The Madras High Court Bench here has ordered an interim stay, restraining a bank, from auctioning the jewels pledged by a farmer at the bank for gold loan.
The petitioner, M.Raja Rajan, a farmer from Velliakundram village, moved the court challenging a demand notice issued by the branch manager of Indian Overseas Bank on May 30, 2013.
According to the petitioner, he had pledged his wife’s jewels at the bank and had raised a jewel loan of Rs.57,000 from the bank at an interest rate of 6 per cent per year. He had taken the loan on August 16, 2012 and was given a year’s time to repay it.
However, the branch manager issued the demand notice directing the petitioner to repay the entire loan amount within 15 days, failing which it was stated that his wife’s jewels would be auctioned, Mr Raja Rajan’s counsel C.Sasikumar told the court. “The bank had granted the loan calculating only 50 per cent on the market value of the gold. It was stated nowhere in the loan agreement that the bank has the liberty to ask the borrower to repay the entire loan amount before the expiry of the actual repayment period,” the counsel contended.
Therefore, he pleaded that the court should quash the impugned demand notice issued by the bank. Around 400 farmers from Velliakundram and surrounding villages were served similar demand notices, he claimed.
Justice N.Kirubakaran ordered an interim stay on the branch manager’s demand notice. The case has been adjourned by two weeks.