Saveena Enterprises Pvt. Ltd. vs Kalatex And Ors.
2007 Latest Caselaw 901 Del

JUDGMENT

Vipin Sanghi, J.

1. Plaintiff has instituted the above suit under Order 37 of CPC, for recovery of Rs. 24,75,607 with interest thereon. Plaintiff is engaged in the business of manufacturing and sale of various types of jersey/polyster, cotton clothes etc. The defendant No. 1 M/s. Kalatex is a partnership firm with defendant No. 2, 3 and 4 as partners carrying on the business of manufacturing readymade garments.

2. Defendant No. 2 is stated to be the managing partner of defendant No. 1, who conducted business transactions on behalf of the defendant firm with the plaintiff. The defendants ordered and plaintiffs supplied, from time to time, various types of jersy polyster cotton fabrics to the defendants. These supplies were duly acknowledged by the defendant firm who received these goods on credit. Payments were being made from time to time. However, the defendants did not make the payment for all the supplies and various cheques issued by the defendants towards payment of the outstanding dues were dishonoured upon presentation. The defendants also acknowledged their liability as on 31.3.98 vide fax communication dated 22.8.98.

3. The suit was registered and summons were issued on 5.9.2001 to the defendants to be served in the form prescribed under Order 37 Rule 2(3) CPC. Summons were received at the office of Defendant No. 1 on 22.11.2001.

4. The defendant No. 1 however entered appearance only on 11.12.2001, along with the aforesaid application (being IA No. 11614/2001) seeking condensation of delay in entering appearance. The defendant firm states that summons were received by one Mr. Joseph Thomas, who was an ex-employee of the firm on the date on which summons were served. He had, on that day, come to the defendants office to collect his experience certificate. It is further averred that since the office of the defendant firm was closed, the post man who had come to deliver the summons handed the same to Mr. Joseph Thomas despite his resistance/refusal to accept the same. The summons so served remained with Mr. Joseph Thomas and were handed over to the security guard of the firm by him only on 8th of December 2001 when he again visited the defendant's premises. The defendant firm entered appearance on the 11th of December 2001 "under protest" claiming that the summons were not properly served. In any event, delay of 9 (nine) days is sought to be explained on these averments and condensation sought. The said application is accompanied by the affidavit of Mr Joseph Thomas himself.

5. The defendant No. 4 has also filed an application for seeking condensation of delay in filing his appearance, being I.A. No. 7624/2003, inter alia, on the ground that he had no knowledge of the pendency of the suit, and the order recording that the defendant No. 4 was deemed to be served as defendants 1, 2 and 3 stood served was itself erroneous as defendant No. 1 was never served in accordance with law, and service on defendants 2 and 3 was deemed to be effected on the basis of alleged service on defendant No. 1. It is also stated that the address of defendant No. 4 had been wrongly given in the plaint, and defendant No. 3 was dead even before the suit was filed by the plaintiff. The plaintiff has accepted this position and filed an amended memo of parties on record on 19.8.2004. The partnership firm ceased to exist upon the demise of defendant No. 3, and therefore defendant No. 4 could not be deemed to have been served merely because defendant No. 1 firm is assumed (though wrongly) to have been served. The address of defendant No. 4 was deliberately wrongly given by the plaintiff in his plaint. Thus, if it was held that the defendant No. 1 was not served properly then consequently the deemed service on other defendants would also be bad and delay ought to be condoned.

6. The defendant firm was ordered to produce Mr Joseph Thomas in court. However, despite several opportunities the defendant failed to do so. Thereafter, defendant No. 2 filed an affidavit expressing his inability to contact Mr. Joseph Thomas despite all efforts and also filed IA No. 451/06 for bringing on record the aforesaid affidavit. This application was also taken up along with the applications under Section 5 of the Limitation Act, and arguments were advanced by both sides and orders reserved.

