Sahara Deposits & Investments (I) ... vs Karan Singh
1996 Latest Caselaw 59 Del

JUDGMENT

R.C. Lahoti, J.

(1) This Division Bench has been constituted by Hon'ble the Chief Justice on a reference made by J.K. Mehra, J. sitting as a Company Judge. Vide order of reference dated 4.1.95 his Lordship has found himself not persuaded to subscribe to the view taken by another learned Single Judge of this Court - Usha Mehra, J. sitting as a Company Judge in the order dated 2.9.93 passed in Ca 790 / 86, Mis. Sahara Deposits v. Smt. Majidan & Ors.

(2) In the case at hand, the proceedings have commenced on an application under Section 446(2) of the Companies Act, 1956 filed by the Official Liquidator seeking recovery of an amount of Rs. 2029.95 and interest. Summons on the respondent could not be served in ordinary manner and hence on an application made by the Official Liquidator service was directed to be effected by affixation of notice at the last known address of the respondent as well as on the notice board of the Court. It appears from the endorsement made by the process server on the summons that the respondent was not available at the given address and hence the summons was affixed on the given address. Endorsement as to affixation is not attested by any witnesses as according to the process server there was no witness available at the place of service. The Deputy Registrar has vide his order dated 9.12.94 accepted the service good in view of the order dated 2.9.93 in Ca 790/86 by Usha Mehra, J.

(3) When the matter came-up for hearing before J.K. Mehra, J., he opined that the service was not good inasmuch as it was not effected by affixation made in the presence of two witnesses. He also expressed his doubts on the view taken by Usha Mehra, J. in her order dated 2.9.93 referred to hereinabove. Hence the reference.

(4) We may notice the view of the law taken by Usha Mehra, J. in her order dated 2.9.93. Service on the respondent was affected by affixation on his last known address. The process server made a verification on oath that there was no witness available to evidence the affixation. She has held that Rule 6 of the Companies Court Rules, 1959 (hereinafter the Rules, for short) permits resort being had to the provisions of Order 5 of the Cpc, Rule 17 whereof contemplates the service by affixation being evidenced by witnesses if available; meaning thereby if the witnesses may not be available the validity of the service would not be open to question. She also opined that the Original Side Rules framed by the High Court in exercise of the power conferred by Section 129 of the Civil Procedure Code were not automatically applicable to the Company Court. To sum up the view taken by Usha Mehra, J., she has held : "(1)the Original Side Rules framed by the High Court under Section 129 of the Code of Civil Procedure will not apply automatically to the Company Court. This Court is not bound by the practice and procedure adopted by the High Court on the Original Side or the rules framed thereunder; (2) The Company Court does not fall under the definition of Original Civil Jurisdiction as mentioned under Section 129 of the Code. Hence for the purpose of its practice and procedure it can either rely on its own rules or the provisions of the Code of Civil Procedure and even the High Court Rules. Since the Company Court Rules are silent regarding the service of the respondent by affixation, this mode of service has been relied on the basis of the provisions laid down in the Code of Civil Procedure. Therefore, for the purpose of knowing whether it ought to have been evidenced by one witness, we have to fall back on the provisions of Rule 17 of Order 5, which does not lay down that if the serving officer does not get the affixation witnessed from any witness then such affixation will be ineffective. On the contrary the word 'if any' used in Rule 17 of Order 5 Cpc, clearly shows that the Legislature had in mind that circumstances can arise when it will be difficult for the serving officer to find a witness. In such an eventuality, the affixation done without being evidenced by any witness will not be declared ineffective or bad in law. Unless specifically ordered otherwise the service effected by way of affixation on the respondent even without being evidenced by a witness such a service will not be treated as invalid service."

