1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.684 OF 1971 Mr. Thomas More Pereira of Pune, Indian Christian Inhabitant, residing at 16, Bund Garden, Pune. .... Plaintiff - Versus - 1. The Municipal Corporation of Bombay 2. Shri J.B. D'Souza, the Municipal Commissioner for Greater Bombay. 3. Prabhavalkar, the Assessor & Collector, Bombay Municipal Corporation all having their office at Municipal Corporation Building, Cruichshank Road, Bombay - 400 003. 4. Soares, the Dy. Commissioner, G-South Ward having his office at 8/8A, N.M. Joshi Marg, Bombay – 400 013. 5. Desai, Assistant Assessor & Collector, G-South Ward having his office at 8/8A, N.M. Joshi Marg, Bombay – 400 013. 6. B.D. Garware 7. V.B. Garware 2 8. S.B. Garware 9. C.B. Garware 10. A.B. Garware 11. R.B. Garware 12. Garware Synthetic Bristles (Pvt.) Ltd. 13. Garware Plastics (Pvt.) Ltd. 14. Garware Nylons Plastics (P) Ltd. 15. Filament Corporation (P) Ltd. the Defendant Nos.6 to 15 having their office at Chowpatty Chambers, Sandhurst Bridge, Bombay-7. 16. Marrie Misquitta of Bombay Inhabitant, residing at Prem Court, Pedder Road, Bombay-26. 16(a) Mr. Cyril Misquitta, husband of original Defendant No.16, residing at Prem Court, Pedder Road, Mumbai-26. 16(b) Ms Clare Misquitta, daughter of original Defendant No.16, residing at Prem Court, Peddar Road, Mumbai-26. 17. Joseph Anthony Pereira of Bombay Inhabitant, residing at 92, Edvil, St. Andrews Road, Bandra, Bombay-400 050. 17(a) Mrs. Shirley Pereira, wife of original Defendant No.17 3 residing at Edville, 92, St. Andrew Road, Bandra, Bombay-400 050. 17(b) Mrs. Sharon Poonawalla, daughter of original Defendant No.17 C/o Edville, 92, St. Andrew Road, Bandra, Bombay-50. 17(c) Mrs. Kareena Gonsalves, daughter of original Defendant No.17 C/o Edville, 92, St. Andrew Road, Bandra, Bombay-400 050. 18. Miss Joan Pereira, of Bombay Inhabitant, residing at 135, Annie Besant Road, Worli, Bombay - 400 018. 19. Transferred as Plaintiff's 20. Anne D'Souza, of Bombay Inhabitant, residing at Linking Road, Bandra, Bombay-400 050. 21. Dr. Bosco Jonathan Pereira of Bombay Inhabitant, residing at 16, Bund Garden Road, Pune. 22. Jay Properties Pvt. Ltd., 135, Dr. Annie Besant Road, Worli, Bombay-400 018. .... Defendants Sarvasri Shriniwas Deshmukh i/b D.R. Jhuria for the Plaintiff. Sarvasri U.J. Makhija a/w R.Y. Shirsikar for the Defendant Nos.1 to 5. Sarvasri Mahendra Shah a/w R.A. Shah i/b M/s. Mansukhlal Hiralal & Co. for the Defendant No.12. Shri A.M. Saraogi for the Defendant Nos.18, 20 4 and 21. CORAM: SHRI A.V. NIRGUDE, J. DATED: APRIL 03, 2009 JUDGMENT: 1. This suit is filed challenging the legality of the auction sale of the plaintiff's property conducted by the defendant-Mumbai Municipal Corporation. The original plaintiff and the defendant Nos.16 to 21 are the owners of the suit property which is a plot of land having two buildings on it. The defendant Nos.7 to 11 are the legal heirs of the defendant No.6 and are concerned with the defendant Nos.12 to 15, who are either private or public limited companies. The defendant Nos.6 to 15 are the purchasers of the suit property. The defendant Nos.2 to 5 are the Officers of the Mumbai Municipal Corporation (hereinafter referred to as “the Corporation”). The defendant No.22 is a party who allegedly agreed to purchase the plaintiff's share in the suit property. 2. The original plaintiff and her husband Edward purchased the suit property in 1938. They also got two buildings constructed on the plot. The original plaintiff's husband Edward 5 died intestate in Mumbai in 1963. Thereafter, the plaintiff and her son, the defendant No.21, experienced acute financial problems which involved filing of petitions under the Insolvency Act, etc.. Due to this problems the original plaintiff and her family members could not conduct their business of pharmaceuticals. It is the case of the original plaintiff that she did not receive the bills for the property tax from the Corporation from 19-9-1968 onwards. Neither she received any demand notices. She said although the Corporation was aware that her business premises had remained closed during those days, yet they did not serve the bills and demand notice to her at her residential premises which was also situated in the suit property. The original plaintiff pleaded that she was not aware of any warrant of attachment having been issued for attachment of the suit property. She asserted that on 26-1-1969 she deposited with the Corporation a sum of