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inrays Vs. State Bank of India and anr. - Court Judgment

LegalCrystal Citation
CourtDRAT Delhi
Decided On
Judge
Reported inI(2008)BC67
Appellantinrays
RespondentState Bank of India and anr.
Excerpt:
.....service. the learned counsel urged that the firm was served with the summons through mr. b.s. kumar (partner) at the address of the firm. not only this, the summons had been sent to mr. b.s. kumar through registered post at his residential address also, i.e. house no. 1246, sector 15, faridabad.the postman made several attempts to serve him at his residential address, but he evaded service and the envelope was ultimately returned unserved on the failure of repeated efforts. this, according to the counsel, would be deemed to be sufficient service on mr. b.s. kumar at his residential address too. the learned counsel pointed out that the local commissioner had also visited the premises of the firm on 18.7.1994 and had prepared an inventory. the employees of the firm participated in the.....
Judgment:
1. The appellant is M/s. Inrays through Mr. B.S. Kumar. The 1st respondent is the State Bank of India and the 2nd respondent is Mr.

Gurnam Singh, the auction purchaser. The appellant is aggrieved by an order dated 31.8.2006 passed by the Tribunal below in MA No. 71/2004 arising out of O.A. No. 757/2000. There, M/s. Inrays figured as applicant/defendant No. 1/JD No. 1 and Mr. B.S. Kumar as applicant No.2/defendant No. 2/JD No. 2. By the impugned order, the Tribunal below dismissed their application under Order 9 Rule 13, CPC for setting aside ex parte judgment and recovery certificate dated 24.6.2004 passed in OA No. 757/ 2000. In prayer, however, the appellant has sought the setting aside of the impugned order dated 31.8.2006 as well as the order of the Recovery Officer dated 27.9.2005 (whereby the auction sale was confirmed).

2. The relevant facts may be stated briefly. The State Bank of India, respondent-Bank herein filed recovery suit before the Senior Sub-Judge, Faridabad for recovery of Rs. 23 lakh and odd along with interest.

There were four defendants in the suit. The defendant No. 1 was M/s.

Inrays, defendant No. 2 was Mr. B.S. Kumar, defendant No. 3 was Mrs.

Preet Narula and the defendant No. 4 was Mr. I.S. Kumar. M/s. Inrays was then a partnership firm and it is an undisputed fact that Mr. B. S.Kumar was one of its partners. Defendant Nos. 3 and 4 were mortgagors/guarantors. M/s. Inrays is now said to be a proprietorship concern of Mr. B.S. Kumar. Anyway, we are concerned with the status of the parties as it existed at the relevant time.

3. In the restoration application made before the Tribunal below, the applicants averred that the defendant No. 4 had died during the pendency of the suit and the address of the defendant No. 3 was not known. Therefore, they have not been impleaded in the restoration application. As per the restoration application made before the Tribunal below, the applicants received the copy of the award in OA on 10.7.2004 by post and then came to know about the case.

4. When the suit was pending before the Senior Sub-Judge, Faridabad, summonses were issued against the defendants for 30.5.1994. The gist of the order passed on 30.5.1994 by the Senior Sub-Judge is that the defendant No. 2 was not present despite service through registered A.D., nor anyone else appeared for him. He was one of the partners of defendant No. 1. So, defendant Nos. 1 and 2 were ordered to be proceeded against ex parte. Defendant Nos. 3 and 4 had not been served and they were ordered to be summoned again. The next date fixed was 19.7.1994.

5. After enactment of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the suit was transferred to the DRT, Jaipur where it remained pending till September, 2000. The defendant Nos. 3 and 4 were also served by way of publication but none appeared on their behalf. Subsequently, on the establishment of DRT at Chadigarh, the record of OA was transferred there vide order dated 28.9.2000 as it had the territorial jurisdiction over the matter. The record was received in DRT, Chandigarh on 3.11.2000. The matter proceeded ahead, the case having already been ordered to proceed ex parte against all the defendants. Evidence was filed by the Bank and final arguments were heard whereafter ex parte judgment was delivered on 24.6.2004 in favour of the applicant Bank. Recovery Certificate was also issued to initiate execution proceedings for recovery. It was during the course of recovery proceedings that M/s. Inrays and Mr. B.S. Kumar approached the Tribunal below for setting aside the ex parte decree by means of restoration application as stated above.

