Mary Mettilda P Vs Ombudsman (NBFC) (Madras High Court)
Summary: The Madurai Bench of the Madras High Court held that Muthoot Mini Finance Limited could not avoid responsibility for jewellery allegedly misappropriated and re-pledged by its erstwhile Branch Manager. The petitioner claimed that she had pledged 134.2 grams of gold jewellery for Rs.7,00,000/- and repaid Rs.89,500/- on 30.09.2025. She further claimed to have pledged 88.85 grams of gold jewellery for Rs.4,00,000/-. When she approached the branch on 24.11.2025 with the principal amount and interest to redeem the jewellery, she allegedly discovered that the jewellery had been misappropriated and re-pledged for a higher amount. A police complaint led to registration of Crime No.428 of 2025. The RBI Ombudsman’s counsel submitted that the complaint had been closed under clause 16(2)(e) of the Reserve Bank – Integrated Ombudsman Scheme 2026, since criminal proceedings and issues requiring detailed evidence were involved.
The finance company denied that the petitioner had pledged the jewellery with the branch or that it had issued the receipts relied upon by her. It contended that the petitioner had personally dealt with the erstwhile Branch Manager, who had allegedly received jewellery and issued forged handwritten receipts. According to the company, its internal audit revealed that the erstwhile Branch Manager had misappropriated jewellery belonging to several customers, issued forged loan receipts and re-pledged jewellery with the same branch and other banks and finance companies for higher amounts. The transactions had allegedly never been entered in the company’s system, which issued system-generated receipts with customer photographs. The company submitted that it had itself initiated criminal action against the erstwhile manager.
The High Court held that where the company had established branches across the State and country, including in rural and urban areas, it was for the main company to ensure proper administration of those branches. Failure in administration and mismanagement of branches could not be allowed to cause loss to customers. The Court observed that the second respondent was “vicariously labelled” for the misdeeds of its staff and could not wash off its responsibility merely by pointing to the criminal proceedings initiated against the erstwhile Branch Manager.
Accordingly, the High Court directed the finance company to take immediate steps to redeem the jewellery belonging to defrauded customers, including the petitioner, whether it had been re-pledged in its own branch or with other financial institutions. The jewellery was to be handed over after receipt of the principal and matured interest up to the date on which it was expected to be redeemed. This exercise was directed to be followed for all customers ready with the money. If the company was unable to redeem the jewellery, it was directed to pay the customers, including the petitioner, the market value as on date of the jewellery pledged with the third respondent branch. The exercise was required to be completed within four weeks from receipt of a copy of the order. The writ petition was disposed of without costs and posted on 25.09.2026 for reporting compliance.
FULL TEXT OF THE MADRAS HIGH COURT JUDGMENT/ORDER
This Writ Petition is filed seeking to issue a Writ of Mandamus, directing the 1st respondent to direct the 2nd and 3rd respondents to permit the petitioner to redeem the jewel loan based on the petitioner’s representation dated 05.02.2026.
2. The learned counsel for the petitioner submitted that the petitioner is the customer of the third respondent Bank where she had pledged her 134.2 gram gold jewels to a tune of Rs.7,00,000/-. She had paid an amount of Rs.89,500/ on 30.09.2025. On 18.03.2025, the petitioner prepared to settle the entire balance for redemption of the said jewellery for which she had approached the third respondent bank on 24-11-2025 with the principal amount and interest to redeem her jewelry. However, to her shock, it was found that the employees of the third respondent committed fraud by misappropriating her jewelry, by re-pledging the same with the third respondent for higher amount.
3. In this regard, she had lodged a complaint before the Pudhukadai police station. Pursuant to which Crime No.428 of 2025 has been registered as against the third respondent blank employees. The second and third respondents are hand in glove with each other and this is not the case in only one branch. She had sent a detailed representation to the first respondent to take action against the second and third respondents. However, the same is not considered, hence this is petition.
4. The Learned Counsel for the first respondent submitted that once a criminal action has been initiated as against either of the parties to the representation in question, the jurisdiction of the ombudsman of the first respondent would be automatically ousted. The documentary evidence including internal audit reports, police FIR, forensic verification of pledged items and systemic irregularities across multiple customer accounts which require detailed oral and documentary evidence beyond the scope of the Ombudsman’s summary adjudicatory process. On the basis of which the petitioner’s complaint has been closed. As per clause 16(2)(e) of the Reserve Bank – Integrated Ombudsman Scheme 2026.
