024-SLLR-1984-V1-BANDARANAIKE-v.-TIMES-CEYLON-LTD.pdf
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Sri Lanka Law Reports
[1984] 1 SriLR.
BANDARANAIKE
v.TIMES OF CEYLON LTD.
SUPREME COURT
SAMARAKOON. C.J.. WANASUNOERA. J. AND COLIN-THOME', J.
S C No. 56/82- C.A.L.A, No. 59/82 (S.C.)-C.A.L.A. No. 36/82 – D.C. COLOMBONo. 81692/MFEBRUARY 1. 1984.
Service of summons on Company-Section 471 of the Civil ProcedureCode-Sections 91 and 357 of the Companies Ordinance.
The plaintiff-appellant sued the respondent-company (Times of Ceylon Ltd.) fordamages. Summons was issued on the defendant and was reported to have beenserved by the fiscal al the registered address namely No. 3. Bristol Street. Colomboby handing it over to a person described as the Manager who really was an officer ofthe Business Undertaking of the Times of Ceylon Ltd.
As the defendant did not appear, ex parte trial was held and judgment and decreewere entered. Subsequently an application for execution of writ was made. At thetime of the service of summons, at the time of the judgment after ex parte hearingand at the date of the decree and application for issue of writ of execution theregistered address of the respondent-Company was No. 3. Bristol Street. Colombo.
On April 10. 1981. the respondent-company prayed that the judgment and decreebe set aside and that permission be granted to it to appear and defend the action.The grounds adduced were that the Business Undertaking of therespondent-company had been vested in the State by Order dated August 2. 1977,and after 3rd August. 1977. the respondent-company had ceased to carry onbusiness at No. 3. Bristol Street, Colombo. Although this was the registeredaddress, its address in fact was No. 9. Castle Street. Colombo. Further byresolution of 5th March. 1981, the respondent-company went into voluntaryliquidation The respondent-company alleged that neither summons nor decree hadbeen served on it. The District Court upheld the objections and the appellantappealed unsuccessfully to the Court of Appeal.
Held –
(1) All that matters is that the summons reached the registered office of theCompany and was received by an officer working at the office even though he maynot have been an employee of the respondent. The law is only concerned with theaddress registered in the Books of the Registrar of Companies and not with theaddress in fact.
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Bandaranaike v. Times of Ceylon (Samarakoon, C.J.)
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Per Samarakoon, C.J.-
" The law fixes the Company's habitat so that the process of law can reach it andthe members of the public who have dealings with it can find it. The Respondenthad represented to the public that its registered office was at No. 3, Bristol Street,and if any member of the public acted on the faitlf of it the Respondent cannot beheard to deny it
Hence summons and decree had been served as required by law.
(2) Even though the respondent-company had ceased to do any business after thevesting order there was no evidence as to whether it had any movable or immovableassets or as to whether the company was now an empty shell. Further despite thevdluntary liquidation of the respondent-company its corporate character continued.
Cises referred to
Mendisv. The Independent Publishing Co. Ltd. 10C.L.W. 145.
A/S Cathrineholm v. Nonequipment Trading Ltd. (1978) 2 QB 314, 322 (C.A )[1972] 2 AH. E.R. 538. 542 (C.A.).
A’PEAL to the Supreme Court from the order of the Court of Appeal
Nmal Senapayake. S.A.. with Kithsiri P. Gunaratne, Saltya Mathew and MohamedQiazzale for plaintiff-appellant.
A Sinnathamby with K. S. Ratnavale for respondent.
Cur. adv. vult.
Narch 8, 1984.
SAMARAKOON, C.J.
