BENGALURU: The Karnataka High Court on Wednesday dismissed a petition filed by IIFL Finance Limited, questioning the legality of notices issued by the Kengeri police for providing details of stolen gold pledged to raise loans, and to produce the gold pledged by an officer of Karur Vysya Bank for investigation.
Claiming that it became aware of the alleged fraudulent activities of the accused after receiving the notice, IIFL Finance Limited contended that if the pledged gold is handed over and seized by the investigating agency, it would be left without any subsisting security in respect of the outstanding loan amounts.
“A pledgee or financier holding alleged stolen property cannot object to seizure on the basis of contractual security interest, commercial hardship, or apprehended financial loss, as no person can acquire a better title than that possessed by the pledger. Stolen property does not acquire immunity from seizure by being routed through commercial transactions,” said Justice Suraj Govindaraj, dismissing the petition questioning the notices issued in October 2025.
The judge also said that acceptance of the petitioners’ contentions would set a dangerous precedent whereby stolen property could be shielded from seizure merely by being pledged with financial institutions. Such an interpretation would frustrate investigation, embolden economic offenders, and erode public confidence in the criminal justice system, he said.
“I am of the considered opinion that no grounds having been made out by the petitioner to grant reliefs which have been sought for, it would be for the petitioner to produce the gold articles before the investigating officer, and for the investigating officer to examine whether the gold articles produced are said to have been stolen from Karur Vysya Bank, and if so stolen, to comply with the requirements of Section 106 of the BNSS. Further, it would be for the petitioner to answer all the queries raised by Kengeri police during the course of investigation,” the judge said.
According to the complaint, the accused, Ashwini, was functioning as assistant manager as well as customer service officer/jewellery loan officer with Karur Vysya Bank, Kengeri branch, since 2022. During a surprise re-appraisal conducted in October 2025, serious irregularities were detected in relation to gold loan accounts handled by Ashwini.
Upon verification, it was allegedly found that she had indulged in acts that amounted to theft and criminal breach of trust by clandestinely removing genuine gold ornaments pledged by customers and replacing them with spurious articles. Such fake articles were found in 34 gold loan packets, involving approximately 3.398kg of gold ornaments, valued at Rs 3crore, on the basis of which the complainant bank had disbursed loans aggregating Rs 1.73crore.
It is further alleged that 17 jewel loan packets were found missing altogether, which were stated to contain approximately 1.557kg of gold ornaments, valued at Rs 1.5crore, in respect of which loans to the tune of Rs 89.01lakh had been sanctioned and disbursed. On the basis of the complaint, an FIR was registered. She pledged the stolen gold with the petitioner for availing loans in her and her husband’s name.