Shalimar Rope Works Ltd. Vs. Abdul
Hussain H. M. Hasan Bhai Rassiwala & Ors [1980] INSC 108 (7 May 1980)
UNTWALIA, N.L.
UNTWALIA, N.L.
SHINGAL, P.N.
TULZAPURKAR, V.D.
CITATION: 1980 AIR 1163 1980 SCR (3)1028 1980
SCC (3) 595
ACT:
Summons, service of-Suits by or against
Corporation- Service of summons how to be effected to be valid.-Code of Civil
Procedure Code, Order 29 Rule 2, Order 5 Rule 17.
HEADNOTE:
The respondent filed a suit at Indore on
24-2-1975 against the appellant claiming damages to the tune of Rs.
26,000/- on account of the alleged
nondelivery of certain goods. Summons in the suit was sent to the registered
office of the company in Calcutta and was served on Sri Navlakha on 17-3-1975
asking the company to appear at Indore on 25-3- 1975. Since the company did not
appear in the Court on that date, eventually, the exparte decree was passed on
22-4- 1975. The appellant company came to know about the ex-parte decree for
the first time when its constituted attorney Sri Jhunjhunwala received a notice
from the respondent by registered post demanding the decretal dues. Thereupon
Sri N. S. Pareek, the Works Secretary of the company who is in- charge of the
legal matters was sent to Indore to ascertain as to how the ex-parte decree
came to be passed. Pareek learnt that the summons was purported to have been
served on Navalakha on 17-3-75. Navalakha did not bring the fact of the receipt
of summons by him to the knowledge of any responsible officer of the company.
He was neither secretary nor a Director nor any other principal officer of the
company authorised to receive summons in the suit. The company remained in dark
and learnt for the first time on 29-7-75 about the passing of the ex-parte
decree. The Trial Court allowed the application but the High Court in revision
under S. 115 of C.P.C. restored the ex-parte order. Hence the appeal by special
leave.
Allowing the appeal, the Court
HELD: 1.Rule 2 of Order XXIX of C.P.C. is not
an exhaustive provision providing for all modes of service on the Company in
the sense as to what is meant by service of summons on the Secretary, Director
or Principal Officer.
Service on managing agents who are a
corporation is valid under clause (a) of Rule 2 of Order XXIX C.P.C., since a
Principal Officer in clause (a) of Rule 2 has been held to include managing
agents and it can under this rule, be on a juristic person. [1031 D-E] Jute and
Guuny Brokers Ltd. & Anr. v. Union of India and Ors. [1961] 3 SCR p. 20;
followed.
2.Sending a summon to a corporation by post
addressed to it at its registered office may be a good mode of service either
by itself, or preferably, by way of an additional mode of service. But leaving
the summons at the registered office of the corporation if it is literally
interpreted to say that the summons can be left anywhere uncared for in the
registered office of the company. then it will lead to anomalous and absurd
results. It has to be read in the background of provision contained in Order 5
Rule 17 of the Code. In other 1029 words, if the serving peon or bailiff is not
able to serve the summons on the Secretary or any Director or any other
Principal Officer of the Corporation because either he refuses to sign the
summons or is not to be found by the serving person even after due diligence then
he can leave the summons at the registered office of the company and make a
report to that effect. In the instant case nothing of the kind was done. It was
also not the case of the respondent in its rejoinder filed in the Miscellaneous
case that the service of the summons was effected in accordance with the first
part of clause (b) of Rule 2 of Order 29 of the Code.
[1032 B-D]
3. Nowhere in the rejoinder a stand was taken
by the respondents that the summons was duly served on the company because it
was left at the registered office of the company.
The company had no knowledge of the ex-parte
decree, even otherwise, before 29-7-75. Hence the application under O.I.X Rule
13 of C.P.C. has been correctly allowed. [1033 C-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 366 of 1979.
Appeal by Special Leave from the Judgment and
Order dated 28-2-1978 of the Madhya Pradesh High Court (Indore Bench) in Civil
Revision No. 93 of 1976.
Shanker Ghosh and S. K. Gambhir for the
Appellant.
R. K. Garg and A. K. Sanghi for Respondent
No. 1.
