Financial institutions must comply with police investigations and cannot shield themselves from legal scrutiny regarding pledged items linked to alleged crimes.

COMMON ORDER:

Since the issue involved in all these writ petitions are similar, this batch of writ petitions is disposed of by this common order. The facts in leading case, being, WP .No.37182 of 2021, are set out for the sake of convenience and disposal of this batch of writ petitions.

W P.No.3 7 1 8 2 of 2 0 2 1 :

2. Notice dated 21.12.2021 issued to the petitioner- M/ s. Manappuram Finance Limited, under Section 91 of the Criminal Procedure Code , 1973, to return the alleged stolen property deposited in the name of Bantu Jayaraju, for further investigation is challenged in this writ petition.

3. The case of the petitioner is that it is a company incorporated under the Companies Act, 1956 and registered as a Non-Banking Finance Company with the Reserve Bank of India. The petitioner company is carrying on its business activities as per the Rules, Regulations and Guidelines issued by the RBI from time to time. The petitioner is primarily in the business of facilitation of loans against the security of gold ornaments to its customers. The gold loans are given on application and after due process of verification of identity and valuation of the security. Pledges are typically used in securing loans, pawning property for immediate cash, by guaranteeing that contract, on failure to repay the loan, the bank has every legal right to dispose the gold to recover the dues as per the terms of the contract of loan.

4. It is submitted that the respondent No.3 is visiting the office of the petitioner’s branches, frequently calling the officers of the petitioner company to the Police Station under the pretext of the crimes allegedly committed by one of the customers of the petitioner i.e. respondent No.4. The respondent No.3 had been interfering with the day-to-day business of the petitioner indiscriminately. The petitioner is no way related to the FIR registered or the offences said to have been committed by the accused therein. The respondents without applying mind, in utter violation of the rights of the petitioner and violation of the principles of natural justice, have issued the impugned notice dated 21.12.2021.

5. It is submitted that the alleged de facto complainants. who have lodged complaints with the respondent No.3, are strangers to the petitioner company and the petitioner company did not enter in to any transactions with them at any point of time. The respondent No.4 opened the customer ID No.21480007013371 and transacting with the petitioner company on account basis. The respondent No.4 had opened accounts on various dates with the petitioner company. The petitioner company, being the NBFC, is following the norms of the RBI. The records maintained by the petitioner also revealed that the said pledges were accepted after the compliance of the Know Your Customer (KYC) norms and the verification of the relevant documents, as per RBI rules. The respondent No.4, towards the KYC norms, submitted his voter's identity card issued by Election Commission of India, Ration Card, Driving License and employee identity card issued by Hindustan Shipyard.

6. It is submitted that the petitioner company had been strictly adhering to the guidelines of the RBI for " Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions , 2007" and more particularly, Rule 17(A) to Rule 17(D), which relate to loans against security of single product - gold jewellery and safety and security measures to be followed by Non-Banking Financial Companies lending against collateral of gold jewellery.

7. It is submitted that the petitioner brought to the notice of the police about the facts and the transactions of the loan account by submitting all the copies of the documents. Despite the same, the police started harassing the officers of the petitioner company for surrender of the movable gold articles, which are under security as pledge and insisting the petitioner company to bring the gold articles, knowing fully well about