Frame guidelines to tackle issue of pledging of stolen ornaments in gold finance companies: Karnataka High Court

Pointing out that the court is witnessing innumerable cases related to pledging of stolen gold ornaments with gold finance companies, the High Court of Karnataka has asked the authorities, including the State Law Commission, to formulate guidelines/rules to regulate process of pledging of gold, particularly to tackle the issue of pledging of stolen gold.

Pointing out that the court is witnessing innumerable cases related to pledging of stolen gold ornaments with gold finance companies, the High Court of Karnataka has asked the authorities, including the State Law Commission, to formulate guidelines/rules to regulate process of pledging of gold, particularly to tackle the issue of pledging of stolen gold.

The guidelines should also contain norms to ascertain gold’s ownership, identity of the person pledging the gold, implication of pledging stolen gold, manner of dealing with such gold when criminal proceedings are initiated, etc., the court said.

Justice Suraj Govindaraj issued the directions while disposing of a petition filed by Muthoot Finance Ltd., which had sought directions to the police not to seize the gold, which was pledged with it, in relation to a criminal case in which the police claimed the stolen gold was pledged with the company.

While directing the petitioner company to co-operate with the investigation, the court directed it to make available all details relating to the pledged gold and also its inspection by the investigating officer.

The court also said that the police can take the pledged gold if it is treated as stolen. However, the police cannot retain the gold in their possession and must deposit it with the jurisdictional trial court. If the trial court has to pass any order for the release of gold for any reason, then it has to hear the petitioner company before doing so, the High Court said.

“The true owner of the gold cannot be deprived of the use of the gold merely because the same is pledged with a gold finance company after being stolen from such true owner. The gold finance company is vested with a duty to carry out proper due diligence before accepting the gold as a pledge for a loan disbursed,” the High Court observed.