2025 (6) TMI 2110 - AT - IBC

Substituted service and deemed notice: publication can validate service despite later postal notice concerns in proceedings.

Substituted service by publication can complete notice where ordinary postal service is disputed, and an affidavit of service is filed and accepted. A ... Validity of the service of notice - non-compliance with postal rules - No effective service of notice of the proceedings and denial of opportunity - challenge based on Rule 208(1) of the Indian Postal Rules, 1933 - Substituted service of notice - Deeming presumption of service - Opportunity of hearing. Substituted service of notice - HELD THAT: - The Appellate Tribunal held that the appellant could not rely on Rule 208(1) of the Indian Postal Rules, 1933 once the Adjudicating Authority had directed service by publication as a substituted mode under Order V Rule 20 CPC. After publication was ordered, affidavit of service was filed and the Adjudicating Authority recorded completion of service. A subsequent direction to issue fresh notice by registered post did not dilute the legal effect of substituted service or the deeming presumption attached to such service. The ex parte order therefore remained valid, particularly when the appellant had not sought recall of that order. The Tribunal further held that the plea based on ongoing settlement talks was of no assistance, as the appellant was attributable with knowledge of the proceedings and could not, at that stage, contend that the Section 7 proceedings had been taken behind his back. [Paras 5, 7, 9, 10, 11] Service by publication was treated as effective service, the plea of denial of fair opportunity was rejected, and the ex parte continuation of the Section 7 proceedings was sustained. Final Conclusion: The appeal was dismissed. The Appellate Tribunal upheld the impugned order, holding that notice stood duly served through substituted service and that no case of denial of opportunity was made out. Issues: Whether service of notice in the Section 7 proceedings was valid despite the appellant's challenge based on non-compliance with postal rules and alleged absence of effective notice.Analysis: The challenge based on Rule 208(1) of the Indian Postal Rules, 1933 was found to have limited relevance because the record showed that the tribunal directed substituted service by publication under Order V Rule 20 of the Code of Civil Procedure, 1908. Once publication was ordered, an affidavit of service was filed and accepted, and the service was treated as complete. The subsequent direction for fresh notice by registered post did not undo the effect of substituted service. In the circumstances, a deeming presumption of service arose, and the appellant's knowledge of the proceedings was also attributed from the surrounding conduct, including participation in related proceedings and settlement efforts.Conclusion: The service of notice was held to be effective, the ex parte proceeding was sustained, and the objection of denial of opportunity failed.