Rs.23,500/- towards the arrears of taxes. In or about the third week of January, 1970, she came to know that the suit property was put up for sale by public auction. On 22-1-1970 she met the defendant No.2 the Municipal Commissioner and requested him to postpone the sale for about two weeks and told him that she was arranging funds for the payment of the property tax. Her attorney even sent a letter to that effect to the Corporation. The defendant No.2 assured her that 6 he would do his best to help her. On the same day, the original plaintiff also met the defendant No.3 the Assessor & Collector of taxes of the Corporation and explained to him the problems and requested him to postpone the auction sale by at least eight more days. The plaintiff's attorney also wrote a similar letter to the defendant Nos.2, 3 and 4 and assured them that the arrears would be deposited shortly. The 25th and 26th of January, 1970 were holidays and on 28th January, 1970 the original plaintiff again met the defendant No.3 at about 11:45 a.m.. She begged him of short time for paying the amount. The defendant No.3 then tried to contact the defendant No.4 the Dy. Commissioner, G-South Ward on phone but could not establish contact for quite some time. The original plaintiff thereafter herself contacted the defendant No.4 telephonically at about 12:45 p.m.. and sought postponement of the auction sale. Thereafter, at her request the defendant No.3 too telephoned the defendant No.4 once again. At that time the defendant No.4 asked as to how much amount the original plaintiff could pay immediately to postpone the auction sale. The original plaintiff then told that she would be able to deposit Rs.3,000/- immediately. The defendant No.3 then informed this fact to the defendant No.4 and requested him to cancel the auction sale. The defendant No.3 further informed to the defendant No.4 that the 7 original plaintiff and her son would deposit the amount at the “G” North Ward office of the Corporation. The defendant No.4 agreed with the original plaintiff that he would not sell the suit property by auction sale on that day. At about 2:00 p.m. on that day the original plaintiff took an amount of Rs.3,000/- to the “G” North Ward office of the Corporation and placed the cash on the table of the defendant No.5 in the presence of the other municipal employees, but the defendant No.5 refused to accept the amount and received the Pay Order from the auction purchasers, the defendant Nos.6 to 15, in collusion with them. The defendant Nos.6 to 15 thus could agree to purchase the suit property for a paltry sum of Rs.2,30,000/-. The defendant No.5 then made a phone call to the defendant No.3 informing him that the auction sale had taken place and he would not accept the amount offered by the original plaintiff. The plaintiff asserted that the auction sale was sham, bogus, collusive and fraudulent. She even asserted that the market value of the suit property was Rs.12,00,000/- on the date of suit. 4. The original plaintiff through her attorney sent to the defendant No.2 a cheque of Rs.20,000/- towards payment of taxes, penalty and costs, etc., but he did not accept the same and refused to cancel the auction sale. The plaintiff then mentioned the 8 following grounds why the sale should be declared void: (i) It was in contravention of the agreement arrived at between the plaintiff on one side and the defendant Nos.1 to 5 on the other pursuant to which the plaintiff arranged to pay Rs.3,000/- on 28-1-1970 at about 2:00 p.m. (ii) The defendant Nos.1 to 5 failed and neglected to comply with the various provisions of the Act which are in the nature of conditions precedent before the right to put the suit property for sale by public auction would arise and accrue in favour of the Corporation. (iii) The monies sought to be recovered through the sale of the suit property by way of auction thereof was wrongful in law. (iv) The advertisement of the public auction was grossly inadequate. (v) The defendant Nos.7 to 15 were influential people and had pending litigation against the original plaintiff. (vi) The auction sale was bad also because there were very few bidders and so the sale was not bona fide. (vii) In the alternative the plaintiff believes that in fact no auction sale took place and the transaction was sham and bogus. (viii) The officers of the Corporation colluded with the defendant Nos.7 to 15 and enable them to obtain the suit property for a throwaway price. (ix) The