7. The case as projected before the Tribunal below and in this appeal is that the appellant was never served of any summons/notice in accordance with law. The learned Counsel for the appellant argued that the Court presumed service on Mr. B.S. Kumar through the firm. He contended that the firm is not a juristic person and was required to be served through its partner. According to him, there was material irregularity in service. It has further been submitted that no summons/notice had been issued to the appellant either by the DRT, Jaipur or DRT, Chandigarh or the Senior Sub-Judge, Faridabad. The service allegedly by publication in "Dainik Veer Arjun" at the instance of DRT, Jaipur had no meaning inasmuch as the said newspaper was not in wide circulation in Haryana but only in Rajasthan. So, the ex-parte decree has been sought to be set aside on the ground of want of service.

8. The respondent-Bank has filed reply to oppose the restoration application. Along the lines of reply, it has been urged by the learned Counsel for the respondent-Bank that the appeal itself is barred by limitation because the appellant has also sought the setting aside of the order of the Recovery Officer dated 27.9.2005 and the appeal has been presented only on 22.9.2006. The learned Counsel also contended that the order of the Recovery Officer cannot be challenged directly before this Appellate Tribunal. It has been submitted that the contention of the appellant is unfounded that no service had been effected and the ex parte proceedings were held without service. The learned Counsel urged that the firm was served with the summons through Mr. B.S. Kumar (partner) at the address of the firm. Not only this, the summons had been sent to Mr. B.S. Kumar through registered post at his residential address also, i.e. House No. 1246, Sector 15, Faridabad.

The postman made several attempts to serve him at his residential address, but he evaded service and the envelope was ultimately returned unserved on the failure of repeated efforts. This, according to the Counsel, would be deemed to be sufficient service on Mr. B.S. Kumar at his residential address too. The learned Counsel pointed out that the Local Commissioner had also visited the premises of the firm on 18.7.1994 and had prepared an inventory. The employees of the firm participated in the said exercise and even Mr. B.S. Kumar was present at the occasion. This fact is evident from the report of the Local Commissioner filed along with the appeal (Annexure A-19). Judged from any angle, the learned Counsel submitted, the appellant cannot claim that no service had been effected. According to him, when the appellant had been duly served of the summons issued by the Senior Sub-Judge, Faridabad, it was the duty of the appellant to have appeared before the DRT, Jaipur and thereafter before the DRT, Chandigarh. The appellant firm having been served through Mr. B.S. Kumar (partner), the service was complete so far as the firm and Mr. B.S. Kumar were concerned. The Counsel reasoned that service on the firm means service on partner also as a natural corollary and necessary concomitant.

9. The learned Counsel for the auction purchaser, to whom the property was sold and sale confirmed, has also adopted and supported the stand of the learned Counsel for the respondent-Bank that the appeal has no merit and is liable to be dismissed.

10. I have carefully considered the matter in the light of the material on record, the respective arguments of the learned Counsel for the parties and the case law submitted by them.

11. While addressing the Court, the learned Counsel for the appellant has confined the challenge in this appeal only to order dated 31.8.2006 passed by the DRT. So, the appeal having been filed on 22.9.2006, the attack on it from the side of the Bank as time-barred is rejected. As I said earlier, the restoration plea of the appellant is built on the ground of non service whereas the contention of the other side is that the firm was duly served through Mr. B.S. Kumar (partner) and, as such, service was sufficient on both i.e. the firm as well as Mr. B.S. Kumar.

So, the fate of the appeal hinges on the answer to this question as to whether due service has been effected on the firm and Mr. B.S. Kumar or otherwise.