The appellant instituted this action on the 18th September, 1978,gainst the respondent for recovery of damages in the total sum of,1s. 750,000 upon two causes of action. The appellant alleged’hat the respondent had published two news items in theNewspaper. 'Sunday Times' of the 4th December, 1977. Theaddress of the respondent set out in the caption to the plaint wasNo. 3, Bristol Street. Summons was issued on the defendant andwas reported to have been served by the fiscal at that address. The'returnable date was the 17th November, 1978. The respondentl did not appear on this date and the case was fixed for ex parte trialon 10th January, 1979. Ex pane evidence was led on the 10thJanuary, 1979, and judgment was delivered on 29th January,1979. Decree is stated to have been entered of record on the 17th
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April, 1979. I presume that this was Decree Nisi. Application forexecution of writ was subsequently made. At the time of the issueof service of summons, at the time of judgment after ex partehearing, and at the date of decree and application for issue of Writof Execution the registered address of the respondent with theRegistrar of Companies was and remained No. 3. Bristol Street,Colombo.
The respondent filed objections on the 10th April, 1981. andprayed that the judgment and decree entered of record be set asideand that the respondent be permitted to enter an appearance, fileanswer and defend the action. The reasons adduced are-
That its Business Undertaking had vested in the State by Orderdated 2nd August, 1977, made under the Business Undertakings(Acquisition) Act. No. 35 of 1972.
That on the 3rd August. 1977, the respondent ceased to cariyon business and ceased to have a business office at No. 3, BristolStreet, as those premises were also vested in the State by the sadvesting order.
That the summons and decree were not sensed on thtrespondent.
That by a resolution dated 5th March,. 1981, the respondentwent into Voluntary Liquidation.
The address of the respondent set out in the caption to th«objections is No. 9, Castle Street, Colombo 8. The District Judgeheld that summons had not been served on the respondent anlordered that the decree be set aside. The Court of Appeal uphellthis Order but gave different reasons. The Appellant has filed arappeal in this Court with the leave of the Court of Appeal which hatasked for a decision of this Court on three matters. I will deal withthem in their order.
The first question posed by the Court of Appeal is as follows
Was the Court of Appeal wrong in law in holding that therehas been no valid service of summons in this case on thedefendant-respondent Company as required by theprovisions of section 471 of the Civil Procedure Code readwith sections 91 and 357 of the Companies Ordinance ?’
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Bandaranaike v Times of Ceylon ISamarakoon, C J)
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i fail to see the relevance of section 357 of the CompaniesOrdinance m this case. That section deals with the service ofcocuments on a Company and there are no doubt many documentsreferred to in the Companies Ordinance that could be served on theCompany Perhaps it could be utilised for the service of summonsissued by a Court of Law but I do not need to consider that aspectof it because we are concerned here with a summons issued by a^ourt of Law and its form and the manner of its servicejoverned by the Civil Procedure Code in terms of which it is issued,'he cardinal rule of the Civil Procedure Code is that there must beproof of personal service (Vide section 59). All summons, as in thetase of all processes of court, unless otherwise directed, shall beesued to the fiscal accompanied by a precept m Form 17 of the>il Procedure Code (section 356 and section 364 of the Civil’rocedure Code). The fiscal's return to the precept must be in themanner required by the provisions of section 371 of the CivilJrocedure Code. The Civil Procedure Code takes cognizance of theact that in the case of juristic persons such personal service isimpractical. Therefore it made special provision in section 471 as‘ollows –
"When the action is against a corporation, or against a board orother public body, or a company authorised to sue and be sued inthe name of an officer or of a trustee, except in cases where aparticular mode of service is directed by law, the summons maybe served-
by leaving it at the registered office (if any) of thecorporation, board, public body, or company : or
by giving it to the secretary or other principal officer ofthe corporation, board, public body, or company :
and the court may in such summons or by special order require thepersonal appearance of such secretary or other principal officer ofthe corporation, board, public body, or company who may be ableto answer material questions relating to the action."
