18/-
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18

reported at 2008(2) Mh.L.J. 819, wherein it is held that Section 149

has to be read with Section 154 and conjoint reading shows that in

case of acquisition otherwise than registered instrument, party has

to make a written application to the Village Officer.

On the basis of the above decisions and the legal

provisions, learned counsel for the petitioner submitted that the

NMC failed to comply with the legal provisions and conducted the

process of attachment, auction and sale of the said property owned

by the petitioner. Thus, the auction by the NMC is not only arbitrary

but also illegal and the same is liable to be set aside.

11. On the contrary, Shri S.M.Puranik, learned counsel for

the NMC reiterated the contentions that the NMC complied with the

legal provisions and, thereafter, had conducted the process of

attachment and auction. Learned counsel submitted that sufficient

opportunity was granted to the petitioner, however the petitioner

was not diligent about her rights and not raised objections to any of

processes and, therefore, the contentions of the petitioner could not

be taken into consideration. As per his submission, in the light of

Rule 1 of Chapter VIII of the MMC Act, duty to give notice of

transfers of title of persons primarily liable to payment to property

tax. Whenever the title of any person primarily liable for the

.....19/-
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19

payment of property taxes on any premises to or over such

premises is transferred, the person whose title is so transferred and

the person to whom the same shall be transferred shall, within

three months after execution of the instrument of transfer, or after

its registration, if it be registered, or after the transfer is effected, if

no instrument be executed, give notice of such transfer, in writing to

the Commissioner. Thus, as per learned counsel for the petitioner,

the petitioner had purchased the said property by registered sale

deed, but till date she had not moved any application for mutation

on the property tax record. He further submitted that though the

NMC issued attachment warrant on 6.1.2015, the said property was

attached on 6.2.2016. He submitted that by following due

procedure the Corporation published Hukumnama under Rule 45 on

18.1.2017 and Jahirnama on 31.10.2017 and, thereafter, the

auction carried on 15.11.2017. Thus, there is no violation on the

part of the NMC. Even after the auction, though there is no

provision for final notice to call objections, the NMC published notice

in newspaper. These facts sufficiently show that sufficient

opportunity was given to the petitioner, but she had not availed the

same as the sale was finalized and the Sale Certificate was issued

and as such no interference is called for.

.....20/-
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20

12. Shri Anand Parchure, learned counsel for the auction

purchasers came with a defence that the auction purchasers are the

bona fide purchasers. They have purchased the said property by

paying consideration amount. The irregularity as alleged was not of

such nature that the auction sale was liable to be set aside. The

petitioner was not diligent in challenging the impugned action.

Hence, no interference is called for.

13. Shri N.B.Kirtane, learned counsel for respondent No.6

submitted that no prayer is made against respondent No.6.

According to him, the communication dated 10.12.2018 was given

in the capacity as leader of the municipal party only with a view to

recover taxes.