12. The learned Counsel for the appellant has cited the decision of the Hon'ble Delhi High Court in Shri Roop Lal v. Edmond International 1994 (28) DRJ. It was held in the said case that service effected on the clerk and not on the partner of the firm shall not be deemed to have been effected on the firm. I should say that it hardly needs any debate that a partnership firm can sue and be sued in its name. It would be recalled that in the OA in question, M/s. Inrays was arrayed as defendant No. 1 and Mr. B.S. Kumar (its partner) as defendant No. 2. As per Order 30 Rule 3 of CPC, where persons are sued as partners in the name of their firm, the summons shall be served either upon any one or more of the partners or 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. It is not disputed that the principal place of business of the firm in question was Plot No. 381, Sector 24, Faridabad. The same address is mentioned in the OA filed by the Bank, restoration application filed by the appellant herein and the memo of appeal presented before this Court. Annexure-A18 (page 87 of the paper book) is the copy of the summons issued by the Faridabad Court to M/s.

Inrays through its partner Mr. B.S. Kumar, on which the date of hearing was mentioned as 30.5.1994. It bears the same address i.e. Plot No.381, Sector 24, Faridabad. It was served on Mr. B.S. Kumar, though he denies to have received it. There does not appear to be any plausible reason for disbelieving service on him on his bare denial. The acknowledgement card bears initials reading as alphabet 'B'. The envelope having been sent at the correct address, the presumption would be of service. The postman concerned or the Bank (public financial institution) could hardly be interested or instrumental in making any manipulation in showing a fictitious service of the registered article sent at this address by the Court. The ruling relied upon by the learned Counsel for the appellant has no bearing on the present case, inasmuch as here the service was effected on the partner of the firm Mr. B.S. Kumar, and not on any clerk of the firm.

13. There is another important document fortifying knowledge on firm and Mr. B.S. Kumar. The relevant document is Annexure-A19 (page No. 94 of the paper book filed by the appellant). During pendency of the suit before the Senior Sub-Judge, Faridabad, a Local Commissioner had visited the factory premises and the above document is the memo of presence prepared by him on 18.7.1994. It, inter alia, records thus: At this stage at about 1.50 p.m. Mr. B.S. Kumar, comes present in the factory but in spite of my request refused to sign the memo of presence by saying that my presence may not be recorded.

This memo contains signatures of several other persons and there is no reason to doubt the fact recorded herein. Thus, Mr. B.S. Kumar cannot plead ignorance as he has tried too.

14. There is yet another fact that summons was sent by the Faridabad Court at the residential address also of Mr. B.S. Kumar i.e. House No.1246, Sector 15, Faridabad. I must point out at this juncture itself that this is the address given by Mr. B.S. Kumar in his restoration application before the Tribunal below. It appears that the summons had been sent by registered post at this address because Mr. B.S. Kumar figured as defendant No. 2 in the O.A. with this address. It was returned back unserved. The photocopy of the same is part of Annexure Al 8 (page No. 89 of the paper book) which shows that the postman made as many as eight attempts to serve the envelope on the addressee, but in vain. The endorsement of the postman on the envelope of Mr. B.S.Kumar is "Bar Bar Jane Par Praptkarta Nahi Milta" which was made on 4.5.1994. What appears to be the reality is that Mr. B.S. Kumar received the summons of the firm sent at firm's address and was also present at the time of inspection of the Local Commissioner on 18.7.1994. He avoided accepting the registered envelope sent at his residential address with ulterior motive to coin a ground of restoration later on. Judging the matter in the light of above speaking facts, it cannot at all be doubted that service was effected on the firm through Mr. B.S. Kumar and he being the partner of the firm, he shall be deemed to have been served in his capacity as defendant No. 2 also.

15. So far as the question of fresh issue of summons/notice after the transfer of the case from the Faridabad Court to DRT, Jaipur and thereafter to DRT, Chandi garh is concerned, it was not at all necessary. The simple reason is that the firm as well as Mr. B.S. Kumar had been ordered to be proceeded ex parte by the Senior Sub-Judge, Faridabad on 30.5.1994, and rightly so, because service had been effected on Mr. B.S. Kumar, partner of the firm. Reference may be made to Section 31 of the RDDBFI Act which relates to transfer of pending cases. It, inter alia, provides that where any suit or proceeding stands transferred from any Court to a Tribunal, the Tribunal may, on receipt of such records, proceed to deal with such suit or other proceeding, so far as may be, in the same manner as in the case of an application made under Section 19 from the stage which was reached before such transfer or from any earlier stage as the Tribunal may deem fit. So, no fresh summons/notice was required to be sent by the DRT, Jaipur or DRT, Chandigarh at least to the firm, defendant No. 1 and Mr.

