Power to sue, compromise and pay compensation.

(1) A municipality may sue in any Court of competent jurisdiction any person who may have in any way caused or may appear likely to cause any injury to any property rights or privileges of the municipality.

(2) A municipality may compound or compromise in respect of any suit instituted by or against it, or, in respect of any claim or demand arising out of any contract entered into by it under this Act, for such sum of money or other compensation as it shall deem sufficient:

Provided that, if any sanction in the making of any contract is required by this Act, the like previous sanction shall be obtained for compounding or compromising any claim or demand arising out of such contract:

Provided further that if any such suit is in respect of land leased or sold under sub-section (1) of section 146 or in respect of any immoveable property sold or leased for a term exceeding ten years or otherwise transferred, it shall not be lawful for the municipality to compound or compromise in respect of the suit except with the previous sanction of the State Government.

(3) A municipality may make compensation out of the municipal fund to any person sustaining any damage by reason of the exercise of any, of the powers vested in it. its committees, officers and servants under this Act.

(4) The municipal fund shall be liable to pay the expenses of any civil proceeding prosecuted or defended on its behalf.