14. After giving thoughtful consideration to the submissions

made by learned counsel for the respective parties, it is apparent

that the said property that is open plot No.102 which is part of

khasara No.54/2 situated at mouza Somalwada, Patwari Halka

No.44, Ward No.15, taluka and district Nagpur, admeasuring 270m2

of Nagar Vikas Cooperative Housing Society, Nagpur is initially

owned by Mrs.Lalita Patne. Initially, the said property was

purchased by registered sale deed dated 22.7.1999 by Mrs.Lalita

Patne. After execution of the sale deed, Mrs.Lalita Patne applied for

.....21/-
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21

mutation in her name on 2.3.2007. Accordingly, name of Mrs.Lalita

Patne was mutated with the NMC on 12.3.2007. It is also apparent

from the record during the mutation notice under Section 125 of the

City of Nagpur Corporation Act, 1948 was served in the name of

Mrs.Lalita Patne calling her to pay Property Tax. The assessment

notice for revision of the Property Tax in relation to the said

property was served on her. As per the contention of the petitioner,

though the notice of assessment was served on Mrs.Lalita Patne, no

bill demanding the Property Tax after the revision was served on

her. The said property was regularized by the Nagpur Improvement

Trust by Regularization Permit dated 30.6.2006 in favour of

Mrs.Lalita Patne. The Nagpur Improvement Trust regularized area

to the extent of 258.75m2 only. The petitioner along with her

daughter Poorva had purchased the said property from Mrs.Lalita

Patne by registered sale deed dated 31.10.2007. Thus, the

petitioner along with her daughter became joint owner of the said

property since 31.10.2007 to the extent of the regularized area of

258.75m2. Their names were also recorded in the PR Card with the

City Survey Department on 17.6.2009. The petitioner along with

her father had also purchased adjoining plot No.120 from Dilip

Kisanrao Patne who is the husband of Mrs.Lalita Patne on

31.10.2007. Thus, the petitioner along with her daughter became

.....22/-
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22

the owner of open plot No.102 which is part of khasara No.54/2

situated at mouza Somalwada, Patwari Halka No.44, Ward No.15,

taluka and district Nagpur, admeasuring 270m2 of Nagar Vikas

Cooperative Housing Society and along with her father became the

owner of adjoining plot No.120. It is also undisputed fact that the

petitioner had erected common compound wall and also installed a

board showing her ownership. Undisputedly, the names of the

petitioner and her daughter were also recorded in the PR Card with

the City Survey Department on 17.6.2009. The petitioner relied

upon data sheet which shows that the property tax was due over

the said property from 2007 to 2016. Admittedly, prior to 2007

nothing is on record to show that any bill or demand was issued to

the erstwhile owner Mrs.Lalita Patne for recovery of the property

tax. The NMC has also not claimed that it had issued any bill or

demand prior to 2007. Thus, it is crystal clear that for the first time

in the year 2015-2016 one data sheet showing the Property Tax is

due from 2007 to 2016 and one notice bearing no date on it were

issued to the erstwhile owner Mrs.Lalita Patne to recover the tax

amount of Rs.65,457/-. The said notice further discloses that as

erstwhile owner Mrs.Lalita Patne had not deposited the said amount

and, therefore, the said property was attached by the NMC and

Mrs.Lalita Patne is held liable to pay Rs.59,506/- against the tax

.....23/-
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23

and Rs.5951/- towards expenses of the attachment process. The

petitioner placed on record day to day proceeding maintained by the

NMC during attachment process. The Roznama of the said

proceeding shows that office bearers of the NMC visited the house

of Mrs.Lalita Patne to serve the notice, but it reveals that she is not

residing on the given address. The proceedings dated 30.11.2015

further discloses that office bearers of the NMC had taken a search

of the owner of the said property and ascertained that Mrs.Lalita

Patne is residing at Mahal, Nagpur. They visited her house at

Mahal, Nagpur and it was disclosed that she had sold the said

property and she was not aware about the address of the present

petitioner. It is mentioned in the proceedings as it was difficult to

execute the warrant against the owner, as the owner was not

residing in the said property, a panchnama was drawn and the

warrant was executed. From the said proceedings, it is crystal clear

that notice was not issued to the petitioner though the NMC came to

know that Mrs.Lalita Patne is not owner of the said property but the

petitioner is the owner of the said property. It further reveals from

the communication that the NMC completed the process of

attachment by drawing panchnama on 9.3.2016. Accordingly,

publication was published in the newspaper on 18.1.2017. The

.....24/-
Judgment

wp1154.20 1

24

publication was issued for the auction of 31 properties including the

said property.

15. On 7.11.2017, in the Standing Committee Meeting,

Rules for attachment and auction are approved by the Members of

the Standing Committee. Accordingly, auction was held on

15.11.2017 and upset price was decided as Rs.75,36,048/-.

Admittedly, though the petitioner had purchased the said property,

tax assessment was not transferred in her name. Admittedly,

though the office bearers of the NMC got the knowledge that

Mrs.Lalita Patne is not owner, but the petitioner is the owner of the

said property, no notice of auction was served upon the petitioner.

Without serving any notice, the auction was held on 15.11.2017 and

the auction purchasers had purchased the said property for

consideration of Rs.86.00 lacs. A final notice was also issued in the

newspaper on 18.1.2017. It further reveals from the

communication by respondent No.2 to the auction purchasers

calling them to pay the purchase amount within seven days in the

office of the NMC. It is apparent that despite of letter issued by the

NMC, the auction purchasers had not deposited the amount,

however requested to reduce the sale price. The said request was

rejected by respondent No.2 on 2.6.2018. Again, the auction

purchasers made a representation to reduce the said price. The

.....25/-
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wp1154.20 1

25

Respondent No.2, vide communication dated 4.12.2018, informed

the auction purchasers that once the sale price is fixed and

accepted by the auction purchasers, in view of Clause No.14 of the

Standing Orders, the NMC is not empowered to reduce the said

price and call the auction purchasers to deposit the amount. It is

further apparent from the record that due to political intervention,

the NMC reduced the total auction amount of the said property from

Rs.86.00 lacs to Rs.79,84,508/- and by communication dated

12.7.2019 directed the auction purchasers to deposit 75% balance

amount of Rs.58,34,508/- within a period of seven days.

Accordingly, the auction purchasers deposited the said amount and

Sale Certificate was issued in their favour by accepting the said

amount.

16. In the light of the above factual aspects, before

adverting to the rival submissions, we would like to reproduce the

relevant provisions of the MMC Act, the relevant Clauses of the

Standing Orders framed by the NMC in the Standing Committee

Meeting; the relevant provisions of the Code of Civil Procedure and

the relevant provisions of the Income Tax Act, 1961. Firstly, we

refer the provisions of MMC Act. In the light of the fact that no

notice was issued to the petitioner and the reason assigned thereof

by the NMC is that though they approached Mrs.Lalita Patne, who

.....26/-
Judgment

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26

was the owner as per their records, she had shown her inability to

state the address of the petitioner and the petitioner had also not

approached to the NMC, Section 477 of the MMC Act is relevant

which is reproduced below:

Section 477. Power of Commissioner to call for

information as to ownership of premises.

(1) The Commissioner may, in order to facilitate

the service, issue, presentation, or giving of
any notice, bill, schedule, summons or other
such document upon or to any person by
written notice require the owner or occupier of
any premises, or of any portion thereof to state
in writing, within such period as the
Commissioner may specify in the notice, the
nature of his interest therein and the name and
address of any other person having an interest
therein, whether as free holder, mortgagee,
lessee or otherwise, so far as such name and
address is known to him.

(2) Any person required by the Commissioner in

pursuance of sub-section (1) to give the
Commissioner any information shall be bound
to comply with the same and to give true
information to the best of his knowledge and
belief.

