LCI Learning
LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

 Sec.27 of General clauses Act 1897 lays down as under.-

Where any Central Act or Regulation made after the commencement of this Act, authorizes or requires any document to be served by post, whether the expression" serve" or "give" or"send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

The Supreme Court while dealing with a case relating to service of notice under Sec.138 of N.I.Act: K. Bhaskaran vs. Sankaran VaidhyanBalan and another (1999) 7 SCC 510 observed as under:

" The principle incorporated in Sec.27 therein could profitably be imported in a case where the sender had dispatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the addressee, unless he proves that it was not really served and that he was not responsible for such non-service. But that would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address”.

Rules 3(1)& 3(2) of Security Interest (Enforcement) Rules 2002 ( for short “the S.I.(E) Rules”) provides for service of statutory notices under the SARFAESI Act by registered / speed post, besides other modes of service such as courier, fax email etc. The relevant Sub Rules (1) & (3) of Rule 3 are extracted and reproduced hereunder:

“(1) The service of demand notice as referred to in sub-section (2) of section 13 of the Act shall be made by delivering or transmitting at the place where the borrower or his agent, empowered to accept the notice or documents on behalf of the borrower, actually and voluntarily resides or carries on business or personally works for gain, by registered post with acknowledgement due, addressed to the borrower or his agent empowered to accept the service or by Speed Post or by courier or by any other means of transmission of documents like fax message or electronic mail service:

Provided that, where authorised officer has reason to believe that the borrower or his agent is avoiding the service of the notice or that for any other reason, the service cannot be made as aforesaid, the service shall be effected by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house or building in which the borrower or his agent ordinarily resides or carries on business or personally works for gain and also by publishing the contents of the demand notice in two leading newspapers, one in vernacular language, having sufficient circulation in that locality.


(3) Any other notice in writing to be served on the borrower or his agent by authorisedofficer, shall be served in the same manner as provided in this rule”.

The provisions of SARFAESI Act and the rules framed thereunder are considered to be stringent in nature and hence,the legislature added a proviso to Rule 3(1) of the S.I.(E) Rules which expressly provides the manner in which a statutory notice is served [i.e by affixing a copy of notice at outer door or some other conspicuous part of the house or building in which the borrower or his agent ordinarily reside/work/carry on business plus causing publication of the contents of such notice so affixed,in two leading newspapers (one in vernacular language)]having sufficient circulation in that locality.

The Authorised Officer under SARFAESI Act is supposed to perform his action without deviation or omission of the prescribed law. The cardinal Latin principle “expressiouniusestexclusioalterius”(=meaning thereby that perform action according to law otherwise do not perform at all.) warrants strict compliance of the prescribed law while performing statutory functions.This cardinal principle is followed by the Supreme Court in a catena of judgments (Indian Banks Association & Others Vs. Devakala Consultancy:2004 (II) SCC1.).Even if the borrower manages to get a false postal endorsement such as "unclaimed" or "party not available" or “party left” or “always door locked” etc., on postal cover, the Authorised Officer cannot presume service of the notice according to Sec.27 of General Clauses Act 1897. He is supposed to affix the notice and cause publication as prescribed in the above said S.I.(E) Rules 2002.Without completion of service of notice as prescribed above, he cannot move for further action under Sec.13 of SARFAESI Act to execute the demand notice, as benefit of Sec.27 of General Clauses Act 1897 is not available to him.Any further action under Sec.13 of SARFAESI Actbased on the presumption under Sec 27 of General Clauses Act 1897 would be inconsistent to the proviso to Sub Rule 3(1) of S.I.(E) Rules. Moreover Sec.35 of SARFAESI Act overrides Sec.27 of General Clauses Act 1897.

Thus it is clear that, presumption under Sec.27 of the General Clauses Act, 1897 in relation to service of statutory notice under SARFAESI Act is not available to secured creditor or his Authorised Officer under the Act.

"Loved reading this piece by c.p.s. ramachary?
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"

Tags :

Category Corporate Law, Other Articles by - c.p.s. ramachary