1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2260 OF 2000 ... Shivnarayin Chiranjilal Rungta Hospital and anr ...Petitioners v/s The Municipal Corporation of Gr.Bombay ...Respondent ... Mr.A.Y.Bookwala,Sr.Adv.with Mr.A.C.Singh, and Mr.Anil Yadav for the Petitioners. Mr.D.H.Mehta for Respondent No.1. Mr.F.Devtre, Sr.Adv. With Mr.H.Toor Mr.Sbhash Bane, Mr.S.B.Pawar i/b S.K.Legal & Associates for the Respondent No.2. ... CORAM: D.K.DESHMUKH, & R.G.KETKAR, JJ DATED: 9th September, 2009 P.C.: 1. The Petitioners who are trustees of the Trust challenge the action of the Bombay Municipal Corporation of auctioning the 2 property belonging to the Trust. The Trust was committed default in payment of property taxes to the Corporation. Therefore, the Corporation attached the property on 23-3-1999 under warrant of attachment. The amount due was Rs.3,74,874/-. The arrears were of property tax, repair-cess, penalty and process fees for the period from 1-10-1994 to 31-9-1998. It appears that after the attachment a representation was made by the trustees on behalf of the Trust that they are trying to raise the amount for making payment to the Corporation. In the last paragraph of the letter dated 21-4-1999 it was stated that, Under the circumstances we have to request you to grant us time and installments to pay off this amount to enable us to clear all dues before March 2000. We can start paying instalments from the month of June, 1999. 3 2. Thus, the trustees undertook to clear all the arrears on or before March, 2000. On 9-2-2000 a letter was written on behalf of the Corporation to the trustees pointing out therein that the property was attached on 23-3-1999 and thereafter the trustees have paid the amount of only Rs.60,000/- and the arrears have not been cleared. It was informed that the matter is now entrusted to the senior legal officer for sale. The senior legal officer, therefore, called upon the trustees to deposit the amount which was due within seven days from the date of the letter, otherwise it was informed that the advertisement will be issued for sale of the property by public auction. It was also informed that, Please note that should you desire to retrieve the property after it is advertised for sale and before the public auction takes place, you will 4 again have to pay about Rs.15,000/- towards the costs of envisaged sale proceedings in addition to the sum due. And you will not be able to retrieve the property after it is knocked down to a bidder. 3. It is common ground that after receipt of this letter within seven days nothing was done by the trustees. No amount was deposited. It is not even the case of the trustees that they approached the Corporation. It is common ground before us that a notice for sale of the property was published in three newspapers twice, once on 27th September, 2000 and second on 17th October, 2000. A notice was also pasted on the property on 12-10-2000. It appears that on the date of the auction the managing trustees of the Trust approached the officer of the Corporation and assured that arrears would be deposited by the Trust and requested the officer to stay the auction. A precise 5 statement in relation to what happened on 18th October, 2000 is contained in the letter of the Petitioner dated 19th October, 2000. It reads as under: My clients state that the Managing Trustee Shri P.M.Rungta accompanied by another Trustee, Shri P.L.Rungta immediately rushed to your office as well as to the office of the Municipal Commissioner with a request to stay the auction. My clients also assured that arrears, if any, of assessment tax, if properly calculated and accounted, the same would be deposited by my clients. Unfortunately, none of your officers nor the Municipal Commissioner was prepared to hear my clients and told them that auction proceedings will not be stayed. 4. According to the Petitioners, thus on 18th October, 2000 the Trustees gave assurance to pay arrears if properly calculated and accounted and requested the officer to stay the auction. It is to be noted that lin letter dated 21-4-1999 the amount was not 6 disputed, only time was sought to pay the amount of arrears due. The auction was not stayed, the property was auction in favour of the Respondent No.2. The Respondent No.2 deposited 25% of the amount, which he was required to deposit as per the terms of the auction. It appears that ,thereafter, the Petitioners approached this court by filing the present writ petition. It was moved before the learned vacation Judge of this court. The learned Vacation Judge by order dated 24th October, 2000 granted ad-interim order in terms of prayer clause (d). According to the Respondent No.2, the Respondent No.2 approached the Corporation for making payment within time and tendered the amount, but the Corporation declined to accept the amount, because by ad-interim order this court restrained the Corporation from taking any action pursuant to the 7 auction. The Petitioner, thus, has filed this petition challenging sale of the property by the Corporation. 5. The learned Counsel appearing for the Petitioner took us through the provisions of Section 206 of the Mumbai Municipal Corporation Act, 1988 (hereinafter referred to as the Act ) and the Regulations framed under sub-section 5 of Section 206 of the Act to contend that once the Trustees had approached the officer of the Corporation and assured to deposit the amount of arrears, the Officer could not have proceeded further to hold the auction. The learned Counsel pointed out by referring to the affidavit filed on behalf of the Corporation that in one paragraph of the affidavit the Officer of the Corporation has accepted that the Trustees of the Petitioner-trust had approached the 8 officer on the date of the auction, but in another paragraph that fact has been denied. The learned Counsel further submitted that the Corporation has taken a contradictory stand. The learned Counsel submits that considering that the valuable property of the Petitioner-trust has been sold for a paltry amount for recovery of the arrears of tax and as pursuant to the interim order passed by the Court the Petitioner-trust has deposited the arrears of tax, the Corporation should not be permitted to go ahead with the sale of the property. 