2000 (2) TMI 880 - HC - Indian Laws

Court dismisses security application in loan recovery case due to lack of proof and specific allegations

The court dismissed the application for furnishing security or attachment before judgment in a loan recovery case. The plaintiff failed to prove the ... - Issues Involved:1. Recovery of loan amount.2. Furnishing security or attachment before judgment.3. Alleged acknowledgment of liability.4. Alleged intention to alienate assets.5. Compliance with Order 38, Rule 5 of CPC.Detailed Analysis:1. Recovery of Loan Amount:Renox Commercials Limited filed a suit for the recovery of Rs. 56,23,123/- with future interest at 18% per annum against Inventa Technologies Private Limited and Allahabad Bank. The plaintiff claimed that loans were advanced to the first defendant on various dates, and despite repeated demands and reminders, the defendant failed to repay. The plaintiff sent a legal notice on 15-4-1997, and the defendant allegedly acknowledged the liability but pleaded for adjustments with other accounts.2. Furnishing Security or Attachment Before Judgment:Pending the suit's disposal, the plaintiff filed an application seeking a direction for the defendant to furnish security for the suit claim or, failing that, to order attachment before judgment of the defendant's immovable property. The application was admitted, and notice was issued to the defendant to furnish security. The defendant opposed the application, denying any loan transaction and the acknowledgment of liability.3. Alleged Acknowledgment of Liability:The plaintiff contended that the defendant acknowledged the debt in a reply to the legal notice dated 10-5-1997. However, the defendant categorically denied the loan transaction and any acknowledgment of liability. The court found that the plaintiff's assertion of acknowledgment was factually incorrect, as the defendant's reply letter clearly denied the liability.4. Alleged Intention to Alienate Assets:The plaintiff claimed that the defendant was contemplating alienating tangible assets, including goodwill and plant machinery, which would obstruct or delay the execution of any decree. The court noted that the plaintiff's affidavit contained a bald averment without sufficient particulars or supporting materials to substantiate the claim.5. Compliance with Order 38, Rule 5 of CPC:Order 38, Rule 5 of CPC deals with 'Attachment before judgment' and requires the plaintiff to prove that the defendant is about to dispose of or remove property with the intent to obstruct or delay the execution of a decree. The court emphasized that mere general allegations, unsupported by particulars, do not satisfy the rule's requirements. The affidavit must state the grounds for the belief or apprehension and disclose the source of information.The court highlighted guiding principles for Order 38, Rule 5 of CPC, including:- The necessity for specific allegations supported by materials.- The affidavit should not be vague and must be properly verified.- The drastic nature of attachment before judgment requires utmost care and caution.In this case, the court found that the plaintiff failed to establish the essential requisites for an order of attachment before judgment. The plaintiff did not provide sufficient evidence or particulars to show that the defendant intended to dispose of property with the intent to obstruct or delay the execution of a decree. The court also noted that the property in question was already mortgaged, which did not satisfy the requirements for attachment before judgment.Conclusion:The application for furnishing security or attachment before judgment was dismissed with costs, as the plaintiff did not meet the necessary criteria under Order 38, Rule 5 of CPC. The court emphasized the importance of specific allegations and supporting materials in such applications.