Mr. Abdul Khalique vs V.K. Construction Works Ltd. And ...
2007 Latest Caselaw 1215 Del

JUDGMENT

A.K. Sikri, J.

1. The plaintiff had filed this suit for recovery of Rs. 14,89,325/- against as many as nine defendants. Defendant No. 1 was M/s V.K. Construction Works Ltd., which is a Public Limited Company incorporated under the Indian Companies Act. Defendant No. 2 was imp leaded in the capacity of Chairman of Defendant No. 1 Company, Defendant No. 3 as Managing Director and Defendant Nos. 4 to 8 as the Directors of the Defendant No. 1 Company. Summons were sent to the defendants. As per the office report, though the summons were duly served, but nobody appeared on behalf of these defendants. Therefore, they were proceeded ex-parte vide order dated 8th May, 2000. In so far as defendant No. 9 is concerned, his name was struck off from the array of parties at the instance of the plaintiff himself. The plaintiff filed his evidence by way of an affidavit, whereupon ex-parte judgment/decree dated 17th May, 2002 was passed in favor of the plaintiff, decreeing the suit in the sum of Rs. 14,89,325/- with costs as well as interest @15% per annum from the date of filing of the suit till realisation.

2. After the suit was decreed, application No. IA 317/2005 under Order 9 Rule 13 of CPC has been filed by the defendant Nos. 1, 2 and 6 for setting aside the ex-parte decree. Thereafter, Defendant Nos. 3 and 7 have also filed separate applications under the same provision, which are registered as IA Nos. 1091/2005 and 1271/2005.

3. I have to mention at this stage that the principal office of defendant No. 1 is 42, Community Centre, New Friends Colony, New Delhi and Registered office at 1142, Sector 15B, Chandigarh. Defendant No. 1 company was also having two project offices at Nerul, Sector 4, New Bombay and Sampada, Sector 3, New Bombay. All the four addresses were mentioned in the Memo of Parties filed by the plaintiff along with suit. Insofar as the defendant No. 3 to 6 and 8 are concerned, for service upon them, two addresses of the company namely, principal office and registered office at New Friends Colony, New Delhi and Chandigarh respectively were mentioned. In respect of defendant No. 7, apart from principal office, other address mentioned was C/49, Ramprasth, Gaziabad, Uttar Pradesh.

4. In the applications filed by these defendants on behalf of defendant Nos. 3 to 6, it is mentioned that they were not properly served at all and they had no knowledge about the proceedings in the suit. The detailed submission made by these defendants in respect of non-service are as follows:

J.D. Nos. 3, 4, 5 and 6 were sought to be served at the office of the J.D. No. 1 at Community Centre, New Delhi at the Chandigarh, and two project addresses at New Bombay. The J. D. No. 1 was at that time not carrying on any business and had closed down its office at New Delhi and also the projects at New Bombay. The notices for the 7th August, 1997 were sent to Chandigarh from where the process server reported that the said J.D.s were not residing at the said given address.

Fresh Notices were issued from time to time and on each occasion, the notices were returned back with the same remarks i.e. that the said J.D.s did not reside at the given address of 1142, Sector 15B, Chandigarh.

Instead of ascertaining the correct address of J.D.s 3 to 6, the Decree Holder filed an application under Order 5 Rule 20 for publication of the notices. The Joint Registrar called for the report on the summons issued and it was reported that J.D.s 3 to 6 were unserved at the Chandigarh address for the reason that they were not residing at the given address, whereas they were unserved at the New Delhi address as they had shifted. It may be pointed out that the New Delhi address was an office address and J.D.s 3 to 6 could not have been residing there.

5. It is a matter of record that thereafter, defendant Nos. 3 to 6 were served by publication in Indian Express, both Delhi and Chandigarh dated 28th July, 1999 and on the basis of these services, they were proceeded ex-parte. The submission of the learned Counsel that the applicant, on the basis of aforesaid record, pertaining to service of summons, was that the principal office and registered office of the Company were not the addresses of these defendants and they were the addresses of Defendant No. 1 company. Moreover, the principal office at New Delhi had been closed down by that time and sending of notice at that address was of no consequence.