The Judgment of the Court was delivered by
UNTWALIA, J. This appeal by special leave is from the judgment of the Madhya
Pradesh High Court reversing the decision of the Second Additional District
Judge, Indore in Miscellaneous Judicial Case No. 23 of 1975. The appellant
company had filed that case under Order 9 Rule 13 of the Code of Civil
Procedure, hereinafter called the Code, for setting aside an ex-parte decree
for Rs. 28,479/- passed in favour of the respondent firm on 22-4-1975 against
the appellant. The learned Additional District Judge held that summons in the
suit was not duly served on the company and it came to know about the decree on
29-7-1975. Hence he set aside the ex-parte decree. The respondent firm filed a
revision in the High Court under section 115 of the Code.
The High Court allowed the revision, set
aside the judgment of the Trial Court and upheld the passing of the ex-parte
decree. Hence this appeal.
The respondent filed the suit at Indore on
24-2-1975 against the appellant claiming damages to the tune of Rs. 26,000/- on
account of the alleged non-delivery of certain goods. Summons in the suit was
sent to the registered office of the company in Calcutta and is said to have
been served on one Shri Navlakha on 17-3-1975 asking the company to appear at
Indore on 25-3-1975 for settlement of issues.
Since the company did not appear in the Court
on that date, eventually, 1030 the ex-parte decree was passed on 22-4-1975.
According to the case of the appellant the company came to know about the
ex-parte decree for the first time when its constituted attorney Shri S. K.
Jhunjhunwala received a notice from the respondent by registered post demanding
the decretal dues.
Thereupon Shri N. S. Pareek, the Works
Secretary of the company who is in-charge of the legal matters was sent to
Indore to ascertain as to how the ex-parte decree came to be passed. Pareek
learnt that the summons purported to have been served on Navlakha on 17-3-1975.
Navlakha was mere Office Assistant in the Sales Department of the company. He
was neither a Secretary nor a Director nor any other Principal Officer of the
company authorised to receive summons in the suit. He did not bring the fact of
the receipt of summons by him to the knowledge of any responsible officer of
the company. The company remained in dark and, as stated above, learnt for the
first time on 29- 7-1975 about the passing of the ex-parte decree.
N. S. Pareek was the only witness examined on
behalf of the appellant in the Miscellaneous case tried by the learned
Additional District Judge. No witness was examined on behalf of the respondent.
The Trial Court held:- "I hold that handing over of summons to Navlakha
who was only an Office Assistant working in the company and who was not an officer
duly authorised to accept summons on behalf of the company did not amount to
valid service of summons on the applicant company." It also accepted the
appellant's case about the knowledge of the ex-parte decree for the first time
on 29-7- 1975 and hence the application filed is about a week's time thereafter
was held to be within time.
The High Court in its impugned judgment has
held:- "It is not in dispute that the person who received the summons in
the office of the Company is not a person who is entitled to be served on
behalf of the company in accordance with sub-clause (a) of Rule 2 of Order 29
of C.P.C." The High Court, however, took the view that since Navlakha was
an employee of the company sitting in its registered office in Calcutta the summons
will be deemed to have been duly served on the company within the meaning of
the first part of clause (b) of Order 29, Rule 2 of the Code. In the opinion of
the High Court since the learned Additional District Judge did not apply his
mind to the provision of law contained in clause (b), it committed a material
irregularity and illegality in exercise of its jurisdiction in setting aside
the ex-parte decree.
1031 In our opinion the High Court was
clearly wrong in upsetting the judgment of the Trial Court. There was no error
in that judgment much less any error of jurisdiction entitling the High Court
to interfere with it.
Order 29 of the Code is headed "Suits by
or against Corporations". There are only three Rules in it. We are
concerned with Rule 2 which reads as follows:- "Subject to any statutory
provision of process, where the suit is against a corporation, the summons may
be served- (a) on the secretary, or on any director, or other principal officer
of the corporation, or (b) by leaving it or sending it by post addressed to the
corporation at the registered office, or if there is no registered office then
at the place where the corporation carries on business." Rule 2 is not an
exhaustive provision providing for all modes of service on the company in the
sense as to what is meant by service of summons on the Secretary, Director or
Principal Officer in Jute and Gunny Brokers Ltd. and another v. The Union of
India and others it was held that the words "Principal Officer" in
clause (a) of Rule 2 would include managing agents and it can, under this rule,
be on a juristic person. Accordingly service on managing agents who are a
corporation is valid under clause (a).
