Kar HC | In a case where director of a company is to be served notice, which will be considered appropriate “his changed residence” or “office”? HC explains in light of instant facts

Karnataka High Court: B. M Shyam Prasad J dismissed the appeal being devoid of merits.

The facts of the case are such that the first respondent – the Karnataka State Financial Corporation filed a petition under Section 31 (1)(aa) and 32 of the State Financial Corporations Act, 1951 before VI Additional City Civil Judge, Bengaluru City, against the appellant and the second and third respondents invoking Bank Guarantee executed by them. Hence the petition was filed under Section 31 (1) (aa) and 32 of the State Financial Corporation Act, 1951 which was allowed, assailing this order another petition under Order IX Rule 13 of the Code of Civil Procedure, 1908 was filed which was dismissed ex parte as inspite of giving repeated reminders no one appeared before the Court. Aggrieved by the dismissal of the petition instant appeal was filed before XXXVII Additional City Civil and Sessions Judge, Bengaluru City.

Counsel for the appellants submitted that the first respondent had shown his address at Wilson Garden, Bengaluru for service of notice but he had sold the property way back in 1992 and shifted his residence and been a resident of this new place ever since. He further submitted that this is the reason why the appellant did not know about the petition and came to know only in the month of September 2008 when he visited Sub Registrars Office for verification of documents.

The Court observed that the question of the appellant being served at the address other than the address mentioned in the petition viz., address of the principal borrower and there was a complete cessation of all association with the principal borrower. It was further observed that when it is admitted that he was one of the directors of the principal borrower and he continued to be a director of the principal borrower as of the relevant date, the service of notice at the first instance at the principal borrower’s address could be reasonably inferred as due service of notice. Also, it would not be reasonable to infer that the appellant has no knowledge of the petition merely because the appellant contends that he shifted his residential address.

The court thus held that based on documents placed on record it is amply clear that there is no information available that the appellant informed the first respondent about his shifting of residence and his new address. Thus, there stands no reason for interference.

In view of the above, appeal was dismissed.[N. Nagaraja Reddy v. Karnataka State Financial Corporation, Miscellaneous First Appeal No. 1413 of 2013 (CPC), decided on 03-01-2021]

Arunima Bose, Editorial Assistant has put this story together