6. It is thus submitted that no inquiry was made as to whether these addresses were correct addresses and without going into this inquiry, service through publication was ordered. The contention is that the Court must be satisfied that either the defendant is having service of the summons or the defendants cannot be served in the ordinary manner. In the instant case, defendant nos. 3 to 6 were not residing at the given address. Report was submitted accordingly repeatedly. It was for the plaintiff to ascertain the correct address of the judgment debtors. This exercise was not done earlier with little efforts. Plaintiff could find the addresses of the defendants. To buttress this submission, learned Counsel pointed out that when the plaintiff filed execution petition on the basis of ex-parte decree, he could trace the residential/Delhi address of the defendants. He contended as to why the plaintiff did not do so earlier. He also submitted that if the notice were not sent at the correct address, substituted service by means of publication could not have been ordered as held by this Court in Union of India v. Associated Producers Company AIR 1992 Delhi 186. It was also submitted that even the required procedure for effecting publication was not followed inasmuch as:

(a) No notice was sent to the last known address with copies of the newspaper and

(b) notices were not affixed on the conspicuous part of the premises nor on the Court's notice board as required by the Law. He also submitted that "Indian Express" has no circulation or negligible circulation in Chandigarh and, therefore, publication in such a newspaper was not valid.

7. It was lastly submitted that there was no attempt or satisfaction to the effect that the defendants were avoiding the receipt of the notice. Once it was reported that judgment debtors were not at the given address, to order publication at that address does not amount to an attempt to serve the judgment debtors and is not proper served, as held in Great Punjab Agro Industries Ltd. v. Khushian and Ors. 2005 (13) SCC Page 502.

8. Learned Counsel also submitted that provisions under Order 9 Rule 13 CPC vests a discretion in the Court and the application should be allowed and the defendants permitted to defend the suit unless gross negligence is proved against them. For this proposition, he relied upon the judgment Sri International Finance Ltd. v. Fairgrowth Financial Services Ltd. and Anr. 2005 (13) SCC 95 and M.K. Prasad v. P. Arumogam .

9. In respect of defendants No. 2 and 7, it was submitted that though there was proper service upon them, in any case if the application of defendant No. 3 to 6 is allowed, then the decree should also be set aside qua him as well to enable them to defend the suit.

10. Learned Counsel for the plaintiff, on the other hand, submitted that the defendants/applicants were intentionally avoiding the service and further that in any case, they were served ultimately through publication, which should be treated as deemed service. He also relied upon the various orders passed for service upon the defendants by ordinary process on the basis of which, he submitted that it was a clear case where repeated attempts were made to serve the defendants by ordinary process but as it became difficult to serve them through that process, there was no alternative but to serve the defendants by publication.

11. The Plaintiff was having business dealings with Defendant No. 1 Company. The suit was filed for recovery of the amount which was allegedly due and payable to the plaintiff for the work of white washing, water proofing, application of red oxide primer and painting of the buildings of the two projects known as CIDCO Housing Complex in the New Bombay area, taken by defendant No. 1 Company.

12. The plaintiff had given all four address of defendant No. 1 Company, namely, principal office, registered office as well as aforesaid two project offices in New Bombay. Defendant No. 2 to 9 were imp leaded in their capacity as Chairman, Managing Director and Directors. Defendant No. 9 was served personally and appeared. He filed written statement as well in which he pleaded that he was no longer a Director of Defendant No. 1 company, which fact was duly intimated by him to the plaintiff in reply to the notice of the plaintiff. On this plea, the plaintiff agreed that the name of defendant No. 9 be struck off from the array of parties. What is sought be highlighted is that the plaintiff took proper steps by giving the addresses of the defendants as they were imp leaded in the capacity as Directors etc., they were sought to be served on the principal and registered office of the company. In respect of defendant Nos. 7 to 9, residential addresses were given, which shows that wherever the plaintiff could find the residential address of these defendants, he had provided that information. As he was not aware of the residential address of other Directors, their residential addresses could not be supplied. Record of the case reveals that notices were sent repeatedly to these defendants at the given addresses. In so far as Delhi address is concerned, the report was that they could not be served as the office had been shifted. In so far as Chandigarh address is concerned, which is the registered office of the defendant No. 1 company, summons were received unserved with the remarks that these defendants were not 'residing' at that given address. There was no question of defendants residing at that address as that was the registered office of the company. Therefore, it could be legitimately presumed that they were avoiding service.