.....27/-
Judgment

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27

Thus, in view of the said Section, power to call for

information as to ownership of the premises is vested with the

Commissioner. The Commissioner, in order to facilitate the service,

can issue any notice, bill, schedule, summons or any such

documents to any person empowering to call the information as the

ownership of the said premises. As per Sub section (2) of the said

Section any person required by the Commissioner in pursuance of

Sub section (1) of the said Section to give the Commissioner any

information and he is bound to give such information to the

Commissioner.

17. Learned counsel for the NMC submitted that in the light

of the Taxation Rules under the MMC Act, the transferors have to

submit information about transfer of title to the Commissioner.

Learned counsel referred to Rule 1 of Taxation Rules under Chapter

VIII of the MMC which is reproduced below:

Rule 1. Notice to be given to Commissioner of

all transfers of title of persons primarily liable
to payment to property tax.

(1) Whenever the title of any person primarily

liable for the payment of property taxes on any
premises to or over such premises is
transferred, the person whose title is so

.....28/-
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28

transferred and the person to whom the same

shall be transferred shall, within three months
after execution of the instrument of transfer, or
after its registration, if it be registered, or after
the transfer is effected, if no instrument be
executed, give notice of such transfer, in
writing to the Commissioner.

(2) In the event of the death of any person

primarily liable as aforesaid, the person to
whom the title of the deceased shall be
transferred, as heir or otherwise, shall give
notice of such transfer to the Commissioner
within one year from the death of the
deceased.

Thus, as per the above said Rule, if title of a person is

transferred, the person whose title is so transferred and the person

to whom the same shall be transferred shall within three months

after execution of the instrument of transfer give notice of such

transfer to the Commissioner.

Learned counsel also referred to Rules 41, 42, 43 and

45 of Taxation Rules under Chapter VIII of the MMC Act which are

relevant and reproduced below:

.....29/-
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29

Rule 41. Levy of penalty on unpaid amount of

bill.

(1) The amount of first half-yearly tax as

specified in the bill which has been served as
aforesaid shall be paid within three months
from the date of service of the bill and of the
second half-yearly tax as specified in the bill
shall be paid before the 31st December of each
year; and if a person liable to pay tax does not
pay the same as required as aforesaid, then he
shall be liable to pay by way of penalty in
addition to the amount of such tax or part
thereof which has remained unpaid, a sum
equal to two per cent. of such tax for each
month or part thereof after the last date by
which he should have paid such tax and shall
continue to be liable to pay such penalty until
the full amount as per the bill is paid:

Provided that, any property tax for which a bill

is served under this Act before the date of
commencement of the Bombay Provincial
Municipal Corporations, the City of Nagpur
Corporation, the Maharashtra Municipal
Councils, Nagar Panchayats and Industrial
Townships, the Maharashtra (Urban Areas)
Protection and Preservation of Trees, and the
Maharashtra Tax on Buildings (with larger

.....30/-
Judgment

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30

Residential Premises) (Reenacted)

(Amendment) Act, 2009 (hereinafter referred to
as “the Amendment Act of 2009”) has remained
unpaid in full or in part, a person who has not
paid such tax shall be liable to penalty as
provided under this Section, on and from the
date of commencement of the said Amendment
Act of 2009.

(2) If the other taxes or dues claimed in the bill

are not paid by the date specified in the bill, the
provisions of sub-section (1) shall mutatis
mutandis apply to the amount which has so
remained unpaid.

Rule 42. Distress or attachment.

(1) If the person [liable for the payment of the

tax for which a bill is served upon him does not
pay the tax together with penalty or interest or
both as required under the provisions of this
Act to pay the same] on whom a notice of
demand has been served under rule 41 does
not within fifteen days from such service pay
the sum demanded or show sufficient cause for
non-payment of the same to the satisfaction of
the Commissioner and if no appeal is preferred
against the said tax, as hereinafter provided,
such sum, with all costs of the recovery, may be

.....31/-
Judgment

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31

levied under a warrant in Form H or to the like

effect, to be issued by the Commissioner, by
distress and sale of the moveable property of
the defaulter or the attachment and sale of the
immovable property of the defaulter or, if the
defaulter be the occupier of any premises in
respect of which property tax is due, by distress
and sale of any moveable property found on the
said premises or if the tax be due in respect of
any vehicle, boat or animal, by distress and
sale of such vehicle, boat or animal in
whomsoevers’ ownership, possession or control,
the same may be.

(2) Where the person liable to pay the tax

according to the bill served upon him pays the
tax as required under the provisions of this Act
but does not pay the amount of penalty or
interest or both either in whole or in part as
may be due on the unpaid amount of tax, for
such amount which has remained unpaid, a
warrant in the form of Schedule H, mutatis
mutandis, may be issued by the Commissioner
in the same manner as if such sums were due
on account of the tax.

Rule 43. Property of defaulter may be distrained

or attached wherever found.

.....32/-
Judgment

wp1154.20 1

32

(1) Where any property of a defaulter or any

vehicle, boat or animal liable to be distrained or
attached is situate within the City, the warrant
issued under rule 42 shall be addressed to an
officer of the Corporation.