(5) J.K. Mehra, J. has opined that the practice and procedure of the Court and provisions of Civil Procedure Code are applicable to the Company Court also. He has further opined: "IN my view, it would not be expedient to ignore the wisdom of the rule and practice of this Court in providing that the service by pasting should be witnessed by independent witness because it would eliminate as far as possible the possibility of any malpractices, and consequent possibility of miscarriage of justice, which may result from any faulty report of service."

(6) In the order of reference, the question arising for decision has not been formulated as such, yet it is clear from a reading of the order that the question arising for decision is: whether a service of summons effected by affixation can be held to be good though not attested by witnesses?

(7) In exercise of the power conferred by Section 643 of Sub-sections (1) and (2) of the Companies Act, rules have been framed by the Supreme Court of India after consulting the High Courts. Rules 32,33 and 36 of the said Rules, relevant for the purpose of this order are extracted and reproduced hereunder :

32.Mode of service and service when deemed to be effected.-(1) Save as otherwise provided by these rules or by an order of Court, all notices, summonses, and other documents required to be served on any person, may be served either personally by delivering a copy thereof to such person or upon his Advocate where he appears by Advocate, or except where personal service is required by prepaid registered post for acknowledgement due addressed to the last known address of such person. In the case of service by registered post where no acknowledgement signed by the address or his duly authorised agent is received, orders of Court shall be obtained as to the sufficiency of service or as to the further steps to be taken for service as the Court may direct: Provided that where a notice, summons or other document has to be served on any Class of persons such as shareholders, debenture-holders, creditors and the like, the same may be sent by prepaid registered post or by ordinary post under certificate of posting, as may be provided by these rules or by an order of Court, and unless otherwise ordered by the Court, the service shall be deemed to be effected at the time when the said notice, summons or other document ought to be delivered in the ordinary course of post by the post office, and notwithstanding the same is returned undelivered by the post office.

(2)Where notice of any petition, application, summons or other proceeding has to be given to the Central Government under these rules, it shall be addressed to and served on the Secretary to Government of India, Department of Company Law Administration, New Delhi, or such other officer at the Central Government may authorise to receive notices on its behalf.

(3)Where any person has to be served at an address outside India, the notice or other process to be served on him shall, subject to orders of the Court, be sent to such address by prepaid airmail registered post for acknowledgement due.

33.Validity of service and of proceedings.-No service under these rules shall be deemed invalid by reason of any defect in the name or description of a person in the list of contributories or in the petition, summons, notice or other proceeding, provided that the Court is satisfied that such service is in other respects sufficient; and no proceedings under the Act or these rules shall be invalidated by reason of any formal defect or irregularity; unless the Judge before whom the objection is taken is of the opinion that substantial injustice has been caused by such defect or irregularity and that the injustice cannot be remedied by an order of Court.

36.Procedure at hearing of petition.-Atthe hearing of the petition.theJudge may either dispose of the petition finally, or give such directions as may be deemed necessary for the filing of counter-affidavit and reply affidavits, if any and for service of notice on any person who, in his opinion, has been omitted to be served or has not been properly served with the notice of the petition and may adjourn the petition to enable the parties to comply with his directions. Except as otherwise ordered by the Judge, it shall not be necessary to give notice of the adjourned hearing to any person.

IT is clear that so long as there is a provisions in the Companies Act or the Rules governing a particular situation or proposition it is not necessary to refer to the provisions of the Civil Procedure Code or the practice and procedure of the Court. Resort to the provisions of the Civil Procedure Code and Rules of practice and procedure of the Court may be had only in a fact situation not covered by the provisions of the Act and the Rule.

(8) Rule 32 provides for a personal service or service by pre-paid registered post with acknowledgement due, if personal service is not required either under a provision or by an order of the Court.

(9) Service by affixation is not contemplated by the Rules. In a suitable case service by affixation may be the only available and convenient mode and the Court may be inclined to order service being effected by affixation. That will be available only by resorting to the provisions of Order 5 Rule 17 or 20 CPC. Rules 17, 18, 19 and 20 of Order 5 of the Civil Procedure Code provide as under : Procedure when defendant refuses to accept service, or cannot be found.

