The Udupi District Consumer Disputes Redressal Forum has made a significant ruling regarding gold loan recovery. The commission stated that when a customer defaults on a real estate mortgage loan, the pledged gold from a separate loan within the same institution cannot be recovered.
In 2015, a customer took a property mortgage loan of ₹25 lakhs from Gurumachideva Multipurpose Cooperative Society, which became overdue. The customer then took a gold loan of ₹16 lakhs in 2018 but demanded the return of the pledged gold after paying off the gold loan. The organisation refused, stating that the property mortgage loan must be paid in full first.
The forum dismissed the customer’s complaint, ruling that they were not entitled to retrieve the pledged gold. The forum cited Section 171 of the Indian Contract Act, which allows lending institutions to confiscate movable assets of defaulting customers. The organisation’s advocate, S. Gururaj Aital, argued on behalf of Gurumachideva Multipurpose Cooperative Society, while President H. Ananda Madiwala delivered the verdict.