(2) Where such property, vehicle, boat or

animal is situate outside the City, the warrant
shall be addressed to--

(a) the Registrar, Court of Small Causes,

Bombay, if such property, vehicle, boat or
animal is situate in the City of Bombay;

(b) the Commissioner, if such property,

vehicle, boat or animal is situate in a City;

(c) the Chief Officer or the Vice-President,

if such property, vehicle, boat or animal is
situate in a municipal borough or
municipal district, respectively;

(d) the Executive Officer of the

Cantonment if such property, vehicle, boat
or animal is situate in a cantonment;

(e) an officer of Government not lower in

rank, than a Mahalkari if such property,

.....33/-
Judgment

wp1154.20 1

33

vehicle, boat or animal is situate

elsewhere.

(3) Any officer to whom a warrant is addressed

under sub-rule (2) may endorse such warrant to
a subordinate office.

Rule 45. Warrant how to be executed in case of

immovable property.

(1) When a warrant is issued under rule 42 for

the attachment and sale of immovable property,
the attachment shall be made by an order
prohibiting the defaulter from transferring or
charging the property in any way, and all
persons from taking any benefit from such
transfer or charge, and declaring that the
property will be sold unless the [tax due,
penalty or interest or both, if any, due and
payable together], with the costs of recovery,
are paid into the municipal office within [twenty
one days].

(2) Such order shall be proclaimed by fixing at

some conspicuous part of the property and
upon a conspicuous part of the municipal office
and also, when the property is land, paying
revenue to the State Government, in the office
of the Collector.

.....34/-
Judgment

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34

(3). Any transfer of a charge on the property

attached or of any interest therein made
without the written permission of the
Commissioner shall be void as against all
claims of the Corporation enforceable under the
attachment.

18. Thus, as per Rule 41, when arrears of tax are due and

the bill is served, taxes shall be paid within three months from the

date of service of the bill. It also denotes that second half-yearly

tax shall be paid before the 31st December of each year. Rule 42

states about the procedure to be adopted for distress or

attachment. As per the said rule, if a person liable for the payment

of the tax for which a bill is served upon him does not pay the tax

together with penalty or interest or both as required under the

provisions of this Act to pay the same on whom a notice of demand

has been served under rule 41 does not within fifteen days from

such service pay the sum demanded or show sufficient cause for

non-payment of the same to the satisfaction of the Commissioner

and if no appeal is preferred against the said tax, such sum, with all

costs of the recovery, may be levied under a warrant in Form H or to

the like effect, to be issued by the Commissioner, by distress and

sale of the moveable property of the defaulter or the attachment

and sale of the immovable property of the defaulter. As per Rule

.....35/-
Judgment

wp1154.20 1

35

43, if defaulter fails to pay the bill and the warrant is issued under

Rule 42, the said property may be attached by addressing warrant

under sub-rule (2). As per Rule 45 speaks about how the warrant is

to be executed in case of immovable property. It states that when a

warrant is issued under rule 42 for the attachment and sale of

immovable property, the attachment shall be made by an order

prohibiting the defaulter from transferring or charging the property

in any way, and all persons from taking any benefit from such

transfer or charge, and declaring that the property will be sold

unless the tax due, penalty or interest or both, if any, due and

payable together, with the costs of recovery, are paid into the

municipal office within twenty one days. As per Sub-rule (2) of Rule

45, such order shall be proclaimed by fixing at some conspicuous

part of the property and upon a conspicuous part of the municipal

office and, when the property is land, paying revenue to the State

Government, in the office of the Collector.

19. It is not in dispute that to regularize the process of

attachment of auction and sale, which are attached due to the non-

payment of arrears of taxes, the NMC approved the Standing Orders

in a Standing Committee Meeting dated 7.11.2017. In the said

Standing Meeting, Standing Rules, in respect of publication process,

.....36/-
Judgment

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36

are also determined. Clause Nos.11 to 17 of the said Standing

Rules are relevant which are reproduced below:

11- [kjsnhnkjkus Hkjko;kph vuker vkf.k u HkjY;kl iqu

% fodzh %&

v- ekyeRrk fodzhP;k osGh T;k [kjsnhnkjkph cksyh

fLodkjyh tkbZy R;kus [kjsnhP;k fdaerhiSdh 25 VDds
jks[k jDde fyyko dj.kk&;k vf/kdk&;kdMs rkRdkG
Hkjyh ikghts vU;Fkk gh feGdr rkcMrksc ijr
fodzhlkBh dk<.;kr ;smu frph fodzh dsyh tkbZy vf.k
iwohZP;k [kjsnhnkjkl iqUgk fyykokr Hkkx ?ksrk ;s.kkj ukgh-

c- tsOgk fu;e 47¼7½ izek.ks vk;qDr Lor%

[kjsnhnkj vlsy rsOgk R;kl ;k LFkk;h vkns’kkrhy vVh
ykxw vl.kkj ukghr- ¼fyykokr Hkkx ?ks.;klkBh dkgh
Bjkfod jDde lqj{kk Bso Eg.kwu ?;koh dk;?½

12- [kjsnhph laiw.kZ jDde Hkj.;klkBh eqnr

LFkk;h vkns’k dz- 16 o 17 e/;s uewn dsysyh 20

fnolkaph eqnr laiY;kuarj 7 fnolkaps vkr vFkok 7 ok
fnol jfookj fdaok lqV~Vhpk vlsy rj R;k uarjP;k
yxrP;k dkekP;k fno’kh [kjsnhnkj [kjsnhph moZjhr
jDde egkuxjikfydsP;k dk;kZy;kr Hkjhy-

