Karnataka High Court asks law commission to frame guidelines for dealing with stolen gold

Bengaluru: The high court has said that the concerned authorities will have to formulate proper guidelines in cases of stolen gold pledged with gold finance companies.

“There are innumerable matters coming up before this court where stolen gold is pledged with a gold finance company. I am of the considered opinion that this aspect would have to be examined by the concerned authorities and proper guidelines have to be formulated in relation to such pledging of gold, ascertainment of ownership, identity of the person pledging the gold, implication of pledging stolen gold, manner of dealing with such gold when criminal proceedings are taken up etc., Therefore, I request the Law Commission, Karnataka to look into this matter and formulate necessary guidelines/rules or the like as deemed fit,” Justice Suraj Govindaraj said.

In the case at hand, Muthoot Finance Limited had challenged the notice dated December 30, 2024, issued by the Begur police in Bengaluru to make available certain gold articles which are claimed to have been stolen and pledged. The petitioner claimed that the interference by police in its business for forcefully seizing the gold articles pledged by its customers is arbitrary and also in violation of fundamental rights guaranteed under Articles 14 and 19(1) (g) of the constitution.

The company contended that there is a right vested in it on account of the pledge of the gold as a security and that security cannot be taken away on the ground that the gold is stolen. The ownership of the gold would have to be established by the person claiming it by way of an appropriately instituted civil suit, the petitioner further submitted.

The court noted that the petitioner, being only a pledgee/pawnee, would only have a right that a pledger/pawner has in the gold and the petitioner cannot claim any right more than that.

“During investigation, the Investigating Officer would be required to ascertain various aspects including the ownership of the said gold and it is for the court seized of the matter to decide as to in whose favour the gold has to be returned, if an application under Section 454 of the earlier CrPC and now Section 500 of the BNSS were to be filed. Of course, at that time the petitioner can always place its rights and claims before the said Court for being decided. 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 a 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,” Justice Suraj Govindaraj said, directing the petitioner company to co-operate with the Investigating Officer.