1969 (6) TMI 43 - HC - Companies Law

Summary

Issues Involved:
1. Non-compliance with Order 5, Rule 19, Civil Procedure Code (CPC) regarding the service of summons.
2. Validity of execution sale conducted without proper notice.
3. Application of Article 166 of the Limitation Act, 1908.
4. Requirement of an express declaration by the court regarding due service of summons.

Detailed Analysis:

1. Non-compliance with Order 5, Rule 19, Civil Procedure Code (CPC) regarding the service of summons:
The Full Bench was constituted to resolve conflicting observations in previous decisions regarding the effect of non-compliance with Order 5, Rule 19 CPC, which mandates the procedure for service of summons. Specifically, the judgment-debtor contended that the service of summons was not properly executed as required by Order 5, Rule 19. The court noted that the process server did not verify the return by an affidavit, and the court did not examine the process server on oath or declare that the summons had been duly served. The absence of these steps rendered the service invalid.

2. Validity of execution sale conducted without proper notice:
The judgment-debtor argued that he had no notice of the sale, rendering it void. He claimed that the property was undervalued and sold fraudulently, causing substantial injury. The court found that the sale was conducted without proper notice, as the service of summons was not compliant with Order 5, Rule 19 CPC. The court emphasized that strict compliance with the provisions of Order 5, Rule 19 is essential to ensure that the judgment-debtor has actual or constructive notice of the sale.

3. Application of Article 166 of the Limitation Act, 1908:
The judgment-debtor contended that the limitation period under Article 166 should start from the date of his knowledge of the sale, not the date of the sale itself. The court rejected this argument, holding that Article 166 prescribes a period of thirty days from the date of the sale, assuming the judgment-debtor had notice of the sale. If the judgment-debtor did not have notice, Article 166 would not apply, and the residuary Article 181 would provide a three-year limitation period. The court concluded that strict compliance with Order 5, Rule 19 is necessary before applying the shorter limitation period under Article 166.

4. Requirement of an express declaration by the court regarding due service of summons:
The court held that an express declaration by the court that the summons had been duly served is mandatory under Order 5, Rule 19 CPC. This declaration can be in any convenient form, such as "defendant duly served" or "service sufficient." The court's endorsement must indicate that the presiding officer has applied his mind and considers the summons duly served. The absence of such a declaration would render the service ineffective and invalidate subsequent proceedings, including the execution sale.

Conclusion:
The Full Bench concluded that non-compliance with Order 5, Rule 19 CPC regarding the service of summons renders the service ineffective. Consequently, the execution sale conducted without proper notice was declared void. The court emphasized the necessity of strict compliance with the provisions of Order 5, Rule 19, including the requirement of an express declaration by the court that the summons had been duly served. The judgment-debtor's appeal was allowed, and the execution sale was set aside.