The interests of an institutional lender, however legitimate in the civil sphere, cannot override the rights of crime victims who have lost their promised gold ornaments, the Karnataka High Court has said.
The court made the observations while dismissing a petition filed by IIFL Finance Ltd. challenging the Bengaluru city police’s summons asking the petitioner-company to produce gold ornaments promised by a woman who was working with a private bank.
Stolen and pawned
The police registered a case based on a complaint filed by Karur Vysya Bank, Kengeri branch, alleging that Ashwini, who worked as an assistant manager at the branch, stole some gold ornaments pledged by bank customers and replaced them with duplicate ornaments. The bank complained that over 3 kg of gold ornaments were allegedly stolen from it in pledge.
During investigation, the police learned that she and her husband had taken a gold loan from IIFL by pawning these allegedly stolen gold ornaments. The IIFL gave the couple around ₹85 lakh based on the promised gold ornaments.
The court found no merit in IIFL’s attempt to characterize itself only as a “secured creditor” and thereby claim immunity from criminal investigation, stating that criminal law does not recognize contractual status as a shield against investigation.
“The moment the property held is allegedly stolen, the nature of the property ceases to be purely civil or commercial and becomes subject to criminal investigation,” the court said.
Even assuming that the petitioner-company extended the gold loan without knowledge of the theft, such ignorance does not elevate its contractual interest over the statutory investigative power or the property right of the real owner of the gold ornaments, the court said.
“Stolen property does not acquire immunity by passing through a commercial transaction,” the court said, noting that “criminal proceedings are not subject to commercial expediency.”
Follow the warning
IIFL has a clear statutory duty to comply with the notice issued under Section 94 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) by the police and immediately produce the gold articles for the purpose of investigation and eventual return to the rightful owners, in accordance with the law, as the court made clear.
If the investigating officer is convinced that the gold pawned with IIFL is what was stolen from the bank, seizure of these ornaments under Section 106 of the BNSS would not only be lawful but reasonable and necessary, the court said, while clarifying that any interest of IIFL remains subject to the imperatives of criminal law and cannot be used to prevent seizure of the stolen property.
Published – 11 Feb 2026 20:52 IST