6. On behalf of the Corporation it is submitted that it was made clear by letter dated 9-2-2000 that the Petitioner has to deposit the amount of arrears within seven days of the receipt of the letter. It was also made clear that if the Petitioner pays 9 the amount of arrears before the date of auction and after expiry of the period of seven days from 9-2-2000, then the Petitioner will have also to pay the amount of costs. The learned Counsel pointed out that it is not the case of the Petitioner-trust that they tendered the amount of arrears. They only assured that they will pay the amount of arrears. The learned Counsel submits that in the absence of amount of arrears together with costs being tendered, the officer of the Corporation had no option but to proceed with the auction. He could not have accepted the request of the Petitioners to stay the auction, merely because the trustees were assuring that they will make the payement. The learned Counsel points out that by a letter dated 21-4-1999 the trustees had assured the Corporation that they will clear all the arrears of tax by March, 2000. The 10 sale has taken place in October, 2000 and except for payment of Rs.60,000/- no payment was made. Therefore, looking to the previous conduct of the trustees, the Officer could not have relied on their assurances. The learned Counsel submits that even after depositing the amount pursuant to the ad- interim order passed by the Court, the Petitioner has committed default in paying the amount of tax. He submits that as on today an amount of Rs.27,80,000/- is due from the owner of the building to the Corporation on account of property tax and other taxes. The learned Counsel appearing for the Petitioner disputed this statement made on behalf of the Corporation. But the learned Counsel appearing for the Corporation stated that he is making the statement, after taking instructions from the officer of the Corporation who is present in Court. 11 7. The learned Counsel appearing for the Respondent No.2 relying on the provisions of Section 206 and the provisions of Regulations submits that once auction takes place and the highest bid is accepted and the highest bidder deposits the amount, which was required to be deposited, a right is created in him on his making payment of the balance amount to have the property conveyed to him. The defaulter by merely depositing the amount thereafter cannot defeat the right of the highest bidder which gets vested in it. The learned Counsel submits that unless there is a law which lays down that after the acceptance of the highest bid if the owner of the property deposits the amount, the auction may be cancelled, the authorities do not have power to cancell the auction. In the submission of the learned Counsel in view of 12 the provisions of Section 206 and the Regulations framed thereunder, the highest bidder gets a right to have the property conveyed to him on his paying the entire amount. 8. Now, in order to appreciate the rival contentions, in our opinion, it is the provisions of Sub-sections 4, 5 and 6 of Section 206 of the Act which are relevant. They read as under: 206(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 13 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. 9. Perusal of the provisions of Sub- section 4 shows that the attachment of the property is removed only where the sum due together with costs of the recovery are paid by the defaulter before the sale is effected. Thus, if before the auction a defaulter wants to avoid the auction of the property, he has to pay and not merely assure to pay the sum together with all costs. Perusal of the letter dated 9-2-2000 shows that senior legal officer of the Corporation had informed the Trust that the arrears of tax as on that date were Rs.4,34,874/- and that they have to pay that amount to the Corporation within seven days. It was also stated that if the payment is not made within seven days and if the 14 payment is to be made after the auction notice is published, then they will have to pay together with the amount due an amount of Rs.15,000/- towards costs. Perusal of the statement made in the notice of the Trust dated 19th October, 2000 shows that it is not even the case of the Petitioners that at any time they even assured to pay costs of auction. It is not their case that they paid or tendered the amount due of arrears of tax. What they did was they merely assured to pay the arrears either on the same date or on the next date if properly calculated and accounted . The letter, in fact, does not disclose that they specified any date on which they are going to make the payment. The version of the incident stated on behalf of the Corporation in its affidavit dated 10th July, 2006 is thus: 15 I say that at the beginning of the auction sale proceeding, the trustees of petitioner No.1 met the officer in-charge who was responsible for conducting the auction. I further say that the concerned officer stated that the auction sale can be stayed only on actual payment and not otherwise. I further say that thereafter the trustees left the Auction Office and, therefore, the question of not permitting them to enter the room is totally false. 