JUDGMENT - A.A. HALBE, J.:---This petition raises an important question about the powers of the Municipal Corporation under The Bombay Provincial Municipal Corporations Act, 1949 and that of Municipal Council under the Maharashtra Municipalities Act, 1965 about offering nominal bid of Re. 1/- at the public auction of the property seized and attached for the recovery of arrears of Municipal taxes. Under section 156 sub-section (3) of the Maharashtra Municipalities Act, 1965 it is provided that 'it shall be lawful for the Council to offer a nominal bid in the case of any immovable property put up for auction, provided the previous approval of the Collector is obtained to such bidding.' Almost the identical provision is to be found in Chapter VIII of Appendix-IV of the Bombay Provincial Municipalities Corporations Act, 1949 and the same is at Rule 47 sub-rule (7) in the said Chapter under title 'taxation Rules (Collection of taxes). 2. The learned Counsel for the petitioner has vehemently urged that exercise of those powers by the Local Bodies almost amount to expropriation, confiscation and deprivation of the valuable properties of the tax payer who is a defaulter for the nominal sums and that indirectly these provisions confer draconian powers on those bodies. No fetters are seen to guide the local bodies in this regard and hence either this provision should be struck down or in the alternative this should be read down with certain limitations. On behalf of the Municipal Corporation it is suggested, in the return filed, that such powers are used in the last resort when the local body finds it impossible to recover its tax dues from the property owner. It is also urged that looking to the arrangement of various sections and rules in the above Acts it cannot be said that these powers are unfettered or unguided. 3. In order to resolve this controversy, few facts of the petition need to be referred to so as to appreciate the point in issue and the point which calls for determination. 4. The petitioner in the above petition is the sole proprietor of M/s. Electronic Products and for that purpose the petitioner owns piece and parcel of the land admeasuring 1545 Sq. yards with structures thereon at Plot No. A/27 Road 10, Wagle Industrial Estate, Thane. The said premises consists of an industrial plot with a two storeyed factory building which admeasures 1200 Sq. yards with structures thereon at Plot No. A/27 Road 10, Wagle Industrial Estate, Thane. The said premises consists of an industrial plot with a two storeyed factory building which admeasures 1200 Sq. ft. There is also one shed near this premises and that the annual tax liability in respect of this premises of the Municipal Corporation is Rs. 4,687/-. This factory produces electronic goods which are meant for substitution of imports. 5. The further claim of the petitioner is that in the year 1975 the workers of the said factory went on strike and this brought about the financial strains on the operations of this factory. This gave rise to arrears of Municipal taxes and by notice dated 25th September, 1981 respondent No. 1-Municipal Corporation attached the said premises. Incidentaly it may be stated that Thane Municipal Corporation came to be constituted on 22-9-1982 whereas prior to that there was Thane Municipal Council. On account of the above notice the petitioner approached respondent No. 1 and settled the dispute by agreeing to make a lump sum payment of Rs. 15,000/- and further payment of Rs. 1,500/- per month. However, as the operations of the factory did not become profitable the petitioner could not square up the tax dues although substantial portion thereof was squared up in due course of time. In July, 1983 when the petitioner tried to make the delayed payment of Rs. 1,500/-, respondent No. 1 refused to receive the same on the ground that the property was sold at public auction as far back as in March, 1983. The auction seems to have taken place on 5th of March, 1983 and that the respondent No. 1 purchased that property for a nominal bid of Rs. 1/-. On learning this fact, the petitioner tried to pay the arrears of taxes by Bank draft but the same was declined. He also approached the Minister in Urban Development, Government of Maharashtra but by the respective letters dated 10th November, 1983 and dated 20th March, 1984 both the Commissioner of the Corporation and the Minister refused to accept the request of the petitioner to cancel the sale and to reconvey the property to the petitioner. 6. The petitioner, therefore, filed this writ petition for cancellation of the auction sale and also for cancellation of the sale certificate issued in pursuance of that auction sale. 6. The petitioner, therefore, filed this writ petition for cancellation of the auction sale and also for cancellation of the sale certificate issued in pursuance of that auction sale. The sale certificate is dated 4th July, 1983. 