defendants failed to fix the reserve bid pursuant to the condition of sale at the time of auction and so the sale was bad and illegal. (x) The sale was bad also because the Corporation could have sold one of the buildings standing on the suit property to recover the due amount. (xi) The plaintiff sought the following prayers: (a) the declaration that the auction sale dated 28-1-1970 was illegal, null and void and not binding on the plaintiff and the defendant Nos.16 to 21. (b) for a permanent injunction to restrain the defendant 9 Nos.1 to 5 from completing the formalities of the auction sale. The Defendant Nos.1 to 5 have filed common written statement and first of all took objection to the maintainability of the suit for want of statutory notice under Section 527 of the Bombay Municipal Corporation's Act and denied the allegations made by the Plaintiff. They stated that the bills / the demand notices and the warrant of attachment was property issued and served. They also stated that public notice in respect of auction sale was published in three different newspapers and the auction sale was conducted as per the rules and conditions of the sale. These Defendants also stated that the very property was previously attached for non-payment of taxes for the period between 1-4-1965 to 21-3-1967. The original Plaintiff then paid a sum of Rs.23,500/- on 27-1-1969 and got the property released from attachment. They further stated that thereafter the original Plaintiff again fell in arrears of the property taxes and so, as said above, the property was once again attached by the attachment warrant dated 24th July, 1969. 2. These Defendants further stated that the original Plaintiff by her letter dated 14-1-1970 enquired as to the exact amount of arrears and taxes and promised to pay. The Assessor 10 and the Collector of the Corporation by his letter dated 23-1- 1970 informed the original Plaintiff that she owed to the Corporation a sum of Rs.23,044.23 and he further informed that if the dues are not paid, the property would be sold in public auction on 28-1-1970 at 12:30 p.m. in "G" North Ward office. These Defendants further admitted that on 22-1-1970, the original Plaintiff had met the Defendant No.2, but they denied that the Defendant No.2 promised her to get the auction sale postponed. They further admitted that the Plaintiff's attorney's letter dated 24-1-1970 was received in the office of the Assessor and Collector on 27-1-1970. They further admitted that on 28-1- 1970 at about 11 a.m. the original Plaintiff met the Defendant No.3 at about 11 a.m. 3. The Defendant No.3 further admitted that he told the Plaintiff at that time that if she deposited Rs.3,000/- before 12 Noon on that day, the auction would be postponed. They even admitted that the Defendant No.5 too had received instructions from Defendant Nos.3 and 4 that in case the Plaintiff had deposited Rs.3,000/- before the time fixed for auction sale, the sale would be postponed. The Defendant No.4 said that he waited for the Plaintiff till 12:45 p.m., but since she did not turn 11 up and since the bidders had gathered for sale and insisted upon the proceedngs with the auction sale, the auction was conducted at about 12:45 p.m. He further stated that at the auction, the highest bid of Rs.2,30,000/- was given by the Defendant Nos.6 to 15 and the property was knocked down in their favour. He said they deposited 25% of the sale price by pay order and the formalities were completed by 1:45 p.m. These Defendnats stated that the original Plaintiff then came to the "G" North Ward ofice at about 2 p.m. and tried to deposit Rs.3,000/- with the Defendant No.6. The Defendant No.5 then contacted the Defendant No.3 telephoncally and on his instructions informed the original Plaintiff that the sale was over. These Defendants also stated that the highest bid of Rs.2,30,000/- was higher than the reserved bid. The Defendant Nos.6 to 15 filed a common written statement. 4. The Defendant Nos.6 to 15 too took exception to the suit on the ground that it was bad for want of notice under Section 527 of the Bombay Municipal Corporation's Act. These Defendnats denied the allegations of the Plaintiff that they had acted in collusion with the Defendant Nos.1 to 5 when they participated in the auction sale and agreed to purchase the suit property. They also denied that they agreed to purchase the suit 12 property for a small amount compared to the market value. They denied that the auction sale was conducted in violation of legal provisions etc.. These Defendants stated that there were about 6 bidders present for the auction sale. They also denied that they had dispute with the original Plaintiff and out of spite they had collusion with the officials of the Corporation etc. The other Defendants supported the case of the Plaintiff. 