5. The contention of the petitioner is that she pledged 134.2 grams of gold jewellery with the third respondent for a sum of Rs.7,00,000/- and repaid a sum of Rs.89,500/- on 30.09.2025 and further pledged 88.85 grams of gold jewellery with the third respondent to the tune of Rs. 4,00,000/-. Thereafter on 24.11.2025, she approached the third respondent with the receipt and the principal amount with interest to redeem the petitioner’s jewel loan.
6. The learned counsel for the respondents 2 and 3 submitted that she pledged 134.2 grams of gold jewels with the third respondent for a sum of Rs.7,00,000/- on 05.03.2025, repaid a sum of Rs.89,500/- on 30.09.2025 and further pledged 88.85 grams of gold jewels with the third respondent on 18.03.2025 for a sum of Rs.4,00,000/- are all denied. She neither pledged her jewel with the third respondent, nor did the third respondent issue any receipt to the petitioner. The petitioner personally approached the erstwhile Branch Manager of the third respondent, who received the jewellery from the petitioner and issued forged receipts to her. The petitioner’s contention is that she approached the third respondent on 24-11-2025 and attempted to redeem the pledged jewels by paying the principal and interest amount along with the receipts and that she was informed that an employee of the third respondent had committed fraud by misappropriating her jewels and re-pledging the same for a higher amount, which is all denied.
7. The learned counsel for the respondents 2 and 3 submitted that the misappropriation of the jewellery and amounts came to the knowledge of the second respondent and immediately an internal audit was conducted. It was identified that the erstwhile Branch Manager of the third respondent had committed fraud and misappropriated the amounts.
8. Therefore, the second respondent lodged a complaint against the erstwhile Branch Manager, namely Bindhu. Based on which complaint, later on 29-11-2025, a criminal case in Crime No.428 of 2025 was registered against her by the Pudhukadai Police Station on 04.11.2025. The second respondent had never restrained the petitioner. The erstwhile Branch Manager of the third respondent namely Bindhu Sreekumar, during her tenure misappropriately pledged gold jewels belonging to various customers of the branch by issuing forged loan receipts to the customers and repledged the same under forged receipts with the same branch as well as other banks and finance companies for higher amounts. The said transactions were never entered into the company’s system. The company only issues system generated receipts to the customer along with their photographs, which is well known to all the customers. The said Bindhu had issued handwritten receipts to the customers.
9. Several complaints were received from customers regarding the same and therefore internal audit was conducted which revealed the deception, fraud and misappropriation committed by the erstwhile manager, pursuant to which a criminal complaint was lodged. Becoming aware of the fraudulent activities of the said Bindu, the company made a paper publication alerting the public as well as customers not to involve themselves in any financial dealings with the said Bindu in the name of the company. The publication was made in Dinamalar daily newspaper on 13.02.2025.
10. Moreover, 6 customers, including the petitioner, issued letters regarding the issue and proper replies were sent to them. The company has not committed any illegality. The petitioner was cheated by the said Bindu in the name of the second respondent and at no point of time with the company cheated the petitioner. The company has already taken legal action in accordance with law and the company is also one among the victim and hence he sought for this writ petition to be dismissed.
11. Heard either sides and carefully perused the materials available on record.
12. It is the second respondent company which had established branches across the state and across the country in the name of Muthoot Mini Finance Limited, in rural as well as urban areas. Once a branch is established by the main company, it is for the main company to look into the affairs of administration with promptness. Having failed in administration and mismanagement of its various branches should not allow the customers to suffer. The second respondent is vicariously labelled for all the misdeeds of their staffs.
13. Under such circumstances, this Court is of the considered view that it is for the second respondent to take full responsibility for the entire jewelry, which is at stake belonging to the second respondent as well as the other customers. Hence, the second respondent cannot wash off their responsibility by pointing out that they have initiated criminal action as against the erstwhile Branch Manager. Even if it is re-pledged in their own branch or in any other financial institutions, it is for the second respondent to take immediate steps to redeem the jewellery belonging to the defrauded customers, including the petitioner and to hand over the jewellery after receiving the principal as well as matured interest, till the date on which the same is expected to be redeemed. The said exercise should be followed in all the customers who are ready with money.
14. In case of the inability of the second respondent to redeem the jewellery, at the market value, as on date of whatever jewellery has been pledged with the third respondent branch, should be paid to the customers, including the petitioner. The said exercise should be concluded within a period of 4 weeks from the date of receipt of a copy of this order.
15. With the above directions, this Writ Petition is disposed of. No costs.
16. Post on 25.09.2026, ‘ for reporting compliance’.