7. In the return filed on behalf of the Corporation it is stated that inspite of time being granted to the petitioner he did not clear all arrears. Some payments were made by virtue of the arrangement between the parties but even those terms of arrangement were not adhered to by the petitioner and hence the property was put to auction sale on 29th June, 1982 after notice to the petitioner on 2nd June, 1982. As no bidders came-forth it was again put up for auction on 18th August, 1982 after notice to the petitioner. Even at that auction the bidders did not turn up and hence by the sanction of the Thane Municipal Council dated 9th September, 1982 the Municipal Corporation purchased this property on 5th of March, 1983. For this also notice was given to the petitioner on 18th February, 1983. The purchase was made by the Corporation because the Corporation had come in existence in succession to Thane Municipal Council. The sale certificate was issued to the Corporation on 4th July, 1983. It is, therefore, contended that the nominal bid was offered by the Corporation after due notices to the petitioner and hence there was no breach whatsoever in bidding at public auction of the property of the petitioner. Regarding the claim of the value of the property running into couple of lacks the Corporation denied that the property is valued at Rs. 25,00,000/- or more. Regarding questioning the constitutional validity which has been set up by the petitioner in the amendment the same is also denied by the Corporation. 8. As indicated in the amendment to the petition, the petitioner challenged the constitutional validity of section 156 sub-section (3) of the Maharashtra Municipalities Act and Rule 47(7) of Chapter-VIII in Schedule of Appendix-IV of The Bombay Provincial Municipal Corporation Act. 9. The undisputed facts, therefore, are that under the various acts of the Council as well as the Corporation the property of the petitioner was put to sale and the same was purchased by the Corporation by offering a nominal bid of Re. 1/-. 10. 9. The undisputed facts, therefore, are that under the various acts of the Council as well as the Corporation the property of the petitioner was put to sale and the same was purchased by the Corporation by offering a nominal bid of Re. 1/-. 10. The learned Counsel for the petitioner contended that such an exercise of powers by the Corporation amount to deprivation of the property of the petitioner for no value and that this exercise of power even exceeds the consequences flowing from forfeiture because in the matter of forfeiture the price realised on disposal of property is credited to the account of the petitioner, whereas in nominal bid there is out-right purchase with no credit whatsoever of any amount in favour of the petitioner. This amounts to confiscation or deprivation of the property of the petitioner and that this should be treated as unconsignable hardship to the petitioner. The public auctions have certain pre-requisites and they are that the bidders must appear, offer the price, they must have previous knowledge about the tentative price of the property. Ordinarily at such sales the reserved price must be fixed and there should be thus trappings of the auction sale as contemplated under Order XXI, Rule 66 read with Rule 54 of the Civil Procedure Code which envisage the participation of the debtor in the matter of information of the tentative price, the encumbrances on the property, the revenue assessment of the property and the amount of recovery of taxes on that property. In the affidavit filed on behalf of the Corporation no such indications are found. It is also urged that it is unlikely that no bidders should turn up for the purchase of property which had practically no encumbrances and which is located in the busy city of Thane. No public notice must have, therefore, been given. The learned Counsel has contended that the petitioner was also no given notices of the auctions held on various dates as indicated in the return of the Corporation and for all these reasons the action on the part of the Corporation should be struck down. 11. It would be in the fitness of the things, to observe that the courts have frowned upon such provisions. In 1950 Bombay Law Reporter (Vol. 11. It would be in the fitness of the things, to observe that the courts have frowned upon such provisions. In 1950 Bombay Law Reporter (Vol. 52) page 263 in the case of (Laduram Hajarimal Marwadi v. Ramrao Jankiram Kadam)1, this Court was pleased to consider sections 155, 150 and 214 of the Land Revenue Code and the relevant rules thereunder. In that case, for the arrears of Abkari balances the property of the contractor was put up for sale and that at a nominal bid by the Government the said property was sold for Re. 1/-. Of course in that case the Court was pleased to find that adequate notice was given to the contractor and that sale could not be set aside. But, while disposing of the matter the Court was pleased to observe in the following words : "But while upholding the sale in this case, we should like to point out to Government that the practice followed by them is by no means fair or equitable. We appreciate the position of Government that when bidders are not forthcoming they have to realise their dues and they have to sell the property. But we do not understand why the Government are obliged to offer a price which is wholly unreasonable and which is in no way commensurate with the real value of the property. Government ought to know what is fair and reasonable price of the property which they are purchasing and there is no reason why they should not offer at the auction a reasonable price. The importance of this will be apparent from the point of view of the defaulter because the only credit that the defaulter gets is Re. 1 which is realised at the sale. Government