No doubt section 357 (a) of the Companies Ordinance providesfor "leaving" a document at the registered office as does section471 (a) of the Civil Procedure Code but this is no reason for sayingthat section 357 can be utilised for the service of summons ofCourt
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The fiscal'repaired'to premises No. 3, Bristol Street, Colombo,and there served it on the "Manager on behalf of the Times o;Ceylon Ltd." That this summons was so served and received is notdenied. An entry in hand made on the original of the summons(which was subsequently returned to Court and now appears in thprecord) shows that it was. received on 09.11.78 at 4.10 p.m. Atthe same time a minute has been made on it, directed to an office!referred to as "P & AM* as follows
"P& AM
PI. ask Editor DM & ST. Mr. E. P. de Silva to see me witfthe pp in question to discuss case with the A.G.
We have to show this to CA when he is in his office."
We were informed that the letters "DM" and "ST" stood for "DailyMirror" and "Sunday Times' respectively which were twonewspapers, the letters "CA" stood for 'Competent Authority' whoran the business for the State and that the letters 'AG' stood for.Attorney-General. On the 10th January, 1979, the GeneralManager wrote to the Registrar of the District Court of Colombostating that the summons in question had been delivered in error 'atthis office' which we were told was a reference to the TimesBuilding, No. 3, Bristol Street. He also added that the defendantmentioned in the summons does not maintain an office in thosepremises. It is quite clear that at the time the Manager received thesummons he did so in the bona fide belief that it was one receivableby him as Manager. It is equally clear that some months later(perhaps after consultation with the Law Officers of the State) itdawned on him that this summons was not meant for the BusinessUndertaking of the State and was wrongly accepted by him. Hetherefore returned the summons to Court and the receipt of hisletter together with the original summons is minuted in journal entry
under date 15.01.79 / 19.01.79.
The registered office of the respondent was No. 3, Bristol Street,Colombo, and there is no evidence that it had any other registeredoffice until it registered the new address at No. 9, Castle Street,Borella. This registration was done in compliance with a duty caston it by the provisions of section 91 (1) of the Companies.
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Ordinance. Notice of any change had also to be given within 28days. Failure in either obligation constitutes an offence. Aregistered office gives the Company a domicile and residence.Service of summons at this office is equivalent to personal serviceon a person under section 59 of the Civil Procedure Code. One ofthe objects of section 91 is to safeguard the interests of the public.The law fixes the Company's habitat so that the process of law canreach it and the members of the public who have dealings with itcan find it. The respondent has represented to the public that itsregistered office was at No. 3, Bristol Street, and if any member ofthe public acted on the faith of it the respondent cannot be heard todeny it. The appellant has done what the law allowed her to do andshe is entitled to the benefit of an act lawfully done.
It is argued that delivery of the summons to the ‘Manager of theBusiness Undertaking of the State* is not a valid delivery in law tothe respondent as he was not an employee of the respondent. Thedecision of Keuneman, J. in Mendis v. The Independent PublishingCo, Ltd. (1) has been cited for the proposition. The dispute in thatcase was whether one Fernando who accepted the summons wasa responsible officer. He was characterised as a cashier.Keuneman, J. held that he was not a cashier but a very responsibleofficer of the Company. This decision is not authority for theproposition that service by leaving it at the registered office can onlybe done by giving it into the hands of a responsible officer. In facthe added 'very much less formality would probably have achievedthe purpose of the section*. All that need be proved is that thesummons reached the registered office of the Company and wasthere left with some human agency. It cannot just be left on sometable or thrown into the office. On the other hand the fiscal cannotbe expected to inquire into and decide on the status of theindividual accepting the summons. In this case there is no doubtthat the summons reached the registered office of the Companyand was taken by a person who claimed to be the Manager. TheFiscal was not Tnade aware of the nice distinction between the'Times of Ceylon Ltd* and the ‘Business Undertaking of the Timesof Ceylon Ltd.* If any confusion arose it was the direct result of thedefault of the respondent. All that matters is that the summonsreached the registered office of the Company and was received byan officer working at the office even though he may not have been
