Hyderabad: Muthoot Fincorp Limited was rapped by the consumer forum after M. Prabhavati, a resident of Chandanagar, established that the company had wrongfully auctioned her ancestral jewellery.
Ms Prabhavati stated that her husband, Gopala Krishna Murthy, had pledged her ornaments and nominated her as the nominee. Her husband later fell ill and died on October 15, 2014. Muthoot Fincorp did not give any notice to the family and auctioned the jewellery in November.
She said the ornaments were pledged for lesser than the market rate of gold.
Muthood Fincorp contended that the complainant had agreed to service the loan accounts. It was clearly notified that non-servicing of the loan accounts would result in auctioning the pledged ornaments.
It said notices intimating the auction of gold were sent to the address provided by the borrower. It said that as a non-banking financial company, it had to follow and guidelines of the RBI.
The forum stated that all the notices sent to the complainant were returned with endorsement, and that the auction notice published in newspapers did not mention the name of borrowers.
The forum said Muthoot Fincorp did not follow the principles of natural justice, and directed it to pay Ms Prabhavati Rs 1 lakh compensation and Rs 20,000 costs.