.....37/-
Judgment

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37

13- [kjsnhph jDde Hkj.;kl dlwj dsY;kl R;kps

ifj.kke

ojhy LFkk;h vkns’kke/;s uewn dsysY;k dkyko/khe/;s

[kjsnhph moZjhr jDde tek dj.;kl [kjsnhnkjkus dlwj
dsY;kl R;kus fyykokps osGh tek dsysY;k vuker 25
Vdds jdesrwu fodzhlkBh >kysyk [kpZ Hkkxfo.;kr ;sbZy
vkf.k moZjhr jDde egkuxj ikfydsP;k fu/khr tek
dj.;kr ;sbZy- R;kuarj lnj feGdrhph iqufoZdzh
dj.;kr ;sbZy- dlwjnkj vlysY;k [kjsnhnkjkyk
feGdrhoj vFkok feGdrhph fodzh d#u feGkysY;k
jdesP;k dks.kR;kgh Hkkxkoj gDd jkg.kkj ukgh-

14- iqufoZdzh dj.ksckcr uO;kus tkfgjukek dk<.ks-

tj ekyeRrsP;k [kjsnhph jDde eqnrhe/;s u HkjY;keqGs

ekyeRrsph iqufoZdzh djko;kph osG vkY;kl v’kk izR;sd
iqufoZdzh ckcr uO;kus tkfgjukek dk<kok ykxsy- vlk
tkfgjukek dk<.;kph i/nrh o dkyko/khlkBh ;k LFkk;h
vkns’kkr ;kiwohZ rjrwn dsysyh fofgr i/nr
okij.;kr ;sbZy-

15- iqufoZdzh vFkok uqdlku >kY;kl [kjsnhnkjkaojhy

nkf;Ro-

v’kk izdkjs dsysY;k iqufoZdzhe/;s iwohZP;k [kjsnhnkjkus

fnysY;k cksyhis{kk deh fdaer vkY;kl lnj nksu

.....38/-
Judgment

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38

fdaerhe/khy Qjd vkf.k iqufoZdzhlkBh >kysyk loZ [kpZ

iwohZP;k [kjsnhnkjkadMwu feGdr djkph Fkdckdh letwu
olwy dsyk tkbZy-

16- fodzh jn~nckny dj.;klkBh vtZ dj.ks-

v- tsaOgk ;k LFkk;h vkns’kkuqlkj LFkkoj ekyeRrk fodzh

dsyh tkbZy R;k fnolkuarj 20 fnolkaps vkr lnj
feGdrhpk ekyd vFkok lnj feGdrhP;k fodzhiwohZ lnj
feGdrhe/;s dks.krsgh fgrlaca/k vlysyh O;Drh lnj
fodzh jÌckny Bjfo.;klkBh vtZ d# ‘kdsy ek= R;kiwohZ
[kkyhyizek.ks jks[k jDde egkuxjikfydsP;k dk;kZy;kr
tek djkoh ykxsy-

1- [kjsnhnkjkyk ns.;klkBh [kjsnh fdaerhps 5 Vdds

jDde-

2- R;klkBh fyykokus fodzh dj.;kps vkns’k >kys gksrs rh

tkfgjukE;kr uewn dsysyh ijarq egkuxjikfydsr tek
dsysyh jDde fyykokP;k tkfgjukE;kuarj otk tkrk
mjysyh jDde-

c- ,[kkn;k O;Drhus LFkk;h vkns’k dz-17 vUo;s fodzh

jÌckny Bjfo.;klkBh fnysyk vtZ ekxs ?ksrY;kf’kok; ;k
LFkk;h vkns’kkUo;s vtZ dj.;kpk vFkok rdzkj nk[ky
dj.;kpk fryk gDd vl.kkj ukgh-

.....39/-
Judgment

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39

d- fyykokP;k tkfgjukE;kr mYys[k ulysY;k [kpkZph

ok O;ktkph jDde ns.;kph tckcnkjh dlwjnkjkojp
jkghy-

17- Qlo.kwd vFkok vfu;feri.kk ;ko#u fodzh

jÌckny Bjfo.;klkBh djko;kpk vtZ-

fyykokP;k rkj[ksuarj 20 fnolkps vkr dks.krhgh O;Drh

Lor%P;k fgrlaca/kkl v’kk fodzheqGs ck/kk iksgpyh vkgs ok
fyykokP;k izfl/nhe/;s vFkok fyykokus fodzh dj.;ke/;s
Qlo.kwd vfu;feri.kk vFkok pwd dsyh ok >kyh vkgs ;k
dkj.kkojp jÌckny Bjfo.;klkBh vtZ d# ‘kdsy-

ek= vk;qDrkaph v’kk Qlo.kqdheqGs vfu;feri.kkeqGs

vFkok pqdheqGs vtZnkjkP;k fgrkl d’kkizdkjs ck/kk
iksgpr vkgs o R;keqGs R;kps dk; uqdlku gksr
vkgs ;kcÌy vtZnkjkus vk;qDrkaph [kk=h iVowu ns.ks
vko’;d jkghy-