13. When the application under Order 5 Rule 20 CPC for substituted service was filed, the Joint Registrar passed an order directing the Registry to report as to what had been the report on the summons issued to these defendants at different address given in the plaint. It was also directed that separate report shall be given in respect of each defendant. It is only after receipt of the report and perusal thereof, order dated 20.03.1999 was passed by the Joint Registrar allowing the application and directing that these defendants namely defendant Nos. 3 to 6 and 8 be served with summons by publications in Delhi and Chandigarh editions of "Indian Express".

14. It is clear that care was taken for service of these defendants by both the places namely, Delhi and Chandigarh. It is not in dispute that citations were duly published in the newspaper.

15. In view of this, I am not persuaded to accept the submission of the learned Counsel for the applicant that there was no proper inquiry made about the correct address of the defendants or the inquiry as to whether defendants were avoiding the service or not. In view thereof, the case of UOI v. Associated Producers Company (supra) will be of no help to the applicants.

16. Likewise, even the case of Great Punjab Agro Industries Ltd. v. Khushian and Ors. (Supra) would be of no assistance to the applicants. That was a case where the notice of substituted service was published in the newspaper circulated only in the State of Punjab while the defendant was residing in Bombay. In these circumstances, it was held that the procedure prescribed under Order 5 Rule 20 (A) with regard to substituted service was faulted. In the present case, as already noted above, publication is at both places namely Delhi and Chandigarh.

17. The argument of the learned Counsel that there is no service of affixation at the last known address or on the notice board of the Court is of no consequence. I may reproduce Sub-rule 1 Rule 20 of Order 5 as under:

'Substituted service' (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.

This Rule stipulates that when the Court is satisfied that the defendant is avoiding service or that the defendant cannot be served by ordinary process, it can order service of summons by any of the following modes:

a) 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

b) in such other manner as the Court thinks fit.

18. Had the alternative mentioned in (a) been resorted to, it was necessary to affix the copy in the Court-house as well as last known address of the defendants. However, in the instant case, second alternative was followed, namely, "such other manner" and under this clause, the order was made to serve by an advertisement in a newspaper. In such a case, Sub-rule 1(a) of Rule 20 of Order 5 mentions that publication has to be in the newspaper which is a daily newspaper and has the circulation in the locality in which the defendant is last known to have acted and voluntarily resided, carried on business or personal work for gain. This procedure was admittedly followed.

19. In so far as defendant Nos. 2 and 7 are concerned, they were even served personally. As per the report, the defendant No. 2 was served through one Sh. Vijender Singh. Defendant No. 7 accepts that he was served but he chose not to appear on legal advice, which can hardly be treated as sufficient ground for setting aside ex-parte decree. In this very case, we have the example of Defendant No. 9 who had contested the suit by mentioning that he had ceased to be the Director and, therefore, not responsible and succeeded in his attempt. Nothing prevented defendant Nos. 2 and 7 to appear and contest the suit by raising whatever contention they wanted to raise.

20. Sub-rule 2 of Rule 20 Order 5 categorically provides that once there is a service by any of the substituted mode, such a service shall be deemed as if it has been made on the defendant personally. Therefore, once there is a satisfaction that there was a proper service in terms of Rule 20, all these defendants are deemed to have been personally served and were rightly proceeded ex-parte when they failed to appear in spite of service.

21. I, therefore, do not find any merit in applications under Order 9 Rule 13 by these defendants. These applications are, accordingly, dismissed. Other applications for stay of the decree are also dismissed consequently. All applications does stand dismissed.