may sell that land to someone else, as they have done in this case, they may realise a fairly large amount, and yet no credit is given to the defaulter in respect of the amount realised by Government. Therefore, Government are really taking to themselves the rights which are even higher than in a case of forfeiture where under section 153 of the Land Revenue Code. If a land is forfeited and then sold by the Collector, the sale proceeds are to be credited to the defaulter. Therefore, Government are really taking to themselves the rights which are even higher than in a case of forfeiture where under section 153 of the Land Revenue Code. If a land is forfeited and then sold by the Collector, the sale proceeds are to be credited to the defaulter. Therefore, Government without forfeiting the land, yet do not give credit to the defaulter when they sell his land and recover the sale proceeds of that land." 12. However, the Supreme Court in (Ramrao Jankiram Kadam v. St. of Bombay)2, A.I.R. 1963 S.C. 827 in the same matter from this Court was pleased to set aside the orders of this Court inter alia observing that eventhough notices were given to the contractor it cannot be said that there was public auction. The Court also observed that there was no question of notice being given to the contractor before hand and that there was no waiver. Relevant observations which can be noted are : "...The question then arises whether a purchase for a predetermined nominal price of rupee one for property, whatever its actual market value, is a sale by public auction within section 167 of the Code. An auction has been described as "the proceeding at which people are invited to compete for the purchase of property by successive offers of advancing sums" and a sale by auction is a means of ascertaining what the thing is worth, viz., its fair market price. If at the sale there are no bids there cannot be a sale. A sale for a predetermined nominal sum cannot, in our opinion, be held to bear "sale by public auction" in the absence of any provision for such sales in the statute. Such a sale appears to us to be somewhat analogous to what Sir Richard Couch described, though in a slightly different context. "The offer and acceptance of a rupee was a colourable attempt to obtain a title without paying for the land. Virtually it was a present which it was not open to the authorities to make." vide (Luchmeshwar Singh v. Chairman, of the Darbhanga Municipality)3, I.L.R. 18 Cal. 99 (106) P.C......................... We do not find it easy to discover the precise legal basis upon which prior notice to the defaulter would have the effect of validating the sale. Virtually it was a present which it was not open to the authorities to make." vide (Luchmeshwar Singh v. Chairman, of the Darbhanga Municipality)3, I.L.R. 18 Cal. 99 (106) P.C......................... We do not find it easy to discover the precise legal basis upon which prior notice to the defaulter would have the effect of validating the sale. If a sale for a nominal bid of one rupee were "a sale by public auction" with section 167 notice to the defaulter that such a procedure would be followed would be legally unnecessary and would not add to the legal efficacy of the sale. If, on the other hand, such a sale or a sale in such circumstances was not a sale by public auction then notice to the defaulter could be of value only if (a) it operated as a waiver of the requirement of section 167, or (b) created an estoppel which precluded him from questioning the legality of the proceeding. First as to waiver, the power of Government to effect the sale by summary process is a special provision resting on public grounds and being so very special it is clear that the limitations on the power thus conferred should be strictly construed. In our opinion, it is an essential condition of the passing of property from the defaulter in invitum that there should be a sale by public auction and if a sale in the manner in which it has been conducted in the present case does not amount to a sale by public auction there is no question of the title to property passing by virtue of such a sale. The plea of waiver cannot therefore be of any avail." 13. The ratio laid down in the above decision would clearly show that in the matter of nominal bids the authority concerned has to point out that there were no bidders or that the bidders were prevented from bidding at the auction. The other circumstance, in our judgment, which can permit the nominal bid are that the property is so heavily encumbered, whereas the real value is far short of it and there was no likelihood of any bidder coming forth to bid. It must be also said that there must be a previous notice about the tentative value of the property being put up in the proclamation. It must be also said that there must be a previous notice about the tentative value of the property being put up in the proclamation. There must also be details about the encumbrances on the property and the liability in respect of tax arrears which must be incorporated in the proclamation. This would give the clear idea about the net worth of the property. Ordinarily such auctions should be preceded by wide publicity, and there should be sufficient bidding by the bidders. 