7. The Ld. Senior Counsel appearing for the defendant applicants submits that the service of summons was not affected on the defendant partnership firm as per the provisions of Order 3 Rule 3 and 5 CPC. According to the defendants, the summons ought to have been accompanied by a notice of the nature referred to in Rule 5. The burden to prove that the service was effected in the aforesaid manner was on the plaintiff, and the plaintiff having failed to adduce any evidence to that effect, it could not be taken that the defendants had been served in the suit in the prescribed manner. Consequently, the time to put in appearance also did not begun to run against the defendants, and there was no default in putting in appearance by the defendants. He relied upon 1994 (28) DRJ 328; AIR 1974 Bom 101; AIR 1975 Rajasthan 121; 84 (2000) DLT 54.

8. He submits that despite this lapse on part of plaintiff to serve the Firm in the prescribed manner, the defendant applicants entered appearance within 3 (three) days of acquiring knowledge of pendency of the above suit against them. He further averred that Mr.Joseph Thomas could not be traced despite all possible efforts made by the defendants and since the affidavit of Mr. Joseph Thomas was already on record, the court could proceed on the basis of the said affidavit without drawing any adverse inference against the defendants/applicants. He submits that the defendants had acted bona fide and had come out with true facts and delay of nine days ought to be condoned in the facts and circumstances of this case. He submitted that if the intention of the defendant was to refuse service, or the delay was intentional, the defendant would not have come rushing to the court on 11.12.2001, when the next date in the suit was fixed for 28th February, 2002.

9. The Counsel for the plaintiff however opposes the applications filed under Section 5 of the Limitation Act on the ground that IA No. 11614/2001 is not accompanied by a proper affidavit and the affidavit of Mr. Joseph Thomas cannot be looked into as he is neither a party to the suit, nor has the defendant produced him despite directions given by this Court. The name of the Security guard was not disclosed in the application and therefore the affidavit of Mr. Joseph Thomas is vague. He further submitted that the present suit has been filed under Order 37 CPC which is a complete code in itself and service has been effected in the the manner provided by Rule 2 of Order 37. He argues that even otherwise the interpretation being sought to be given to Rule 5 of Order 30 by the defendant is not tenable in law as it would only strengthen the hands of the unscrupulous defendants who would very easily manage to avoid service of summons by taking shelter of the procedure provided therein.

10. He also contends that the decision in Shri Rooplal's case is not applicable to the facts of this case since the defendants had failed to produce Mr. Joseph Thomas and the case is covered by the decision in Industrial Medical Engineers and Ors. v. Anil Nijhawan and Anr. . He also relies on P. Sen Engineering P. Ltd. v. Delite Builders P. Ltd. and Ors. AIR 1993 Cal. 28.

11. The question that arises for consideration is whether a partnership firm ought to be served in accordance with Rules 3 and 5 of Order 30, even in a summary suit, and if so, the effect of noncompliance with said provisions.

Rules 3 and 5 of Order 30 C.P.C read as follows:

Rule 3. Service- Where persons are sued as partners in the name of their firm, the summons shall be served either-

(a) upon any one or more of the partners, or

(b) at the principal place at which the partnership business is carried on within India upon any person having, at the time of service, the control or management of the partnership business there,

as the Court may direct; and such service shall be deemed good service upon the firm so sued, whether all or any of the partners are within or without [India]:

Provided that, in the case of a partnership which has been dissolved to the knowledge of the plaintiff before the institution of the suit, the summons shall be served upon every person within India whom it is sought to make liable.

5. Proviso: [Service Upon a Dissolved Firm]- The word `person' in the proviso does not mean any person, but any person sought to be made liable as a partner. Where there has been dissolution to the knowledge of the plaintiff before suit, no outgoing partner can be made liable unless the summons is served upon him. So also in a decree against a firm (on the death of a partner) the personal estate of the deceased partner cannot be made liable unless the legal representative of the deceased partner is joined [Mathuradas v. Ebrahim, A. 1927 B 581: 51 B 986]. It is not incumbent upon the applicant to have served the legal representatives of the deceased partner [Subhash Oil Company v. Balwant Rai Tayal, (2001)(2) Punj LR 82(85) ( P&H).