17.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 [who is absent from his residence at the time when service is sought to be effected on him at his residence and there is no likelihood of his being found at the residence within a reasonable tune], and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whim service can be made, the serving officer shall affix a copy of the summons on defendant ordinarily resides or carries on business or personally works for gain, 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. Endorsement of time and manner of service.

18.The serving officer shall, in all cases in which the summons has been annexed, on or to the original summons, a return stating the time when and the manner in which the summons was served, and the name and address of the person (if any) identifying the person served and witnessing the delivery or tender of the summons. Examination of serving officer.

19.Where a summons is returned under Rule 17, the Court shall, if the return under that rule has not been verified by the affidavit of the serving officer, and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another Court, touching his proceedings, and may make such further enquiry in the matter as it thinks fit; and shall either declare that the summons has been duly served or order such service as it thinks fit. Substituted service.

20.(1) Where the Court is satisfied that there is reason to believe that the defendant is keeping out of the way for the purpose of avoiding service, or that for any other reason the summons cannot be served in the ordinary way, the Court shall order the summons to be served by affixing a copy thereof in some conspicuous place in the Court-house, and also upon some conspicuous part of the house (if any) in which the defendant is known to have last resided or carried on business or personally worked for gain, or in such other manner as the Court thinks fit.

[(1A)Where the Court acting under Sub-rule (1) orders service by an advertisement in a newspaper, the newspaper shall be a daily newspaper circulating in the locality in which the defendant is last known to have actually and voluntarily resided, carried on business or personally worked for gain.] Effect of substituted service.-(2) Service substituted by order of the Court shall be as effectual as if it had been made on the defendant personally. Where service substituted, time for appearance to befixed.-(3) Where service is substituted by order of the Court, the Court shall fix such time for the appearance of the defendant as the case may require.

(10) When the service by affixation is effected under Rule 20, it is not necessary that the affixation must be made in the presence of witnesses. When the affixation is made under Rule 17, affixation may be made in the presence of the witnesses if available. Even under Rule 17 presence of witnesses is not mandatory, as the use of the words "if any" suggests. Presence of witnesses is not mandatory contemplated by Rule 17. In short, the absence of witnesses at the time of affixation would not by itself annul the affixation or invalidate the service. Rule 19 vests a discretion in the Court. The Court may feel satisfied by the verification on affidavit made by the process server or examine him so as to satisfy itself as to the regularity and reliability of the service if the Court may feel itself not satisfied by the verification by affidavit of the serving officer. It may direct the service afresh and in such manner and with such directions as it may deem fit. Discretion in the matter of treating the service by affixation as good and valid, as is conferred by Rules 19 of the Order 5 of the Cpc is also found conferred on the Company Court by Rules 32 and 36 of the Companies Court Rules, 1959. If at the time of hearing of the petition, the Judge may form an opinion that the respondent has not been served or has not been properly served, the hearing of the petition may be adjourned and directions may be made for effecting the service afresh and in such manner and with such directions as the Court may deem fit to make.

(11) In the order of reference, we do not find mentioned any rule or rule of practice governing the Court which mandatorily requires a service by affixation to be made in the presence of witnesses - one or more. We have for ourselves looked into Delhi High Court (Original Side) Rules, 1967 framed in exercise of powers conferred by Sections 122 and 129 of the Civil Procedure Code and Section 7 of Delhi High Court Act, 1966. Rules 8 to Ii of Chapter Xxi - "Processes etc." provide as under :

8.Process to be served after identification of party.-The serving officer shall serve all processes entrusted to him after due enquiry as to the identity of the persons on whom or the house or property where, the same is to be served : Provided that if it appears to the Registrar that sufficient information cannot be given as to the identity and place of residence of the person whom process is to be served or as to the house or property where process is to be served or if the Registrar is satisfied from the affidavit of the serving officer or upon his examination on oath (if necessary) that the person or the house or property or the place of residence of the person aforesaid could not be identified after due diligence and enquiry he may ask the party concerned to supply an identifier.

