Skip to main content

Banks Can Retain Pledged Gold Till All Dues are Cleared: HC

The Kerala High Court on Wednesday held that gold pledged for loan could be retained  by a bank even if the loan is repaid, when the customer has another loan is pending with the same bank. However, the court made it clear that banker’s lien will not apply to gold entrusted to the bank for safe custody in a locker.

Justice V Chithambaresh passed the order while disposing of a petition filed by Nakulan, of Kollam, seeking a directive to Canara Bank to release the gold ornaments pledged on the petitioner clearing only the gold loan. He said that he had taken a personal loan of `25,000 in January 2012. No security of any sort was obtained at the time of transaction.

He also availed a gold loan of Rs. 85,000 in May 2012 by pledging 46.7 grams of gold. The petitioner said that he was willing to clear the gold loan in its entirety and so, the bank is bound to release the gold ornaments without retaining them as security for the personal loan. However, the bank submitted that the gold ornaments cannot be released without the petitioner discharging the entire liability. The bank relied on section 171 of the Indian Contract Act to exercise its right of lien and retain as security the gold ornaments pledged for the amount due from the petitioner.

The court held that a bank has a general lien over all forms of security, including gold ornaments, deposited by or on behalf of the borrower in the ordinary course of banking business for the balance due from him. The bank has a further right to sell the securities, like the gold ornaments, and utilise the proceeds in discharge of the liability due from the borrower in respect of other loans.

The court further permitted the petitioner to repay the amount due towards the personal loan in six equal monthly instalments, in which event the sale of the gold shall be deferred.

Article referred: http://www.newindianexpress.com/cities/kochi/Banks-Can-Retain-Pledged-Gold-Till-All-Dues-are-Cleared-HC/2014/01/09/article1990749.ece

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Owner of vehicle is not expected to verify the genuineness of the driving license before appointing a driver

Cause Title : Rishi Pal Singh Versus New India Assurance Co. Ltd & Ors., Civil Appeal No. 4919 Of 2022, The Supreme Court Of India Date of Judgment/Order : July 26, 2022 Corum : Hemant Gupta; J., Vikram Nath; J. Background the truck owned by the appellant met with an accident. The owner deposed before the court that before employing the driver, he had taken his driving test and that he was driving the vehicle satisfactorily and  that the driver was employed with him for 3 years before the date of the accident. He produced his driving license. This was reaffirmed by the driver who deposed that the driving license was obtained from the driver and it was issued from Nagaland, but no such license was produced on record. Both the Motor Accident Claims Tribunal and the High Court have held that the owner has alleged that the driver had a driving license from Nagaland but the same was not produced and therefore, the Insurance Company is entitled to recover the awarded amount...
Post a Comment
Read more

Person Being Prosecuted To Be Provided With All Relevant Documents

The Delhi High Court, in the case of Poonam Jain vs Union of India & Ors, noted that a person being prosecuted against has a right to be provided with all the material relied upon by the prosecuting agency to prosecute her/ him. In the instant case, a search was conducted at the residences of the petitioners and their statements were recorded and several documents were seized. They were issued show cause notices under Section 276 C(1) and Section 277 of the Income Tax Act, Section 181 of the Indian Penal Code and Sections 50 and 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act. They sought to be provided with a copy of their statements and the documents seised. However, the same was denied to them.
Post a Comment
Read more