Order 21 Rule 50(2) is controlled by the proviso to this rule where the dissolution was to the knowledge of the plaintiff. If the plaintiff had knowledge of the dissolution at the time of the suit, the decree binds all the partners whether they have served individually or not [Gordhandas v. Gautam, A 1925 B 331; see Wigram v. Cox & Co. 1894, 1QB 792]. Where plaintiff has notice of dissolution, a decree obtained after service on one partner only is a good decree against the firm. The only effect is that it could not be executed individually against the partners not served, nor could plaintiff get leave under Or 21 r 50(2) [Satya v. C H E Co. 42 CWN 820].

12. The judgments of various High Courts, cited by the defendant including a decision of Satpal J. of this very High Court have dealt with this aspect in detail. The Bombay, Rajasthan and Delhi High Court have, in the judgments cited by the defendant held that service of summons on a partnership firm must be effected strictly in accordance with Rules 3 and 5 of Order 30 C.P.C. As per Rule 3 summons may either be served on a partner, or if not on a partner then on a person having control and management of the firm at the time of service. When summons are sought to be served on the firm in the manner prescribed by Clause (b) to Rule 3, i.e., on a person in control of business, the requisite notice under Order 30 Rule 5 must accompany the writ of summons. The Bombay High Court also laid down in the above case the proposition that the special provisions in regard to service of summons on a firm against which a suit is filed in the firms name contained in Order 30 of CPC must prevail over the general provisions of the code in regard to service by registered post or latter, must be read so as to harmonise with those special provisions. There is no reason to accept the contention that the provisions of Order 30 Rule 3 and 5 would not apply to service of summons issued in a summary suit under Order 37 CPC. Order 37 in fact imposes additional conditions for service of summons in a summary suit by prescribing that the summons have to be issued in a particular form (Form No. 4 in Appendix B) and that the summons should be accompanied with a copy of the plaint and annexures thereto (Rule 3(1) of Order 37 CPC).

13. Order 37 CPC does not draw any distinction with regard to service of summons. In fact, I would think that the service of summons in a summary suit under Order 37 CPC deserves greater and stricker compliance of the regours of the law, since Order 37 fixes a tight time schedule for entering of appearance by the defendant, and can result in drastic consequences for the defendant if he fails to put in timely appearance. If service is effected sans the notice of the nature specified by Rule 5 of Order 30, the service is not effective.

14. The real question before Sen, J in Industrial Medical Engineers Case (Supra) was pertaining to sanctity of the endorsement 'refused' on the AD card, of the summons sent by registered AD post, to the principal place of business of the defendant firm. The said decision, as pointed out by the counsel for the defendant and rightly so, was made without taking into consideration the provisions of Order 30 Rule 3 and 5 and the decision is therefore not germane to the present controversy.

15. The decision in P. Sen (Engneering) (Supra) can at the most be treated as an authority on the interpretation of Rule 3 of Order 30. The said case only lays down that the summons though required to be served 'upon' the partners are not compulsorily required to be served "personally" on them. Summons may be served upon any person expressly or impliedly authorised to receive summons or letters on behalf of the partner or at the principle place of business.

16. It is not the plaintiffs case that while effecting service the aforesaid procedure was of Rule 5 of Order 30 CPC complied with. It is also not the plaintiffs case that the summons in the name of the defendant firm were served upon a partner or that Mr. Joseph Thomas was a partner of the defendant firm. There is nothing to show that Mr. Joseph Thomas was in control or management of the business of the defendant firm. I see no force in the contention of the plaintiff that the application for seeking condensation of delay be rejected since it is not supported by an affidavit of the defendants, and is purportedly supported by an affidavit of Mr.Joseph Thomas. Firstly, the relevant facts pleaded in the said application are those attributed to Mr. Joseph Thomas. Secondly, the defendant No. 2 has filed his affidavit dated 12.1.2006 on record with IA No. 451/2006, which removes the technical deficiency, if any.

17. In view thereof, this question must be answered in favor of the defendant and the service of summons on the defendants cannot be deemed to be effective. In any event, the delay of 9 days is of little consequence and the same is condoned since, the defendants have disclosed sufficient cause for the delay in filing their memo of appearance. The conduct of the defendants appears to be bona fide since they put in appearance, under protest, much before the returnable in the summons. It is trite law that parties must litigate on merits and mere technicalities should not hamper administration of justice. The I.A's preferred by defendants are therefore allowed.