Court stays auction of pledged gold

Published: 14th July 2013 07:56 AM  |   Last Updated: 14th July 2013 07:56 AM   |  A+A-

A gold-loan company could not conduct the public auction, scheduled for Saturday, of over 100 sovereigns of gold jewellery pledged with it, following a restraining order from a city court.

This follows two customers approaching the court alleging that the company, Muthoot Finance Ltd, Ramnathapuram, was collecting 29 per cent interest while the Tamil Nadu Pawn Brokers Act, 1943 mandated a maximum of 16 per cent.

In response to the complaint, First Additional Subordinate Judge Rama Parthiban granted an interim ex-parte injunction restraining the company and the auctioneer, P Pappathi, from conducting the auction.

The petitioners’ counsel M Venilla said they had on several occasions pledged over 100 sovereigns of gold with the company since 2008. However, the company collected exorbitant interests of up to 29 per cent from 12 per cent per annum.

The complainant could not pay the principal and accrued interest within an year due to financial crunch. Meanwhile, the company issued notices on auctioning the pledged gold, despite pleas for time and reduction of interest.

The company served notice to the customers on 28 June and fixed the auction date of 13 July.

However, the company’s assistant manager, Kalaivani, said they had sent notices to the customer several times. But there was no response to the notices. The company is working as per the rules.


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