14. Now, when we look to these sections we find that the regular auctions are held in the first instance and thereafter the auction where nominal bids are given are held. Of course in the above provisions such auctions are to be found but we are of the firm opinion that the Legislature has in its mind that these auctions should be held by way of last resort. They should be rare and few. So far Bombay Provincial Municipal Corporations Act, 1949 is concerned right to sale the property is referred in section 128 whereas in Chapter-VIII of the Annexure the procedure is provided for effecting the sale, and the provision relating to the nominal bid comes last in both the Acts and if that be so, in our judgment, the power to be used by the local body for offering nominal bid should come last and that too after the satisfaction of the local body that inspite of auctions of the property on previous dates after wide publicity bidders are not comingforth. We are of that view in that behalf that such a situation can come only if the value of the property and the encumbrances thereon are wholly disproportionate, the liability is in far excess of the value of the property and in such events only the question of local body steping in as a bidder could arise. However, this can be insulated by putting up the reserve price or the up-set price in the proclamation. It is only in such circumstances that the Corporation or the other local body can justify its interference at the public auction. As indicated, such auctions should have trappings of the public auctions as contemplated under Order XXI C.P. Code. The justification would, therefore, be available only in such events. It is only in such circumstances that the Corporation or the other local body can justify its interference at the public auction. As indicated, such auctions should have trappings of the public auctions as contemplated under Order XXI C.P. Code. The justification would, therefore, be available only in such events. Else, it can be said that the nominal bid is nothing but appropriating the property by the local body for virtually no value. The scope of the above provision would, therefore, show that such powers have to be rarely used and that too after complete satisfaction that all attempts to hold the public auctions have failed. We hope that such situations would be far and few. In our judgment, the above provisions shall have to be read with above limitations. We read down the above provisions accordingly. 15. In this case it has been submitted by the learned Counsel for the petitioner that the property is worth Rs. 40,00,000/- at present. At the time of public auction it was not less than Rs. 25,00,000/-. The petitioner had obtained loan of Rs. 1,00,000/- from financial Corporation and the liability to repay had not arisen at that time. In this background, therefore, if there was sufficient proclamation the question of offering nominal bid would not have at all arisen. Relying on the above ratio we hold that the auction has to be set aside and so the sale certificate. 16. Now, so far as this case is concerned, we find that at the time of actual bidding the Corporation had come into existence and under Clause 4 sub-clause (2) of Part-I General of Appendix-IV of the Act of 1949 it is provided that all proceedings pending before any authority of the Municipality on the said day, which under the provisions of this Act, are required to be instituted before or undertaken by the Commissioner shall be transferred to and continued by him and all other proceedings shall, so far as may be, be transferred to and continued by such authority before or by whom they have to be instituted or undertaken under the provisions of this Act. Obviously, therefore, on the date of the public auction the Corporation was bound to take action under this Act of 1949 and in that background it will have to be observed that although the permission of the Collector was taken under The Maharashtra Municipalities Act the previous approval of the Standing Committee was not taken by the Commissioner in this case. Under Clause 47 sub-clause (7) it is clearly provided that the Commissioner can offer bid at the public auction of immovable property provided that the previous approval of the Standing Committee is obtained. The respondent has not produced any record to show that the previous permission of the Standing Committee was obtained, when as a matter of fact the Corporation had come into existence six months prior to the date of auction. On this count also there is a breach of the provisions on the part of the Corporation and this would, therefore, vitiate the entire public auction and the bid given by the respondent No. 1. 17. From the interim order it is clear that the entire amount due on account of the property tax has been made good by the petitioner and for all these reasons we hold that the petition succeeds. 18. Before parting with this matter, we must observe that the learned Counsel for the petitioner has not pressed the consideration of the vires of the above provisions. She had submitted that the above guidelines should be read while construing these provisions and that they are adequate and therefore do not call for striking down the above provisions. 19. Writ petition it therefore allowed. Rule made absolute. The auction sale dated 5-3-1983 and the sale certificate dated 4-7-1983 are hereby set aside. However, in the circumstances of the case, there should be no orders as to costs. Petition allowed. -----