5. By consent of the parties, I once again frame the following issues: ISSUES (1). Whether the Suit is bad for want of Statutory Notice to Municipal Corporation ? (2). Whether the Plaintiff proves that the Auction Sale of the Suit Property was bad in law ? (3). Whether the Plaintiff proves that the Auction Sale of the Suit Property was in collusion with the Defendant Nos.1 to 5 on one side and the Defendant Nos.6 to 15 on the other side ? (4). Whether the Defendant Nos.1 to 5 prove that they had served Municipal Bills, Payment Notices, Penalty Notices, Warrant of Attachment etc. on the Original Plaintiffs ? 13 . Issue Nos.2 & 3: These two issue are interrelated and can be decided together. It is for the plaintiff to prove that the auction sale of the suit property was bad and that it occurred due to collusion between the officers of the Corporation on one side and the defendant Nos.6 to 15, the purchasers on the other. The plaintiff led oral evidence of two witnesses. But before I discuss the oral evidence, I must mention the relevant provisions. The provisions of Section 200 to 206 of the Mumbai Municipal Corporation Act, 1888 (hereinafter referred to as “the MMC Act”) deal with the property tax, its recovery and the consequences of failure to pay the same. The Sections 200, 202, 203 and 206 read as under: “200. [Service] of bills for certain taxes:- (1) When any property tax or instalment of any such tax, shall have become due, the Commissioner shall, with the least practicable delay, cause to be [served upon] the person liable for the payment thereof a bill for the sum due. (2) Every such bill shall specify the period for which, and the premises, in respect of which, the tax is charged, and shall also give notice of the time within which an appeal may be preferred, as hereinafter provided, against such tax. 202. Notice of demand:- (1) If the amount of tax for which any bill has been [served] as aforesaid is not paid in the municipal office [or deposited with the Commissioner within fifteen days from the service] 14 thereof, the Commissioner may cause to be served upon the person liable for the payment of the same a notice of demand in the form of Schedule I, or to the like effect. (2) For every notice of demand which the Commissioner causes to be served on any person under this section, a fee of such amount not execeeding [rupees fifty] as shall in each case be fixed by the Commissioner shall be payable by the said person and shall be included in the costs of recovery. 203. [Distress and attachment]:- (1) If the person liable for the payment of the said tax do not pay within fifteen days from the service of the notice of demand pay the sum due, 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 levied under a warrant in the form of Schedule J, or to the like effect, to be issued by the Commissioner by distress and sale of the goods and chattels 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 a property tax is due, by distress and sale of any goods and chattels found on the said premises [or, if he tax be due in respect of any vehicle of animal, by distress and sale of such vehicle or animal in whomsoever's ownership, possession or control, the same may be.] (2) If after the service of the notice of demand the amount of the said tax is paid but the fee for the notice is not paid, the sum due on account of the said fee may be levied under a warrant in the form of Schedule J (mutatis mutandis) to be issued by the Commissioner in the same manner as if such sums were due on account of the tax.] (3) When a warrant is issued 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 15 all persons from taking any benefit from such transfer or charge, and declaring that such property will be sold unless the amount of tax due with all costs of recovery is paid into the municipal office within 15 days. (4) Such order shall be proclaimed at some place on or adjacent to the property by beat of drum or other customary mode, and a copy of the order shall be fixed in 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. (5) Any transfer of or change on the property attached or 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.] 