20. Learned counsel for the petitioner submitted that the

above said clauses of the Standing Rules are not followed by the

NMC. It is a matter of record that the auction purchasers had

purchased the said property by offering a bid of Rs.86.00 lacs. The

said offer was accepted by the NMC. As per Clause No.11 of the

Standing Orders, the auction purchasers immediately deposited

25% amount of Rs.21,50,000/-. As per Clause No.12 of the

.....40/-
Judgment

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40

Standing Orders, after 20 days, they have to deposit 75% of

amount within seven days. These 20 days are reserved to deal with

the objections, if any, raised by somebody in the light of Clause

Nos.16 and 17 of the Standing Orders. Clause No.13 of the

Standing Orders speaks about failure of the bidder in depositing

75% amount. It states that if the bidder fails to deposit 75%

amount within seven days, the said property would be declared for

re-auction and 25% amount deposited would be forfeited. Clause

No.14 of the Standing Orders speaks about publication regarding

re-auction and resale of the property.

21. Admittedly, the auction purchasers offered Rs.86.00

lacs during the auction process. They had also deposited

Rs.21,50,000/-. The said auction was held on 15.11.2017. The

period of twenty days were reserved for dealing with the objections,

if any. After completion of these initial twenty days, the auction

purchasers were to deposit 75% of amount within seven days.

Admittedly, final notice was issued by the NMC on 18.1.2017. No

objection were received within twenty days. Thereafter, the auction

purchasers were to deposit the amount within seven days. The said

twenty days would be completed on 7.2.2017. Thereafter, the

auction purchasers had to deposit remaining 75% amount within

seven days. It is apparent that as the auction purchasers failed to

.....41/-
Judgment

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41

deposit the said amount, the NMC issued a letter on 19.3.2018 and

called upon the auction purchasers to deposit the said amount.

But, the auction purchasers instead of depositing the amount made

a request to reduce the sale price and to issue the sale certificate.

The said application was rejected by respondent No.3 assigning the

reason that once sale price was fixed by publication, the same could

not be change in any circumstance and called the auction

purchasers to deposit the remaining balance amount. Again, the

auction purchasers made a request on 12.6.2018 to reduce the sale

price. Again, respondent No.3 on 4.12.2018 informed respondent

the auction purchasers that if they fail to deposit 75% amount, as

per Clause No.18 of the Standing Orders, the NMC would cancel the

entire auction process and would publish a new publication to sell

the said property. It is further apparent that the NMC, against the

provisions of the Standing Orders, reduced the total auction amount

of the said property to Rs.79,84,508/- and by communication dated

12.7.2019 directed the auction purchasers to deposit 75% balance

amount of Rs.58,34,508/- within a period of seven days. As per the

said communication, the auction purchasers had deposited amount

of Rs.58,34,508/-. The NMC issued Sale Certificate on 23.7.2019.

Thus, admittedly, no notice of auction or attachment was issued to

the petitioner. Even, in the light of Section 477 of the MMC Act, no

.....42/-
Judgment

wp1154.20 1

42

notice, either to the erstwhile owner or the present petitioner was

served. Though the Commissioner, under Section 477 of the MMC

Act, is empowered to call for the said information which was not

called by the Commissioner. It is also apparent from the record that

when office bearers of the NMC visited the house of erstwhile owner

Mrs.Lalita Patne, she refused to take the demand notice and

informed that the said property had been sold, but she was not

aware about the address of the present petitioner. No steps were

taken by the NMC to ascertain who was the owner at the time of

attachment and no notice was given. Thus, there is no compliance

of Section 477 of the MMC Act.

22. It is also apparent that the NMC also failed to comply

with the provisions of the Standing Orders approved by the NMC in

its Standing Committee Meeting that if the bidder fails to deposit

the amount, the NMC is bound to publish a notice for re-auction. It

is apparent that unnecessary concession was given to the auction

purchasers by reducing the sale price of the said property. No

provision has been pointed out which empowered the Municipal

Commissioner to reduce the final sale price as has been done by

communication dated 2.7.2019. It is also apparent that there is no

compliance to Rules 41, 42, 43 and 45 of Taxation Rules under

Chapter VIII of the MMC Act before attachment warrant. It was

.....43/-
Judgment

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43

obligatory on the part of the NMC to issue notice. The NMC had not

placed on record to show that they have complied with Sub-rule (2)

of Rule 45 of Taxation Rules under Chapter VIII of the MMC Act.

Thus, admittedly, there is no compliance of Rules 41 to 43 and 45 of

Taxation Rules under Chapter VIII of the MMC Act. Also, there is no

compliance of Clause No.57(1) of the Second Schedule of the

Income Tax Act, 1961, which is reproduced below:

Deposit by purchaser and resale in

default.57(1) On every sale of immovable
property, the person declared to be the
purchaser shall pay, immediately after such
declaration, a deposit of twenty - five percent
on the amount of his purchase money, to the
officer conducting the sale; and, in default of
such deposit, the property shall forthwith be
resold.

(2) The full amount of purchase money payable

shall be paid by the purchaser to the Tax
Recovery Officer on or before the fifteenth day
from the date of the sale of the property.

As per said provisions, the person declared to be the

purchaser shall pay, immediately after such declaration, a deposit of

twenty five percent on the amount of his purchase money to the

.....44/-
Judgment

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44

office conducting the sale and in default of such deposit the

property shall forthwith be resold. Admittedly, respondent Nos.4

and 5 had not complied with the same. Thus, there is no compliance

of the said provisions.