B.S. Kumar, defendant No. 2, order of proceeding ex parte hearing having already been passed against them by Faridabad Court on 30.5.1994.

16. The learned Counsel for the appellant has also placed reliance on the decision of the Hon'ble Supreme Court in Sushil Kumar Sabharwal v.Gurpreet Singh and Ors.

that the Hon'ble Supreme Court has held that the defendant's knowledge about pendency of the suit does not amount to his knowledge about the date of hearing. I have gone through the said ruling and find that it is not at all applicable to the present case. The said view was expressed by the Hon'ble Apex Court with reference to Second Proviso to Rule 13 Order 9, CPC (added by the 1976 amendment) which provides that no Court shall set aside the decree passed ex parte merely on the ground that there has been an irregularity in the service of summons if it is satisfied that the defendants had notice of the date of hearing and had sufficient time to appear and answer the plaintiffs claim. The Hon'ble Apex Court held that it is the knowledge of the "date of hearing", not the knowledge of "pendency of suit" which is relevant for the purpose of proviso aforesaid. This proviso is not applicable to the present case, because it is not a case of any irregularity in the service of summons. Rather, the truth of the matter is that the firm and Mr. B.S. Kumar had been served of the summons issued by the first Court. Mr. B.S. Kumar on his behalf and the firm had the knowledge right from the beginning when the summons was sent by Faridabad Court fixing 30.5.1994. Mr. B.S. Kumar was not only served of the summons sent to the firm through him at the principal place of the firm, but was also present at the time of inspection carried out by the Local Commissioner in the presence of several other persons. The memo prepared by the Local Commissioner recording the fact of his presence before a number of persons (who signed the memo) cannot at all be disbelieved. He was an Officer of the Court and an unconcerned person.

He could hardly have any motive to record a wrong fact.

17. It may not be out of place to mention that the rules are intended as aids for reaching a just decision. They are meant to further the ends of justice and not to frustrate them by introduction of endless technicalities. The self sought hyper technicalities urged from the side of the appellant could not prevent the Court to do justice.

18. The restoration application was not on behalf of the defendant Nos.

3 and 4. Therefore, this argument is untenable that the newspaper in which publication was made was not widely circulated in Haryana. The argument of the learned Counsel for the appellant that there was material irregularity in the service cannot be accepted. There could hardly be any irregularity when the partner of the firm Mr. B.S. Kumar received the summons on behalf of the firm and thus came to be served on behalf of the firm as well as for himself in his capacity as the defendant No. 2 and partner of the firm. As per Section 18 of the Indian Partnership Act, a partner is the agent of the firm for the purpose of the business of the firm. Section 24 of the said Act says that notice to a partner, who habitually acts in the business of the firm of any matter relating to the affairs of the firm operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner. Therefore, it hardly mattered that Mr. B.S. Kumar was arrayed in the OA as defendant No. 2 as well as in his capacity as partner of the defendant No. 1 firm M/s. Inrays. The liability of the partners of the firm is unlimited. To say in other words, partnership is not a juristic person and the liability of the partners in relation to a partnership firm stands as if on personal footing. I should make reference to a few very pertinent rulings dealing with the subject of service of summons and notices. The Hon'ble Supreme Court held in the case of V. Rajakumari v. P. Subbarama Naidu I (2005) BC 1 (SC) : IV (2004) CCR 211 (SC) : 2004 (4) RCR (Criminal), that where the addressee managed to get the notice returned with postal remarks "not available in the house", "house locked" and "shop closed" respectively, it must be deemed that notices have been served. Hon'ble Punjab & Haryana High Court held in the case of Ajita Sharma v. Rakesh Kumar Sharma 1999 (1) Civil Court Cases 363 (P & H), that if a person knows about a pending case and still ignores the said litigation, it would be wholly unfair for that person to urge that he had not been formally served. What the Hon'ble Supreme Court said in the case of Madan and Co. v. Wazir Jaivir Chandra , would be most apt to be set forth here. In paragraph 6 of the report it considered the effect of endorsements such as "not found", "not in station", "addressee has left" and so on. The relevant paragraph is quoted below: The proviso insists that before any amount of rent can be said to be in arrears, a notice has to be served through post. All that a landlord can do to comply with this provision is to post a prepaid registered letter (acknowledgement due or otherwise) containing the tenant's correct address. Once he does this and the letter is delivered to the Post Office, he has no control over it. It is then presumed to have been delivered to the addressee under Section 27 of the General Clauses Act. Under the rules of the Post Office the letter is to be delivered to the addressee or a person authorized by him. Such a person may either accept the letter or decline to accept it. In either case, there is no difficulty, for the acceptance or refusal, be treated as a service on and receipt by the addressee.

