Citing Re 1 default in loan repayment, bank holds back pledged gold worth 3.5 lakh

The customer has petitioned Madras HC stating that the bank refused to release the jewellery or accept payment of pending Re 1.

Chennai: Claiming a default of Re 1 in repayment of a loan, a co-operative bank has allegedly refused to return 138 grams of gold jewels pledged for the loan, prompting the customer to move the Madras High Court for relief.

In a petition, C Kumar, an account holder of the Pallavaram branch of Kancheepuram Central Cooperative Bank, submitted that he had been running from pillar to post for the past five years to get back the jewels worth around Rs 3.50 lakh and sought a direction to the bank to return them.

When the plea came up for hearing on Friday, Justice T Raja recorded the petitioner's counsel submissions and directed the government advocate to get instructions from the authorities within two weeks.

The petitioner said he had taken a loan of Rs 1.23 lakh from the bank by pledging 131 grams of gold jewellery on April 6, 2010.

In between, he took two fresh loans totaling Rs 1.65 lakh by pledging a total of 138 grams of gold.

On March 28, 2011, he closed the first loan by settling the amount along with interest and redeemed the 131 grams of jewels.

He repaid the two other loans also shortly thereafter, but the bank refused to return the jewels saying there was a balance of Re 1 in each of the loans.

Petitioners counsel M Sathyan said even after repeated requests by the petitioner, the bank refused to release the jewellery or accept payment of pending Re 1 for each account.

The petitioner submitted that he nurtured a doubt with regard to the safety of his jewels.