23. Learned counsel for the petitioner also referred the

provisions of Rules 84 and 85 of Order XXI of the Code of Civil

Procedure, which read thus:

Rule 84. Deposit by purchaser are re-sale on

default -

(1) On every sale of immovable property the

person declared to be the purchaser shall pay
immediately after such declaration a deposit of
twenty-five per cent, on the amount of his
purchase-money to the officer or other person
conducting the sale, and in default of such
deposit, the property shall forthwith be re-sold.

(2) Where the decree-holder is the purchaser

and is entitled to set-off the purchase-money
under rule 72, the Court may dispense with the
requirements of this rule.

Rule 85. Time for payment in full of purchase-

money. -

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The full amount of purchase-money payable

shall be paid by the purchaser into Court before
the court closes on the fifteenth day from the
sale of the property:

Provided that, in calculating the amount to be

so paid into Court, the purchaser shall have the
advantage of any set-off to which he may be
entitled under rule 72.

24. The aforesaid provisions state that on every sale of

immovable property the person declared to be the purchaser shall

pay immediately after such declaration a deposit of twenty-five per

cent. on the amount of his purchase-money to the officer or other

person conducting the sale, and in default of such deposit, the

property shall forthwith be re-sold.

25. Thus, provisions under clause 57 of the Second

Schedule of the Income Tax Act, 1961 and the provisions under Rule

84 of Order XXI of the Code of Civil Procedure are similar in nature.

In both these provisions, word “shall” is used. Thus, the provisions

are mandatory. Therefore, it is the mandate of the legal provisions

that the purchaser has to deposit 25% of the total purchase amount

and on failure the property is to be declared for re-sale.

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26. Rule 85 of Order XXI of the Code of Civil Procedure

denotes that full amount of purchase-money payable shall be paid

by the purchaser into Court before the court closes on the fifteenth

day from the sale of the property.

27. Rule 86 of Order XXI of the Code of Civil Procedure

speaks about procedure in default of payment. It states that in

default of payment within the period mentioned in the last

preceding rule, that is Rule 85, the deposit may, if the Court thinks

fit, after defraying the expenses of the sale, be forfeited to the

Government, and the property shall be re-sold, and the defaulting

purchaser shall forfeit at all to the property or to any part of the

sum for which it may subsequently be sold.

28. Thus, the above said Rule and Clause No.14 of the

Standing Orders approved by the Standing Committee of the NMC

show that on failure of deposit of remaining balance amount, the

property is to be put in re-auction and the amount deposited by the

offerer is to be forfeited.

29. Thus, after considering all the legal provisions, it is

crystal clear that the NMC had not complied with the legal

provisions and undue favour was granted to the auction purchasers.

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47

The sale price was also reduced in contravention of the legal

provisions.

30. The auction purchasers claimed that they are the bona

fide purchasers. As per contention of the auction purchasers that

they purchased the said property paying due consideration amount.

It is well settled that an honest purchaser would at least make

enquiries with the persons having knowledge of the property and

also with the neighbouring owners. The standard of proof required

to show that respondent Nos.3 and 4 are the bona fide purchasers

and entitled to the exception provided in Section 19(b) of the

Specific Relief Act. The burden of proof is on the purchaser. If the

purchaser had not taken the ordinary precaution, which a normal

purchaser would take, his conduct could not be said to be bona fide.

This Court, in the case of Kailash Sizing Works vs. Municipality of

Bhiwandi and Nizampur, reported at (1968 Bom. L.R.554), had

observed that a person cannot be said to act honestly unless he

acts with fairness and uprightness. A person who acts in a

particular manner in the discharge of his duties in spite of the

knowledge and consciousness that injury to some one or group of

persons is likely to result from his act or omission or acts with

wanton or willful negligence in spite of such knowledge or

consciousness cannot be said to act with fairness or uprightness

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48

and, therefore, he cannot be said to act with honesty or in good

faith. Whether in a particular case a person acted with honesty or

not will depend on the facts of each case. Good faith implies

upright mental attitude and clear conscience. It contemplates an

honest effort to ascertain the facts upon which the exercise of the

power must rest. It is an honest determination from ascertained

facts. Good faith precludes pretense, deceit or lack of fairness and

uprightness and also precludes wanton or willful negligence. The

said judgment cited supra was challenged before the Honourable

Apex Court by the Municipality of Bhiwandi and Nizampur and it is

reported at (1974 (2) SCC 596). While confirming the judgment of

this Court, the Honourable Apex Court had held, as under:

In Jones v. Gordon(1) Lord Blackburn pointed

out the distinction between the case of a
person who was honestly blundering and'
careless, and the case of a person who has
acted not honestly. An authority is not acting
honestly where an authority has a suspicion,
that there is something wrong and does not
make further enquiries. Being aware of
possible harm to others, and acting in spite
thereof, is acting with reckless disregard of
consequences. It is worse than, negligence, for
negligent action is that, the consequences of
which, the law presumes to be present in the

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49

mind of the negligent person, whether actually

it was there or not. This legal presumption is
through the well known hypothetical
reasonable man. Reckless disregard of
consequences and mala fides stand-equal,
where the actual- state of mind of the actor is
relevant. This is so in the eye of law even if
there might be variations in the degree of
moral reproach deserved by recklessness and
mala fides.

