The Andhra Pradesh High Court has held that a bank may retain jewellery pledged for a repaid gold loan when the borrower remains liable as a co-borrower on another defaulted facility.
The petitioner sought release of her ornaments after clearing the gold loan. The bank relied on the housing loan taken with her husband and on a clause authorising the ornaments to secure existing and future liabilities.
The Court found that the express pledge clause, coupled with the banker’s general lien under Section 171 of the Indian Contract Act, entitled the bank to retain the gold. Earlier decisions requiring release were distinguished because those borrowers had not given comparable authority. The writ petition was dismissed without costs, underscoring that the wording of the security document—not repayment of one account alone—determines whether collateral must be returned.
