A significant ruling from the State Consumer Disputes Redressal Commission, West Bengal, clarifies that financial institutions cannot evade liability for damage to pledged gold jewellery merely by obtaining a discharge voucher from the consumer. The decision reinforces the duty of care owed by pledgees under the Consumer Protection Act, regardless of post-damage documentation.
Background & Facts
The Dispute
The respondent, Litrani Mondal, pledged gold jewellery - including a finger ring and a neck chain - with M/s. Manappuram Finance Ltd. as security for a loan. On 10 June 2014, she retrieved the pledged items after repaying the loan. Upon inspection, she discovered visible damage to the jewellery. She filed a complaint before the District Consumer Disputes Redressal Commission, alleging that the damage occurred while the jewellery was in the custody of the appellant, and that she was pressured into signing documents that did not reflect the true condition or weight of the items.
Procedural History
- 10 June 2014: Respondent retrieved pledged jewellery and discovered damage
- 2016: Complaint filed before District Consumer Disputes Redressal Commission, South 24 Parganas
- 30 June 2016: District Commission held the appellant liable and ordered compensation of Rs. 50,000 plus Rs. 5,000 litigation cost
- 2016: Appellant filed first appeal before State Commission
Relief Sought
The appellant sought to set aside the District Commission’s order, arguing that the respondent had signed a discharge voucher acknowledging full and final settlement, thereby waiving all claims. The respondent sought affirmation of the compensation award, asserting that the damage occurred before the voucher was signed and that the signing was done under duress.
The Legal Issue
The central question was whether a consumer’s acceptance of a discharge voucher, after retrieving damaged pledged jewellery, extinguishes the pledgee’s liability for damage that occurred prior to such acceptance, particularly when the consumer alleges coercion and lack of informed consent.
Arguments Presented
For the Appellant
The appellant relied on IV (2022) CPJ 407 (NC), arguing that once a consumer signs a discharge voucher acknowledging full and final settlement, they cannot later raise claims regarding the condition of the pledged goods. It contended that the respondent had accepted the jewellery without protest at the time of return and later raised the issue only after initiating litigation. The appellant further claimed that the damage, if any, was accidental and not due to negligence.
For the Respondent
The respondent countered that the discharge voucher was signed under pressure and without disclosure of the actual condition of the jewellery. She produced a written communication from the appellant’s branch admitting liability for the damage, stating: "we are liable to return the pledged ornament in same quality and quantity... the damage was entirely accidental... we are ready to settle your issue amicably and compensate adequately for repair of damage." She argued that the voucher was not a voluntary waiver but a procedural formality imposed by the lender, and that the admission of liability in writing superseded any subsequent discharge.
The Court's Analysis
The Commission examined the nature of the relationship between the pledgee and the pledgor under the Consumer Protection Act, 2019, and the principles of fair trade practices. It emphasized that the pledgee holds the pledged goods in a fiduciary capacity and owes a duty of reasonable care. The mere existence of a discharge voucher does not automatically absolve the pledgee of liability if damage occurred during custody.
"With reference to your complaint at Manappuram, we are liable to return the pledged ornament in same quality and quantity, while the damage was entirely accidental, we are deeply sorry and the company is ready to settle your issue amicably and compensate adequately for repair of damage."
The Court held that this written admission by the appellant constituted a clear acknowledgment of fault and liability. The fact that the damage was described as "accidental" did not negate responsibility; it confirmed that the damage occurred during the appellant’s custody. The Court distinguished IV (2022) CPJ 407 (NC), noting that in that case, there was no prior admission of liability or evidence of coercion. Here, the respondent had raised the issue immediately upon retrieval, and the appellant’s own communication demonstrated awareness of the defect.
The Commission further observed that the burden of proving informed consent and absence of coercion lies with the party seeking to enforce a discharge voucher. The appellant failed to produce any independent witness or video record to establish that the respondent signed the voucher voluntarily and with full knowledge of the condition of the jewellery.
The Verdict
The appellant’s appeal was allowed. The impugned order of the District Commission was set aside. However, the State Commission upheld the compensation award of Rs. 50,000 and litigation cost of Rs. 5,000, affirming that the appellant remained liable for damage to pledged gold jewellery despite the discharge voucher, due to its prior admission of fault and failure to prove voluntary, informed consent.
What This Means For Similar Cases
Admission of Liability Overrides Discharge Vouchers
- Practitioners must now treat written admissions of fault by financial institutions as binding, even if followed by a discharge voucher
- A discharge voucher signed after damage is discovered cannot extinguish liability if the institution previously acknowledged fault
- Always preserve all written communications from the opposite party - these may override formal releases
Fiduciary Duty in Gold Pledge Transactions
- Finance companies handling pledged gold are fiduciaries under consumer law
- Any damage during custody triggers strict liability unless proven to be due to force majeure and beyond control
- Documentation must include pre-return inspection reports signed by both parties to avoid disputes
Coercion Must Be Proven by the Pledgee
- The burden shifts to the pledgee to prove that discharge documents were signed voluntarily and with full understanding
- Silence or lack of protest at the time of return does not constitute consent if the consumer was not given opportunity to inspect
- Audio or video records of return procedures are now essential for compliance