9.Endorsement of identifier on the original process.-If the serving officer is not personally acquainted with the person to be served, he shall, whenever possible obtain on the original process the endorsement by signature or thumb-impression of a respectable person of the locality identifying such person or place of residence or the house of property on which the process is served.

10.Procedure where defendant refuses to accept service or cannot befound.- Where the person to be served, or his agent, refuses to sign the acknowledgement of where the serving Officer, after using all due and reasonable diligence, cannot find that person and there is no agent empowered to accept service of the summons on his behalf, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which that person ordinarily resides or carries on business or personally works for gain, and shall then return the original to the Court from which it was issued with a report endorsed thereon 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. He shall also obtain the signature of the person or the return, who identified the person or in whose presence the copy was affixed on the said house.

11.Returns of service.-(a) Every process serving officer shall immediately after completion of any duty connected with any process, record with his own hand upon the original process at the place of execution and in the presence of at least one respectable witness his report specifying the manner of execution or the causes which prevented execution. Thereafter, he shall swear or affirm in the correctness of that report before an officer of the Court, duly authorised in this behalf and file the same in the Court together with the process. (b) Process serving officer must invariably note the date, hour and exact place of service in each individual process. (e) If the process is addressed to more than one person, die report shall describe the manner of service on each person and also the sequence in which the processes are served on different persons.

(12) A perusal of the above said provisions goes to show that the underlying object behind the above said provisions is to insist on the presence of one respectable person of the locality who may identify the house or property on which the process was affixed so as to eliminate the possibility of the process being affixed on a house or property with which the person sought to-be served has nothing to do. The use of the words "whenever possible" in Rule 9 and the words "if any" in Rule 10 clearly suggest that the provision as to presence of the person identifying the property is merely by way of caution; it is directory and not mandatory. The language of Rule 11 goes to suggest that the presence of at least one respectable witness is necessary when the process server writes the report of service on the process. If the presence of at least one respectable witness and attestation by him is not made mandatory by Rules 8 to 10, then the presence of one respectable witness at the time of drawing up the report of service by the process serving officer under Rule Ii cannot be termed or held mandatory. It is also directory. Ultimately it is a question of satisfaction of the Court as to the sufficiency of service. It is common knowledge that unconcerned persons have a tendency to avoid themselves being involved into Court proceedings. If the presence of at least one witness or more at the time of affecting service by affixation is held to be mandatory, two consequences - both undesirable - shall follow. Firstly, it would amount to expressing a distrust in the process serving agency of the Court. Secondly, in a good number of cases service by affixation may be rendered difficult and impracticable, if not impossible. The most reasonable view to be taken would be to leave the question of sufficiency of service in an individual case being determined by the Court which may before proceeding ahead with hearing of a matter on merits form its opinion whether it was satisfied on the sufficiency of service by affixation as disclosed by the report of the process server and/or from the inquiry made by the Court which it may deem fit to make regarding the manner or events touching the service.

(13) It is not necessary to express any opinion on the question whether the Original Side Rules are applicable to a Company Court, for the purpose of the present case. It would suffice to answer as under the question referred to us : "WHENEVER the service is affected by affixation, it is not necessary to make affixation in the presence of one or more witnesses. A service by affixation made by the process serving officer even in the absence of witnesses can be deemed to be good and sufficient. It is a question of forming of opinion by the Company Judge in the individual facts of each case if from the manner in which the service by affixation his been effected by the process serving officer and his report on affidavit or on his examination, it feels satisfied of the sufficiency of service. If not so satisfied, the Court may direct service to be effected afresh in such manner and with such directions as it may deem fit to make.

(14) The reference stands answered accordingly.

(15) Let the record be placed before the learned Company Judge.