Bombay High Court
Dr. Sharda W/O Sharad Gavande vs Nagpur Municipal Corporation, Nagpur ... on 30 August, 2022
Author: A.S.Chandurkar
Bench: A.S.Chandurkar
Judgment
wp1154.20 1
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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:-
[email protected] ..... 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/-
Judgment
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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 .....3/-
Judgment wp1154.20 1 3 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, .....4/-
Judgment wp1154.20 1 4 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/-
Judgment wp1154.20 1 5 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, .....6/-
Judgment wp1154.20 1 6 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/-
Judgment wp1154.20 1 7 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 .....8/-
Judgment wp1154.20 1 8 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/-
Judgment wp1154.20 1 9 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/-
Judgment wp1154.20 1 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/-
Judgment
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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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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 .....16/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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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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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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/-
Judgment 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 wp1154.20 1 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 wp1154.20 1 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/-
Judgment wp1154.20 1 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/-
Judgment wp1154.20 1 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
wp1154.20 1
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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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 wp1154.20 1 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. -
.....45/-
Judgment wp1154.20 1 45 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.
.....46/-
Judgment wp1154.20 1 46
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.
.....47/-
Judgment wp1154.20 1 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 .....48/-
Judgment wp1154.20 1 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 .....49/-
Judgment wp1154.20 1 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, .....50/-
Judgment wp1154.20 1 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 .....51/-
Judgment wp1154.20 1 51 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 .....52/-
Judgment wp1154.20 1 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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Judgment wp1154.20 1 53 (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
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