The difficulty is where the postman calls at the address mentioned and is unable to contact the addressee or a person authorized to receive the letter. All that he can then do is to return it to the sender. The Indian Post Office Rules do not prescribe any detailed procedure regarding the delivery of such registered letters. When the postman is unable to deliver it on his first visit, the general practice is for the postman to attempt it on the next one or two days also before returning it to the sender. However, he has neither the power nor the time to make inquiries regarding the whereabouts of the addressee; he is not expected to detain the letter until the addressee chooses to return and accept it; and he is riot authorized to affix the letter on the premises because of the assessee's absence. His responsibilities cannot, therefore, be equated to those of a process server entrusted with the responsibilities of serving the summons of a Court under Order V of the CPC. The statutory provision has to be interpreted in the context of this difficulty and in the light of the very limited role that the Post Office can play in such task. If we interpret the provision as requiring that the letter must have been actually delivered to the addressee, we would be virtually rendering it a dead letter. The letter cannot be served where, as in this case, the tenant is away from the premises for some considerable time. Also, an addressee can easily avoid receiving the letter addressed to him without specifically refusing to receive it. He can so manipulate matters that it gets returned to the sender with vague endorsements such as "not found", "not in station", "addressee has left" and so on. It is suggested that a landlord, knowing that the tenant is away from station for some reasons, could go through the motions of posting a letters to him which he knows will not be served. Such a possibility cannot be excluded. But, as against this, if a registered letter addressed to a person at his residential address does not get served in the normal course and is returned, it can only be attributed to the addressee's own conduct. If he is staying in the premises, there is no reason why it should not be served on him. If he is compelled to be away for some time all that he has to do is to leave necessary instructions with the postal authorities, either to detain the letters addressed to him for some time until he returns or to forward them to the address where he has gone, or to deliver them to some other person authorized by him. In this situation, we have to choose the more reasonable, effective, equitable and practical interpretation and that would be to read the word "served" as "sent by post", correctly and properly addressed to the tenant and the word "receipt" as the tender of the letter by the postal peon at the address mentioned in the letter. No other interpretation, we think, will fit the situation as it is simply not possible for a landlord to ensure that a registered letter sent by him gets served on, or is received by, the tenant.

Be that as it may. In the case in hand the registered letter sent to Mr. B.S. Kumar (arrayed as defendant No. 2 in the O.A.) was returned with the endorsement "not met" by the postman. The Supreme Court has considered the legal effect of such endorsement with reference to the service of summons/notice in the case of Madan and Co. (supra).

19. It is significant to note that this appeal has been filed by Mr.

B.S. Kumar on behalf of the firm M/s. Inrays of which he was a partner.

It having been found that the said firm was served through him of the summons issued by the Faridabad Court fixing 30.5.1994 as the date of hearing, the very ground of restoration that no service was effected on the firm is completely demolished.

20. Having judged the matter from all angles, I am in agreement with the view taken by the Tribunal below that there was no sufficient cause for setting aside the ex parte decree.

21. I find no merit in the appeal and it is accordingly dismissed. No costs.

Copy of this order be supplied to the parties and be sent to the Tribunal below.


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