The Ernakulam District Commission, chaired by Shri D.B. Binu, Shri V. Ramachandran, and Smt. Sreevidhia T.N., ruled that the bank is responsible for safeguarding the assets pledged by its customers and cannot shirk this duty.
Case Summary
The complainants filed a complaint against Union Bank of India, alleging poor service and unfair trade practices after the bank failed to return their pledged gold ornaments, despite the complainants’ readiness to repay the gold loans. Initially, the bank informed them that a staff member had stolen the gold, and assured them that either the gold or its market value would be returned upon repayment of the principal and interest. However, when the complainants sought to close their loan accounts, the bank demanded additional interest beyond the agreed period and offered a lower compensation of ₹2,900 per gram of gold instead of returning the original ornaments. The complainants, having fully repaid the bank, sought either the return of their gold or its equivalent value, along with ₹25,000 each for the mental distress caused by the bank’s actions.
Bank’s Defense
The bank contended that the complainants were attempting to close their loan accounts unilaterally by paying interest up to a self-imposed cutoff date. Each complainant had taken out gold loans under separate agreements requiring repayment of the principal amount with interest until full settlement. The bank offered two options: repay the entire loan and retrieve the gold from the court or settle for the market value of the gold. The complainants did not select either option and failed to settle their accounts, leading to increased arrears. The bank denied agreeing to limit interest calculation to the complainants’ proposed date.
District Commission’s Observations
The District Commission found that the bank failed to uphold its responsibility to protect the pledged gold ornaments, resulting in their theft. It was evident that the complainants had repeatedly expressed their willingness to repay the loan with interest, believing it would be calculated only up to November 2018 based on assurances from the bank manager. The bank’s subsequent refusal to honor this agreement and its demand for additional interest constituted a deficiency in service. The Commission held the bank accountable for the loss and ordered it to either return gold ornaments of equivalent weight or pay the complainants the current market value of the gold.
The Commission directed the bank to calculate interest on the loan amounts only up to November 1, 2019, provided the complainants settled the principal and interest within 45 days of receiving the order.
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