31. The provisions contained in Section 19 of the Specific

Relief Act, 1963 seek to protect a subsequent purchaser who

purchases the property in good faith and for value without notice of

the original contract. The same are in the nature of exception to

the general rule. The onus of proof of good faith is on the purchaser

who takes the plea that he is an innocent purchaser for value

without notice of the original contract. Thus, ones of proof of good

faith is on the purchaser who take the plea that he is an innocent

purchaser. Good faith is a question of fact to be considered and

decided on the facts of each case. The issue of bona fide purchaser

and protection to the bona fide purchaser is dealt by this Court in

the case of Laxman Sakharam Salvi since deceased by heirs

Krishnabai w/o Laxman Salvi and others vs. Balkrishna Balvant

Ghatage by his Vat Mukhtyar Shankarrao Balwantrao Ghatage,

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50

reported at 1995 (1) Mh.L.J. 7 wherein it is held that for claiming

protection under Section 41 of the Transfer of Property Act, the onus

is on the transferee to show that he acted in good faith. Having

regard to the fact that nothing is placed on record by the auction

purchasers to show that they are bona fide purchasers and hence

they are not coming under the exemption of Section 19(b) of the

Specific Relief Act and hence they are not entitled to the protection

provided under the section.

32. In view of the aforesaid facts, it is crystal clear that

before attachment of the property no steps are taken by the NMC to

ascertain who is the owner of the said property. Admittedly, neither

erstwhile owner Mrs.Lalita Patne nor the present petitioner was

informed by notice. However, the erstwhile owner Mrs.Lalita Patne

had informed the NMC that she had sold the said property. The

proceedings maintained by the NMC which were obtained by the

petitioner under the Right to Information Act show that when the

office bearers of the NMC visited Mrs.Lalita Patne, the erstwhile

owner of the said property, she specifically informed them that the

said property is sold and she was not aware about the address of

the petitioner. It was for the NMC to avail the provision of Section

477 of the MMC Act which empowers the Commissioner to call for

the information as to ownership of premises. However, the same

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was not done by the NMC. Moreover, the NMC has not followed the

due process of law while conducting attachment and auction of sale

the said property and contravened the Rules under the MMC Act and

Rules 42, 43 and 45 of Taxation Rules under Chapter VIII of the

MMC Act. It shows that no notice of attachment, sale or auction

was served either upon erstwhile owner Mrs.Lalita Patne or upon the

petitioner. Needles to say that the NMC has contravened Clause

Nos.11 to 17 of the Standing Orders to regularize the process of

attachment and auction of the said property. There is no provision

under the said Standing Orders empowering the NMC to extend the

time of deposit of money by the offerer, but the NMC in

contravention of the said Standing Orders extended the time and

undue favour was shown to the auction purchasers. Under which

provisions, the said time was extended is not explained by the NMC.

33. In the facts of the present case, the auction purchasers

failed to show that they are bona fide purchasers.

34. Considering the aforesaid facts and circumstances, it is

crystal clear that the entire process conducted by the NMC

contravening the legal provisions, without giving any notice and

opportunity to the petitioner to raise any objection about the said

process, are against the principles of natural justice. The action on

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52

the part of the NMC is illegal, arbitrary and against the provisions of

law and as such the auction deserves to be quashed and set aside.

The petitioner in terms of the order dated 28.2.2020 has deposited

an amount of Rs.59,000/- towards outstanding dues of property

tax. That amount with accrued interest is liable to be paid to the

NMC.

35. In that view of the matter, the writ petition succeeds in

the light of the contravention of the legal provisions by the NMC. In

the result, we proceed to pass following order:

ORDER

(1) The writ petition is allowed.

(2) The auction conducted by respondent Nos.1 to 3 – the Nagpur

Municipal Corporation on 15.11.2017 of open plot No.102 which is

part of khasara No.54/2 situated at mouza Somalwada, Patwari

Halka No.44, Ward No.15, taluka and district Nagpur, admeasuring

270m2 of Nagar Vikas Cooperative Housing Society, Nagpur is

declared as illegal and arbitrary.

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(3) The auction dated 15.11.2017 conducted by respondent Nos.1

to 3 – the Nagpur Municipal Corporation on 15.11.2017 is hereby

quashed and set aside.

(4) The sale certificate issued by respondent No.2 - Deputy

Municipal Commissioner (Property Tax), Nagpur Municipal

Corporation on 23.7.2019 in favour of respondent Nos.4 and 5 is

hereby quashed and set aside.

(5) The respondent Nos.4 and 5 – auction purchasers shall be

repaid the amount of sale consideration of Rs.21,50,000/- and

Rs.58,34,508/- by the Nagpur Municipal Corporation within a period

of four weeks from today. The said respondents are at liberty to

take necessary steps to seek redressal of their grievance against the

Nagpur Municipal Corporation, if so advised.

Rule is made absolute in the aforesaid terms with no

order as to costs.

(URMILA JOSHI-PHALKE, J.) (A.S.CHANDURKAR, J.)

Digitally signed
!! BrWankhede !! by BHUSHAN
BHUSHAN RANA
RANA WANKHEDE
WANKHEDE Date:
2022.09.03
13:04:21 +0530
...../-