A Tumkur resident in Karnataka faced a unique challenge when two gold loan accounts with Canara Bank were robbed in August 2017. According to reports from The Times of India, the borrower had pledged 120.80 grams of gold under the first account and 133 grams under the second account, securing loans of ₹1,50,000 each. After discovering the theft, Canara Bank offered to pay the gold value, valuing the first account at ₹2,600 per gram (₹1,56,033) and the second at ₹2,500 per gram (₹2,12,500), based on net weights of 90 grams and 85 grams respectively.
The borrower sought ₹88,362 in additional compensation, claiming 20% towards making charges and 3% for stone value. As reported by The Times of India, he approached the District Commission alleging deficiency in service and unfair trade practice. Jayesh H, Co-Founder at Juris Corp explained that determining appropriate compensation can be complex, noting that banks have almost absolute liability in such cases, with making charges equally applicable as costs incurred by the pledgor.
The District Commission allowed the complaint in July 2020, directing Canara Bank to pay the additional amount claimed by the borrower, along with ₹30,000 as compensation and ₹10,000 towards litigation expenses within 45 days. According to The Times of India, the commission noted that the borrower had alleged the bank refused to pay making charges and stone value, and ordered payment of ₹88,362 plus 9% interest from August 29, 2018. The bank challenged this decision before the Karnataka State Disputes Redressal Commission.
The Karnataka State Disputes Redressal Commission rejected Canara Bank's appeal and upheld the District Commission's order, stating that the order was 'in accordance with law'. As reported by The Times of India, the commission emphasized that when jewellery in bank custody is lost through robbery or theft, the bank has a duty to settle value at prevailing rates, including making charges and stone value. The commission held that banks cannot insist on invoices as proof of making charges, noting that they are levied on gold ornaments as a matter of course and are therefore payable. The Canara Bank branch was directed to pay the borrower ₹88,362 plus 9% interest, ₹30,000 compensation, and ₹10,000 towards litigation expenses.