206. Sale:- (1) Where the property seized is subject to speedy and natural decay or when the expenses of keeping it in custody together with the amount to be levied is likely to exceed its value, the Commissioner shall at once give notice to the person in whose possession the property was, when distrained, to the effect that it will be sold at once, and shall sell it accordingly unless the sum due and all costs of recovery are paid forthwith. (2) If not sold at once under sub-section (1), the property distrained or attached or, in the case of immovable property, sufficient portion thereof, if the same can be conveniently severed may, after the expiry of the period stated in sub-section (3) of section 203, or named in the notice served under section 205, as the case may be, be sold by public auction by order of the Commissioner, unless the warrant is suspended by him or the sum due and all costs or recovery are paid by the defaulter, and the Commissioner shall apply the proceeds or such part thereof as shall be requisite in discharge of the sum due and the costs of recovery. 16 (3) The surplus, if any, shall be forthwith credited to the municipal fund, but if the same be claimed by a written application to the Commissioner within one year from the date of the sale, a refund thereof shall be made to the person in possession of the property at the time of seizure or attachment and any surplus not claimed within one year as aforesaid shall be the property of the Corporation. (4) Where the sum due and all costs of recovery are paid by the defaulter before a sale is effected, the property seized shall be returned to him and the attachment, if any, of immovable property, shall be deemed to have been removed. (5) Sales of immovable property under this section shall be held in the manner laid down in the regulations [made by the Commissioner in this behalf with the approval of the Standing Committee]. (6) After the sale of the immovable property as aforesaid, the Commissioner shall put the person declared to be the purchaser in possession of the same and shall grant him a certificate to the effect that he has purchased the property to which the certificate refers. (7) It shall be lawful for the Commissioner on behalf of the Corporation to bid in the case of any immovable property put up for sale, provided the previous approval of the [Improvements Committee] is obtained whether generally or for any particular property. (8) Subject to sub-section (7), no officer or servant in the service of the Corporation shall directly or indirectly purchase any property at any such sale. (9) The Commissioner may direct the removal from the immovable property by any police officer of any person who obstructs him in any action taken in pursuance of sub-section (6) and may also use such force as is reasonably necessary to effect any entry on 17 the said property.” The above mentioned provisions show that when the property tax instalment becomes due, the Commissioner causes to be served a bill for the sum due on the person liable for such payment. The next step is if the amount of tax for which the bill is served is not paid, the Commissioner within fifteen days would send a demand notice in a particular form. The third step is that if the person liable for payment of such tax does not -within fifteen days from the service of notice of demand- pay the amount due, the Commissioner would issue a warrant of distress and may attach his movable or immovable property. The next relevant stage for our discussion is the sale of the immovable property so attached. In case, despite attachment, the property tax is not paid, the Commissioner should sell the same by public auction. The plaintiff has asserted that the lawful steps contemplated by law were not taken before the property was put to sale. The original plaintiff was in the know of all the events that had taken place at the relevant time. When the plaint was drafted, it is specifically mentioned in it that she was residing on the suit property and that she did not receive the bill, demand notice, etc.. She also mentioned in the plaint that she and her son had gone to visit 18 certain officers of the Corporation and had a discussion with them but unfortunately the original plaintiff died during the pendency of the suit and the son whose name is mentioned in the plaint, having accompanied her to the municipal officers, unfortunately, has not entered the witness box. The present