10. The versions given in the affidavit quoted above and the versions found in the letter dated 19th October, 2000 agree with each other. Thus, it is nobody s case that the trustees before the beginning of the auction either paid or tendered the amount of taxes. It is nobody s case that the trustees paid or tendered or even assured to pay the amount of costs. In our opinion, in these circumstances, the officer of the Corporation was perfectly justified in going ahead with the auction. Had the Officer of the Corporation accepted the request of the 16 trustees of the Petitioner and stayed the auction for an indefinite period, without any amount being actually paid, fault would have been found with him and that action would have resulted in making the Corporation to spend further amount on issuing fresh auction notice. In our opinion, therefore, no fault can be found with the action of the Officer of the Corporation for proceeding further with the auction. 11. Perusal of the provisions of sub- section 5 of Section 206 shows that sale is to be conducted in accordance with the Regulations. A copy of Regulation is placed before us, which have been framed under Sub- section 5 of Section 206 of the Act. Perusal of Clause 13 of the Regulation lays down that if the highest bid be equal to or higher than the reserved price, the Commissioner shall, 17 subject to the provision of Rule 10, make an entry in the said note book to the following effect: I declare to be the purchaser for the property No........ put up for sale, for the sum of Rs......... 12. Thus, if the bid given by the bidder is above the reserved price, then the Commissioner has no option but to accept that bid and on acceptance of that bid the highest bidder is declared to be the purchaser subject to his depositing initial amount of 25% on the same day and the balance amount within a period of 30 days. There is no provision to be found in the Regulations which empowers the Corporation to cancell the sale, in case the defaulter deposits any amount after the bid is accepted. In this situation, therefore, in our opinion, the 18 learned Counsel appearing for the Respondent No.2 is right in submitting that in the absence of there being any law vesting power in the Corporation to cancell the auction on the defaulter depositing the amount after the completion of the auction, the Corporation does not have power to cancell the auction and this Court also will not be justified in cancelling the auction, in the absence of any provision in the law, merely because the defaulter agrees to make the payment or actually makes the payment after the completion of the auction. The right created in the highest bidder can be defeated only because of an express provisions in law. Unless there is an express provision made in law putting the highest bidder on notice that though his highest bid is accepted he may not get the property because the defaulter deposits the amount of arrears even after the 19 completion of the auction, the highest bidder would be entitled to get the property subject to his depositing the balance amount. In our opinion, apart from this legal position even the conduct of the Petitioners does not entitle them to any relief in the extra ordinary jurisdiction of this court. Perusal of their letter dated 21-4-1999 shows that they allowed the arrears to mount right from 1994. They did not take any action till the property was attached by the Corporation on 23-3-1999. Even thereafter, they waited till 21-4-1999 to address a letter to the Corporation and in that letter they assured the Corporation that they will clear all the arrears before March, 2000. Before, March, 2000 they paid just an amount of Rs.60,000/- when the amount of arrears was Rs.4,34,874/-. The Corporation, therefore, addressed a letter dated 9-2-2000 to them giving them 20 further time of seven days to deposit the amount of Rs.3,74,874/-. They did not claim that the amount of arrears mentioned in the letter is not correct. Nothing was done within that period. They were told that if they want that their property should not be auctioned even after not paying the amount within the period of seven days, then they can avoid the auction by paying the amount of arrears together with costs of Rs.15,000/- before the date of auction. But they did nothing. Though, it is common ground before us that notices were published in three newspapers twice, averments are made in the petition that the auction was held without any notice and without advertisement. Though, in the letter dated 9-2-2000 precisely the amount due is mentioned and the amount of costs is also mentioned, in the letter dated 19th October, 2000 they stated that they 21 assured to make payment of arrears of assessement tax if properly calculated and accounted. What is pertinent to be noted is that after receiving the letter dated 9-2-2000 they did not write any letter disputing the amount of arrears mentioned in the letter. Thus, we find that the Petitioners have not approached the court with clean hands, in asmuch as, they have made misleading statements in the petition. In our opinion, therefore, the Petitioners are not entitled to any relief in the extra ordinary jurisdiction of this Court. 13. In the result, therefore, petition fails and is dismissed. Rule discharged with no order as to costs. 14. At the request of the learned Counsel appearing for the Petitioners operation of 22 the interim order is continued for a period of eight weeks from today, subject to the condition that within a period of two weeks from today the Petitioners file an undertaking in this court undertaking to this court to hand over peaceful possession of the property to the Corporation on expiry of the period of eight weeks, if they do not succeed in getting an order setting aside or staying further proceedings pursuant to the auction within a period of eight weeks from today. (D.K.DESHMUKH, J.) (R.G.KETKAR, J.)