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an employee of the respondent. In normal circumstances thatsummons would have been acted upon. The predicament that therespondent now finds itself is entirely its own fault. 'They did notenter the change of address on the register as they should havedone'- per Denning, M. R. in A/S Cathrineholm v. NonequipmentTrading Ltd (2).The dispute in this .case hinged on the service ofwrit by post. The plaintiff sent the writ by post on July 21. 1971. ina prepaid envelope to the registered address of the defendantwhich was at 34-35, Norfolk Street, London W.C.2. It was notdelivered there. It was not however returned by the postalauthorities through the dead letter office. The plaintiff rightly actedon the presumption that in the normal course of post it would havebeen delivered on July 22, 1971, and obtained judgment in defaultof appearance. It was subsequently established that the defendanthad vacated the premises on June 24, 1971, and on July 5, 1971,the building was handed over to a contractor for demolition. Thenew office of the defendant was at 23, Ridgmount Street, W.C. 1.which address was not registered. When the postman arrived withthe letter on July 21 the building was a derelict, the letter-box hadbeen removed and a pneumatic drill was working outside the door.No delivery could be made but there was no evidence to show whatthe postman did with the letter thereafter. In any event the Courtheld that the letter must be deemed to have been delivered and thejudgment obtained by the plaintiff was regular. Roakill. J. summedup the position thus-
"What happened in this case was entirely the fault of thedefendants. They changed their registered office from 34-35,Norfolk Street to 23, Ridgmount Street; they did not give noticeas they should have done under section 107 (2) of theCompanies Act. 1948. The plaintiffs did what' the law entitledthem to do : they posted the writ to the registered office inNorfolk Street. The building was then apparently little more thanan abandoned shell. There was nothing else that the plaintiffscould do if they intended to serve the defendants by post, andany misfortune of the defendants is through their own fault.*
For the reasons given above I would answer the first question in theaffirmative.
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Bandaranaike v. Times of Ceylon (Samarakoon, C.J.)
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The next question posed is as follows :
{b) Does the view expressed by the Court of Appeal that at therelevant time 'merely the empty shell of the Companyremained’ constitute a misdirection in regard to the effectof the provisions of the Business Acquisition Act, No. 35 ofT971.
The Vesting Order (A2) has vested the business undertaking of"Times of Ceylon Ltd." and'its registered office No. 3, Bristol Street.-In paragraph 3 of the-objections the respondent states that sincethen it had ceased to have any business. There is no evidence toindicate whether or not it has any other movable or immovableassets. Its corporate-capacity continued and still exists in spite ofthe voluntary liquidation (Vide section 219 of the CompaniesOrdinance), lathe absence- of further evidence it is not possible tostate whether the vesting under the Business Acquisition Act leftthe Company an empty shell.
The last question posed is as follows
Did the Court of Appeal misdirect itself in holding that theDistrict Court had been informed that No. 3 Bristol Street,Colombo T, was no longer the 'registered office' of theCompany ?
The letter dated 10th January, 1979 (marked A), does not statethat No. 3, Bristol Street is no longer the "registered office". Itmerely, states that the defendant "no longer maintains an office" inthe premises. In any event this is a statement of a third party andthe Court was under no obligation to act upon it. My answer to thisquestion is in the affirmative.
The Court of Appeal has held that "though No. 3, Bristol Street,Fort was nominally the registered office in the books of theRegistrar of Companies, in reality it was not". By this I understandthe Court to mean that though in law it was the registered office, infact it was not the registered office. The taw is only concerned withwhat is registered in the Books of the Registrar of Companies andthe law must take its course. It was open to the respondent to makereality conform to the law but it failed to do so. The only reasongiven by the respondent in its petition is that summons was notserved on it. There is no other reason given.
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The appeal is allowed and the Orders of the Court of Appeal andthe District Court are set aside. The appellant will be entitled tocosts here and in the Court of Appeal.
WANASUNDERA, J.-l agree.
COLIN-THOME’, J.-l agree.
Appeal allowed.
Orders of the Court of Appeal and District Court set aside.