The meaning of clause (b) has got to be
understood in the background of the provisions of the Code in Order 5 which is
meant for issue and service of summons on natural persons. Sending a summons by
post to the registered office of the company, unless the contrary is shown,
will be presumed to be service on the company itself. But the first part of
clause (b) has got to be understood with reference to the other provisions of
the Code. In Rule 17 of Order 5 it has been provided:- "Where the
defendant or his agent or such other person as aforesaid refuses to sign the
acknowledgement, or where the serving officer, after using all due and
reasonable diligence, cannot find the defendant, and there is no agent
empowered to accept service of the summons on his behalf, nor any other person
on whom service can be made, the serving officer shall affix a copy of the
summons on the outer door or some other conspicuous part of the house in which
the defendant ordinarily resides or carries on business or personally works for
gain, 1032 and shall then return the original to the Court from which it was
issued, with a report endorsed thereon or annexed thereto stating that he has
so affixed the copy, the circumstances under which he did so, and the name and
address of the person (if any) by whom the house was identified and in whose
presence the copy was affixed." Sending summons to a corporation by post
addressed to it at its registered office may be a good mode of service either
by itself, or preferably, by way of an additional mode of service. But leaving
the summons at the registered office of the corporation if it is literally
interpreted to say that the summons can be left anywhere uncared for in the
registered office of the company, then it will lead to anomalous and absurd
results. It has to be read in the background of the provision contained in
Order 5 Rule 17 of the Code. In other words, if the serving peon or bailiff is
not able to serve the summons on the Secretary or any Director or any other
Principal Officer of the Corporation because either he refuses to sign the
summons or is not to be found by the serving person even after due diligence
then he can leave the summons at the registered office of the company and make
a report to that effect. In the instant case nothing of the kind was done. It
was not the case of the respondent in its rejoinder filed in the Miscellaneous
case that the service of the summons as effected in accordance with the first
part of clause (b) of Rule 2 of Order 29 of the Code. Annexure A to the counter
affidavit filed by the respondent is the petition filed by the appellant under Order
9 Rule 13 of the Code. In paragraph 9 of the said petition it was stated:-
"Inspection of record of this Hon'ble Court relating to the service of the
summons reveals that the bailiff of the Small Cause Court at Calcutta seems to
have delivered a copy of the summons to a gentleman who is described as an
office assistant, on 17-3-1975 at about 12.40 P.M. No office assistant of the
defendant No. 1 Company is empowered or authorised to receive summons. The
original summons which has been returned by the bailiff to this Hon'ble Court,
has been signed by one Shri Nawlakha. Shri Nawlakha was concerned merely with
sales and had nothing to do with legal matters generally or with receiving
summons in particular. Service of the summons on Shri Nawlakha cannot be regarded
as due service on the defendant No. 1 for the purpose of Order 9 Rule 13
C.P.C." The rejoinder of the respondent is Annexure B to the counter
affidavit. Para 9 of the rejoinder which is in reply to para 9 of the petition
reads as follows:- 1033 "In reply to para 9 it is stated that the summons
was duly served as stated in this para. But it is denied that Shri Nawlakha was
concerned merely with sales and has nothing to do with legal matters, generally
or with receiving summons in particular. It is denied that service on Shri
Nawlakha cannot be regarded as due service on the Company Defendant No. 1 for
the purpose of Order 9 Rule 13 C.P.C. Shri Nawlakha was a responsible officer
who could have intimated the receipt of the summons to his so called bosses.
Without prejudice it is submitted that the Madhya Pradesh amendment in Order 9
Rule 13 C.P.C. may kindly be perused." No where in the rejoinder a stand
was taken that the summons was duly served on the company because it was left
at the registered office of the company. Reference to the Madhya Pradesh
amendment of Order 9 Rule 13 is immaterial as the Trial Court has pointed out
that the company had no knowledge of the ex-parte decree, even otherwise,
before 29- 7-1975. No contrary finding has been recorded by the High Court.
We, therefore, hold that the judgment by the
Trial Court setting aside the decree was correct. In any event no error of
jurisdiction was committed by it. The High Court went wrong in interfering with
it. We accordingly allow the appeal, set aside the judgment of the High Court
and restore that of the Trial Court. The suit shall now proceed to disposal in
accordance with the law. We may, however, make it clear that the appellant
under the orders of the Court had furnished bank guarantee for the decretal
amount. It has agreed to continue the same till the disposal of the suit.
We shall make no order as to costs.
S.R. Appeal allowed.
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